• With: Dan Henninger, Mary Anastasia O'Grady, Kim Strassel, Bret Stephens, Matt Kaminski

    (CROSSTALK)

    HENNINGER: Right, because our problems are fiscal problems right now. And I think that essentially what Barack Obama has here is not the treasury secretary who represents the economy or Wall Street, but he would call him a treasury secretary for the middle class. In other words, he's part of this much more populous middle class idea that Obama is pushing right now. And I think that's what Lew's job is going to be, to help Obama, as I said in the previous segment, get spending up to this level that needs to support the middle class.

    GIGOT: Here is what I always think it means. The grand bargain, the grand budget bargain is dead. There will not be a grand bargain. Tax reform for the next two years, probably dead. What we're going to have is trench warfare. And on spending, fight after fight after fight and really no bipartisan agreement. And Jack Lew is the kind of guy you pick if you want him to be basically your trench-warfare general.

    HENNINGER: Yes.

    O'GRADY: And the not much discussion about growth.

    GIGOT: No, I don't think so.

    All right, when we come back, the president's national security team is also getting a makeover. And at least one of his picks all but guarantees a confirmation fight. What the Hagel hearings will tell us about foreign policy in a second Obama term, next.

    (COMMERCIAL BREAK)

    GIGOT: Some other big cabinet announcements this week, with President Obama nominating former Nebraska Senator Chuck Hagel as defense secretary and White House counter-terror chief, John Brennan, to run the CIA. The two join last month's choice, Massachusetts Senator John Kerry, to replace Hillary Clinton as secretary of state.

    We're back with Dan Henninger. Wall Street Journal foreign affairs columnist, Bret Stephens; and editorial board member, Matt Kaminski, also join the panel.

    And, Matt, first term, we had Leon Panetta at CIA, Bob Gates, a carryover from the Bush administration at defense, and Hillary Clinton as secretary of state. Very different choices in mindset and stature than these three. What defines this new team?

    MATT KAMINSKI, EDITORIAL BOARD MEMBER: I think it's pretty much defined by a couple of things. One, they're much more dovish across the board in terms to their approaches to -- should America be involved in the world beyond, how assertive should we be. Chuck Hagel, especially has, throughout his career in the Senate and afterwards, almost an neo- isolationist viewpoint that we, you know, we --

    (CROSSTALK)

    GIGOT: Despite being a Republican.

    KAMINSKI: Absolutely. I think that's what's misleading here, in a way. He doesn't agree with the mainstream Republican Party. He's being put forward as a bipartisan sort of pick. But throughout his time in public office, he has said that we cannot shape events overseas, that we shouldn't get embroiled in the problems in the Middle East, we shouldn't challenge Russia or China on human rights or democracy. And I think John Kerry is pretty much the same way.

    GIGOT: Right.

    KAMINSKI: Which is different even from Hillary Clinton, who has, at times, been much more hawkish.

    GIGOT: Yet, the White House would respond and say, look, John Brennan led the counter-terror effort inside the White House that's gone effectively after Osama bin Laden and Anwar Awlaki and other terrorists around the world, so don't lay on this neo-isolationist business on us.

    It's not fair.

    BRET STEPHENS, FOREIGN AFFAIRS COLUMNIST: I think in the case of Brennan that's not a controversial pick. You can have your quibbles with a number of things that Brennan has done in his career, alleged to have done, but I think as CIA picks go, he's a fairly solid pick.

    The real issue has to do with Chuck Hagel. Now, it's not entirely true that Hagel has always had this contrarian profile. Actually, there's a great deal of political opportunism in his career. You might remember in 1997, the Bird-Hagel Amendment, adamantly opposing the Kyoto Protocol in 1998. He was one of the people who was pushing Bill Clinton --

    GIGOT: That's the global warming --

    STEPHENS: Exactly.

    GIGOT: -- agreement.

    STEPHENS: In 1998, he was one of the Republicans pushing Bill Clinton to deploy ground troops to Kosovo. But it's true that in the last eight or nine years, he's developed a very dovish persona. Putting him not just to the left of the Republican Party, but putting him to the left of President Obama's own stated positions when it comes to countries like Iran.

    GIGOT: Really?

    Well, I guess a lot of people would say, well, fine, this reflects, these choices reflect President Obama's world view. He won the election.

    Shouldn't he get those choices?

    HENNINGER: Well, perhaps, except that his world view includes, I'm convinced, the idea that spending on defense has got to fall and that that money has to be reprogrammed into domestic spending. The defense budget is about $600 billion, more or less. And post war, it's been about 5 percent of GDP. Conservatives argue it should now be about 4 percent of GDP. I think Chuck Hagel's job is to start pushing that number downward, and that's because Barack Obama wants it to fall after Iraq, after Afghanistan.

    And then, as Democrats have wanted for 25 years, spend that money on domestic education and energy and --

    (CROSSTALK)

    STEPHENS: And, of course, as the Europeans have discovered, you can only take so much money from defense and put it into entitlements.

    HENNINGER: I think they believe that.

    STEPHENS: And eventually, you end up both bankrupt and defenseless. The Europeans can afford that because they have the Americans behind them. Who do we have behind us?

    GIGOT: Right, but here is the question that I have politically. The president knows, because this was floated and you've written two critical columns about Chuck Hagel, and a lot of other people have as well. Republicans have -- some Republicans have come out and said they won't support him. Chuck Schumer, the New York Democrat, said, well, I want to hear his record. And he hasn't come out and said he'll vote for him. So, why would the president court a confirmation fight in this manner?

    STEPHENS: You know, I actually think there's a psychological element. He wanted Susan Rice as secretary of state. She was --

    GIGOT: U.N. ambassador.

    STEPHENS: The U.N. ambassador. She was heavily criticized, including by me and various others. She withdrew her name. And I think he was simply determined that he wasn't going to be pushed around again, that he was going to pick Hagel. Also, he has a friendship with Hagel that goes back --

    GIGOT: To their Senate days.

    STEPHENS: -- for several years. So I think it -- a lot of these decisions aren't just simply ideological or policy decisions. There's a personality aspect.