• With: Dan Henninger, James Freeman, Kim Strassel, Mary Anastasia O'Grady

    This is a rush transcript from "Journal Editorial Report," April 13, 2013. This copy may not be in its final form and may be updated.

    STUART VARNEY, GUEST HOST: This week on the "Journal Editorial Report," President Obama releases his budget, pitching it as a peace offering to Republicans. But a closer look at the details suggests there's plenty more conflict ahead.

    Plus, the Senate moves forward on gun control legislation, but is the bill they're looking at really what the president wanted? And could some red state Democrats wind up paying with their political lives?

    And Beyonce and Jay-Z's Cuba trip sparks outrage. Other celebrities have done it, so what's the big deal?


    PRESIDENT BARACK OBAMA: For years, the debate in this town has raged between reducing our deficits at all costs and making investments that start to grow our economy. And this budget answers that argument because we can do both.


    VARNEY: Welcome to the "Journal Editorial Report." I'm Stuart Varney, in this week for Paul Gigot.

    Well, at long last, President Obama released his budget for 2014 this week, calling it a fiscally responsible blueprint for middle class jobs and growth, and pitching it as a peace offering to Republicans. But after looking at the details, should we be hoping for gridlock? Let's ask Wall Street Journal columnist and deputy editor, Dan Henninger; assistant editorial page editor, James Freeman; and Washington columnist, Kim Strassel.

    Dan, hoping for gridlock? What? You don't like this?

    DAN HENNINGER, COLUMNIST & DEPUTY EDITOR: It sounds good for me based on what I heard President Obama say. So, on the one hand, he says, in the past, we've been trying to reduce deficits at all costs. That means cutting spending, as opposed to making some of the investments we need, which means increasing spending. And he says he's solved it. Well, he has. He has increased spending. It's up to 22 percent of GDP.

    Here is an interesting fact. Before 2008, spending, federal spending was $2.7 trillion. In this budget, it's $3.7 trillion. Obama has increased spending in four years by a trillion dollars. Now, he's doing that because he wants it pay for infrastructure, high-speed rail, electric cars, even as the industry is going bankrupt and to do that he's going to need to raise taxes. Am I for gridlock, Stuart? I say so.


    VARNEY: Kim, give me the big picture here, where there's talk that this budget is a compromise. Is it?

    KIM STRASSEL, WASHINGTON COLUMNIST: This is not a compromise. It was certainly -- the White House wanted that to be the argument, but think of it rather as a fig leaf or a diversion away from what Dan was just talking about, a budget that's exactly the same that we've seen from this administration for the past four years. And that's why there will be gridlock. Because while you had this one little item in there, like an unchained CPI or the way that you calculate cost-of-living adjustments, something that the Republicans have talked about, and the president put that out, this is just a tiny item in the budget. The other 99.9 percent of the budget is a problem and it's the reason why you're not likely to see this grand deal that the press has been excited about this week. There is simply too big of a gulf. The White House wants vastly more spending and the Republicans are focused on the big problem of deficits and debt.

    VARNEY: James, part of the budget is a plan to cap how much you can have in IRAs and Keoghs.


    VARNEY: What's the latest on that?

    FREEMAN: It's kind of amazing. When you look at this economy's slow growth, we've got a terrible employment report, and the administration decides that going after the incentive to work, save and invest, reducing that incentive is what's needed now. It's kind of amazing. So basically the administration, Barack Obama decided that a reasonable amount of retirement saving is roughly $2 to $3 million, and beyond that, nobody needs any more tax advantages in these plans.

    VARNEY: The White House did use that word, "need." We know how much you need.

    FREEMAN: Right. And reasonable. And the idea -- it should be -- it bothers any American that the government decides how much you ought to be making, I think. But beyond that, people who save, who fund America through their investments and who build up a large nest egg through hard work and thrift, ought to be rewarded and celebrated. And unfortunately, it's kind of a commentary on their hero that now is going after them.

    VARNEY: Then there's a cigarette tax increase, 94 cents a pack, and that will be used to pay for universal pre-school.

    Kim, what do you make of that?

    STRASSEL: I think that that this is going nowhere. And it's also -- interestingly, we also wonder what guides Barack Obama. You can look out at a lot of big liberal states like Illinois where he came from, places like this that has instituted cigarette tax. What they quickly found out, placing every higher burden on taxes on a diminishing group of taxpayers like smokers is not a very good way to fund your long-term ambitions. The problem the administration has is it has got to come up with the money somewhere and smokers' tax sounds better than most things, so that's what it threw out there for its preschool initiative.

    VARNEY: Dan?

    HENNINGER: The way that they hope to come up with the money is -- can be summed up in two words, a "grand bargain." The White House wants to pull the Republicans into a negotiation over a grand bargain in which they commit to some reduced spending, but the Republicans have to raise some taxes. Politically, that's a poison chalice for the Republican Party. If they do that, they're probably going to lose the House in 2014. And that's the only thing that Barack Obama has his eye on right now. And the question is, will the Republicans take the bait.

    VARNEY: Is it really a reduction in spending? That's only in a very narrow area.

    HENNINGER: The promised of reduction in spending.

    VARNEY: It's a minuscule reduction in spending. And I believe in this budget, President Obama becomes the first president in history to spend $4 trillion in one year. And we do that in the fiscal year 2015. Spending goes up every single year.

    FREEMAN: And trillions of more debt --


    FREEMAN: My favorite moment from that from Wednesday announcement was when he said there's not a lot of smoke and mirrors in his budget. In other words, yes, I'm trying to get some gimmickry and pull stuff through in this package, but other parts of it are OK.


    VARNEY: Kim, will it fly politically?

    STRASSEL: No, this is nowhere. This is coming a month after both the House and the -- I mean, the House and the Senate passed their own budgets. You almost have to wonder what the point of this was. The idea behind budgets the president puts out a plan, a blueprint to guide the rest of Congress to put forward his ambitions and then it cements what sort of shapes what comes after. This came a month later. The debate is short of largely done. He has a little concession on calculating retirement benefits. But this has done nothing to move the ball toward a bigger discussion or a bigger debate or a grand bargain.

    VARNEY: All right.

    When we come back, the Senate moves to debate gun control legislation, but is it the bill that President Obama wanted? And could this decision to push forward on the issue cost some in his party their jobs in 2014?