• With: Ray Kelly

    GIGOT: Right.

    FREEMAN: -- or my neighbor's progressing. But I think for the president here, this is a problem, that it is another campaign and people want results and he's now --


    FREEMAN: -- talking about the policies of the last 10 years when he has been in the office for half of them.

    GIGOT: Steve?

    MOORE: You know, I wanted to make a point about this. This is the new line here in Washington. That the reason the economy isn't doing well and this president is floundering is because the Republicans in Congress won't pass his initiatives.

    The problem with that argument, as you know, Paul, is for the first two years of this presidency, Barack Obama did everything virtually that he wanted to do with a few exceptions. That actually was negative for the economy. The American voters turned thumb downs to that. And I would make the case -- you mentioned I'm the resident bull on the editorial page.


    One of the reasons I'm kind of bullish is precisely because President Obama can't do the things he wants to do. He can't do Cap-and-Trade and he can't do union Card Check --


    MOORE: -- and he can't have this second stimulus bill. And ironically, he may be saved by the fact there is a little bit of gridlock in Washington because most of the ideas --

    GIGOT: All right.

    MOORE: -- that he mentioned in the speech were the things he did in the first two years.

    GIGOT: Mary, quickly.

    O'GRADY: But, Paul, I think what Steve is missing there is the facts don't matter for this president.


    He is going for the heart. He is going for the emotion. That's what the speech was about.

    Look, I see a bright, sunny America, and if only you will get behind me, I will bring you that. These guys are austere. They are cutting government. They are cutting growth.

    GIGOT: Republicans may have given him an opening by focusing so much on the budget and not on growth.

    When we come back, a federal judge rules that the Motor City can move ahead with bankruptcy proceedings despite the objections of unions and pension funds. Is it the right move for Detroit? And could other cities be next?


    GIGOT: A federal judge this week blocked a chance to halt Detroit's bankruptcy proceedings, despite protests from public employee unions and retirees concerned about cuts to wages, benefits and pensions. The city is the largest municipality in U.S. history to file for Chapter 9 protection. And despite the calls from labor leaders to intervene, the Obama administration so far has shown little appetite for stepping in.


    JAY CARNEY, WHITE HOUSE PRESS SECRETARY: We will, of course, as we do with every city, work with them to find ways to assist them in their effort as Detroit tries get back on its feet and continue to make progress. But the issue of insolvency is something Detroit and its creditors immediate to resolve.


    GIGOT: This week, the AFL-CIO came out and said Detroit does needs federal help. They have a lot influence among Democrats. Does Detroit deserve a bailout?

    O'GRADY: Absolutely, not. Not any more than California deserves a bailout or any other municipality or state that got into trouble because they took on too much debt, which is basically what the problem is. They have $18 billion in debt. Some portion of that is pensions. But it's not even a majority.

    GIGOT: What about the argument that, Mary, you know, Detroit is a victim of the economy. The auto industry is -- you know, had a terrible time for a few years there. And that is basically it. It's an innocent bystander. We immediate to help it just like it was a natural disaster.

    O'GRADY: But, Paul, I think you can make that argument in a lot of cities in the northeast. And in the Rust Belt as well. The economy is a dynamic organism. It changes and populations move, innovations moves to -- because of innovation, you know, economic activity moves to other places. But that can't be the justification for a bailout because you are continually going to have the challenges. And I think in a lot of ways, Detroit didn't take the right steps to attract capital back, and that's where the fault lies.

    GIGOT: Cities like Boston and New York, which were really down on their luck. When certain industries, textiles in Boston, moved out, they brought in new industries.

    FREEMAN: Right. These facts were known. And just like individuals have to respond if their business is not doing well, they might want to move, they might want to pursue a different career path. What you didn't see was reform. While Michigan's economic problems were continuing, you didn't see an effort in Detroit to lower its costs, to reduce the state's highest tax burden to attract those new industries that might have come in. So I think that this is really a question of political promises that were not justified by the amount of revenue --


    GIGOT: Should pensions be on the table as part of bankruptcy? Because the unions are also saying, no, they should not be.

    FREEMAN: They have to be. And I don't -- and they should be. And I don't know why public-sector workers should be exempt from the reality that the rest of the world faces when --

    GIGOT: And you would say bond holders should be on --


    FREEMAN: They should get hurt, too.

    O'GRADY: Let's remember, too, when you talk about a bailout, you are talking about bailing out the creditors, and these people went into Detroit and took risks and got the spread, the extra premiums --


    GIGOT: Knew what they were doing.