• With: Matt Kaminski, Bret Stephens, Joe Rago, Kim Strassel, Mary Kissel, James Freeman

    This is a rush transcript from "Journal Editorial Report," August 10, 2013. This copy may not be in its final form and may be updated.

    PAUL GIGOT, HOST: This week on the "Journal Editorial Report," as a global terror alert shuts U.S. embassies across the Arab world, a look at how Al Qaeda made its comeback.

    Plus, it is the story nobody in Washington wants to talk about. We will tell you how the White House is helping Congress weasel out of Obama-care.

    And the president says it is time for the government to get out of the mortgage business. Six years after the housing bubble burst, is it a step in the right direction?

    Welcome to the "Journal Editorial Report." I'm Paul Gigot.

    Nineteen U.S. embassies and consulates in the Middle East and Africa were shuttered this week and a global travel alert issued after communications among senior Al Qaeda operatives were intercepted indicating the plans for a major attack were under way and calling it into question the Obama administration's narrative that the terror group is on the run.

    Wall Street Journal columnist and deputy editor, Bret Stephens; and editorial board member, Matt Kaminski, join me with more.

    So just to add this list on Friday, the U.S. closed the consulate in Lahore, Pakistan, which I have been to, and which is the safest part, supposedly the safest part of Pakistan. Are we watching the comeback of Al Qaeda as a global threat?

    MATT KAMINSKI, EDITORIAL BOARD MEMBER: Actually, we have been watching it for months. It is just that only now we noticed. I think with this last week has shown, one, that's the Al Qaeda core, the central Pakistan, led my Ayman Zawahiri, taking over from Usama bin Laden, he is in charge --


    KAMINSKI: -- and he is active. Exactly. Number two, we have seen that the -- these Al Qaeda affiliates took up -- basically, when we went out after Al Qaeda and Pakistan, they moved to Yemen, they moved to North Africa, and now to Syria. But this affiliate in Yemen has been the most dangerous one.

    GIGOT: This is the one that's the source of this?

    KAMINSKI: Exactly. And when think about the embassy in Yemen, he just named the head of the affiliate, his number two, and that's what prompted the alerts earlier this week.

    GIGOT: What makes these Al Qaeda franchises dangerous, Bret? Because a lot of the people who say don't worry about this so much, these are local franchises, they are not threat yenning us, they are preoccupied with the governments of their countries and that's all. We don't need to be as concerned about them as we do with the Al Qaeda core.

    BRET STEPHENS, COLUMNIST & DEPUTY EDITOR: Well, I mean, we need to be free occupied with them as they grow in sophistication, reach and ambition. That's what we have been seeing. The affiliate in Yemen was trying to bomb western jetliners over Detroit several years ago. So this has been going on for some time. Al Qaeda in North Africa tried to take over Mali earlier this year and would have succeeded had it not been for French intervention.


    GIGOT: But is Mali really a threat to us? I mean, is that really a threat to the United States?

    STEPHENS: Look, you could have made the same argument 15 years ago, is Afghanistan really a threat to us? This distant, highly remote little country in the middle of Asia. But it is a threat to the extent it provides a secure base from which Al Qaeda can plan and plot. That's the issue.

    Now the biggest threat increasingly, I would say, is not Yemen but it's Syria where we have literally thousands of fighters affiliated with the al-Nusra Front and various other Al Qaeda -- ideologically-linked Al Qaeda groups that are gaining strength. They're gaining expertise, they're gaining fighting experience. They're jihadis --

    GIGOT: And they have created sanctuaries inside of Syria, which will be presumably very hard for us to penetrate.

    STEPHENS: Right. Not only that but they are importing jihadis from Europe who are going to go home at one point, back to Hamburg or Madrid, and they are going to create, perpetrated jihadi --


    GIGOT: But we were told, Matt, we were told that this Syria isn't our fight. It is irrelevant to our security. Yeah, it is OK, it is over there. That's the Middle East. We need to withdraw from the Middle East, pivot to Asia, the president said, because we have been stirring the hornet's nest there. Are we finding out it is a threat to us?


    KAMINSKI: We were told that what happens in Syria stays in Syria. But it has already been clear the threat (ph) has moved into Iraq. It destabilized the government there where -- Al Qaeda --


    GIGOT: There is an Al Qaeda cell that --


    GIGOT: -- defeated in the surge but that is gathering --

    KAMINSKI: Right. Prisoners escaped last week. They destabilized Jordan and Lebanon, and as Bret as pointed out, one day it will come back and hurt us. This is why we are paying the price for not doing anything about Syria.

    STEPHENS: Al Qaeda in Iraq was defeated when we left Iraq.

    KAMINSKI: That's right.

    STEPHENS: Defeated in 2008. It is gaining strength precisely because we are not there, not because we were there.

    GIGOT: What about the argument that this global alert about embassies is really an overreaction, that this is a political response to the criticism the president got about the disaster in -- where Americans were killed in Benghazi. And this is really not as threatening as they say. This is mostly just frankly political self-protection.

    STEPHENS: I think overreacting to terrorist threats is always the right thing to do. Just imagine if we had another consulate or another embassy destroyed as the embassies in Tanzania and Kenya were in 1998, hundreds of dead, both locals as well as --

    GIGOT: As Americans.

    STEPHENS: As well as Americans. People would be demanding to know why we didn't take the necessary precautions to make sure, especially if we felt we had intelligence that could have prevented this. So the idea we are overreacting to terrorism is an idea that seems persuasive until there is a terrorist attack.

    GIGOT: You credit the Obama administration with doing the right thing here?

    KAMINSKI: Yes, absolutely. I think one thing is we don't know fully what happens. There's stories out that there was a meeting of 20 senior Al Qaeda leaders by some sort of -- not by phone, by chat somehow last week is what they found. But we don't also know what they are responding to or what they were trying on provoke. There is a very possible --