• With: Dan Henninger, James Freeman, Kim Strassel, Joe Rago, Bret Stephens

    This is a rush transcript from "Journal Editorial Report," October 5, 2013. This copy may not be in its final form and may be updated.

    PAUL GIGOT, HOST: This week on the "Journal Editorial Report," gridlock grips Washington as the U.S. government dances with default. Can the two parties find a way out?

    Plus, lessons from the ObamaCare rollout. What to make of this week's glitches and what to watch for in the days ahead.

    And a just released U.N. report calls climate change unequivocal but it can't explain the hiatus in global warming of the last 15 years.

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

    Gridlock continued to grip Capitol Hill this week as the two sides failed to reach a budget accord, forcing a partial shutdown of the federal government and raising fears of a default as the debt ceiling deadline looms. It's a partisan standoff President Obama insists he has nothing to do with.

    (BEGIN VIDEO CLIP)

    PRESIDENT BARACK OBAMA: During the course of my presidency, I have bent over backwards to work with the Republican Party and have purposely kept my rhetoric down. I think I'm pretty well known for being a calm guy. Sometimes people think I'm too calm.

    (END VIDEO CLIP)

    GIGOT: Joining panel this week, Wall Street Journal columnist and deputy editor, Dan Henninger; Washington columnist, Kim Strassel; and assistant editorial page editor, James Freeman.

    Dan, you're a calm guy.

    DAN HENNINGER, COLUMNIST & DEPUTY EDITOR: Sure.

    (LAUGHTER)

    GIGOT: You can comment on the calm guy, the president of the United States. He says he won't negotiate with the Republicans until they do two things, one, pass a clean increase in the debt limit and a clean continuing resolution, with nothing attached except to fund the government. What's his calculation?

    HENNINGER: Let me just say I have personally spent four years bending over backwards to be fair to Barack Obama --

    (LAUGHTER)

    -- so let me try to do that right now. They are basically three things that I think he wants. One, that -- this is something people must not forget, because he has said it. He wants to take back control of the House of Representatives in 2014. To do that, he has to give voters a reason to vote against Republicans. That's going on right now.

    GIGOT: So you think that's the underlying motivation here?

    HENNINGER: I absolutely think it's one of the underlying --

    GIGOT: So he wants a shutdown?

    HENNINGER: I think he would accept a shutdown.

    GIGOT: We have one now. But is he enjoying this?

    (LAUGHTER)

    HENNINGER: I think he's absolutely enjoying it. I watched his speech in Maryland yesterday and he was enjoying himself. He wasn't calm. He was trashing the Republicans and trashing John Boehner. Nothing he said would have given John Boehner an incentive to negotiate with the president about anything.

    GIGOT: So what about default, which is a dicier proposition? Do you think he's toying with that, too? Could he welcome that in order to blame it on Republicans, too?

    HENNINGER: An interesting news stories that came out this week is that the Treasury Department, which would have to manage a default, is not giving the market any indication of what its plans are to manage that situation. That's really unusual, Paul, for treasury not to tell, not so much the Republicans but the market that's going to have to deal with this crisis, and they won't tell them what they're going to do. I mean, it suggests that they're planning for a situation that is a tremendous crisis that they can blame on the Republicans. It's hard to avoid that conclusion.

    GIGOT: That's very high risk.

    Here's the other thing, James, he may be thinking, which is, you know what, the Republicans are going to crack first. They're going to break here. They're going to -- before the default or whenever it is, John Boehner will simply say, look, we'll turn it over to the House, let Democrats in, whoever, whatever Republicans want to vote for, the debt limit increase, and so he can play this game of chicken.

    JAMES FREEMAN, ASSISTANT EDITORIAL PAGE EDITOR: Yeah, he can. And I think he feels like he's winning so there's not a great urgency to move towards the Republicans but he does hate the sequester. He hates these limits on spending --

    (CROSSTALK)

    FREEMAN: -- automatic spending cuts.

    GIGOT: That are built into the law now.

    FREEMAN: Yes, and he's thrilled to have ObamaCare rolling in. But this now pretty much takes off the table any new spending programs over the rest of his term. And as we know, what he loves to do is create new spending programs. I think that's the leverage for Republicans, ultimately, to make him make an offer to them on resolving these issues.

    GIGOT: OK, Kim, let's talk about the Republicans. Where are they? Publicly? And they have a common front? There's no question about that. And they're holding firm. But behind the scenes, there are some disagreements. Why don't you explain what's going on?

    KIM STRASSEL, WASHINGTON COLUMNIST: Well, look, the leadership never wanted to be in this situation of shutdown. It was sort of foisted on them by those who pushed forward with this defund strategy. But now, having arrived here, they realize the importance of having some sort of honorable exit. Because if they just fold on this, and this is the fear, that then Barack Obama knows that he's got them on either other negotiation, too, and they're sort of sitting ducks in the water. They can't ever exert leverage again. I think what is going on, along with what James said, is there's talk about whether or not you can't roll this up into the debt ceiling argument as well, where the president has been willing to negotiate in the past. You get some sort of sequester as a leverage. You get some sort of budget reforms on the Republican side. And then, maybe something smaller on health care that satisfies those who have been pushing to fund.

    GIGOT: Right. OK, but, Kim, that's the strategy that Paul Ryan and some of the other House leaders would like to get to as an exit strategy if they can. But it takes two things. One, the president has to negotiate. Because if he doesn't negotiate, you can't get to these kinds of negotiations. And, two, you have the Ted Cruz faction, which is basically saying we won't negotiate at all either over anything except ObamaCare. What is the exit strategy that the Cruzites are saying -- here's our end game, here's where we want to arrive at? Do they have one?

    STRASSEL: They have no end game, Paul. They've never had an end game. And, you know, I think what they're hoping is that Democrats are simply going to crack at some point under the pressure. But I have not seen any sign of that. In fact, they have been taking vote after very difficult vote with near unanimity because --

    GIGOT: The Democrats have?

    STRASSEL: The Democrats have. Because they understand, this goes back to Barack Obama's calculation, that this is the president's signature achievement. And to go so far as to do defund or even delay to a certain point is to fundamentally undercut that law and get rid of that achievement.