• With: Kim Strassel, Dan Henninger, Steve Moore, Joe Rago

    This is a rush transcript from "Journal Editorial Report," October 19, 2013. This copy may not be in its final form and may be updated.

    PAUL GIGOT, HOST: This week on the "Journal Editorial Report," an 11th-hour deal ends the government shutdown and avoids default but for how long? A look at the battle ahead as Congress negotiates a long-term budget.

    And almost three weeks after a very rocky rollout, those health care exchange glitches don't seem to be getting any better. So who's responsible for this high-dollar debacle?

    And the Virginia governor's race heats up and gains national attention. Why this campaign is one to watch.

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

    An 11th-hour deal to reopen the government and avoid default passed Congress late Wednesday, ending the budget stalemate in Washington, at least for now. The Senate-negotiated agreement keeps the government running through January 15, raises the debt ceiling through February 7th, and instructs a bipartisan committee to report back on a broader budget plan by mid-December. So what can we expect 13 weeks from now?

    Let's ask Wall Street Journal columnist and deputy editor, Dan Henninger; Washington columnist, Kim Strassel; and senior economics writer, Steve Moore.

    So before we get to looking ahead at the budget fight, Kim, what's the big lesson you take away from this showdown battle?

    KIM STRASSEL, WASHINGTON COLUMNIST: Well, I think the big lesson for Republicans are don't walk into box canyons that you don't have much of an escape from. Look, nobody really won in this deal at all, neither the Republicans --

    GIGOT: Right.

    STRASSEL: -- nor the White House. But the Republicans certainly took the bigger brunt of this. Their poll numbers are way down. The party is divided. There are a lot of conservatives angry. They were promised something that they could never actually achieve other than blowback to Republican candidates, for instance, running for the governor's race in Virginia. So this has really been hard for the party.

    Now, one thing they do emerge with is another shot at this. And with, still, what is their best leverage --

    GIGOT: Right.

    STRASSEL: -- which is the sequester, the sequester levels.

    GIGOT: I want to get -- I want to get to that later.

    Dan, how big is the split here, do you think, between the Tea Party or the folks that push this shutdown, and the business community, which is clearly not happy with it?

    DAN HENNINGER, COLUMNIST & DEPUTY EDITOR: Yeah. Well, I think it's beyond a split, Paul. These are fissures and fractures. I think some really significant damage has been done to the Republican Party. There are divisions inside the Congress itself. There are divisions between the conservative community. Usually, in politics, you win some, you lose some, life goes on. There's a lot of deep bitterness out there.

    And now the idea that the business community says they're going to put arm's length between them and the GOP, we're not talking about the Fortune 500. These were sort of midlevel manufacturers and so forth. They're very nervous about the Republican Party right now. Someone has a big job putting Humpty Dumpty back together.


    GIGOT: You know, Steve, when a lot of conservatives out there are saying -- that even Paul Ryan, the House Budget chairman, and Marco Rubio, who only two years ago was a hero of the Tea Party -- when they are somehow labeled sellouts for wanting to work with, say, on immigration or some kind of long-term tax reform, you've got a real problem within the GOP, don't you?

    STEVE MOORE, SENIOR ECONOMICS WRITER: You really do. Look, I think the Tea Party needs some adult supervision. They just need to get a lot smarter about tactics. It's interesting. Dan is right. There is this big fissure between the business community, the people who put money in these races, and the Tea Party. What the Tea Party tell me in response to this, Paul, is, look, maybe we screwed up, but we're not going to advance a kind of conservative free-enterprise agenda in Washington without the kind of grassroots of the Tea Party movement. So this divide right now could be crippling for the party that the big beneficiaries of it could be Barack Obama and the Democrats in 2014.

    GIGOT: Right, and particularly if you go into the 2014 elections and get third-party candidates who split the --

    MOORE: Yes.

    GIGOT: -- conservative right-leaning vote. Then that would help perhaps the Democrats take back Capitol Hill.

    So, Kim, how bad do you think this divide is? Can you put it back together?

    STRASSEL: It's awfully hard because part of the problem here -- look, this shouldn't be such a big deal, Paul, in that, ideologically, there isn't necessarily a huge split out there. There isn't a single conservative you talk to who don't all despise ObamaCare.

    GIGOT: Right.

    STRASSEL: But one of the things that happened as a result of this is that guys like Ted Cruz and some of these outside groups, like Heritage Action, they took what was, in fact, a strategic divide in the party, and they suggested it was an ideological divide. So you do have a lot of conservatives out there, who have turned against what they consider the establishment in the party, and they're very angry and feel what has to happen first is some sort of purge within the conservative movement, and then move on to tackling Democrats. And that can be very disruptive.

    GIGOT: Steve, with that as a backdrop, what do you think can possibly get done here in the next couple of months on these things? The president talked about three things this week. He talks about progress on the budget. He talked about a potential farm bill. And he talked about the immigration reform. Any prospects for movement on those?

    MOORE: The environment is toxic right now in Washington in the aftermath of this battle than any time that I've seen in the 30 years I've been there, so I'm extremely skeptical that you're going to see these big deals. By the way, right after the deal was reached, President Obama was on his high horse saying we're going to go for more spending, more taxes. He's feeling his oats right now. But Kim is right. The one card that Republicans have, that Democrats desperately want to take from the Republicans, is the sequester.

    GIGOT: Right.

    MOORE: And I pray they don't give that away it because, if you do, that spending is going to go right back through the roof again.

    GIGOT: But to get a budget deal, Dan, the president has to take his demand for a tax increase off the table. You could trade the sequester budget caps on discretionary spending for entitlement reform. But if he insists on a tax increase, nothing gets done.

    HENNINGER: That's right. We used to say Social Security was the third rail in politics. For Republicans now, raising taxes is the third rail.

    GIGOT: Because they raised them in January.

    HENNINGER: Because they raised them in January.

    GIGOT: Right.

    HENNINGER: If they do it again, it will totally, totally dispirit the Republican base across the country. And that arguably is what Barack Obama wants. And that is why one might predict there is not going to be a deal. He'll hold out for higher taxes.

    GIGOT: Kim, are you as pessimistic --