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

    This is a rush transcript from "Journal Editorial Report" March 8, 2014. This copy may not be in its final form and may be updated.

    STUART VARNEY, GUEST HOST: This week on the "Journal Editorial Report," tempers flare on Capitol Hill as Lois Lerner declines once again to answer questions from Congress. So why is she talking to the Justice Department instead?

    Plus, vulnerable Democrats breathe a sigh of relief as the administration announces yet another Obamacare delay.

    But if you thought that was the only trick up the president's sleeve this midterm election year, wait till you see his budget.

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

    Fireworks on Capitol Hill this week as former IRS official, Lois Lerner, once again refused to answer questions at a House Oversight and Government Reform Committee hearing. Committee Chair Darrell Issa says contempt charges against Lerner could come as early as next week.

    But some Democrats are crying foul, with ranking member, Elijah Cummings, calling the House's investigation into the targeting of Tea Party groups one-sided and un-American.


    REP. ELIJAH CUMMINGS, D-CALIF., RANKING MEMBER, HOUSE OVERSIGHT AND GOVERNMENT REFORM COMMITTEE: I am a member of the Congress of the United States of America. I am tired of this.


    CUMMINGS: We have members over here, each who represent 700,000 people. You cannot just have a one-sided investigation. There is absolutely something wrong with that and it is absolutely un-American.


    VARNEY: And joining the panel this week, Wall Street Journal columnist and deputy editor, Dan Henninger; Washington columnist, Kim Strassel; and editorial page assistant editor, James freeman.

    Dan, to you first.

    As I mentioned earlier, Lois Lerner refuses to answer questions from Congress but she is talking to the Justice Department. What is with that?

    DAN HENNINGER, COLUMNIST & DEPUTY EDITOR: The issue is what part of the Justice Department is she talking to? An issue like this would normally be handled by the Public Integrity Section of the Department of Justice. It's always been done that way. She is not talking to them. She is talking to the Civil Rights Division, which is run by Barbara Bosserman, who is an Obama partisan. That makes you wonder, what is the point of her talking to the Department of Justice?

    I think what is going on here is that the Obama people understand they are on very thin ice with this IRS investigation because abuse of power is not merely a political expression. It's a federal felony. You start pulling on that string and finding other people who conspired to impede a federal investigation, a lot of individuals are going to have very significant legal and political exposure. Lois Lerner is the one they are all hanging on to.

    VARNEY: James, it sounds like a harsh question but I'll phrase it, is the fix in?

    JAMES FREEMAN, ASSISTANT EDITORIAL PAGE EDITOR: I think it's a reasonable question. I talked to Representative Jim Jordan this week, who has been leading, along with Darrell Issa, this investigation. He is saying Lois Lerner has been given a grant of immunity by the administration and its signals. He's saying the president's FOX News interview Super Bowl Sunday saying there is not a smidge of corruption here. A few weeks before that, in our paper, you had the FBI official saying there are not going to be criminal charges here.

    The question is what is she really afraid of here? Why can she not talk? Her lawyer said one of the reasons that she is reluctant to do a public hearing is because of threats against her. But, of course, all of the anger against her is because she's taken the Fifth, hasn't come clean, won't tell the story.

    VARNEY: Didn't her lawyer say it's over? That was the exact expression, it's over.

    HENNINGER: Yeah. I'm referring to this past weekend when there was a hint from Darrell Issa that she might testify again. The explanation was threats. But, of course, just the truth and an honest accounting to the American people would probably diminish a lot of the anger here.

    VARNEY: Kim Strassel, what is with contempt charges may come next week?

    KIM STRASSEL, WASHINGTON COLUMNIST: There is no recourse. This is the second time Lois Lerner has been called in front of a congressional committee. As Dan and James laid out, it really is the only place where a real investigation is happening at this moment. It's certainly not happening at the Justice Department. Yet, she refuses to speak. If you bring contempt charges, you can set the ball in motion to potentially compel her to have to testify in front of a court. Republicans, I think, you could see the frustration there in that clip you ran. They are simply stymied at this point, not just with her refusal to talk, but the IRS refuses to turn over documents they need. Some view this as the only logical next step in trying to get something that will help finally answer some questions.

    VARNEY: Do you think those questions will finally be answered, Kim?

    STRASSEL: It's a hard -- that is a very hard question. Everyone is clearly -- look, something's gone on and everyone knows there is a lot of liability out there. Mrs. Lerner is going to fight this as hard as she can.

    And I think the biggest problem for Congress is that they are doing magnificent work on these investigations. But they lack, for instance, Justice Department ability to bring charges against people. Where this all ends in the end, it may end up being more political than a question of legal system.

    VARNEY: Dan?

    HENNINGER: Let's understand the political stakes. No one made up the idea that these conservative groups were investigated. They were. Many were put out of business. If this all goes away, what that means is the Internal Revenue Service has become a weapon of politics. It can be used as an instrument of politics by an administration routinely against his political enemies. It has been done before, but not on this level. It has become institutionalized. That's what the stakes are here.

    VARNEY: James?

    FREEMAN: I agree. It really goes to the heart of our democratic process. If a president or his party or people supporting him can go after his opponents, I think as far as how we get to the truth, if justice won't act on it, there is private litigation out there. Jim Jordan saying, let's have a special prosecutor. He suggests the I.G. at Justice, Michael Horowitz, to take on that role.

    VARNEY: Kim, you could say that the president has won. And he's gotten away with it because the rules governing political activity by nonprofits have been changed. And changed to the point where Tea Party groups cannot function as they used to function. I believe, however, Kim, there are exceptions to those rules.

    STRASSEL: The joke of this is the administration is now using the targeting that happened as an excuse to formalize this targeting via these new rules. The IRS has put up these rules, will institute a crackdown on the very same Tea Party groups that were targeted in the first time, restricting their speech.

    In the meantime, as we head into this midterm election season, think of all the other nonprofits under the IRS tax code that are not going to be held under that restriction, for instance, the unions, the greatest supporters of Democrats out there in this midterm election.

    VARNEY: James, the effect on this year's elections that this IRS scandal will be prolonged -- the scandal won't be prolonged, but the suppression of it will be prolonged beyond those elections. Do you think that's going to happen, James?

    FREEMAN: I think the big issue in the elections is ObamaCare. I think people are working on finding ways to get their voice heard even despite this action. But this is really about the health of our republic, I think, more than this particular election outcome.

    VARNEY: All right, thanks, everyone.

    When we come back, just in time for the midterm elections, another ObamaCare delay. But will the move really help vulnerable Democrats this November?