• With: Dan Henninger, Jason Riley, Collin Levy, Mary Anastasia O'Grady, James Freeman

    This is a rush transcript from "Journal Editorial Report," April 26, 2014. This copy may not be in its final form and may be updated.

    PAUL GIGOT, FOX HOST: This week on the "Journal Editorial Report," the left and right react as the Supreme Court upholds Michigan's ban on racial preferences. But is the decision really the death knell for affirmative action?

    Plus, with student loan debt soaring, the administration tries to fix a problem of its own making. But could taxpayers be left footing the bill?

    And President Obama and Vice President Biden head overseas in an attempt to reassure anxious allies. Can they count on America as Russia and China ratchet up the threats?

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

    The Supreme Court on Tuesday upheld a 2006 Michigan voter referendum banning racial preferences in admissions to its public university, preserving the status quo in that state and seven others that have ended affirmative action since 1996. The 6-2 decision produced five different opinions, including a 58-page dissent by Justice Sonia Sotomayor, who compared Michigan's referendum to Jim Crow laws in the south, calling it, quote, "The last chapter of discrimination," and writing that "a majority of the Michigan electorate changed the basic rules of the political process in that state in a manner that uniquely disadvantaged racial minorities."

    For more, I'm joined by "Wall Street Journal" columnist and deputy editor, Dan Henninger; "Political Diary" editor, Jason Riley; and senior editorial writer, Collin Levy.

    So, Collin, you wrote about this for us. The opinion was really splintered, a lot of opinions, different points of view. What should our viewers -- what should be the main takeaway from the opinion?

    COLLIN LEVY, SENIOR EDITORIAL WRITER: Right, Paul, the main takeaway here is that the justices got to the right answer. But they got there by the most incremental means possible. They found that states can ban racial preferences without violating the Constitution but, as you said, it took them five opinions and 102 pages to do it. So it's pretty clear this opinion is not going to be a clear guiding light going forward.

    GIGOT: But it's very clear this opinion did not say that racial preferences are unconstitutional. In fact they just said --

    LEVY: Yes, Justice Kennedy -- yeah, Justice Kennedy was very, very clear to say that -- and wanted to make sure this was a very narrow opinion --

    (CROSSTALK)

    GIGOT: So it boils down to basically the people can decide whether or not they want to ban them, or allow the universities to and government to implement them. But it's up to the public, people and through referenda or the legislatures to decide?

    LEVY: That's exactly right.

    GIGOT: OK.

    Now, Jason, there was a dissent -- not a dissent, excuse me -- concurrence by Justice Scalia joined by Clarence Thomas that while they agreed in the result, didn't agree in the logic.

    JASON RILEY, POLITICAL DIARY EDITOR: Right. They wanted the court to go further, as they have for the past 20 years-plus, Paul. As you said, the court won't just come out and say that racial preferences are unconstitutional. And that's really what we need the court to do. And they keep punting on that issue. They keep saying, you can racially discriminate, you know, sort of if you're not too obvious about it, if it's for diversity sake or, you know, if there is some government compelling interest or -- but what we need the court to say is either you can take race into account or you can't. And they won't -- they won't just come out and --

    GIGOT: And your argument is they should do that because that's the plain language of the 14th Amendment of the Constitution, and post-Civil War amendment which said you cannot discriminate by race. That's your argument?

    RILEY: They should do it, right, because I believe racial preferences are discriminatory and unconstitutional. But also because I think that racial preferences actually harm the intended beneficiaries. And the evidence that they do that is mounting by the day, frankly.

    GIGOT: So what about this argument that Charles Krauthammer and some others have made that, you know, what the court actually did the right thing. It's incremental, but they did the right thing because they said we're not going to decide for the public. This is too contentious an issue. This is something for voters to decide. And you saw that in Justice Breyer's, liberal Justice Breyer's concurrence. He said we shouldn't settle this for all-time. The voters should have the say.

    What's wrong with that?

    DAN HENNINGER, COLUMNIST & DEPUTY EDITOR: Well, Justice Sotomayor thinks there is a lot wrong with that. She thinks the voters are capable of disadvantaging minorities, using that process. She said that's what happened in Michigan. They passed the constitutional amendment, it means that racial minorities no longer have access explicitly to the elected board of regents to appeal to them as parents of legacies or athletic scholarships are able to do.

    GIGOT: What's your reaction to her point?

    HENNINGER: I think that -- look, she says there is persistent racial inequality in society. To Jason's point, Justice Sotomayor is talking about black Americans, because of the legacy of slavery in the United States. The problem is the United States is now full of other ethnic minorities, such as Asians or Hispanics, who themselves can make similar legal claims to Justice Sotomayor's. And so you're looking towards an endless legal tangle here. And to have it suggest --

    (CROSSTALK)

    GIGOT: So you're saying race is uniquely combustible and complicated, unlike, say, legacies for alumni, which, face it, sometimes are --

    HENNINGER: Yeah.

    GIGOT: -- do get a preference in academic institutions for admissions. So is that your argument, that race is somehow unique?

    HENNINGER: It's Justice Sotomayor's argument that it is unique, and it uniquely disadvantages black Americans. And she cites areas of American life where she called persistent inequality persists. But the question is, what is the result that she is looking for? And mainly, it is a statistically based equality that people like her and Eric Holder and Thomas Perez of the Labor Department -- this is not just Justice Sotomayor.

    This is President Obama's view of race in America.

    RILEY: Just a couple of points. First, she omits Asians when talking about the minorities that are harmed by this ruling. Because we all know that racial preferences harm Asians --

    GIGOT: In admissions.

    HENNINGER: Yeah.

    RILEY: -- in admissions in college admissions, because they over perform.

    Secondly, however, even if you buy her argument that racial discrimination is still some barrier to black progress in America -- I don't buy that argument -- but even if you do, it does not follow that racial preferences are the best way to address that argument. We have evidence mounting that shows -- and you mentioned eight states now have these bans in place. When they stopped using racial preferences in California and other states, black college graduation rates went up. Not only across the system, but they went up in the most difficult fields of math and science. So we would have more college graduates, but for these policies. So it's not just a matter of them being wrong and harmful, it's a matter of them being harmful, as well.

    GIGOT: All right, Jason, thank you very much.

    When we come back, faced with surging enrollment and skyrocketing costs, President Obama is now calling for reforms to his own student loan program.

    But even with those fixes, could taxpayers be left paying the tab?

    (COMMERCIAL BREAK)