• With: Kim Strassel, Dan Henninger, Jason Riley, Bret Stephens, Matt Kaminski

    This is a rush transcript from "Journal Editorial Report," June 14, 2014. This copy may not be in its final form and may be updated.

    PAUL GIGOT, HOST: This week on the "Journal Editorial Report," Eric Cantor's stunning defeat raises questions about just what kind of leadership Republicans in Congress need and puts immigration reform in doubt. Will the GOP learn the right lessons from the loss?

    Plus, Iraq on the brink, as al Qaeda-linked insurgents set their sights on Baghdad. We'll assess the threat to the region and to the United States.

    And Hillary Clinton's book tour, looking an awful lot like a campaign rollout. What her performance tells us about the landscape heading into 2016.

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

    With Republicans reeling from the stunning defeat of majority leader, Eric Cantor, in Tuesday's Virginia primary, new questions are being raised about just what kind of leadership the party needs to advance its agenda, with major party initiatives, including immigration reform, hanging in the balance. So will the party learn the right lessons from this week's defeat?

    Let's ask Wall Street Journal columnist and deputy editor, Dan Henninger; Washington columnist, Kim Strassel; and Political Diary editor, Jason Riley, author of the book, "Please Stop Helping Us: How Liberals Make it Harder for Blacks to Succeed."

    Kim, as we move towards the -- to the next week's vote, it looks like Kevin McCarthy, the number-three leader in the Republican House, is consolidating votes to move up to number two, to majority leader. How would that change the way Republicans operate in the House?

    KIM STRASSEL, WASHINGTON COLUMNIST: Well, Kevin McCarthy is a politics guy within the Republican caucus.

    (CROSSTALK)

    GIGOT: Explain what that means.

    STRASSEL: Well, he's been very involved over the years. He recruited a lot of the members that won election, and he helped a lot of them win election. As a result, he's actually very well-liked by a lot of people, which is why he's likely to win this race. And it could be, too, that he manages, as a result, to maybe bring a little bit more unity to the caucus. By contrast, Eric Cantor, who a lot of the more conservative members of the caucus viewed with a little bit of suspicion.

    (CROSSTALK)

    GIGOT: But when you say a politics guy, you mean he's focused more on winning elections, the nuts and bolts of elections, like how to you raise money, for example, how to you turn out voters, that sort of thing, more than policy, more than budget reform, more than the actual agenda. It's more, how do you get the votes.

    STRASSEL: That's absolutely right. This is not a guy, who has been seen like a Paul Ryan, for instance, an innovator on policy or a Jeb Hensarling, who has very much pushed members to try to embrace some very tough policy decisions. And I think that's a really challenging question for the GOP in terms of where they go. Because they've got big decisions coming up, Paul. It's not just how they handle themselves the next five months until the election, but they've got to start thinking ahead. If they do actually manage to take back the Senate and they do have control over both houses of Congress, that's going to be -- they've got huge decisions to make about how they're going to handle that power. And the policy aspect of this is going to matter a great deal.

    DAN HENNINGER, COLUMNIST & DEPUTY EDITOR: Well, just to continue Kim's point, Eric Cantor had a reputation for intervening or -- in the operations of the major committees. You can make an argument that sometimes that's worth doing, except that Kevin McCarthy probably won't do that. And the good news is that two of the people who were running for this post, Jeb Hensarling, who is running financial services now, and Paul Ryan, who will probably take over the Ways and Means --

    GIGOT: Ways and Means.

    HENNINGER: -- tax writing committee, are both very good committee chairmen. Jeb Hensarling probably will terminate the X/M Bank. He will try to rewrite Dodd/Frank in a way that will make it work. And Paul Ryan could produce an historic rewrite of the tax code, building on what Dave Camp did. If Kevin McCarthy is supporting them in that effort, and they, as Kim says, win the Senate in 2016, you could have a potentially very productive House of Representatives.

    GIGOT: And my information, Jason, is that -- my sources are saying that McCarthy told the senior members, other senior members of the Republican Party he's not guaranteeing that he'll run for speaker if John Boehner departs, retires at the end of this year or in a couple of years. There's no -- so that would still leave the opening for somebody like Ryan or Jeb Hensarling, who is a Texas conservative, free-market conservative, for either one of those to run to succeed Boehner.

    JASON RILEY, EDITOR, POLITICAL DIARY: Yeah. But I think we also need to remember, though, tht this is going to be more of a change in style than substance. The folks, the anti-establishment folks that were cheering Cantor's defeat in the primary, McCarthy will make this a very short-lived high for them. He was not their guy. They did prefer a Hensarling or a Sessions. Cantor --

    (CROSSTALK)

    GIGOT: Pete Sessions, another Texan.

    RILEY: Yes, two Texans. Cantor endorsed McCarthy for this position. And it's interesting, the step below this is the House whip, which McCarthy is currently serving as, and it looks like that could be a three-way race that could involve his deputy winning, someone, again, that he tapped for that. So it shows you how difficult it can be to break up this establishment clique that the anti-establishment folks have been trying to do for a few years now.

    GIGOT: Well, what about the future of immigration reform? I know Kevin McCarthy has supported it. Paul Ryan and Mario Diaz-Balart, of Florida, have been working behind the scenes to try to get some votes of the members, a majority of the Republican conference to support this. I've been told they had as many as 144 in support to do something this year before this election. And now half of that support has melted away.

    RILEY: I think -- I think the results of Cantor's defeat mean it's probably dead for this year. And that's unfortunate, Paul, because I think there's a danger of reading too much into what happened to Eric Cantor. If you look at other races, Renee Ellmers, in North Carolina, faced the Tea Party opponent, ran on immigration. Ed Gillespie, in Virginia, just won the Republican nomination for Senate. He is very pro-comprehensive reform. So I think there is a danger in extrapolating too much from these results in Virginia. But I do think the political reality is, a lot of people are spooked right now, and I don't think anything is going to get done on immigration.

    GIGOT: In a sentence, Kim, do you agree with Jason on that?

    STRASSEL: Yeah, I don't think it's going to happen this year. Although, I didn't think it was going to happen even before the Cantor defeat.

    GIGOT: OK. Well, I was an optimist.

    (LAUGHTER)

    When we come back, Islamist insurgents sweep through two Iraqi cities and set their sights on Baghdad. We'll take a closer look at the terror group, ISIS, how they rose to power and how they caught the U.S. off guard.

    (COMMERCIAL BREAK)

    GIGOT: A rapidly deteriorating situation in Iraq where, this week, the al-Qaeda-affiliated terror group, known as ISIS, the Islamic State of Iraq and Syria, seized control of the cities of Mosul and Tikrit, and continued its march towards Baghdad. Just who are these insurgents and how are they able to advance so quickly and what threat do they pose to the region and to the United States.

    Wall Street Journal foreign affairs columnist, Bret Stephens; and editorial board member, Matt Kaminski, join us with more.

    So let's get to that last question first, Dan. What are we talking about here in terms of the outlook now? Because they are now on the outskirts of Baghdad.

    HENNINGER: Well, it potentially poses some significant threats, not just to the region, but to the rest of the world.

    (CROSSTALK)

    HENNINGER: It's going to be an old reason, an old reason, traditionally, why do we care about the Middle East? We care about the Middle East, because of all of the oil that's there. And Iraq is a significant source of oil. The price of oil is already going up. It is already disrupting markets all over the world. If this went on for a long time, that would continue.

    The new reason, this group, the Islamic State in Iraq and Syria, ISIS. Look, if they were going to establish a state in northern Iraq, establish Sharia Law, draw a circle around it and live happily ever after, who would care? This is not what they are. This is a centrifugal, outward-moving source. They're going to attract jihadists from all over the world. They're going to be able to plan terror strikes into the region, into other countries, like Jordan, conceivably even Israel, and then into Western Europe and the United States.

    GIGOT: Isn't this the dream of bin Laden to establish what he called the caliphate --