Journal Editorial Report: 8/22

" Up next more bad news for the economy we tell styles to -- Troubled mortgages -- Iraq for high -- the wheels are coming off the administration's recovery plan. Double toll synching health care reform we'll take a closer look at Obama has contradictions adolescent meltdown over the public -- retreat. -- of millions of Afghans both despite Taliban threats a majority of Americans say the wall that is not -- fighting. The Journal Editorial Report stops and now. Welcome to The Journal Editorial Report --"

" in this week for pulled you go for us -- could the wheels becoming off the administration's economic recovery plan well the bad news just keeps on coming. Retail sales fell unexpectedly last month raising fears that the key back to school shopping season -- hit negative territory for the first time in years. And use this week that the number of homeowners delinquent on their mortgages or in full closure. Rose to the highest level in four decades more than 4% of all -- was all in full closure. About 9% I've missed at least one payment. It is eight triple whammy if you -- about the continuing problems with unemployment. Joining the panel this week Wall Street Journal columnist and deputy editor Dan Henning. Editorial board member Jason -- And senior economics writer Steve -- Steve we'll start with you if -- The stock market a terrific rally we hear -- the recession is winding down and maybe Obama so why is the president's recovery plan being questioned so harshly."

" Well the one piece of good news Stewart is that the stock market has really been on us soaring -- Increase over the last three or 45 weeks and that's good news and I've always regarded the stock market is that an important for a looking indicator -- but you're also right -- every time it looks like the economy's picking up a little bit of steam. You see these statistics they come out this adjusted stumbling he got and I think. I think what's making Americans most nervous right now Stewart is these lousy unemployment numbers we saw unemployment numbers clock climb a little bit. Last weekend so this suggests that we might be and the throngs -- Jobless recovery we -- where we just don't see that unemployment rate -- much and when you got fifty million. Americans who are unemployed it's hard for them to pay their rather it's hard for them to pay their mortgages hard for them to go out and shop."

" Dan I'm looking at the credibility of the president's recovery plan and I saw that credibility questioned by Warren Buffett's in the New York Times this past week when he says look. You can't you can't go on spending borrowing and printing money like this I sold out as a warning --"

" Well as a warning shot -- we've talked about that a lot on this program security threat of inflation. I think Buffett also. Suggested. Something about the value of the dollar. And you know it is entirely possible that they're going to try to. Engage in an export led recovery which implies. Cheapening the dollar and a cheaper dollar implies feeding inflation into the system and as we've said many many times on this program at some point. The Federal Reserve is going to have to tighten liquidity. But they may have to do that just in advance of next year's all your elections that is going to be politically unpopular the Fed is under tremendous pressure not to tighten next year. But that would -- in --"

" And into the system and it is not just Warren Buffett is questioning the effectiveness of the stimulus package USA today. Recent -- 57%. Of Americans. Don't think that the stimulus package is working. And so consumer confidence is down which is feeding those. Retail numbers that you mentioned earlier people don't and they look at unemployment as Steve mentioned well nearly nine and a half percent so people don't feel confident -- spent money. It's hard to see where that economic growth is gonna come from right I mean that's the real problem here with -- looking for whether it's the stock market. Or consumers I mean typically in our economy it's that -- class upper income Americans who are of the job creators. Who end end. Obama made them enemy number one -- it's gonna go after them."

" If you thought it very distinct sides of the fence Syria -- Wall Street's rally and profitability in corporations looking pretty good. -- main street suffers from declining Consumer Spending. And Lowell and continually -- up on employment and now this housing crisis tailored to reality is a student."

" I think that judge Jason really put his finger on the problem -- the growth gonna come from I think the one lots and hopefully we've learned from the last six months he's you don't create prosperity and you don't create jobs. By -- massively increasing government spending and increasing -- and the other portion of this story that we haven't mentioned yet is what's going to happen. -- late next -- tax rates are gonna increase on small businesses on ambassadors. That makes I think I'm a businessman. Very reluctant Stewart to invest in new enterprises a new equipment and new high. Iris if they think their tax rates are going up it's a cockamamie theory that you can increase spending and then raise taxes later they get growth."

" And those housing. Numbers could get worse before they get better -- remember that a lot of people are still in homes they can't afford -- still under water there mortgages. They don't want -- march in the home is worth which could could drive those foreclosure rates. Downey and -- little -- probably question -- growth coming from double what about a second stimulus package since."

" Well I think. Yeah I think. A second stimulus is probably -- AB and C for this administration that's -- they believe Bennett right it's their economic theory that stimulus creates this multiplier and creates jobs in the economy. And some within the administration and others outside like -- Paul Krugman and Joseph Stiglitz do want another big stimulus package. Politically I just don't see that happening. He's already asking -- Democrats in congress to vote for a one point four trillion dollar health care bill they already did a big stimulus package obviously American people are upset about deficits. So I just don't see that happening in if that doesn't happen. I just don't don't see a plan B for this administration because as Steve suggested. Normally under those circumstances you would go to cutting taxes and a recession. But they need all the tax revenue they can get for their health care bill so where does that -- us is Steve if I listen closely to these town hall meetings is not that there is anger over health care reform that is true. That is this seems to -- also anger up about government spending that's just out of control -- another stimulus plan would make any of them was when it."

" Well there's no question about it this rage out there. There is not just Republicans and conservatives but independent voters is really a result of the massive got a look at voters get the joke that if you have 800 billion dollars of spending. It's not free Stewart -- have. That's the come from somewhere and that's the whole. Fallacy of the stimulus idea people know that their -- are gonna have to be raised later or that that's gonna have to go up by a massive amount of paper all of this spending which is a big. -- no stone around the neck in this economy right now -- would then."

" You know Alan Greenspan used to say that. The American economy had been so deregulated and so privatize that it is now able to withstand extraordinary. Blows from recessions it would've brought it to its knees in the past but again his point was. It was the private sector that was the strength of the American economy and I just don't see them doing anything to help the private."

" Sector got a when we come back Obama has contradictions. Of the president says support for his plan is -- That because. Folks aren't listening. But maybe he's in trouble because they wrong."

" The concern is that somehow that won't mean rationing up here. Right that somehow some government bureaucrat out -- will be saying. Well you can't have this test or you can't have this procedure. The idea is actually pretty straightforward -- choose if we've got a panel of experts. Health experts doctors. Who can provide guidelines to doctors and patients about what procedures work best in what situations. And find ways to reduce for example the number of tests that people take Medicare and Medicaid or on on an unsustainable -- Medicare is -- it is to go into the red in about eight to ten years. If were able to. Get some but right like Medicare. Then -- me a little more confidence that may mean the government. Can have a role not the dominant role but a role in making sure the people are treated fairly when it comes to insurance."

" Confused about Obama camp it could be because the president's company contradicts himself often times in the same speech. On to his reform plan government bureaucrats won't tell you what tests you can and can't have. But a panel of health experts will. -- it's an example of something the government got right except that is going broke. The latest administration double -- whether the so called public option is essential to that reform efforts. Senior editorial page try to -- joins the panel for the segment all right Joe. I think this debate is flat out chaotic -- so you."

" that's right I mean it's it's not only the contradictions it's. President Obama is out they're blaming the Republicans for its current trouble but he doesn't -- Republican support. -- he does put it what he really lacks is public support in democratic support. The withdrawal the administration's withdrawal on the public option this week. Which would have been entitlement program like Medicare for the middle class. -- Democrats going dessert. Liberal Democrats you've got conservative Democrats running away from the liberals and and chaos is exactly the way to put it."

" And we haven't even -- the Republicans yet all right Dan what about that that seems to be an attempt to demonize the private insurance companies."

" Well that's right we know that the strategy turned from health care cost to. Reforming the health insurance industry Nancy Pelosi is tried to call him bill Bill -- had a carpet back VMware carpet bomb the American people. But boy something really extraordinary happened last week. Henry Waxman the chairman of the house committee that's shepherding this bill sent out a letter concluded chairman of all the health insurance companies. Asking them requesting quote unquote. Information about. Compensation levels for all their executives who make over 500000. Dollars. They want others compensation level -- salary they're bonuses their stock options and perquisites and retreat you know off campus retreats and such. This is the Ross sort of intimidation when they did that to the banking industry the argument was they were taking taxpayer money through heart and therefore we -- an obligation to oversee the -- money was well spent. This industry is -- no such money. I mean it's just that is this just. Pistol whipping them into coming around."

" Support this bill and -- and Republicans was not just the insurance industry that's been demonized by the administration it's just. Ordinary Americans who post their plan are being -- demonized by the administration usually -- see these town hall meetings. Where conservatives are showing up in voicing their opposition to being labeled this as on American as disruptive I mean. When liberal groups like -- coroner or or move on that Oregon -- that's is that everything that George Bush dead that was grassroots democracy. When conservatives do the same thing their label is on Americans who -- there with innocent in this. Where the Republicans as well don't know if I -- the debate is chaotic vote Republican and democratic funny it is it is but. I think Republicans run the risk of overplaying their hand here Obama did get elected in part on on a pledge to reform health care. And the American people do want health care reform they may not want what Obama is proposing. But they do want health care reform and I think Republicans it's not enough for them to just say now they have to be seen that in negotiating in good faith."

" Well I shouldn't and it didn't talk about it tort reform to about a national market no state mandates state what -- Yeah I think the American people would like to turn an Obama Caron under the act cash for clunkers broke up I just think -- Americans have two big problems -- this proposal. Number one the idea that you're gonna save money out of the health care system and create -- one trillion dollar new entitlement is sort of laughable to Americans that's problem number one. Problem number two -- is that it turns out about 75 to 80% of Americans kinda like the health care they get right now. And all they see is -- kind a downside risk. To total restructuring the system pushing more Americans into a government program that they don't want and I think those are the 2 central contradictions. Of the Obama care. -- tell me is there a difference between the public auction. And the -- idea."

" I mean there's some differences on the margins but they're they're both leading in the same direction. If if we're gonna start co ops in the states it's just going to be another nonprofit insurer like blue -- blue cross or blue shield. Kind of pointless. On the other hand it could become. Government sponsored enterprise like -- Fannie Mae or Freddie Mac. Where we're has a lifeline to to taxpayers. It gets into all sorts of troubles bailed out. And tries. Private sector competition because of its government advantages."

" We seem to be coming to a little bit more clear cops -- debate it seems to be between. Do we get to a continuation of private medical okay in the United States -- do we shift away socialized medical system. Do we spend a trillion dollars or don't we spend a trillion dollars seems to be coming down the fumble like that that."

" Well I think it always comes back to arriving at that point because of the forces in play here look. The left wing of the -- of the car of the Democrats in congress the so called progressives like Henry Waxman Nancy Pelosi. They do want a public option hand the head towards a national system. Their strongest and stitch we constituencies want to as well the unions Andy Stern out of the public employees' union said this week he thinks Democrats will be -- out of office in next November. If they don't -- the public option I took that as an implication that the unions might pull back some other support. If the Democrats don't push this thing through. So yeah I think eventually next September when they come back we're going to be back at the same watering hole arguing over whether there's going to be. Federal insurance program or whether that will be a threat to the private insurance people have."

" Now and that's when the real fights begin is it enough it'll be fun in the -- will and still ahead as -- Afghan vote as did five Taliban threat still -- in this week's presidential election a new poll says the American public is losing its resolve to win the war that. -- Taliban threats and attacks aimed at polling stations millions of Afghans who voted Thursday in an election seen as a critical benchmark of that nation's progress. As well as a test of the administration's new strategy that -- Obama this week called the war in Afghanistan a war of necessity. And one that we have to win. But -- Washington Post poll poll finds that the majority of Americans see the war is that is not worth pointing. Wall Street Journal -- on a fast columnist and deputy editor Bret Stephens joins the panel as well as editorial features editor rob -- to you for us does that poll. It was a shocking poll. Does that put some come a time limit on president Obama's freedom of maneuver us in Afghanistan."

" Well if he chooses to look to have to follow public opinion rather than leave it -- in that case it it does. In American C a war. It is not going -- they see a Taliban that's for search and they saw an election that in which the voters were were courageous but also intimidated by by the Taliban. And the question is whether this president. Really means it when he east when he speaks about a war of necessity. A war that we have to win win win on the other hand when Obama talks about finishing this war. That suggests that he's looking for some kind of exit strategy and when you're dealing with the insurgency situations like that. Finishing it is not necessarily the -- he rarely talks about it he doesn't mention Afghanistan very often. No one he he understands that. That he. Spoke about Afghanistan as the contrast to the war in Iraq War America -- The war America -- went. But there really is a question whether he has the political will he certainly has the political capital to resist. The look his his his left flank which is urging him to get it out of Afghanistan as if 9/11 never happens -- should that -- and you saw -- Iraq style in Afghanistan. What the question this."

" Urged to achieve what I mean we have to be realistic about the mission in Afghanistan in -- and has been to Afghanistan as I have twice knows it's -- very different country from an old civilization like direct rip that -- very very primitive country it's it's largely a literate it's his -- West Africa basically. We can't talk about rebuilding Afghanistan it's it's building operation similarly I don't think we can be terribly optimistic about the prospects. For Afghanistan becoming a modern democracy in the short run and by that I mean the next a couple of decades so what's the mission there. I think the mission in Afghanistan. Is to prevent it from becoming another safe haven for terrorists. And I think that can be done without a terribly large commitment of US forces but then you in the very very."

" Long bull with a small number of forces and for a long haul but you don't have lots of troops -- Youngster and I'd like talk will be up. Bit about the politics of this them take issue with one thing that bright side which is that the president has the political capital see this through I think. You know any president even as popular as this one has a limited -- for political capital. This president his current lead. Drawing down his capital on health care and trying to get the economy revived the health care bill is really gonna drain his political capital. There are his -- advisers around him that have been telling him you do not want Afghanistan this war on the front pages next November when the Democrats are running for reelection in the congress. And might think there's going to be a tremendous is -- the -- form this going to be tremendous pressure to ratchet down. The war in Afghanistan. Now we could pay a price over there if he does that on the ground but I think. He's he's just going to be asked again and again get us out of there there's."

" Look I think that does the book classic problem for Democrats -- they're always perceived as weak on national security so it is important for this president. In particular to stand up when it comes to Afghanistan he needs to ask himself what will hurt him. More if American troops are still deployed still fighting in Afghanistan or if he's -- he he's pulling out of the country and there's a perception of that country's going right back -- it was. In the 1990s when Osama bin Laden slipped into Afghanistan and plotted the attacks nine elevenths."

" What you make of all these bombings in Iraq recently going back to and all the law Iraq horrific bombings across across the country recently does that detract from the president's ability to act forcibly in Afghanistan."

" I'm not sure that it does because again I don't I don't I don't think this success going -- Afghanistan is -- do defined primarily by the number of American troops on the ground and and and already in Iraq we with withdrawn an American troops and Iraqi city it's I think the Iraqis are doing reasonably well Aaron Aaron and I'm quite optimistic hectic MMI surprised that terrorists are challenging situation. No I'm not get it do I know who it is. Look they -- it they said it was up here around this it could just as loved every -- ran trying to destabilize the country they're going to be continued challenges to the order in Iraq. But the interesting thing about Iraq is -- is continually surprised to the upside."

" And last -- right. Well I think I agree one bombing in Baghdad does not make -- terrible ending for the war and this president is gonna have to show the same fortitude that his much maligned predecessor showed. In in in Iraq with the search because."

" Will he well we'll see if we -- thanks. -- we have to take one more break and when we come back our hits and misses of the week."

" All right time now -- hits and misses of the week Brett -- you. Well what happened to brave -- this is a huge miss to the government of Scotland for letting. Free be terrorists who was convicted of murdering 270 people in the pan am flight 103 that went down. Over Lockerbie Scotland and 21 years. But go he was sentenced to life in prison which I think is already compassion too much with a minimum of 27 years. And when he went went when he was set free he wound -- some -- wound up spending of -- total of twelve days in jail for every single one of the victims that he killed. This is a black day for Scotland and it's a victory for terrorists who know that the west. Does not have the will to confront and punishment you know -- got."

" was the hero's welcome ago when he got back home taught rob what's yours. Well -- your member Cindy Sheehan a mom who lost her son in Iraq and then was credited by the both of the press -- absolute moral authority of her critique of the Iraq War. Well at least Cindy Sheehan is a consistent critic. Of war now that Barack Obama isn't power last week she told journalists Byron York that quote. The answer were left was used by the Democratic Party I like to call -- the anti Republican war movement. Asked by mr. York issues still protesting since she said she was but the media just isn't interested anymore -- all right Joe what show us."

" Well here remember Tom DeLay the former Republican majority leader. Nickname the hammer he may be getting a new one Napster's new gig. Which is an appearance on -- reality TV program Dancing With The Stars. You know this is actually -- hit because it shows. That there are consequences for bad behavior in Washington. This is one of the man most responsible for the GOP's overspending and corruption. In in 2006 and instead of becoming a high powered soar high priced lobbyists. He's now been reduced to hearing on. --"

" See if he wins all right Steve what show us. The great towering economists rose Friedman the wife of Milton Friedman died this week she was a lovely lady and an incredibly influential economist she was -- co -- of the most important economics -- of the last hundred years free to choose she promoted freedom free enterprise around the world -- places. From from Poland -- China India and you know the good there's a good news under this story -- and that is that now she and her husband. Are promoting free enterprise in the flat tax -- haven't. You gotta stay with thank you very much needed dollar and all back next week poll which guns we'll see of them."