The Journal Editorial Report: 10/24

" This week on The Journal Editorial Report from government. Moves to cut compensation -- banks. Whether or not they were bailed out will they soon be setting wages for all of us and the White House picks another target. Move over Fox News the US chamber of commerce is the latest group defined itself in the administration's cross hairs plus. A special election in New York is -- prominent Republicans. Against each other. And raising doubts about the party strategy to take back the house in 2010."

" Welcome to The Journal Editorial Report I'm apology ago White House pays. -- drastically cut the salaries of the highest paid employees. At the seven companies that received the biggest taxpayer bailout. The cash portion of their salaries will be slashed an average of 90%. Over last year and the Federal Reserve proposed new pay guidelines for all banks it regulates whether or not. They were bailed out. President Obama praised Feinberg ruling calling it an important step forward in curbing the influence of executive compensation on Wall Street. While still allowing those companies to succeed and prosper."

" I've always believed that our system of free enterprise works best when it works hard work this is America. We don't disparage wealth we don't begrudge anybody for doing well we believe in success. But it does offend our values when executives of big financial firms. Firms that are struggling pay themselves huge bonuses even as they continue to rely on taxpayer assistance to staple."

" Joining the panel this week Wall Street Journal columnist Mary Anastasia O'Grady assistant. Editorial page editor James Freeman and Washington columnist Kim Strauss so. Mary I think a lot of our viewers might think OK these bankers paid themselves very handsomely. Before the panic than they got. Bailed out by the taxpayers another having a pay cut case of just desserts."

" Well it is the seven big companies that got the TARP money from still the government are. And so have the TARP money it might be I mean we don't now because we don't there's a reason why the markets hats compensation."

" A single person sitting in Washington really doesn't know how much any of the employees are worth for the company but how some of them might be worth less than 200000 dollars he says."

" Yeah I think I think the bigger concern is that the Fed and the treasury announced say that they can regulate compensation for the entire financial services industry and not a lot more troubling. I mean and and the other thing that's really troubling here in me is that the those who caused this problem. Are really not being held her responsible at all that would be the people the Federal Reserve vote. -- burned men had earlier interest -- risk was this price for very long time because a the Fed was pumping out a lot of money. And -- the credit rating agencies which work basically anointed by the government."

" Florida -- triple -- that Hillary's -- solemn solemn and make seize on on the sales this is a crucial issue which is. What role do we know what do did the bankers -- because that's what the federal government is -- saying. Banker paid cause at all just cut -- it will never had this happen again. And it's it's more depressing the Senate --"

" How can really you go. -- financial disaster like we've just had and you hope there -- some lessons Slorc a big. Part of the reason this happened is because the federal government the Federal Reserve the regulators started labeling things safe. Regulated across the world actually. Hold these mortgage backed securities they're safe we know what risk is now we're getting back into the same exact experimenting and where the government is now saying. We understand risk and we will be able to tell you. What compensation is appropriate for that risk. And and the danger is that when a standard gets sent across the whole economy. It's gonna be wrong is going to be wrong everywhere just like it was with the the rules that the Fed put out -- backs you have a problem Kim with a seven companies that still have TARP money being limited."

" it's being marginally more defensible slightly more defensible than the Fed rules but the comments here what why these seven companies. We're the ones that were in such terrible situation auto companies yeah he's -- AIG America insurance. They they weren't such dire straits they needed federal interventions and now we're doing is setting. Compensation limits so strictly that is -- mean that much harder for them to get the high flying talent they need to bring these companies up out of the doldrums that there and that's a real risk to."

" So so that these companies still need to pay back the federal government you would like them to think it will get some of our money back right -- and not stopping cruising is that if you limit their pace and -- smartest folks Linda going to the banks that have less."

" Regulating pay -- and I think Ken Feinberg was aware that community that you really he's the pig czar isn't he really did try to say look we have to keep a good human capital of these companies -- they wanna get them back. On their feet there was no way he was gonna satisfy everybody. I think. I think what was what's more troubling here also with the fact that the for example Goldman Sachs which. Also was part of about money but paid it back completely gets off but they don't -- they don't follow under any of the compensation. Limits that Ken Feinberg -- they're still regulate the calendar fine birds but they would present -- fall under the Fed's guidelines because they're now deposit taking institution right away actually and they took the TARP money they they claim now well we didn't really needed and there are lots of people around tables then will we were forced. But this brings up another subject which is that. Why there's such a lack of transparency there and you why was it a closed door session where. Hank Paulson decided you know whenever he decided it now everybody has their own version of -- you're right -- we'll hear that the black parents got."

" No transparency but I guess it is bizarre thing I think the danger is that this spreads to the whole economy I mean it's fun to be bizarre I was a little bit intoxicating. He's already saying he hopes to get that his guidelines which were for the seven banks that are getting taxpayer assistance. Are picked up voluntarily by companies across the country now and I think that's a little rough on fiber because I think he's been given possible past I think this is the political class on Washington in Washington saying. We knew and now we don't wanna blame ourselves if we don't want it I don't I don't whereas our mistakes okay so it so again can't you take it. -- hit you you handle this and then we'll pick up your guidelines."

" And spread them everywhere because that's what congress wanted that doesn't excuse the Fed for its guidelines which actually is probably even more coercive then Feinberg rules and that because this really isn't regulatory because they're not -- but they could be in the yeah into the very squishy word yet but I think it's an incredible pressure companies to what you're suggesting that the Fed is separate from the -- And I don't know if I think this is part of problem -- means. The -- is now taking direction from the treasury."

" The other problem is that it's the government is not taking that to me to -- issue and addressing that reform and it's that guarantee against failure. That allows a company like Goldman Sachs ultimately to be able to take these outside risk because they know you know what if we make mistakes. The -- analyst James ago I get the last word. When we come back why the US chamber of commerce is the latest organization. And make Obama's enemies list."

" If the president and his top aides treat people -- different views as enemies. Instead of listening to what they have to say they're likely to end up with a narrow view of and a feeling that the whole world is out to -- And as those of us who served in the in the Nixon administration know that can get you into a lot of trouble."

" That was Republican senator Lamar Alexander of Tennessee who accused the White House this week of street brawling with opponent. And said the west wing strategy of freezing out its critics. Is the modern day equivalent of president Richard Nixon's enemies list to the attacks on this network have been well publicized but the White House is waging. Another war as well that's what -- businesses that fight its agenda. The United States chamber of commerce is the latest group defined itself -- administration target. Having voiced opposition to many of the president's priorities including some aspects of health care reform financial. Regulation and climate change legislation. We're back with Mary O'Grady and -- Russell and Wall Street Journal columnist and deputy editor Dan -- also joins us so Kim. Chamber at an umbrella group for thousands of businesses large and small why would you fight with -- business a business lobby if you're trying to persuade that lobby to help you on these issues."

" It's -- divide and conquer. Mean he has the attitude isn't the very deliberate thing that what his father at the White House about the chamber is that the chamber. Is very effective about the things when does push that she given the administration some help. On things like stimulus etc. it was for this stimulus or cash for clunkers affordable at our gala for everything. But you know what they have pushed back on his card check on climate on some of those financial. Check -- union organizing make it easier to organize unions yet so that. This bothers the White House what -- was undermined organizations that they can then pick on individual CE o.s CEOs are easily intimidated get them to distance themselves from the chamber and then chambers a less forceful -- that's what they look."

" Seems to be working in some ways you have 45 firms big companies that have resigned from some parts of the chamber of not the entire chamber -- on the big utility a couple of design and cabinetry Apple Computer. -- where Al Gore is on the board resigned in action in the peak over."

" Climate change well first of I think we should make it clear that it's not unusual for a business group to be interest in subsidies. So we shouldn't be surprised that they climbed on board with some things that that the Obama administration has done."

" But I think what you're seeing here is a little bit of what I. I would call their corporate this agenda -- mean in under corporate chasm which is an economic model that that links business labor and government to gather. Government house to give business its legitimacy. It signs off on which businesses are legitimate and and it it does not support really an entrepreneurial. You pick winners and losers exactly opposed to. If support for market and the chamber here has not and you know they're not global warming and hires. They're not against a government subsidy in health care they just don't like the particular model that's been set forth here so the fact that they're pushing back and there are some dissent the White House doesn't."

" Well Paul -- we should think lower as someone wants what's going on here. And get out of this policy doesn't start to get it right -- real dirty stuff bright look a lot of what this administration is trying to do the health care initiative. Cap and trade legislation carjacked. Is really not despite what they say in the main stream they think it's in the mainstream it's hard they've been having a hard time passing this stuff. As to what they've decided to do is use the full force and power of the federal government to say to these institutions. Look if you oppose us this is what's gonna happen you remember the insurance industry was with them on health care. Until that strategy wasn't working so it just carved out the insurance industry and make."

" And the at a medical device industry they said you know all the machines you go to India for certain amount of money that the device makers to India enough so they can Arnold. That's what I like forty billion dollar -- this is black Jack politics and."

" An -- it's not just that I mean look when Humana which is an insurer sent out information to its customers saying. Medicare Advantage is going to get cut under Obama care they got hit with which is true or by the way that we just what they got hit with a gag order from the federal government. -- insurers came out recently criticized the most recent health care product this week that congress was talking about stripping them of their antitrust immunity is the closest I."

" In raw raw armed robbery part of the problem is that the Obama hit campaign. Had such smooth sailing everybody loved him everybody climbed aboard and now when you start surrounded to some resistance. I think he doesn't really know how to deal with it and he is. Really hurting -- laws that it is an interesting statistic I found out your point."

" they are really tried to restructure the American economy moving it towards more about social market economy like Europe. Where the government does guide in many ways there is much more stronger regulatory. Phenomenon and it takes a lot of effort to do that you have got to push. The private sector in the United States to accept it and talk ago he can you talk to Tom -- head of the chamber this week to look like he's -- off."

" And -- is that an average he was he was certainly not out an aggressive about some of the people the White House and others who -- but but evidently strong comeback out of sort of the argument into -- we have the right to go out there and and the complain talk about the things we don't like and that is not bad for business community we're gonna keep doing what what are."

" The dangers here again for a pro white house of places kinda bare knuckle politics and in. Early in administration you have all the power but sooner or later I assume you're gonna need some Republicans are gonna need some conservatives. And in if the if you've alienated the mall when you need them on Afghanistan or something -- they now may not be there."

" Well they may not be there and I also think there's a media problem call the word nixonian is getting kicked around -- Richard Nixon was present in 1970s. This is 2000 night. Media presence is pervasive and when you elevate it -- the way it has been elevated it doesn't look very attractive and that was Barack Obama's. Biggest attribute he was an attractive new politician he start -- look."

" Kind of tarnished all right thank you when we come back. Special election this November that may signal trouble for the GOP. The race to fill a vacant seat in congress is -- prominent Republicans against each other. And raising doubts about the party's plans to take back the house in 2010."

" It's a rare house race this November and the special election to fill the seat vacated by former Republican. Congressman and now army secretary John Q. In upstate New York should be an easy win for the GOP. Instead it's -- some prominent Republicans against each other. In a three way contest that -- with a Democrat represented a district for the first time since the civil war era. The latest poll shows Democrat Bill Owens with a slight lead over Republican assemblywoman DD Scott -- Fatah. Whose liberal voting record has caused some voters to pleaded -- Hoffman. A business executive who after losing the GOP nomination is running on the Conservative Party line the race. Seen by many as a Bellwether for the mid term congressional elections next year. Has garnered national attention recently -- father was endorsed by. Former Republican house speaker Newt Gingrich last week and Hoffman by former majority leader leader Dick Armey. And late this week former Alaska Governor Sarah Palin. Endorsed Hoffman calling it a matter of principle. Wsj.com. Columnist John fund joins us so generally -- Republicans scrapping with one another instead of what. Everybody said they were gonna do which is aimed at the Democrats in the majority."

" New York is one of the few states Paul where party bosses pick candidates Oprah's personal primary. The party bosses decided to pick the local assembly woman the problem is. She's an attractive candidate. But her voting record is left of half of the Democrats in the state legislature. And she barely edged out there were partly another Republican Doug -- so he's running with the support of the Club for Growth and a lot of conservative groups announced -- One house so is the mean and so this was -- of a back room deal basically this was the bosses in fact Sarah Palin her endorsement. Of the conservative candidates said. I fought against the political machine. I'm endorsing a -- because he's fighting against. And why did they -- and presumably that for reasoning thought she was more she was -- a woman I suppose that would be the -- make an appeal to. Two more Democrats from voting record might appeal the district is sort of a purple district it's. Barack Obama won 52% so we're bush carried it twice right so they figured that they wanted somebody who was more to the left but the well now backfired. Because she is so bad all of the issues the conservative base likes with the exception of gun control there's been revolt against -- very heavy handed campaign I think she's in danger of slipping into third place in the race -- in the next week be between the conservative candidate in the them."

" Both the Democrat wins I can make a whole -- for a very long time we know that incumbents are hard to beat. But isn't getting a seat to organize this that the house that is a Republican seat particularly when you're down in the minority is not more important than. Then I basically let's put it bluntly ideological purity here."

" Well look I mean people are trying to make this a question of ideological -- in the Scott -- campus saying what you that this is just another example of all those knuckle bring conservatives who don't like. Socially moderate candidates like me and they're not really talking about the fact that this that this is about it in economic and fiscal questions that are being raised in the race and the fat. The you know which she is actually doing so poorly against Hoffman on the -- to suggest that this that seemed to wait most of the people in district feel it and that's why he is doing well because there's this big this big questions so yes. I mean they they should be trying Republicans should be trying to put people."

" Districts that their districts that this was just. But here's the problem a lot of people -- there's been enormous grassroots. Anger built up in some parts of the country about the Obama agenda. And that his -- has has has created real energy. Against the Obama agenda on the other hand it could turn against the Republicans in some cases. If they don't really articulate a very well. That's the problems will agenda that's the problem with the -- a problem because she supported the Obama's stimulus package not a single Republican in the house did. She supported union card check legislation. There -- almost no Republican supporting that she is way off. The Israel into the only -- left when it comes the Republican -- way of saying is are -- to question is this grassroots populist passion. Going to end up dividing the Republican coalition and a way that helps the Democrats keep a majority for a very long time."

" I don't think necessarily fall. New York State -- unique situation even a hot New York Times editorialized this week that state politics as a cesspool but they have got to. Understand that this will be represented as a national loss for the party all these particulars -- give him washed out why do you think Bill Clinton is up there in upstate New York. Can campaigning for the Democrats because they know what has national."

" As an an and Barack Obama is raising money for the Democrat who appeared in in New York this week so what's the lesson here for the Republican Party nationally. -- you do have to pick more moderate candidates for more moderate districts but you cannot he'll need every single part of your conservative base you have to stay within the guard rails. In this case they went off the -- real -- about a Democrat could win but I actually think the conservative candidate might pull a Jim Buckley. He was -- he was the conservative senator in the one in 1970 against two liberals -- liberal Republican right and one liberal Democrat and you're thinking that could be a repeat which would. Dominate. On the people's that the district all right -- we have to take one more break. When we come back our hits and misses of the week."

" Time now for our hits and misses of the week -- for Steve."

" Paula headed to Tennessee senator Lamar Alexander who says that we ought to start thinking about giving students the option of getting through college in three years now obviously this is driven in part by the skyrocketing. Cost tuitions and schools but I think there's something else going on here I was on the streets of New York recently when I heard one young 111 young woman say to another one. So you don't think your life is gonna be as much fun as college. A rough time -- That we are in a worldwide competition -- with India China Taiwan Korea and I think. Three years which showed that we're in the game to win not to place our kids."

" Yet Democrats have. I'm very worried about the high price take up their health care reforms this week he tried to do something and hoping to get support from actors they tried to passes doc fix which is a way of putting off expected cuts in Medicare payments to doctors. -- instead of putting in their big help for for the tried to pass on its own 240 by billion dollars in deficit spending. They couldn't get the votes -- and it failed on the ground a rare hit for some temporary sanity -- Washington. John."

" On November 3 they're going to be two initiatives in Maine and Washington that -- tell us more about the mood of the country than which personalities win. And those initiatives are called -- taxpayer's bill of rights and what they would say -- state government spending can grow. The rate of inflation and population growth but if you have to go fat grow faster than that you have to get a vote of the people approve it. These are bought all the public employee unions against them a lot of the taxpayer groups the tea party people -- for them. How big turnout may well indicate the direction of the country on the issues of big government."

" That's important vote all right thanks John that's it for this week's edition of The Journal Editorial Report thanks to my panel. And -- looking for watching I'm Paula you know we hope to see you all. Right here next week."