This is a partial transcript from "The Journal Editorial Report," July 9, 2006, that has been edited for clarity.

PAUL GIGOT, FOX HOST: The disclosure last month by The New York Times of a secret Bush administration program to monitor international banking transactions has set off a new round of debate over the obligations of the press in wartime.

In a recent Wall Street Journal editorial, my colleagues and I weighed in, criticizing The Times for compromising, if not overtly obstructing, the administration's efforts to fight the war on terror.

We invited New York Times executive editor Bill Keller to be on the show. He declined.

We are pleased to be joined instead by Marvin Kalb, a senior fellow at the Jones Shorenstein Center on the Press, Politics and Public Policy, and a FOX News contributor.

Marvin, welcome to the program.

MARVIN KALB, SENIOR FELLOW, JONES SHORENSTEIN CENTER: Thank you very much, Paul.

GIGOT: Let me read to you a quote from Senator John McCain this week. And I want to get you to respond.

He said the following, when it was asked whether the press should have published this story on terror financing; "No, I don't think they should have. I think there are laws that were passed that allow programs such as this. I think it is a very important program. Tracking the money is always a vital tool. And members of Congress were kept informed and agreed to this program," end quote.

Why is John McCain wrong?

KALB: Well, I'm not saying that he is wrong. I think that the story that The New York Times broke is one of those that you end up 49-51, do I go with it or do I sit on it?

My own feeling is that The New York Times did the right thing by going with the story. In that sense, I disagree with the senator, most respectfully.

I do believe, however, that if I were the editor of The Times — a very unlikely prospect — I would have gone with the story in a different way. Not with all of the detail on finances, but by focusing on another major activity of the administration without sufficient consultation with the Congress and possibly — although not necessarily in this case — in some violation of the law itself.

GIGOT: But nobody since that story has broken has said this has violated the law. I mean, there hasn't been…

KALB: Now, that's true.

GIGOT: And John McCain and others — Jack Murtha, in fact — asked The Times not to publish it — the Democrat from Pennsylvania. So there is no assertion here that Congress wasn't adequately informed.

KALB: I think the assertion was made by The New York Times, by the LA Times, by your own newspaper and the Washington Post, all of whom ran this story.

And what they said was that there was very limited consultation with the Congress. Only after the administration knew that the Times was going to go with the story were all of the people on the relevant committees informed.

I think that the editorial that you ran, Paul — and I say this, as you know, with total respect for you as a journalist — I think it was dead wrong. I think you declared war on another American newspaper without due cause. It is mean. It is mean-spirited.

GIGOT: What we want to know is — what I've heard from many people, many of our readers is what is the public interest that was served in disclosing this story? Why did we have to undermine a program that really worked effectively to track terror financing? What specific interest was served?

KALB: Well, number one, I don't know about the undermining of the program. I don't know enough about secret details and all of that. I don't have access to that.

And I don't think you do either by the way. But I think…

GIGOT: Absolutely not. But we don't make that leap of faith and say, which The New York Times has said, that they think in fact the terrorists already knew it. We are not omniscient. That's what The Times is saying.

KALB: No, no. But, Paul, I think what The Times said — and everybody has said, and you don't have to be a particular genius to figure this out — the terrorists themselves must know. It is the oldest rule of journalism and terrorism — follow the money.

So if they are going — if they know about that, they are going to be very careful about the way in which they send money through regular banking channels.

We know from newspaper stories, including those in the Wall Street Journal, that the terrorists themselves are going outside of this established channel to do it in different ways. Hand carrying money, that sort of thing.

GIGOT: But the…

KALB: So in other words, I don't no that you have a right on the editorial page of the Wall Street Journal, which was also fed this story by the government.

GIGOT: We were not fed the story. The news side — the news side was fed it.

KALB: …to accuse the Times of treason. That's terrible.

GIGOT: The news side of The Journal was given the story because they didn't like — they wanted to affect the way that this story was portrayed. We were trying to answer...

KALB: You said that.

GIGOT: We were trying to answer…

KALB: You said that there would be a straighter account.

GIGOT: Right.

KALB: A straighter story written by Glenn Simpson. What does that mean that he's going to it uncritically? I don't think so.

GIGOT: Well, he didn't do it uncritically. He did it straightforwardly.

But on your point that the terrorists knew this story — knew how this terrorist financing worked. In Bali, the terrorist in Bali, who was behind the Bali bombing, clearly didn't know this because that helped uncover him.

How can we, as newspaper editors, really assert that we know the terrorists understand this program and knew how it worked? Because, in fact, they may have known that we knew in the United States that we could track terror financing. But perhaps the people in Oman or Saudi Arabia or elsewhere didn't know that they could use this SWIFT Program.

It is a leap of faith and arrogance, it seems to me, on the part of the press to assert that we know that this program wasn't really all that important.

KALB: I think you are making a very good point. I think that we don't know that. And I tried to say before I don't know. And I don't think you do either.

But journalism is a matter of daily judgment. An editor is paid a certain amount of money to make judgments every single day about whether a story should be in the newspaper, on a network, or not.

You make the decision to invite me on to this program. You could invite someone else on. But you have that judgment call that you have to make as a producer and editor.

Now, that doesn't mean that the journalist will always get it right, particularly in war. But it does mean, since you raised this question, that coverage in wartime is not something that is taken lightly by any journalist who has ever covered a war.

I don't know if you have. But I can tell you, flat out, that most journalists are very respectful of the rights, of the needs, of the soldiers. They are not going to run anything that they think is going to harm the American people or the American troops. I think we all know that.

And it shouldn't be alleged or even implied, which is what you did, that this is not the case with The New York Times. That's so unfair.

GIGOT: All right, Marvin — all right, Marvin. You get the last word here. Thanks for coming on.

KALB: Thank you.

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