This is a rush transcript from "The Journal Editorial Report," January 27, 2007.

PAUL GIGOT, HOST: This week on the "Journal Editorial Report"...

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: We enter the year 2007 with large endeavors underway and others that are ours to begin.

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GIGOT: President Bush delivers his sixth State of the Union address amid a Senate revolt on Iraq. Are we headed toward a constitutional showdown between the White House and Congress? Or can the president rally support for his troop surge?

Our panel looks at the Bush agenda at home and abroad, and it chances for success, right after these headlines.

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

In his first State of the Union speech before a democratic Congress, President Bush this week urged members to support his plan to secure Iraq.

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BUSH: We went into this largely united in our assumptions and in our convictions. And whatever you voted for, you did not vote for failure. Our country is pursuing a new strategy in Iraq. And I ask you to give it a chance to work.

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GIGOT: Many on Capitol Hill voiced opposition to that new strategy, including some in his own party.

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SEN. CHUCK HAGEL, R-NEB.: I don't know how many United States Senators believe we have a coherent strategy in Iraq. I don't think we have ever had a coherent strategy. In fact, I would even challenge the administration today to show us the plan that the president talked about the other night. There is no plan.

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Joining the panel this week, "Wall Street Journal" Columnist and Deputy Editor Dan Henninger, Foreign Affairs Columnist Bret Stevens, Columnist Kim Strassel and Opinionjournal.com Editor James Taranto.

James, I thought the president took a conciliatory tone towards Congress on Iraq this week, asking them to support his new surge strategy. Did he get anywhere with that and more help from Congress?

JAMES TARANTO, WSJ OPINIONJOURNAL.COM EDITOR: I don't think so, Paul. We're at a very perilous moment for the country because of the politics of Iraq.

I thought one of the most powerful lines in the State of the Union speech was when the president said to Congress, whatever you voted for, you did not vote for failure, reminding many of the Democrats they initially supported this war.

I think after the Democrats lost the 2002 Senate election, they began to see themselves as having a stake in failure. And it finally paid off for them politically, in their view, when they won Congress last year.

What we have now is Democrats who think that it is in their political interests for America to fail in Iraq. And Republicans, who are scared of the whole thing, or perhaps in the case of Hagel, who are just kind of sanctimonious about it, and trying to really undermine the country's success in Iraq.

GIGOT: A perilous moment, Dan. You remember Vietnam. Is James overstating things here?

DAN HENNINGER, WSJ COLUMNIST & DEPUTY EDITOR: No. I think he put it very well, as a matter of fact. The Democrats did attack Bush on the argument of failure.

And I think the problem is they, themselves, have no Plan B politically. They have no way to step down from the position they have taken to criticize and undermine the administration's position. And so there is nothing constructive that they are offering the administration.

I mean, the government has been very — you know, it has criticized itself on its handling of the war. Now, they have come — appointed General Petraeus. They do have a plan.

The idea that Hagel and the Democrats are standing there saying there is no plan is really quite irresponsible.

GIGOT: These Senate resolutions are proliferating. But one thing they don't do is have any binding quality force of law, so that they really don't stop bush from doing anything, at least not yet. They just say we are opposed to the mission.

Why don't they use the power of the purse, assuming they have that, which there is some debate about whether they do? But most people assume they could probably do that. Why don't they use that power of the purse to just say, look, we are not going to support this surge?

KIM STRASSEL, WSJ COLUNIST: Because they don't actually want the blame for that, if they actually do it, and things go bad in Iraq.

The people that are criticizing the president at the moment are walking a very fine line. They want to appease the public, the bit of the public that's not happy with the war at the moment. But they are desperate to not to be seen to be not supporting our troops in war, or to have to stand up and take the responsibility if things go wrong there.

So instead, you get these non-binding resolutions. Let's look as though we are doing something when, in fact — and it could have very negative consequences.

BRET STEPHENS, WSJ FOREIGN AFFAIRS COLUMNIST: And the political cowardice really is astonishing on their part. If they really think that we are in a failed endeavor, then they should exercise the one constitution responsibility that they do have, which is just to cut off — is to cut off funds.

I think there is a real problem that we are going to get into a situation in which Congress thinks that it has the responsibility, all 535 commanders in chief, to dictate the course of the war.

I mean, it should be within the prerogative of the president of the United States — it is his sole prerogative to decide if we need 20,000 more troops or 40,000 more or even fewer.

I think Congress is stumbling into very dangerous ground for itself.

TARANTO: But they are going to be very careful about cutting off funding. They are terrified to do that because that would be failing to, quote, unquote, "support the troops," which they say they do.

GIGOT: But what about this idea that Hillary Clinton has. She doesn't want to cut off funds. She says she has a responsibility, James, and therefore, can't do that.

But she wants to put a cap on the number of troops in Iraq. Is that something that Congress constitutionally has the power to do?

TARANTO: I don't think that's ever been tested. I suspect not. It seems to me, the president is the commander in chief.

I would just like to say, by the way, four weeks ago, on this show, I said I thought that now the Democrats are in power, they would be more responsible. I officially retract that statement.

(LAUGHING)

STRASSEL: Congress only has two powers, the purse and also the power to declare war. They did the first. And they are not doing the second.

GIGOT: OK. We're going to have more on this when with we come back.

Still ahead, energy independence, it's an idea that has figured predominantly in the past two State of the Union speeches. But how realistic is it? And will it make us more secure?

Plus, the health care debate, in 2008 President Bush urges market- based reforms to the insurance system. But are Democrats holding out for an issue to run on next year?

Our panel weighs in on those topics, and our "Hits and Misses" of the week, when the "Journal Editorial Report" continues.

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GIGOT: Continuing with our discussion of the political fallout surrounding the Senate's anti-surge resolutions on Iraq.

In his confirmation hearing this week before the Senate Armed Services Committee, the new top commander in Iraq, Lieutenant General David Petraeus, was asked about the effect of such resolutions on the troops.

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SEN. JOHN MCCAIN, R-ARIZ.: Suppose that we send you additional troops. And we tell those troops that we support you, but we are convinced that you cannot accomplish your mission. And we do not support the mission we are sending you on. What affect does that have on the moral of your troops?

DAVID PETRAEUS, LIUTENAT GENERAL, TOP IRAQ COMMANDER: Well, if would not be a beneficial affect.

SEN. JOE LIEBERMAN, D-CONN.: The Senate-passed resolution of disapproval for this new strategy to Iraq would give the enemy some encouragement, some feeling that — well, some clear expression that the American people were divided?

PETRAEUS: That's correct, sir.

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GIGOT: All right, Dan. What do you make of that exchange?

HENNINGER: Well, what I make of that is — you know, following that exchange — this was brought up by Senator — some of the other senators, Warner...

GIGOT: We're going to show that.

HENNINGER: We're going to show that, OK.

General Petraeus' is obliged to tell the truth when he goes before these committees. Not only is he speaking to that committee, he is speaking to every soldier and Marine in Baghdad and in Iraq.

Now, he is going to go over there. And if these guys saw him sit there and say no, sir, resolutions to hold down troop levels in Iraq will have no affect on morale, every single soldier in Iraq will have a word for that, which I can't repeat on this show.

(LAUGHTER)

And from day one, General Petraeus' authority would be diminished.

GIGOT: But those comments by General Petraeus clearly discomforted some senators. And let's see that — Senator John Warner of Virginia, how he responded.

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SEN. JOHN WARNER, R-VA.: I hope that this colloquy has not entrapped you into some responses that you might later regret. I wonder if you would just give me the assurance that you'll go back and examine this transcript, as to what you replied with respect to certain of these questions.

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GIGOT: Clearly, John Warner, Kim, did not like what he had heard from the general because he thinks that — he is one of the sponsors of these resolutions. Other senators felt the same way. Why are they so upset?

STRASSEL: You saw them all twisting in their seats. And it is because Petraeus blew apart this sort of fiction that's out there, which that they would all like everyone to continue to believe, which is that they can put forward this resolution, they can express their unhappiness, and that nothing serious will happen as a result of it.

And Petraeus said, no, that is not the issue.

What was more interesting is he seemed to be so angry that Petraeus was involved with politics. And the shame of it is that someone didn't mention why is John Warner involved with generaling the war?

HENNINGER: Senator Warner is living in an alternative universe from the one from that which the troops in Iraq have to live in.

TARANTO: Well, I think the point that is being missed here is that politics is the war.

I mean, Zawahiri sent a letter to Zarqawi, a couple years ago, in which he said half this battle is going to be fought in the media.

Al Qaeda has been fighting deliberately and has been fanning sectarian flames with a deliberate view of creating a situation that appears to Americans like a quagmire.

They understand very clearly, just as Ho Chi Minh did, to take a Vietnam analogy, that the war isn't won in Baghdad. It is won in Washington.

And so when Warner claims, well, we have to have these deliberations and they are somehow separate from the struggle that's happening in Baghdad or in Anbar Province, that's also a fiction.

GIGOT: But they are also saying, look, Godspeed, sir. We wish you well, but we don't believe in your mission. That's a contradiction. What kind of a message is the U.S. Congress sending with that kind of resolution?

TARANTO: An absolutely outrageous message. And I'm appalled by Warner's comments.

It seems to me that, when the country is at war, political leaders have a patriotic duty not to try and cause the country to lose the war. And what Warner is saying — what Warner is hinting to Petreaus — he didn't quite come out and say it — is, as Kim said, this is a matter of domestic politics. Stay out.

Well, it is not a matter of domestic politics. Politics are supposed to stop at the water's edge. And Warner is putting his own political posturing ahead of the interest of the country.

GIGOT: Briefly, Dan, what's the motivation for Republicans here to do this? Democrats have a partisan interest, I guess. Why John Warner?

HENNINGER: John Warner? Well, John Warner specifically saw what happened to George Allen in Virginia. He thinks that the state is moving towards a more democratic cast. And he is trying to cover his rear end against things, like Senator Webb's victory there.

And I think the Republicans are looking at the opinion polls. And they are just now doing what the Democrats did in forming their policy, based on what they think the opinion polls are telling them.

GIGOT: All right, Dan.

We will be back after this short break.

Coming up, immigration, education and health care reform, President Bush laid out an ambitious domestic agenda Tuesday. But can he push it through a democratic Congress?

That, and our "Hits and Misses" of the week when the "Journal Editorial Report" continues.

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BUSH: Changing the tax code is a vital and necessary step to making health care affordable for more Americans. In all we do, we must remember that the best health care decisions are not made by government and insurance companies, but by patients and their doctors.

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GIGOT: President Bush got ready to rumble Tuesday night, setting the stage for a long needed debate over health care and taxes.

Dan, the president put one big idea on the table. How would this work? And is it a good idea?

HENNINGER: In health care, it is a huge idea. He's proposing to take the tax code and use that as the instrument to reform the health care system. He would give — let's just talk about families — a $15,000 tax deduction to every family. This would mean a tax cut for about 80 percent of American families.

They could then take that money and use it to buy an insurance policy to cover catastrophic health care costs. More importantly the policy would be portable.

And I'm convinced this is one of the single things that has people upset about the health care system, which is, if they change jobs, they have to go through the whole process again of getting their health insurance.

GIGOT: So if you lose your job, you would be able to use the deduction, even as an individual? It kind of levels the playing field between employer-sponsored plans and individual plans.

HENNINGER: Right.

GIGOT: But, Kim, the Democrats are saying — Pete Stark, who runs one of the important health care committees in the House, says we're not even going to give this a hearing. So does this have any chance of passing in this Congress?

STRASSEL: It probably doesn't. Although, this is going to be a tougher one for the Democrats than some of the previous.

And Bush has come out and, in the past, he's had big reform — Social Security, tax reform. But a lot of American don't really understand what that's going to mean for their bottom line.

This one is much more concrete. They can say, $15,000, I could use that for health insurance. So that's going to make it harder for Democrats just to not even talk about it.

The other issue is it gives Republican something to fall back on as a standard as this debate goes forward, rather than just being all over the place.

GIGOT: Republicans have typically fled from the health care argument because they don't understand it, because they think it helps Democrats.

This, at least, sets up in the debate in a philosophical basis for 2008 between Republicans being able to offer a free market-based plan, consumer-based plan, and Democrats who typically, traditionally have proposed bigger government plans.

TARANTO: Yes, although, I think the Democrats still feel more passionately about this. It was telling when President Bush started talking about health care. He said something like all Americans should have a right to health care — he didn't say "right," but should have health care.

Nancy Pelosi bolted out of her seat and started applauding. She was much quicker to her let feet than Vice President Cheney.

(LAUGHTER)

And the Democrats all applauded this. As soon as he started talking specifics, Nancy was seated again.

GIGOT: Bret, let's change the subject quickly to energy. And one of the interesting moments in the speech was when Chuck Grassley, the Iowa Senator — I thought he was dancing a jig there when the president talked about ethanol, more ethanol subsidies, more ethanol mandates.

(LAUGHTER)

Ethanol, of course, is made with corn and your tax dollars.

So is ethanol really a key to getting us more energy secure?

STEPHENS: Ethanol is the fool's gold of energy security...

(LAUGHTER)

... if there is really such a thing. In fact, according to some studies, it takes more — ethanol has more energy inputs that go into it than what you actually get out of it. So it ends up reducing our energy security, because we need more gasoline to make up what we are missing.

The other point that needs to be made, and I think it needs to be made to Democrats, is that ethanol is not an environmental panacea, quite the contrary. You're going to replace big oil with big corn? You're going to have to — to get the quantities of corn you need, to get sufficient amounts of ethanol, you are going to have to farm almost every acre of farmland in America to get that kind of corn.

GIGOT: They will be growing corn in Manhattan if this mandate takes place.

(LAUGHTER)

But the president is betting on a technological breakthrough here, for so-called cellulosic ethanol, which we produce from plant matter, not just corn. Because corn is all we have, now, the technology to do — corn and sugar.

But if we go to cellulose, this would be a bigger deal. But we don't have that breakthrough yet, do we?

STRASSEL: No. Cellulose and gasohol was supposed to be ten years away 35 years ago. So we are not moving ahead on that.

And moreover, even if you make it happen, it is going to be so much more dramatically expensive than oil that it is not going to be cost effective to use.

GIGOT: Dan?

HENNINGER: Well, that's the point. The political issue is the price of energy will be higher. Are the American people willing to pay more for their energy?

STRASEL: It'll be less competitive.

GIGOT: All right. Thank you.

We have to take one more break. When we come back, our "Hits and Misses" of the week.

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GIGOT: Winners and losers, picks and pans, "Hits and Misses," it's our way of calling attention to the best and the worst of the week.

Item one, a hit for U.N. Secretary General Ban Ki-moon — Dan?

HENNINGER: Yes, that's right, Paul. As the viewers may recall, last week on this program, we discussed this U.N. Development Fund program in North Korea, which has been — we reported on the editorial page, has been run since at least 1998, with virtually no oversight by the United Nations.

Several things happened this week. The secretary general ordered an audit of the program to be completed in three months. Secondly the executive board of the UNDP, the Fund, voted that there will be no new programs in North Korea. And the ones that do exist will be brought under, incredibly, U. N. control, rather than North Koreas themselves. That will affect things, like on-sight visits, hard currency and things like that.

Now, the audit is not going to go into other programs. But we have argued that they ought to now look at things, like the Population Fund program in North Korea and the World Food Fund program in North Korea. This is just the tip of the iceberg.

GIGOT: All right, Dan, thanks.

Next, this just in — Global warming causes terrorism — Bret?

STEPHENS: Yes, we have known that global warming is apparently going to inundate Florida and other coastal areas. Now — then it was that global warming causes more hurricanes. Then, global warning causes tsunamis.

There was a study out of Italy quite recently that said that global warming causes an increase in suicide risks.

And now, a former British diplomat, a man by the name of Krispin Tickle, who sounds like a character from a Monty Python sketch, says that global warming causes terrorism.

Now, I think this is wonderfully convenient. I mismatched my socks this morning — global warming. I missed my deadline — global warming. I forget to do the shopping for my wife — global warming too.

(LAUGHTER)

I think this is an opportunity for all of us of males.

(LAUGHTER)

GIGOT: I am not buying the things on the deadline, Bret. Sorry.

(LAUGHTER)

Next, a hit to the National Geographic Society for its decision to screen a controversial new documentary — Kim?

STRASSEL: Yes, a hit for standing up for freedom of expression. The story here is that there is a new documentary out called "Mind Your Own Business."

And what it does — it is much overdue. It tells the story of the dark side of environmentalism and how these groups that protest against development, especially in poor places, cause great poverty in communities that don't have jobs.

So this movie opened up in Europe. It got a lot of great reviews. But when the National Geographic Society decided to air it here, huge protests from environmental groups, calls for it to be censored and not come out.

The National Geographic Society did air it this week, which is great. And I would like to think, or hope, that is was because they thought that, if the American public gets to see things like Al Gore's movie on global warming, they should at least get to hear the other side.

GIGOT: All right, Kim, thank you.

Finally, a miss to the anti-war employee of an on-line retailer, and the peace activists who supports him — James?

TARANTO: Paul, Sergeant Jason Hess, who is stationed in Iraq, wrote to a company called discountmats.com, and asked can you send a delivery to a military address.

He got a reply saying, no, they are not able to do that, quote, "and even if we did, we would never ship to Iraq. If you were sensible, you and your troops would pull out of Iraq."

He is sending this to a sergeant in the Army.

(LAUGHTER)

Well, this started getting circulated on the Internet. Talk radio show hosts were talking about it. It caused an outrage. The company claims that it's fired this employee.

But my favorite comment, as a result of this, comes from a peace activist named Julie Enslow, who is quoted in the "Milwaukee Journal Sentinel" as follows: "This is a matter of free speech," she says. "It is totally irresponsible for radio stations and bloggers to attack a person for his personal political views."

So free speech means, if you agree with her, you can mouth off on company time. If not, you can't say it in a public forum.

GIGOT: All right, James, thanks.

That's it for this week's edition of the "Journal Editorial Report."

Thanks to Dan Henninger, Bret Stephens, Kim Strassel and James Taranto.

I'm Paul Gigot. Thanks to all of you for watching. We hope to see you right here next week.

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