This is a rush transcript from "The Journal Editorial Report," March 3, 2007.

PAUL GIGOT, HOST: This week on the "Journal Editorial Report," he's shaken up the Democratic field. And he's gaining on Hillary Clinton in the polls. From his days in the Illinois senate, to the rough and tumble of presidential politics, we'll take an up close look at candidate Barack Obama.

Plus, a guilty verdict in the Scooter Libby trial puts President Bush in the hot seat. Will he pardon the former vice presidential aide? And what are the political consequences it if he does?

Our panel weighs in after these headlines.

(NEWSBREAK)

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

A virtual unknown when he was elected to the United States Senate in 2004, Barack Obama has quickly cultivated a star following that has catapulted him to early and unexpected preeminence in a Democratic field filled with far more seasoned candidates.

Just who is this political newcomer? And what do his days in the Illinois State Senate tell us about the kind of president he would be?

Joining me now with some home town perspective is Chicago Tribune columnist John Kass.

John Kass, welcome to the program. Good to have you here.

JOHN KASS, COLUMNIST, CHICAGO TRIBUNE: Thanks for having me.

GIGOT: You followed Obama. He's had this extraordinary rise. What is the most important aspect of Obama's character or political philosophy you think Americans should know as a potential president?

KASS: He talks about changing the nature of our politics. He talks about ethics and how important that is. And at the same time, he is back here in Chicago by the political machine, the Daley machine, which has its own issues with federal grand injuries.

GIGOT: Well, what is...

KASS: So there is a disconnect between what America wants in a candidate. I think it is the whole Camelot thing that people want to revisit and seek in terms of Mr. Obama, and the nature of Chicago politics which is not Camelot by any stretch of the imagination.

GIGOT: Having lived in Chicago, I can agree with you on that. When you talk about the Daley machine and say that Obama comes out of that machine. What do you mean? And how does it work? Is it a patronage machine, a typical patronage machine? What does it mean he is a product of that politics?

KASS: He separates himself from it rhetorically, positioning himself as an independent Democrat.

But in Illinois, as you know from your time here, the state senate is basically run by people who tell the other senators what to do. And they generally fall into line.

He has done some things in terms of ethics that have separated him from the rest of the pack. He has talked about ethics. He has invoked reform in his speeches.

But at the same time, the machine in Chicago is about patronages, as we found out recently. Patrick Fitzgerald the special prosecutor in the Libby case successfully prosecuted top members of the Daley administration for building illegal patronage armies by the thousands.

So there is a difference between the Obama message publicly, nationally, and how politics works here. It is all basically very simple here. It is about interests.

And Mr. Obama got jammed up into an issue that I don't think has gotten a lot of national play. It is his relationship with an indicted influence peddler here named Tony Risco, and the land they purchased for Obama's home and that will probably trickle out as the days continue.

GIGTO: Those associations, you are arguing, will become a political vulnerability as the campaign moves on?

KASS: I don't know if they will get national traction, but I think what they suggest, best case scenario, Mr. Boom Obama is a nice man, charismatic, highly intelligent and a decent fellow. But it also suggests that perhaps he is naive. And the issue for the American people, I think, is when you put Obama next to Vladimir Putin in a room talking about whatever they will talk about if he is president, is he seasoned enough to deal with that kind of pressure.

GIGOT: What about Obama's political philosophy. Ronald Reagan was a self-identified proud conservative. Bill Clinton called himself a new Democrat Is there any philosophy would you ascribe to Obama's politics?

KASS: I would say that basically he is a left of center liberal, doctrinaire in the social positions. He has talked about ethics which I think is part of his campaign.

But really you don't he is not a maverick in the sense that the man who -- that his predecessor, Senator Peter Fitzgerald of Illinois, was a maverick, a Republican who defied his own party to bring Patrick Fitzgerald here, for example.

Mr. Obama is sort of a -- remember how he was elected. The leading Democratic frontrunner imploded in the domestic violence issue. The Republican frontrunner fell apart when there was a sex scandal. Mr. Obama just came in and basically rode in on these disasters. So he hasn't really had the kind of campaign that he is facing now.

GIGOT: Can you think of a single instance in Illinois politics where Obama took on one of the main Democratic interest groups, whether it be teachers' unions or the trail bar or some main interest group, and challenge one of their orthodoxies?

KASS: I really can't. I have been wracking my brain. I am sure there might be something. He did stand up for ethics and ethical reform at a time when the Democrats were building their case against the Republic's locally.

But when it comes down to it, I don't think he is revolutionary in that regard. I think he's a basically a doctrinaire liberal in that sense.

GIGOT: OK, John Kass, thank you for that interesting perspective.

KASS: Thank you.

GIGOT: Much more on Obama's run when we come back, including a look at some recent polls that surly have the Clinton camp in a sweat.

Also ahead, all eyes are on President Bush as he ponders the fate of a former administration aid. We'll make the case for why Scooter Libby should be pardoned now.

(COMMERCIAL BREAK)

GIGOT: Senator Hillary Clinton might still is the democratic favorite for the 2008 presidential nomination, but polls show Barack Obama closing the gap.

Joining the panel this week, "Wall Street Journal" Columnist and Deputy Editor Dan Henninger, as well as Jason Riley and Dorothy Rabinowitz, both "Wall Street Journal" editorial board members.

Dan, in addition to the national poll that shows Obama gaining about 10 point in a month, we have a poll in New Hampshire that shows that we can put up that shows that primary contest is in the democratic side and statistical dead heat. How do you explain this meteoric rise by Obama?

DAN HENNINGER, WSJ COLUMNIST AND DEPUTY EDITOR: My short explanation would be to say that Obama is the "not" candidate. He is not Hillary Clinton. And he's not Washington.

I don't think can you really over state how disgusted the average person is with politics as usual in this country because, in fact, it is pretty ugly, as we will discuss in the Libby case. This is kind of become business as usual.

And Obama has been above the fray. The question in my mind is can he stay above the fray for the next 11 months or so all, the way to the primaries?

And secondly, should he remain above the fray. Because if he does so, it sounds as though he is disconnected from the substance of politics.

JASON RILEY, WSJ EDITORIAL BOARD MEMBER: You're right, Dan. It will be very tough for him to do that, particular because, other than the color of his skin, there isn't much to distinguish him in terms of ideology against Hillary Clinton. I mean, they're both big government liberals. Barack's anti-war. He's for more government spending on health care. And down the line, he's for racial preferences.

What you will see him doing is playing the typical liberal identity politics. Hillary will talk about breaking the glass ceiling. Obama will talk about breaking racial barriers.

DOROTHY RABINOWITZ, WSJ EDITORIAL BOARD MEMBER: And the first time that Obama strays from that high-minded pursuit of no mud, you will see this immense bacchanalian orgy of press comments, tarring him, saying, "This is it? He has fallen. He is an ordinary politician." You cannot be above the fray. Politics is an American sport.

GIGOT: But isn't there an inspiration quality here, Jason? You know about the appearance that both Hillary and Obama made in Selma last week on the anniversary of the march. And I listened to Obama, compare to Hillary. He was so much better just to listen, and just to inspire you. And Hillary was kind of earnest and in her way.

RILEY: Obama, even though he doesn't come out of that same civil rights tradition, black colleges and so forth -- he's Harvard educated -- he's very comfortable talking to black people.

So you put Hillary and Obama in a room addressing blacks and I think Obama is going to come out looking pretty well, which is what you saw.

Hillary's challenge here will be going after Obama without alienated her own black supporters. That's going to be very tough to do. Because Hillary needs the black support to win the primary. But needs it to win the general election.

GIGOT: She has the support of what you would call the black congressional establishment. I think Charlie Rangel's for her, most of the committee chairmen are for her. What is his relationship with the black establishment?

HENNINGER: It's a very interesting point. I think his relationship to them is very threatening. He's a younger guy. He represents a younger generation of black leaders.

It has been so hard for people of Obama's generation to gain any presence as black spokesmen in American life. And I think it is very possible that the establishment, the black caucus, will see him as a threat.

RILEY: The other thing to remember, Paul, is that in 1984, the Congressional Black Caucus supported Walter Mondale over Jackson for president. And that's was because Mondale was a prot,g, of Hubert Humphrey, who was known as being very favorable among blacks. It didn't do him much good. Let's put it that way. It didn't do Mondale much good.

GIGOT: Do you have any doubt he will get more of the black vote than Hillary Clinton in the primaries?

RILEY: I have no doubt, no doubt at all. He'll do it.

GIGOT: All right, great. Thanks, Jason.

Still ahead, the battle lines are forming over a possible pardon for Scooter Libby. What will President Bush do? And what are the political consequences?

Our panel weighs in when the "Journal Editorial Report" continues.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: On a personal note, I was sad -- I was sad for a man who worked in my administration, and particularly sad for his family.

(END VIDEO CLIP)

GIGOT: That was President Bush reacting to the guilty verdict against former vice presidential aide Scooter Libby.

Libby's conviction in federal court on perjury and obstruction of justice charges set off a new debate in Washington, with top Democrats demanding a no-pardon pledge from the president, something White House Press Secretary Tony Snow refused to speculate about.

(BEGIN VIDEO CLIP)

TONY SNOW, WHITE HOUSE PRESS SECRETARY: All of this conversation, speculation about a pardon, I know makes for interesting speculation, but it is just that. There is a process, you know, and it is it is available to anybody who has been convicted in the United States.

(END VIDEO CLIP)

GIGOT: Dorothy, should President Bush pardon Scooter Libby?

RABINNOWITZ: Yes, he should. And he should do it now. And that process that you are talking about is the appeals process.

These are the facts. The trial is what brings the facts out. Trials are all about facts. The president cannot pretend that he's going to know anymore during an appeals process. An appeals process is about points of law.

There is absolutely no excuse for George Bush not to do as his father did with Cap Weinberger, which his father pardoned Cap Weinberger, at Iran- Contra, before a trial.

We have no excuse for the President who knows exactly how much he is to blame for Libby's problems. Not to pardon him because there can be no pretense of anything to be gained by waiting for an appeal.

GIGOT: All right.

Dan, people say a jury convicted him. He had a fair trial under our system. That's a serious offense. Why not let him serve the punishment?

HENNINGER: Well, I think you would have to -- look this was a political event. Scooter Libby was not convicted in Washington for making money for graft, for stealing. It was a wholly political thing.

People who come to Washington understand you are putting yourself at some risk. You are always on thin ice in Washington because you can always fall afoul of something like this. And people will use the law against you to try to hammer you. Your opposition will do that.

Scooter Libby lost. But I think the grownups of Washington understand that, when somebody gets chewed up like this, that they are entitled to a pardon to put their life back in order. Because if you don't do that -- and I know outsiders will say, oh, I don't under it. Well, they will never understand Washington.

GIGOT: And the president I think bears some personal responsibility here because he never really refereed the political disputes and disagreements and, in some cases, insubordination by others in his administration.

I mean, Collin Powell and Richard Armitage, the secretary of state, deputy secretary of state, never told the president that they knew who the leaker of the original crime was.

RILEY: Right. The administration launched this missile. They allowed Ashcroft, the former attorney general, to recuse himself. And then they allowed for the appointment of Fitzgerald, even though, as you said, they knew -- justice department officials knew that the leaker was Armitage.

This is, as Dan said, about the criminalization of politics. And that's bad. That's bad because it brings players into the arena that don't belong there, special prosecutors and judged decided policy disputes, which is not what we do here. We have elections for that and legislatures for that.

GIGOT: What about the plan there would be a political backlash, Dorothy, if Bush pardons Libby?

RABINOWITZ: Well, that is the point. Here's the president who, if he has one great thing to his favor in terms of his popular supporters, is he is a stand-up guy. He is resolute. And he doesn't really care if he believes he is right.

If he fails to pardon Libby at an appropriate time, which is now, but tends to waiver and wait, I think it will be cause for very serious political disappointment.

HENNINGER: And you know, there has always been a political backlash. The Democrats are trying to use Scooter Libby as a club to hammer the Republicans. I think if would pardon Libby, it would galvanize the Republican party, because I think Scooter Libby is turning into a Robert Bork-like figure for Republicans.

RILEY: And the media would go crazy. But the media have behaved so shamefully in this episode. They spent the past year criticizing Fitzgerald's overreach. But since he produced an outcome that they like, they go, oh, well, that's okay.

GIGOT: Quickly, Dan, do you think he will pardon Libby?

HENNINGER: You know what? I don't think he will. I think he's too straight laced to do it.

GIGOT: Not until the end of his administration, if he does it at all.

HENNINGER: Right.

GIGOT: I'm sorry to say.

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

(COMMERCIAL BREAK)

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, an inch of snow this week brought the nation's Capital to it knees once again -- Dan?

HENNINGER: Well, yes it did. Senate Majority Leader Harry Reid on Wednesday said Washington is different from other places. What did he mean? He meant there was an inch, maybe two inches, of snow that was falling and falling and gathering on the ground in Washington.

The first thing that happened is that Senator Reid had to cancel a vote on a Homeland Security bill from the morning to the afternoon. A long-scheduled hearing on Bingaman-Specter legislation on global warning was cancelled.

You have to have lived in Washington to understand what goes on. When snow gathers on the ground the federal buildings empty out. They jump into their cars. And everyone goes roaring out of the city.

I have seen people slam on their brakes, slide through stop signs and red lights. It is just an area of complete panic.

And the reason is there are 50 different driving styles in Washington. And so I'm standing shoulder to shoulder with Harry Reid, Washington is a different place.

GIGOT: All right, Dan, thanks.

Next, a miss to the FCC for holding up the XM-Sirius satellite radio merger -- Jason?

RILEY: Yes, FCC Chairman Kevin Martin is one of the people in the way of this merger taking place between these two subscription- based radio services on the ground they would create an monopoly. This is utterly absurd.

This combined company would have to compete, first and foremost, with free radio, which 99.9 percent of us still listen to. Then, there's Internet radio stations, which are increasingly popular. Then, there are music channels available through your cable company that people also listen to, and on and on and on. There's no reason to block this merger.

GIGOT: All right, Jason, thank you.

Finally the network news rating war is becoming downright undignified -- Dorothy?

RABINOWITZ: I used to say that you can't trivialize the news anymore than the networks themselves do. But the truth is, it's getting bad. Who's on first? Who's on second? Who's third in the anchor race is now well-known to everybody.

I promise you, on the life of my dog, on everything I hold sacred, that this following conversation took place. I asked my doorman, do you know anything about the anchor race? Oh, yes, he said. CBC is last. NBC is behind ABC. And that's why NBC's anchor Brian went off to Iraq.

I thought to myself this is going on everywhere -- everywhere. How did this happen?

It happened because the networks, where once they would cloak everything in secrecy and with dignity, are now giving huge inside stories about how they are shuffling everybody. Is this the news?

GIGOT: I am afraid it is nowadays, Dorothy. Thanks.

That's it for this week's edition of the "Journal Editorial Report." Send your e-mails to jer@foxnews.com. And visit us as on the web at www.foxnews.com/journal.

Thanks to Dan Henninger, Jason Riley and Dorothy Rabinowitz.

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

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