This is a rush transcript from "The Journal Editorial Report," January 19, 2008.

PAUL GIGOT, HOST: Welcome to this special edition of the "Journal Editorial Report." We are live with results from the South Carolina GOP primary where tonight John McCain pulled off a big win.

Also today, the Nevada caucuses where Hillary Clinton beat back a tough challenge from Barack Obama and Mitt Romney cruised to an easy win over his rivals in the Republican field.

But first, to the Palmetto State, where tonight veterans and self- described moderate voters helped propel John McCain to victory over his chief rival there, Mike Huckabee.

For more on that, I am joined by Republican pollster Whit Ayers.

Whit Ayers, thanks for being here.

WHIT AYERS, REPUBLICAN POLLSTER: Hey, Paul. How are you?

GIGOT: Great, thanks. Big win tonight for John McCain. Eight years ago it didn't go so well for him. What did he do differently tonight that gave him the victory that didn't happen eight years ago?

AYERS: It has to be a sweet win tonight after the bitter loss eight years ago. Eight years ago he actually got 42 percent of the vote, 10 percent more than he got tonight. The big thing different today is there were four major candidates rather than two major candidates like there were eight years ago and he did just well enough to get past Mike Huckabee.

GIGOT: Last time, I recall, he didn't do as well with Republican voters and conservatives. But this time, he did seem to do — at least get close enough with conservatives, able to compete for their votes with Mike Huckabee on the rest of the field. What part of McCain's message do you think worked this time in particular?

AYERS: I think the national security message. His strength on military affairs. There are so many veterans from South Carolina. It is a patriotic state. Very concerned about the war on terror. And I think having a primary, post-9/11, with a hero, an American military hero really worked to his advantage tonight.

GIGOT: One thing that struck me in the exit polls was that about one out of four Republicans said immigration was the most important issue, yet McCain only lost by three or four points, I think, to Huckabee among voters who said that was their most important issue. This, after a year in which everybody was saying John McCain was going to lose the nomination on the immigration issue. Are we seeing that maybe immigration isn't the really decisive voting issue some people think it is?

AYERS: There is a small proportion, about a quarter of the Republican primary electorate that is relay fired up about immigration. There are a lot of others who are concerned. But they realize the issue is more complex than sometimes it is presented. And I think it is fascinating that McCain did as well among those people who care about immigration as he did today.

GIGOT: Other issues liking the economy or national security, the war on terror or Iraq are more decisive voting issues than immigration?

AYERS: For some voters, they are.

GIGOT: We have heard a lot this campaign season that this GOP coalition, the cultural conservatives the free Market conservatives the national security conservatives are splitting apart. That there is no possibility, that they are social conservatives fob Huckabee some free marketeers for Rudy Giuliani or Mitt Romney, is it as fractious as all that? Is this coalition splitting apart?

AYERS: I don't think it is splitting a party. You have candidates that appeal to parts of it. You saw that in South Carolina today. South Carolina has a number of cultures. To borrow a line from John Berendts' "Midnight in the Garden of Good and Evil," in Greenville, they ask you where do you go to church. In Columbia, they ask you what do you do for a living. In Charleston, they ask you what will you have to drink.

Huckabee did really well with the church crowd. He won two to one among people who go to church more than once a week. The what-do-you-do- for-a-living crowd split among major candidates. The what-will-you-have- to-drink crowd was waiting for Giuliani, but he never showed up so they voted for McCain.

GIGOT: Why has it taken so long though for the GOP voters to coalesce around one candidate? It seems it is taking longer this time than it has in the past. Is it a failure of the candidates to have the coalescing message? Or is this the voters are in a show me state of mind?

AYERS: I think it is more, Paul, the fact that you have different candidates all of whom have different strengths. Mike Huckabee is so strong on the values message. And Mitt Romney is so strong on the business and economy message and John McCain is so strong on the national security military affairs message. They are wonderful when they are talking about their specialties. They not only understand the words but they understand the music as well. And so I think you have candidates who have different strengths that appear to parts of the coalition. Ultimately, the coalition will come together. But we have got awhile to go before that will happen.

GIGOT: Who do you think is best poised now to emerge as somebody who can unify these fractious wings before the party or is anybody out there who you think can do this moving ahead?

AYERS: John McCain clearly has momentum after South Carolina. But Mitt Romney is — did well in Michigan and in Nevada and the economy is coming up as an issue which is Mitt Romney's strong suit. I think those two are well positioned but couldn't count out Mike Huckabee and don't count out Rudy Giuliani. If he can win Florida, he is back in the mix again.

GIGOT: Let me ask you about this issue of change which we heard about. When Democrats talk change, they talk about getting rid of the Republican in the White House. We know what that's about. But when Republican voters talk about the fact that they want change or tell pollsters they want change, what kind of change in Washington are they looking for?

AYERS: Republicans are upset about the direction of the country just like Democrats and Independents.

GIGOT: How so? What are they upset about?

AYERS: They are upset about a lot of things. Iraq. It is not going as well as we want. They are upset about some of the apprehensions about the economy. Some Republicans are really upset about spending. There is a whole host of different things Republicans are upset about. What they want is a new start and new direction and you are going to get that when you get a nominee for president. He will redefine the party in his own image.

GIGOT: Mitt Romney, when he talks about change and says he is an outsider who can bring change to Washington, that's a resonant message even with — even with Republicans?

AYERS: Yes, because everybody dislikes Washington. They dislike the bickering in Congress. Everybody is disgusted with the lack of action on various things like immigration in the Congress. And so they want something to happen and they want somebody to make it happen.

GIGOT: All right, Whit Ayers, thank you for being here.

AYERS: Thank you, Paul. Good to be with you.

GIGOT: When we come back, McCain's big win. As the race moves to Florida, is he the candidate that can unify the Republican Party? Our panel weighs in after the break.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

JOHN MCCAIN, (R), PRESIDENTIAL CANDIDATE: Thank you. Thank you. Thank you my friends. Thank you, South Carolina. (CHEERS)

Thank you South Carolina for bringing us across the finish line first in the first-in-the-south primary. (CHEERS)

You know — you know it took us awhile, but what's eight years among friends, huh?

(END VIDEO CLIP)

GIGOT: That was John McCain the winner of today's South Carolina Republican primary. Welcome back to this special edition of the "Journal Editorial Report." I'm Paul Gigot.

Joining me on the panel this week, "Wall Street Journal" columnist and deputy editor Dan Henninger, editorial board member Jason Riley, and Washington columnist Kim Strassel.

Kim, you were in South Carolina this week. It seems to me if you look at the exit polls, John McCain did better than he did eight years ago among conservatives and Republicans. How did he do it?

KIM STRASSEL, WASHINGTON COLUMNIST: No, that's right. And he was working very hard. If you look back in 2000, he got 42 percent of the vote. A lot of that number was from Independents and moderates and he didn't want to make that mistake this time.

When he landed in South Carolina this week straight out of Michigan, he was on the ground. He had Tom Coburn, a very conservative Senator from Oklahoma, out making an endorsement of him. He was on every stump speech he talked about his pro-life record. He talked about the need to appoint the right kind of judges. And he was very determined to get a lot of core conservative voters. His 30 percent tying Mike Huckabee has to make his campaign feel good.

GIGOT: He came out, Dan, with a tax plan this week. Eight years ago, John McCain was a matter of principle saying I am not for tax cuts. This time he came out with a major tax plan that would cut the corporate tax rate, eliminate the AMT and do other things those of us who are economic conservatives like. Is this a new McCain?

DAN HENNINGER, COLUMNIST & DEPUTY EDITOR: To some extent it is. He is obviously become more shrewd, I would say. He is shedding the maverick reputation he used to have.

John McCain is close to winning this nomination, I think. And he is doing what he has to do. And yes, to some extent the Reagan coalition — I don't think this is fractured, I just think it is upset. And by giving them a package like this where you have really strong tax cuts — and it is a strong package — I think it is very reassuring to the conservative base that McCain is someone that they can coalesce around.

JASON RILEY, EDITORIAL BOARD MEMBER: Just following up on something Kim said about how well he did among conservatives, he did decent among evangelicals and a lot of the media expected Mike Huckabee to clean up with them.

One exit poll outcome I think is worth note something Greenville, South Carolina, where Bob Jones University is. Basically, McCain and Huckabee did about evenly there.

Eight years ago, Bush beat McCain by 20 points there, which is to say McCain has some pull with evangelicals. That's important to note. Evangelicals don't vote monolithically. McCain has something to offer them. Some have problems with Mike Huckabee's big government agenda and his lack of foreign policy experience which McCain gives them.

GIGOT: Let me say one exit poll result said about 59 percent of voters who were Republican said they were — they considered themselves an evangelical Christian. Huckabee won those over McCain, 40 to 27. For the 47 percent who said they were not evangelical or born-again, McCain won 40- 12. That's all Huckabee got.

Kim, I want to read to you a quote and get you to respond, from Bob Wicker, who is a Huckabee campaign media consultant. Here's what he said, quoted in the "New York Times." "Our message is about his unwavering faith." That's Huckabee's. "Do we worry about turn off other phones? No, we want to energize that base," unquote. Was that a smart strategy for Huckabee?

STRASSEL: Well, I think it was something he had to do. You did see him down there. He was — he spent a lot of time in northern South Carolina, which is where a lot of religious vote were. He was there and pushing it hard. But you know the number you pointed out about how badly he did among people who do not consider themselves evangelicals, do not consider them born-again, that's the same — that mirrors a figure out of Michigan where he only got eight percent of people who said they were in that category.

GIGOT: Kim, that suggests to me Huckabee hasn't been able so far to break out of the — out of that particular cul-de-sac, that branch of that wing of the party. He is not providing a message that might draw in some of these economic conservatives or people for whom faith is important but not decisive.

STRASSEL: No, that's right. I think today's outcome was doubly bad for him. One, he did not consolidate the evangelical vote he was betting on, did not break out past that vote either and demonstrate he can appeal to wider parts of the Reagan coalition. That's not good for him going forward in these next states.

HENNINGER: Let's not go too far in ghettoizing the evangelical vote. This is not just a Jesus vote, though Huckabee ran on that in Iowa. I think Huckabee is the guy who made himself an insular candidate appealing to the religious side of the evangelical vote. These are normal people. They have other things on their minds.

GIGOT: If you look, for example, the Catholic vote, Catholic conservatives, important to the coalition and helped George W. Bush win. He did very poorly among those. And sometimes Catholic voters don't want to candidate who is maybe so overtly religious. They want somebody a person of faith but not somebody who runs as an overtly religious political leader.

RILEY: Right. Right.

STRASSEL: Can I just point out, too, you know, if you go and you look, this is something the Republican candidates everyone has been slow on, to go to Dan's point about how people aren't just looking at religious issues. You go — the number one issue among voters in South Carolina — and we saw this in Michigan, New Hampshire and Iowa and Republicans are slow to pick up on this until this past week — is the economy. People are worried about the economy. Now we are seeing them pivot, talk about it more. That will be key to who does well.

RILEY: I think that might be bad news for John McCain. The economy, according to exit polls, was more important to people than terrorism and the Iraq war combined. John McCain has run his campaign on the war. Ironically, he could be a victim of the war's success if people are less concerned about it.

HENNINGER: If you are right, Jason, it is bad news fore Rudy Giuliani because he was the guy running on those issues.

GIGOT: Giuliani came out with a big tax plan himself. And, of course, another new tax plan is Mitt Romney's. He had a win in Nevada. He wasn't contested by the other Republicans but he had a victory.

And, Kim, he is going to go storming I gather into Florida with the same economic message and take on McCain and say you voted against the Bush tax cuts so we will have a debate I think over taxes.

STRASSEL: It's about time. Yeah, I know. I mean, he stormed out of Michigan. This is what did it for him. He hit on the economy. Interestingly, he did that before he had a tax plan out. But he made that his theme.

Like I said, they have all been late. They are now getting to it but I think we will have a rip roaring debate on which plan is a best and we are getting specifics and it is overdue.

GIGOT: Dan, Fred Thompson didn't do as well as we thought. Is he going to get out and endorse John McCain?

HENNINGER: I think he will get out and it will help McCain a lot.

GIGOT: Thanks, Dan.

Still ahead, the Democrats face off in South Carolina off in next week where Hillary Clinton is trailing Barack Obama in the polls. Will today's Nevada win give her a bounce?

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

HILLARY CLINTON, (D), PRESIDENTIAL CANDIDATE: This is one step on a long journey throughout the country as we put our cases forward and take that case to the people. And this was an especially wonderful day for me.

(END VIDEO CLIP)

GIGOT: That was Hillary Clinton, winner of today's Democratic caucus in Nevada. A hard-fought race marred by last minute charges of dirty politics. Imagine that, Dan, dirty politics.

HENNINGER: With the Clintons?

(LAUGHTER)

GIGOT: We hear party establishments are dead. This is a new era in politics. Yet, if you look at the caucus today, Hillary beats around the fact the party itself, Democratic party, Harry Reid, the majority leader in the Senate, essentially head of the Democratic party in Nevada, really came out and made that work. Is that what happened?

HENNINGER: I think that's what happened. If you look to the extent we can — and the exit polls are fairly reliable. If you go down through the polls in Nevada, what you see is Barack Obama winning in two categories heavily among black voters and he won well among younger voters.

I would like to make an analogy, if I can, to McCain and Huckabee. That was a close race in South Carolina but if you go down through the exits poll categories, John McCain is ahead of Huckabee by three points almost in category after category exempt evangelicals, people who go to church a lot and younger voters.

The point is that both Hillary and McCain are winning all of the way down and across-the-board among most of the voters in their parties. And I would expect that's going to hold true right through to the end of this.

GIGOT: Looks like the base of the Democratic Party, Jason, is sticking with Hillary Clinton. I mean, I am talking about, for example, women voters.

RILEY: Yes. Some parts of the base. She cleaned up among Hispanic voters I think 65-35.

GIGOT: She won two to one.

RILEY: She cleaned up among union voters. Yes. She lost those Dan mentioned among black voters. That's a very important part of the Democratic base.

Obama is now moving on to South Carolina which has — where a large number of primary voters will be black. So she has got some of the stools there but not all of them.

GIGOT: Kim?

STRASSEL: I would also argue, this was the week when the Democratic race fundamentally shifted, meaning the Obama was brought down to earth. In that, you know, Hillary Clinton, so far, had made this very much about saying I am experienced, he is not ready to lead. That didn't seem to be getting her the traction she need it had to get. So she started hitting him issue, issue, looking at his record and policies. She hit him on abortion, taxes, something he said about Ronald Reagan, about gambling. And he was forced to answer these criticisms one after another and then it kind of brought him down from the 30,000 feet his campaign.

RILEY: Kim, also, those attacks are part of the reason black voters are abandoning her for Obama. She has to be careful about how she goes after him even when the criticisms are legitimate like on his voting record.

GIGOT: Kim, I want to ask you about the point Jason made about the fault lines you see emerging, I guess you could say ethnic fault lines in the Democratic Party, where Hillary Clinton is doing better among Hispanic voters and Obama is doing much, much better among African-Americans.

Is there a danger here for the Democrats if you will see these fissures growing wider?

STRASSEL: No. I think they did it to themselves by playing into these identity politics games a couple of weeks ago, starting a couple weeks ago with all of the discussion about Martin Luther King Jr. The black vote in Nevada is really interesting. There are as many black voters in Nevada as there are Hispanics, 15 percent in each category. Barack Obama took 83 percent of that vote which is huge. When he is moving on the next big race to South Carolina where that black vote is even bigger, that's a really interesting question.

GIGOT: Do you see the Clinton campaign either overtly or subtly playing up this tension within the Democratic party between the black policy holders, who by and large, at least in the congressional leaders who supported Hillary Clinton, but saying to Hispanics in California, say, or Hispanics in Florida, which will be two important states, look, you have to support us because I will going to do more for you than say Barack women can?

STRASSEL: They may be doing that subtly but they have to be careful. Hillary Clinton will have a lot of trouble if the black vote abandons her wholesale. They have always done well in that community. So this is something —she can't just overtly go out and suggest that she is the only person that will help in some minorities and not others. That's a dicey one.

RILEY: The other difference between blacks and Hispanics is the Democrat fear is not that blacks will abandon them for the Republican Party, it is that they won't come out and vote. The fear among with the Hispanic constituency is different. Hispanics traditionally have been a swing voting block. We don't know. Republicans haven't been treating them nicely of late so we don't know how that will work in November. But traditionally, Hispanics are more likely to cross the line and vote for or the party.

HENNINGER: It's ironic that before the Nevada vote, Bill Clinton accused the Obama campaign of voter suppression. I think what we are seeing here is, if the Clinton camp isn't careful, they themselves will be guilt of voters suppression and the voters will be black voters, if they think the Clinton camp has beaten up on Barack Obama.

GIGOT: Kim, let they ask you about John Edwards moving forward. He finished a distant third. Yet he vows to fight upon. He is gathering delegates as he goes. Is he going to be able to play the role of kingmaker as it goes ahead trading his support and maybe his delegates as well in return for something from either one of the candidates?

STRASSEL: I absolutely. He certainly will stay in through South Carolina. He was born there. He was a senator from a nearby state. He did very well there the last election. He will see how it turns out. Yes, he is positioning himself and you have seen it in this the debates. He goes with Obama, against Hillary for awhile. The last time you saw him team up against him. He is positioning himself as someone everyone has to reckon with somewhere down the line.

GIGOT: He hasn't burnt his bridges with Senator Clinton?

STRASSEL: I think he is burning them equally with both sides, so at this point.

GIGOT: All right, Kim, thanks.

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 as misses," it's our way of calling attention to the best and the worst of the week.

Item one, Barack Obama's shout-out to the teacher's unions — Dan?

HENNINGER: Yes, that's right. A big miss to Barack Obama who, in the debate, the Nevada debate, was asked to respond to the fact there is a disproportionately higher drop out rate among black males. It was an opportunity for him to do something beyond rhetoric. And he got down to concrete issues. He gave an answer phoned in from the teacher's union. The first thing he asked for was billions of dollars more in spending on early childhood education, more money for teachers and more money spent on after-school programs and summer school programs. It was simply a rote answer. The interesting thing is, as soon as he finished, Hillary Clinton jump in and mentioned the Eagle Academy, which is a public charter school in New York for black males. And you've got to give her credit for pivoting quickly and getting to his right on that.

GIGOT: More of a change agent on that issue than Barack Obama. OK.

Next, something you don't hear often these days, a hit, certainly not from you, Jason, to Congress.

RILEY: Yes, Congress' approval ratings are in the low 20s, I believe. But rather than pile on, I would like to give them a hit for their investigation of steroids in baseball.

Economists use the term "opportunity costs" to explain how time spent doing one thing means less time spent to do something else. So my theory is that if Congress spends its time investigating relatively trivial matters, like whether millionaire baseball players want to shoot themselves up with steroids, it means they will have that much less time to look into things like the economy and screwing it up with their bad ideas. So I hope Congress takes its time on this investigation and maybe moves on to other sports.

GIGOT: Some of us don't consider Roger Clemens a trivial matter, Jason. I just want you to know that.

(LAUGHTER)

He's going to the Hall of Fame, I hope.

Finally, she's calling herself the most vetted presidential candidate in the race, but is Hillary Clinton trying to hide something — Kim?

STRASSEL: You know, if you listen to Hillary, you have heard her a bajillion (ph) times say Democratic voters should vote for her because she has the most experience, but also because she is most vetted, meaning everything in her record is picked over unlike Barack Obama.

The problem is it isn't true and the reason it isn't true is because of Mr. and Mrs. Clinton. The Clinton Library opened years ago and yet Mr. Bill Clinton refuses to release thousands of documents that would bear on the first lady. Not just her question of experience, what she did in the health task force, Bosnia, welfare reform, but this question of the scandals as well, the travel office firings, the fund-raising scandals, the pardons. So this is a big miss to Mrs. Clinton. let's have a little transparency.

GIGOT: OK, Kim.

That's it for this special edition of the "Journal Editorial Report." Thanks to my panel and to all of you for watching. I'm Paul Gigot. I hope to see you here next week.

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