This is a rush transcript from "The Journal Editorial Report," May 31, 2008.

PAUL GIGOT, HOST: Coming up next on the "Journal Editorial Report," he is under attack from John McCain for his lack of experience. But will a summer trip to Iraq help bolster Barack Obama's foreign policy credentials.

And a look at Scott McClellan's controversial new memoir. What is says about its author and what it says about the Bush White House.

And the great space debate. Who should pay for projects like the Mars Lander? We will hash it out after these headlines.

(NEWS BREAK)

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

Democratic presidential hopeful Barack Obama said this week that he is considering a trip to Iraq before the November election but dismissed as a political stunt an invitation by Republican rival John McCain to make the visit together. McCain has been hammering Obama for making just one trip there in 2006 and has been playing up in recent weeks his opponents lack of foreign policy experience, as well as Obama's statement last year that he would meet without preconditions with leaders of countries like Iran and North Korea.

James Rubin was assistant secretary of state during the Clinton administration. He's now an adjunct professor at Columbia University's School of International Affairs.

James Rubin, welcome.

JAMES RUBIN, FORMER CLINTON ASSISTANT SECRETARY OF STATE: Nice to see you, Paul.

GIGOT: Good to have you here.

Let me start by reading you a quote from Joe Lieberman in the "Wall Street Journal," an independent Democratic Senator, who has endorsed McCain. And he recently wrote, "Too many Democrats have seemed to have become confused about the difference between America's friends and America's enemies." Who does Barack Obama think are our enemies?

RUBIN: He is quite clear that iron and North Korea and others are a danger to the United States. And Senator Lieberman is trying to confuse the issue by a rather selective approach to foreign policy in that piece. Let me address directly the point.

GIGOT: You said a danger but you didn't say enemies. Are they enemies?

RUBIN: I don't know. Enemies — we are not in a state of war with Iran. Traditionally, the word enemy is for a state of war.

GIGOT: But they are in a state...

RUBIN: We are in a state war with the Shiite militias and al-Qaeda we are in a state of war. Iran has policies that we object to and we reject.

GIGOT: But there...

RUBIN: And we should confront.

GIGOT: But they are contributing to the deaths of Americans, if you listen to the American military in Iraq, by supporting some of the rogue militias. Shouldn't that make them enemies?

RUBIN: That makes them a country dangerous to the United States and we need to confront that danger directly. But the difference between Obama and McCain is McCain wants to continue a policy that's failed. We haven't made any progress with Iran and we are no better off.

Iran was the big victor in George Bush's war in Iraq. Iran is stronger because of the fall of Saddam Hussein and stronger. Iran is stronger in the region because its ally, Hezbollah, has moved up its power in Lebanon. Iran is stronger because it has continued to enrich uranium towards a nuclear bomb. That is the result of George Bush's failed policies that John McCain wants to continue.

GIGOT: How does it help us in Iran and in confronting Iran to pull out of Iraq, which Senator Obama says he wants to do, which would be seen I think by many in Tehran as a sign of American weakness. How does it help us to do that?

RUBIN: Well, first of all, we need to do a lot better job of understanding what goes on in Tehran. I don't think we do a good job at all.

GIGOT: U.S. intelligence, as you know from your government days, U.S. intelligence about the Iranians is terrible.

RUBIN: Awful. We can't seem to distinguish between reformers, between moderate conservatives, extreme conservatives. We do a terrible job in that area. And we have to do a better job.

Iraq has been a net loss for the United States. Before we invaded Iraq, the Iranian government was understandably scared that the United States would conduct a military operation. We had overthrown the Taliban and defeated Milosevic in Kosovo. American deterrent power was at its height.

As a result of five, going on six years of war in Iraq, America's deterrent power has been weakened. We've lost thousands of soldiers. We've spent trillions of dollars. And we are still engaged in pitched battles across the country but that doesn't help us.

GIGOT: That sounds like the Iraq you're describing in 2006. We've since had the surge and the violence is declining in Basra, even in Basra where the Shiites dominate. And the shatter government has been able to control the rogue Shiite militias. And it's also declined in Baghdad and Mosul. Don't you credit the surge with any kind of success?

RUBIN: Personally, I think the surge has been remarkably successful as a result of two factors. One, the effect of our troops on the ground conducting operations in a much more thoughtful and effective way. And number two, in doing what we probably should have done many, many years ago is cut a deal with the Sunnis. Had we cut a deal with the Sunni militias and Sunni extremists after the fall of Saddam Hussein, the kind of deal that we are engaged in now, we probably wouldn't have had to be a civil war. So the situation is better, Paul.

GIGOT: So why give up risking those gains by saying you will put out precipitously starting on January 20th.

RUBIN: First of all, it's precipitously. That's your words.

GIGOT: Well, six months is pretty is pretty fast.

RUBIN: That's your words. First of all, we have to have an election in this country and the American people have to make a judgment. And I think what people need to focus on is that this election is, in a sense, a referendum on Iraq. If the American people vote for the Democrat, they will be voting with their eyes wide open for a president who is going to begin the withdrawal from Iraq. If they vote for John McCain, again with their eyes wide open, the public is going be supporting an extended involvement in Iraq.

If the voters vote for Barack Obama that is what we are going to do. We're going to do it responsibly with the right support and right assistance from everyone. And we can begin a responsible withdrawal.

GIGOT: Let me ask you about Iran where — negotiating with Ahmadinejad without preconditions has come up. Last summer, when Barack Obama was asked about this, he said — would he negotiate without precondition and he said I would. Hillary Clinton called that reckless and, frankly, naive. Was she wrong?

RUBIN: I support Hillary.

GIGOT: Was she wrong? Was she wrong?

RUBIN: And I think she pointed out something that was true — is that you want to do any negotiation with a leader of a recalcitrant state like Iran very carefully. And frankly, Ahmadinejad is not the right person. It should be the supreme leader. Ayatollah Ali Khamenei, who has the real power over foreign affairs in that country. And if you are going to have a meeting with the leader of that country, it should be with him and not with Ahmadinejad, who I think we both agree will try to make propaganda hay out of such a meeting.

But if we do have such a meeting, Barack Obama has said he would prepare it and would not just do it willy-nilly.

GIGOT: But it sounds like he's backing away from that original statement.

RUBIN: That will be for others to say. For me to say that I think it is wise and start to — if you are going to meet with a leader, meet with Khamenei, not with Ahmadinejad.

GIGOT: All right, thanks Jimmy Rubin. Good to have you here.

RUBIN: Nice to see you.

GIGOT: It's already number one on Amazon's best-seller list. But what does Scott McClellan's so-called tell-all really tells us about the Bush White House? Our panel weighs in when we come back.

(COMMERCIAL BREAK)

GIGOT: One time White House press secretary, Scott McClellan, stunned his former colleagues with the release of his tell-all memoir. Among the charges in the book, that President Bush relied on a political propaganda campaign rather than hard intelligence to support a war in Iraq.

Joining the panel this week, "Wall Street Journal" columnist Mary Anastasia O'Grady and Bret Stephens, and editorial features editor Rob Pollock.

Rob, another former White House official trashing the White House and his former Bush and colleagues. Did you learn anything new in the book?

ROB POLLOCK, EDITORIAL FEATURES EDITOR: Yes, I learned that the president's chief spokesman for three years didn't understand the war he was supposed to be selling. Look, I don't think it is that hard to make a good case for the security rationale for the Iraq war and weapons of mass destruction.

GIGOT: You are saying he was not able to make it because he didn't understand it?

POLLOCK: That's correct.

GIGOT: Anything else, revelations here? Any new details about the so-called false pretense selling of the war?

MARY ANASTASIA O'GRADY, COLUMNIST: For me, what jumped out at me was the fact that Scott McClellan was never very good at his job and, as Rob says, it's because he didn't understand it. But what is ironic also is that the Bush administration seems to have gone with him even though he wasn't really at the top of the game.

GIGOT: At not for three months, for three years.

O'GRADY: Yes, and they did it mostly because of the loyalty play, you know, that he was one of the family from Texas and this was a critical mistake. They needed somebody in that job who could talk about the war. And Tony Snow showed you incompetent was Scott McClellan really is.

BRET STEPHENS, COLUMNIST: Yes, that's right.

GIGOT: Tony Snow being the successor as White House spokesman to Scott McClellan.

O'GRADY: Exactly, yes.

GIGOT: The part about loyalty, Bret, excessive loyalty on the part of the president to say Texas people who have gone back to him or people who have just served him is, that a fair criticism?

STEPHENS: I think it is an important criticism and I think it is going to be one of the more depressing legacies of the administration. This administration has had some real intellectual stars, from Josh Bolten and Karl Rove and Don Rumsfeld, but had extraordinary mediocrities as well. And the president seems to have been unable to distinguish his brighter stars from people to whom he felt he owed some loyalties.

The remarkable thing here is that it's precisely the people to whom he felt loyalty to seem to have felt no loyalty toward him.

GIGOT: Rob, why is this book getting so much attention right now? We are in the middle of the presidential campaign. The Democratic primaries are over. But it's still — is this time to come out now?

POLLOCK: Look, the war is the define — remains the defining issue of the Bush presidency. Could you argue it was time to come out now to help Obama? That is possible and certainly there are supporters of Obama who worked with Mr. McClellan on the book. I don't think that is the overriding...

GIGOT: But wait a minute. With the surge working, as it has, and security improving in Baghdad and Basra and most of Iraq, don't the Democrats want to change the subject? Let's not talk about the surge and immediate withdrawal. Let's talk about going back to that original decision to go to war and say it's misguided and the cost has been too much. And not only that, Bush lied about it. Isn't that what this is really all about politically?

POLLOCK: That is what it is about. It is not just Mr. McClellan who didn't understand the war he was trying to selling. Unfortunately, we're seeing as well that the president didn't understand it as well as he should have.

When Tim Russert put the distinction between war of necessity and war of choice that Mr. McClellan talks about in the book, the president has an unconvincing answer, not only there on the spot, but thereafter. I think that is an important issue. I think it's a fairly specious distinction.

If you look at most of the wars the United States have been in, including our own Revolutionary War, you can't argue most were wars of necessity. But it as question that needed to be answers.

GIGOT: And there are opponents of the war that are said the presidents lied us into it whether it be Lincoln or FDR. But then there are still historians who say Pearl Harbor was somehow...

STEPHENS: Sure because that plays on the inability or unwillingness of people to see the difference between a mistake, which was the mistake in views about the nature of Saddam's WMD, and the lie, which is that the president actually knew that Saddam did not have WMD. And this is a phrase that comes up over and over again.

GIGOT: Is there any new evidence in this book about the cover up of intelligence or selling the war falsely? Any new evidence at all?

STEPHENS: None. And in fact, there are con tint contentions made but they are flatly contradicted by three separate reports, two from the Senate and one from the British.

GIGOT: All right, Bret, thank you.

When we come back, should the U.S. government be paying for projects like the Mars Lander or is space exploration better left to the private entrepreneur? There's a debate ahead.

(COMMERCIAL BREAK)

GIGOT: NASA's Phoenix Lander touched down this week on Mars, giving scientists their first ever peek at the red planet's northern arctic region. The space craft is on a 90-day mission to search for signs of primitive life. The lander has flown 422 million miles since leaving earth last August, all at a cost of $420 million.

Bret, so the American taxpayer, what do we get out of this other than admittedly cool photographs and some national prestige? Anything else, benefits from this?

STEPHENS: First of all, basic science is important and there are certain elements of basic science that are frankly not going to be done by the private sector because their potential application is ever 10 or 15 years into the future or maybe 100 or 200 years in the future. But that isn't to say it isn't important.

The second this is, you have American leadership in the science and the technology, which is going to be the sort of next story of man kind and in the next century or two. And I think that is particularly significant.

We look back at the Spaniards and we think that Ferdinand and Isabella bankrolled Columbus to go to the Americas. I think similarly as a historical matter, this is equally as important.

O'GRADY: But if you're thinking about the Mars Lander in terms of what Fernando and Isabella did, you are behind the times. Basically, what we have now is an economy that is much flatter and an economic structure that is much flatter where entrepreneurs can...

GIGOT: Have the money to do that.

O'GRADY: They have the money and they tend to be more innovative and more creative and at better prices. I mean, big government central planning projects are not the most efficient use of taxpayer money.

POLLOCK: And they're not very inspired, either.

Look, Bret, when I looked at the pictures I had the feeling I have seen them before. And you know what? I have, from the mid 1970s when the Viking Lander went to Mars.

STEPHENS: By your arguments, we shouldn't have sent that in the Viking Lander in first place.

POLLOCK: No, no. What I'm saying is we are not very creative in what we are doing in space. And I think Mary has a very good point that we ought to be looking to private entrepreneurial or charitable activities. The X prizes in the last few years are very interesting developments.

STEPHENS: I'm sorry but that is absolute nonsense. It's one thing for Richard Branson, he wants to send a bunch of hedge fund millionaires to float around in space for 15 minutes for $15 million apiece.

GIGOT: He's the entrepreneur, Virgin Airlines Entrepreneur.

STEPHENS: There is a clearly a commercial rationale for that and I'm all for it and I'M all for sending people...

POLLOCK: But, Bret, that is not it. There's not only one X Prize. There is now a lunar sponsored by Google. They are trying to get a private lunar lander to the moon by 2012. There's a $20 million prize for that. There are a lot of teams that are taking this seriously.

O'GRADY: What we already know is that the market allocates capital to its highest use and if you allow the market to make those decisions in space, I think you will get a better bang for your buck, much more innovation. And you also, when you have the government sucking all the oxygen out of room with its monopoly force, you don't know what kind of entrepreneurial developments you would get.

GIGOT: That's a good point, Mary, but what about the issue that private investments, by their very, nature, tend to be for commercial interests and they want a payoff. They are for consumers. And going to Mars or going to Jupiter doesn't have a commercial payoff for 50 or 100 years if ever.

O'GRADY: I don't think that you can say that. That is sort of what a central planner would argue.

GIGOT: Oh, that hurts.

(LAUGHTER)

O'GRADY: You have all kinds of research going on in all kinds of areas and not just space that doesn't seem to have immediate application and yet entrepreneurs do it.

STEPHENS: But that argument, Mary, that argument breaks down. I mean, I would say the libertarian argument breaks down on both ends the spectrum. On the one hand, the things that are very, quote, "useless," which is very basic sciences. You are not going to get private money going in that direction. And the other legitimate function of government are things that are absolutely essential, like the national defense. I would argument that on both far ends of the spectrum, that is where government has legitimate purpose and it is in the middle.

O'GRADY: Spending on military defense gave us the multimillion dollar toilet seats and hammers.

GIGOT: And it also helped us win the Cold War.

O'GRADY: Yes, but at what...

GIGOT: The private sector didn't build the British Navy in the 19th century to control the seas. Doesn't someone have to control space?

O'GRADY: No. I think we should have private property rights in space.

GIGOT: We need to be able to police the — we need to make sure it is safe if we're going to have these commercial operations, right? And that is the new high ground.

O'GRADY: But that is a different question than whether private sector can do the research.

GIGOT: OK, all right, Mary, 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 and Misses," it's our way of calling attention to the best and the worst of the week.

Item one, tough talk from two Fed officials helped boost the dollar — Mary?

O'GRADY: Yes. This is a hit for Minneapolis Fed President Gary Stern and Richard Fisher. At the Dow said on Wednesday, they both made public comments suggesting that the Fed needs to raise rates in order to combat inflation. Richard Fisher's comments produced a rally in the dollar against the euro that we haven't — that we needed for a long time and it is good to see that somebody is awake over at the Fed.

GIGOT: All right, Mary, thank you.

Next, Exxon Mobil's CEO takes on that company's green share holders — Bret?

STEPHENS: Yes, courage is not a word that you typically associate with a modern day CEO always looking over his shoulder at his legal liabilities. But Rex Tillerson took on the Greens, including the heirs to the Rockefeller fortune which, of course, comes from oil.

GIGOT: Carbon

STEPHENS: Amazing.

And he said very emphatically that this company was still going be devoted primarily to oil and natural gas, not to renewables. And he also talks about global warming and said — and I think this is important, "My view is that this is so extraordinarily important to people the world over that to not have a debate on it is irresponsible; to suggest we know everything we need to know about the issues it irresponsible."

I think that is responsible talk from a modern CEO, who is not going to be cowed by political correctness, Al Gore and the belief that to go along is to get along long. Congratulations to him.

GIGOT: All right, Bret.

Finally, could it be there is sanity left in the legal system — Rob?

POLLOCK: Yes, Merck got a dose of good news when appellate courts in two states, Texas and New Jersey, overturned two big verdicts against the company.

GIGOT: The drug company.

POLLOCK: The drug company, yes. Claiming that the pain killer Vioxx harmed people.

This is how it should be. We already have a Food and Drug Administration that regulates the drug approval process. If the pharmaceutical companies are then going to be second guessed by scientifically illiterate courts, that is going cause drug development to go to a halt.

GIGOT: Was Merck wrong to settle the suits because they did come to an agreement?

POLLOCK: Yes, that's right. I think they were, yes.

GIGOT: And if they hadn't settled, they might be off the hook for a lot of this money.

POLLOCK: That's correct.

GIGOT: All right, thanks, Rob.

That is it for week's edition of the "Journal Editorial Report." Send your emails to jer@foxnews.com and visit us on the web at www.foxnews.com/journal .

Thanks to my panel and to all of you for watching.

I'm Paul Gigot. We hope to see you right here next week.

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