This is a rush transcript from "The Journal Editorial Report," June 7, 2008.

STUART VARNEY, GUEST HOST: Up next on the "Journal Editorial Report," Barack Obama's V.P. conundrum. Can he win with Hillary Clinton on the ticket? Can he win without her?

Plus, with Hillary out, is the Democratic Party's love affair with the Clintons finally over?

It got warm on Capitol Hill this week. A heated debate over a controversial climate change bill that would wind up costing you a bundle. Critics say it is DOA. But what happens when the White House gets a new tenant?

Find out after these news headlines.

(NEWS BREAK)

VARNEY: Hello everyone, and welcome to the "Journal Editorial Report." I'm Stuart Varney, in this week for Paul Gigot.

Well he finally got the nomination after a hard-fought primary season but Barack Obama has no time to rest on his laurels. Problem number one for the new nominee, what to do about Hillary Clinton. Can he win in November with her on the ticket? Can he win without her?

Joining the panel this week, Wall Street Journal columnist and deputy editor Dan Henninger, editorial board member Jason Riley, for the Democratic perspective, FOX News political analyst Kirsten Powers.

Kirsten, can he win without her on the ticket?

KIRSTEN POWERS, FOX NEWS POLITICAL ANALYST: Everybody believes it is a Democratic year. Probably yes, he could. But he has a problem and especially because she made it clear that I think she wants to be on the ticket eastbound, though she clarified that, no, she is shot pushing for it she is happy to do whatever. He wants and it's his decision. Her voters know she wants to be on the ticket and they want her on the ticket.

I think he has a problem because polls are showing that her voters — some of her voters have a problem with him and she could possibly help him with that.

VARNEY: There are so many Clinton voters who will not vote for Obama unless she is on the ticket. It is a numerical thing.

POWERS: Yes, so the polls say. Exit polls have shown that. I think there is a Pew poll that shows 30 percent of them essentially, about 34 percent have a high negative opinion of him.

And so you know the question is does he lose 5 percent of those voters? In which case, they had 19 million people vote for her depending upon whom you talk to, 17 million or 1 million people. That's a lot of people.

JASON RILEY, EDITORIAL BOARD MEMBER: I would be very suspect of those polls at this point. I think it is hard for Hillary Clinton to believe this but there are more people out there that are more interested in winning the White House than supporting Hillary Clinton.

It is true that you might have a situation here where Hillary Clinton could help Barack Obama win, but governing would be a disaster. I mean, you'd have to — it is hard to imagine Hillary playing second fiddle to anyone in the White House, let alone having Bill Clinton running around with nothing to do.

In terms of helping her on itself campaign trail, with those Reagan Democrats tat she had trouble with in battleground states like Pennsylvania and Ohio, she could be an asset there.

Governing, I don't think she would be very, very effective and also she undermines his message which is change. Hillary Clinton represents the past. And I think putting her on the ticket would diminish that message.

DAN HENNINGER, COLUMNIST & DEPUTY EDITOR: I think there is also an X factor that won't get discussed too much. There is another player in this campaign and that's us, the media, which is to say look at the way the campaign has been Reverend Wright, there's been Bill and all sorts of stories that come out of left field.

Hillary Clinton, the Clintons, are a heavy load. And they are going to create news, positive and negative. If he has her over in the corner creating negative news and distracting from his message and his personality, it is going to be a problem for him. That's not a problem a vice president normally creates for a presidential candidate. and you know that's going to happen with her.

VARNEY: Are you going to answer the other side of the coin question, which is, could he not — he would not win with her? Is that what you are saying?

HENNINGER: I think he has to win it without her. This is a very charismatic candidate, a very powerful personality. In this day, we are running on personality candidates. and I think he has to somehow figure out a way to get focus on Barack Obama.

RILEY: I think her campaign to be on the ticket is quite tacky. Tuesday night was an occasion for her to acknowledge her defeat. And she didn't do that. Instead she issued this veiled threat that if she wasn't put on the ticket, she might — might, maybe, I don't know, be very enthusiastic. Her and her supporters wouldn't be enthusiastic about supporting Obama in November. I think that was very tacky.

VARNEY: All right, Kirsten, let's go full circle Christian continue. Can he win with her?

POWERS: Yes, he absolutely could win with her. And I think the things that have been just said are things Hillary voters don't care about. It is not — I think the average voter doesn't care about these types of things. I don't think they care if she gave a tacky speech. I don't think they are concerned about the things we are talking about.

What you said is an important point though, which is Barack Obama cannot — he has a very disciplined campaign. Really very good campaign. He cannot spend his time worrying about what Bill Clinton will say or what Hillary Clinton will do and have this side story and that could be a problem. I don't buy the idea that it doesn't fit into his narrative. Everybody says that. It doesn't fit into his narrative but I don't think it will make someone into the vote for him.

VARNEY: I am reading between the lines and it sounds like all three of you are saying that it is unlikely she will be on the ticket. Barack Obama probably doesn't want her.

POWERS: He definitely doesn't want her. There is no doubt about that. I also think another media, sort of mean that he will look like a wuss if he chooses her. I think that's also irrelevant. The average voters isn't thinking, oh, he is pushed into choosing her.

But he doesn't warrant her. He said it is my party. It is his party now. He doesn't want Bill Clinton around who still thinks it is his party. I can't imagine what who make him choose her.

VARNEY: Well said. We'll have more on that in just one moment.

When we come back, in fact, the Clintons and the Democratic Party, is the love affair over? And what role did bill play in Hillary's loss?

(COMMERCIAL BREAK)

VARNEY: Is it over? Did Hillary's loss put an end once and for all to the Democratic Party's love-hate relationship with the Clintons? And what role did bill play in Hillary's defeat?

Let's ask the first question first to Dan.

There seems to be some considerable hostility between the Clintons and the Democratic Party now and you are raising your eyebrows.

HENNINGER: Don't tell anybody this, Stuart, but I actually know a lot of Democrats.

VARNEY: Good lord.

HENNINGER: Since I live in New York and spend time in San Francisco you can't get away from them. I have to say the animosity one encounters toward the Clintons is incredible and it is intense. It is a remarkable phenomenon. You have to try to figure out what is going on here. And because they were so defensive of Bill during his problems, and after his presidency, and I think partly it was based on the idea that I am not going to be against Bill Clinton and blow up my party at the same time.

But now that they have a new leader they feel they can separate them she is from the Clintons and move forward. I think what allowed them to move away is when Barack Obama proved he could raise millions and millions of dollars. It was about the money, stupid. The Clintons were the biggest transfers in the Democratic Party. But Barack out raised her. And it was at that point they said we don't really need the Clintons anymore we can go forward with the new guy.

VARNEY: Is it not sexism, Kirsten?

POWERS: I think there was definitely sexism in the race but it is not in terms of the media coverage but that's not why she loss, not even remotely.

VARNEY: But the rejection of Hillary?

POWERS: No, I don't think so. Just to be clear, we have to distinguish between sort of the party elites and the average voters. I think there is a difference. Certainly among party elites, there is incredible hostility toward the Clintons. I was amazed. I get a lot of e- mails from being on TV and I have seen a lot of right wing e-mails. I started to get them from Democrats. The anti-Clinton e-mails that started happening right after the campaign started. I thought this is crazy. These conspiracy e-mails about Bill Clinton. And I think people just got tired of getting pushed around by the Clintons.

VARNEY: Is a personality thing or policy thing because Obama, I would suggest, is to the left and has pulled the party along?

POWERS: He is to the left. I do think a lot of Democrats, certainly among the elites, feel he is their chance. He is their Reagan. He is their chance to have someone come in and really transform the government and have a liberal movement. Bill Clinton was never that person as you know. He was a triangulator. He was a DLC person and they kind of felt like they had to go with him because he could win, but there was a lot of resentment towards a lot of things that he did.

RILEY: It is personal. It is personal. Hillary Clinton is a very divisive figure. There are lots of Democrats who love her and lots of Republicans who despise her and would never vote for her in a million years.

To Dan's point, your viability as a candidate has long been linked to your ability to raise money. Barack Obama, look where things ended up here. Hillary Clinton was loaning her campaign millions of dollars while she was being out-raised by Barack Obama.

When the Democrats saw that there was not an inevitability to Hillary Clinton, that there was another way to go, that there was another viable candidate out there, they tossed her overboard frankly.

VARNEY: What happened to Bill Clinton, the skilled smooth politician? What happened here?

POWERS: He is an ex-president now. I think he is entirely different person than when he was running before. He was a young, hungry politician before and now he is an entitled ex-president.

VARNEY: Is he part of the reason for Hillary's loss?

POWERS: Absolutely.

HENNINGER: Yes, I think so.

VARNEY: You think so?

POWERS: Yes.

HENNINGER: To make another media point, the media elevates everybody into politics today and puts them in front of the camera and makes them larger than life. The Clintons give off positive vibes and negative vibes. We know that. And that just gets amplified. The negative side of it really gets pounded out into the media and into people watching it. and I think a lot of Democrats have reunited to that. They've just over overwhelmed them. The Clintons created the personas they have. and they have to live with the down side. This has been the down side.

VARNEY: If Hillary doesn't get the vice presidential nod, what will happen to the Clintons in the future? Does she go quietly back to the senate? What?

POWERS: Well — I think — well that's...

VARNEY: Kirsten, you're the Democratic strategist. What does she do?

POWERS: That's the big question, I think. And she doesn't have a lot of options at this point. People throw, oh, she can be the leader of the Democratic Party. No she can't. Harry Reid is not going anywhere. And ever if he did, there are other people in front of her. She has to go back to the senate and just started building her career from there. She doesn't have a lot of options.

HENNINGER: The November outcome will determine. We have to wait for that. If for some reason Obama loses, guess what, she is back. If he wins they have to reconsider.

VARNEY: Hillary for the Supreme Court, Jason?

RILEY: Wouldn't be my first pick. But there is talk that is one way Barack Obama could apiece her.

VARNEY: I am glad we brought it out in the last ten seconds. Jason, thank you very much.

Still ahead, a hot debate in the senate over a controversial global warming bill. Critics say it is DOA. But will it rear its head again after the November elections? Find out after this break.

(COMMERCIAL BREAK)

VARNEY: Pardon the pun, but it got warm on Capitol Hill this week. A heated debate over the so-called climate security bill, which would put mandatory caps on carbon monoxide and other greenhouse gas emissions. Critics say it would cost Americans a bundle. The lame duck legislation has virtually no chance of passing this year but all bets are off after the November elections.

Here to tell us why, "Wall Street Journal" editorial page writer Joe Rago, and senior economics writer Steve Moore. Along with Dan, who is still with us.

Joe, bring us up to date. It is virtually dead this year but does it come back next year with a vengeance?

JOE RAGO, EDITORIAL PAGE WRITER: Yes, there is no question it is coming back. Nobody expected it to pass this year but it was supposed to be the last big push during this administration for global warming. Instead it went out - what was supposed to be a bang, went out with a whimper.

VARNEY: Next year, it doesn't matter who is in the White House, both candidates, Obama and McCain, said they are a favor of cap and trade and it's hardly likely that we would get a significant majority of Democrats in the Senate and House. It comes back big time is likely to succeed next year, isn't it?

RAGO: I think the debate this week puts that somewhat in question. This was the first time the Democrats really had to defend an actual piece of legislation. And what the Republicans did this week is merely point out what this bill would do, which is raise your energy prices and be a huge revenue windfall for the federal government. And the Democrats folded like a house of cards.

VARNEY: Steve, is a cap and trade tax on business better than an increase in federal income tax rates or capitol gains tax rates because it is a — capital gains is a tax.

MOORE: I want to accentuate the point Joe made. I think this was a lousy week for the environmental movement and global warming crowd. This was a real set back. This was supposed to be their week of triumph and all of a sudden Democrats and Republican started to flee from this concept. Can you think, Stuart, of a worse time to bring up a bill to raise energy and electricity and gas prices than right now?

And so I think that this whole concept of cap and trade is in real trouble. Joe is right that there will be a big push for this next year. But it has the feel, to me, of Hillary health care or maybe it's hit the peak in terms of populace because when people look at details of the bill they don't like it much.

VARNEY: Steve, you're the economics guy. Explain how it would raise energy prices.

MOORE: Basically, what it does is regulate the amount of carbon that industries can emit into the atmosphere. The way they are allowed to do that is buy credits from the federal government. Ad this would raise, by my estimates, between $1 and $1.5 trillion over the next ten years. Critics said this would be a major tax increase on industry.

And another issue, Stuart, that hurt the supporters of this is that the people who were against it said, look, this is going to send our industries and factories overseas to countries like China and India who do not have any kind of caption on carbon emissions.

VARNEY: Dan?

VARNEY: I think, as Joe suggested earlier, we can't overstate the extent to which this was a political catastrophe for the Democrats. They got their heads handed to them. We get the false impression that everybody supports environmentalism because polls seem to suggest that. This debate showed the costs. It also showed is how hard it is for liberals to get ideas like this through the political process. Generally, they use administrative agencies like the Environmental Protection Agency or the courts. This was a huge failure when it had to go through a legislature. John McCain should capitalize on this.

VARNEY: So has it peaked? Has the environmental movement peeked in terms of cap and trade and CO2 emissions?

HENNINGER: I think it suggests it has hit a wall of reality. I don't know in it's peaked. But they've got to regroup and figure it out.

MOORE: Stuart, there was an amazing poll that came out just this week that makes the point that Dan was just making. It showed that Americans, yes, they said they wanted to do something about global warming but when they asked them are you willing to pay a higher price, even a penny more a gallon of gasoline or higher electricity prices, by two-thirds Americans said no. When you look at the specifics and what it will mean for their energy bills, they say, no, they don't want this.

VARNEY: Joe?

RAGO: I think there is a danger of Republicans becoming too complacent here. There was $6.7 trillion-dollar over the next four decades that government was going to take unto its own auspices. And the danger is that cap and trade will become sort of a non-ideological carbon farm bill where all they do is buy off political opponents, business and everyone and just get them on board.

VARNEY: We have to take one more break. But when we come back, our "Hits and Misses" of the week for you.

(COMMERCIAL BREAK)

VARNEY: 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 to French President Nicolas Sarkozy and his brains - Dan?

HENNINGER: Yes, a big hit. I would say a sextuple hit to French Prime Minister Sarkozy. His super model wife, Carla Bruni, revealed in a book this week that she says the prime minister has five or six brains. What she means by this is he can sit in a room with people talking and read and understand what they are saying at the same time.

Now in my experience, most women get really upset when they are talking and you keep reading, but apparently in France it is sexy. I want to give a big hit credit and credit where credit is due to Nicolas Sarkozy for having five brains, being able to pull this off and have an understanding wife.

VARNEY: You are on dangerous ground with that one, Dan. Good luck with it.

We have a miss. What is this, Jason? A miss to former film star Brigitte Bardot.

RILEY: Yes, a miss to Miss Bardot. A court in Paris fined the former actress for insulting Muslims. Ms. Bardot is now an animal rights activist and she criticized a Muslim feast that involves slaughtering sheep.

Let's get this straight. What bothers Ms. Bardot about Islam is not its radical elements, which involves subjugating women and flying planes into building full of people. What bothers her with the religion is its cruelty to animals. This is why we want entertainers to stick to entertaining. Stuart, even when they do the right thing, they do it for the wrong reasons.

VARNEY: That was the most nuanced miss I've heard in a long time. All right, Jason, it was a good one though.

Finally, could it be something has finally gone right for Michigan — Steve?

MOORE: Yes, Stuart. We have been kicking Michigan on the editorial pages for its dysfunctional economic policies, high taxes, kowtowing to unions. It's had the worst performance of any state in the country in terms of its economy.

It is good news that this week the Detroit Red Wings won the NHL Stanley Cup playoffs. People are talking about the Detroit Red Wings as being a dynasty like the New York Yankees. They won four of the last Stanley Cups.

What I am saying is that it is so nice that Michigan is finally number one in something other than job losses and mortgage foreclosures.

VARNEY: When we said something gone right in Michigan, I thought you would talk about Toyota was thinking of putting a plant in Michigan. I thought you were going to say that.

MOORE: That would be the first for a company to actually move into Michigan because most have been moving out.

VARNEY: It would be another hit. A hit would be a hit, would it not?

MOORE: It sure would.

VARNEY: Thanks, Steve.

Thanks everyone.

That's it for this week's edition of the "Journal Editorial Report." Please send us your e-mails and make sure to visit us on the web.

Thanks to my panel and to you all for watching.

I'm Stuart Varney. Paul is back next week and we do hope to see you then.

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