This is a rush transcript from "The Journal Editorial Report," August 9, 2008.

PAUL GIGOT, HOST: Up next on the "Journal Editorial Report," Barack Obama's energy agenda from renewables to rebates. We'll break it down and compare it to John McCain's.

Plus, is the Democratic stonewall on oil drilling finally giving Republicans an issue they can win on in November? A look at the races that could turn on the energy issue.

Case closed. We'll examine the evidence that led the FBI to declare Bruce Ivins the sole anthrax killer. Did they really get their man?

The "Journal Editorial Report" begins right now.

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

Democratic presidential candidate Barack Obama laid out his energy plan Monday kicking off a week-long focus on an issue that could well dominate the November elections.

Here with a closer look at what he is proposing, Wall Street Journal columnist and deputy editor Dan Henninger, columnist Mary Anastasia O'Grady, editorial page writer Joe Rago and Washington columnist Kim Strassel.

Let's take a look at some of what Barack Obama is proposing — a cap and trade program to reduce carbon emissions, a windfall profits tax on oil companies to pay for a $1,000 energy rebate for families, $150 billion over ten years in subsidies for alternative energy, a million hybrid cars on the road by 2015, a mandate that all new cars have flex-fuel capability, and more drilling only if packaged with alternative fuel subsidies.

Dan, that's a really long list, everything under the sun, so-to-speak. Let's assume it all passed or much of it passed. What would it do — would it reduce energy prices?

DAN HENNINGER, DEPUTY EDITOR & COLUMNIST: I really don't think so. I am glad we are having this conversation because gasoline is down to $4 a gallon. But people are upset about that. They want the price to come down. It is not going to happen overnight. You can't throw a switch and make it happens.

And if Barack Obama did all this that's the debate we should have. In my opinion his plan is loaded up heavily on renewables. I think the price of New Year actually might go up. Renewables are expensive.

GIGOT: Joe, they also are not in plentiful supply, wind and solar. What percentage of American energy do they now provide?

JOE RAGO, EDITORIAL PAGE WRITER: Alternative energy provides an about 7 percent of our current total energy supply, about 9 percent of electricity right now. The real problem with renewables is, you know, nobody really worships carbon here or there is no political conspiracy but right now they are inferior to fossil fuels and nuclear.

GIGOT: You mean they're less efficient and cost more to develop and the technology is not there to provide them with the kind of energy on a mass basis that you can do, for example, with nuclear power or coal or in terms of transportation oil? Is that what you are saying what you say inferior?

RAGO: Exactly. Inferior in the sense that they have less energy density. They have to be farther away from population centers. And we really have a lot of durable investment in fossil fuels right now. So switching over to something completely new, as Barack Obama says he wants to do — he says it will take nothing less than a complete transformation of the American economy. And, you know, that's pretty ambitious and pretty unrealistic.

GIGOT: But, Mary, $150 billion in subsidies for alternative fuels. Is that significant enough to prime the pump to get these technologies up to where they can compete with oil?

MARY ANASTASIA O'GRADY, COLUMNIST: No one knows the answer to that. Of course, if the market is not putting its money there, it suggests it is not very promising.

The other problem here is that $150 billion is supposed to be paid for with a windfall profits tax on existing companies that extract fossil fuels, which we will be dependent upon for a very long time. You slap that tax on those companies, you are going to get less investment and less production. And as Dan says, I think that will, you know, make price go up, not down.

GIGOT: Kim, there is an idea that some people think is attractive that Obama has, people who love electric cars or the idea of electric cars. He says a million new electric cars by 2015. Is that possible? I know you are a big fan of the internal combustion engine. You may want to do...


GIGOT: But what about this electric car idea?

STRASSEL: Look, one thing that has to happen is you have to actually have an automotive industry that is able to make the car and sell them at a price Americans can afford. Now Barack Obama is also proposing to give us a tax credit for people who buy things like this. But it isn't clear that — especially if gas prices come down, all American will be willing to make the trade office that come with smaller cars, in particular safety, et cetera.

One of the more interesting things there is you still have to use a lot of energy to make a plug-in car work. You have to get the electricity from somewhere. That is often coming from coal or natural gas plants. A lot of these plug-in cars are not the carbon-free things everyone suggests they are.

GIGOT: Let's compare what Obama is proposing with what McCain is proposing.

Where are the significant differences, Joe? Where are the big differences? One is nuclear power.

RAGO: Right. McCain wants 45 new nuclear power plants built by 2030. We haven't built a new nuclear power plant since the 1970's, although some are on the books.

GIGOT: Obama is for nuclear sort of, maybe with a lot of caveats.

RAGO: A lot of caveats. A lot about safety. The safety of nuclear is improving and actually has a better track record than people think it has. But McCain is very much more gung-ho in favor of nuclear.

GIGOT: The other big difference is drilling right, Dan?

HENNINGER: Yes, McCain really does want to drill. Obama does have drilling in his proposal, but in a halfhearted way. So it is — drilling is going for the resources that we know exist right now. Obama's proposal is much more heavily loaded up on promises and ideas that will require a tremendous investment.

GIGOT: Mary, any other differences?

O'GRADY: No, McCain is really keen on the whole idea of flex-fuel cars and new technologies. But he's not...

GIGOT: Flex-fuel cars can use more ethanol in their fuel?

O'GRADY: Yes. He has actually suggested that we get rid of the tariff on Brazilian sugar ethanol so the market can...

GIGOT: We can actually do that? Yes.

O'GRADY: I am in favor of that. But the difference really is McCain is not talking about such a big subsidy program and taxing oil companies in order to pay for it

GIGOT: All right, thanks, Mary.

Still ahead, will the Democrats' drilling stonewall hurt them with voters in November? We take a look at some key races when we come back.



GIGOT: At last Republicans may have found an issue they have an advantage on going into November. The House and Senate adjourned for August recess last week amid angry calls from House Republicans for a vote on an energy bill that would expand domestic oil drilling, a move a majority of Americans say they favor.

We are back with Dan Henninger and Kim Strassel. And also joining the panel is columnist John Fund.

Kim, lets go back to what we were talking about in the first segment, Obama vs. McCain on energy. Strictly as a political matter, who is now winning this debate?

STRASSEL: I don't think there is any question that John McCain is winning this debate. Americans look around, they are unhappy about gas prices. They believe drilling will make a difference. You see that in public opinion polls. And he has just hammered on this point again and again.

On the other side you, have Barack Obama saying, well, maybe if we did it in a responsible way I might say yes to drilling possibly.

I think you're seeing this in the opinion polls as John McCain has made a little bit of ground. The polls have been closing between him and Barack Obama. and I think it is on the back of energy.

GIGOT: Conventional wisdom a few weeks ago was $4 oil, Dan — I mean, $4 gasoline and $140 oil would hurt Republicans because they are the party that owns the White House. and Obama was going to be able to pin it on McCain. Sounds like, from what Kim is saying, McCain has been able too pivot and say, all right, we have this problem. What do you want to do about it?

HENNINGER: I think that's exactly — we have had an enormous reality check here, once we got into the detail energy, the way energy is produced in this country. John Boehner said it is the most important issue he has seen in his lifetime for Republicans.

GIGOT: He told us that in our offices last week.

HENNINGER: I think what has come out of this debate is the fact that oil and coal and, to some extent, nuclear are the sources of energy that keep the lights on in America, that keep cars on the road, that keeps the economy going right now.

The Democrats have got themselves — and the Democrats are against those things because they produce carbon. They are in the Al Gore mode. And that is an idea that is based on the promise of renewables, like solar and wind. And that's way out in the future though.

GIGOT: They may be good.

HENNINGER: They may be good.

GIGOT: Nothing against solar, nothing against wind.

HENNINGER: That's right. We can try its. But it won't do anything for those problems, those price problems in the here and now. They are potential promises. I think it is becoming very difficult for Democrats out there to defend that in front of the American people.

GIGOT: John Fund, there is a debate in Congress over whether or not the — either house, House or Senate, will be able to get a vote on more drilling. The Democratic leadership so far has opposed that, even going so far as to stop the appropriations process in both houses to be able to prevent any kind of vote on the floor. Are they going to be able to continue to do this when they come back in September?

JOHN FUND, OPINIONJOURNAL.COM COLUMNIST: Look, I think Barack Obama recognizes the political peril here. That's why he has tentatively accepted some drilling. But Nancy Pelosi and Harry Reid are afraid of alienating their environmental allies. They have shut down the House for the August recess. It won't convene until September 8th. That means Democrats will be hanging out back in their districts and states for a month, being pummeled for not allowing a vote on drill.

I think it is perilous because this is one area in which the Democrats are completely against the American people and, if they don't even allow a vote, they go against the reform agenda they said they — came from in 2006, they looked like bullies, not governors.

GIGOT: But Democrats in swing seats, Kim, that I hear about, including many of the Democrats in the House, who were elected in the last election, in the seats that Republicans held for a long time, they desperately want to vote. And don't you think the leadership will be smart enough to give them one? They have to, don't they?

STRASSEL: Well, I think that they are going to do everything they can to avoid it. This is why you hear Harry Reid talking about an energy summit. You know, people want — their goal all along — Harry Reid and Nancy Pelosi want to drag this out all the way through the November election where they then hope to have a bigger majority and not have to deal with the drilling question.

One problem, now we have this gang of ten, Republican, Democratic senators in the Senate, who came out and said they've come up with a compromise. That actually may give Mr. Reid and Mrs. Pelosi cover to draw this out more or just not do anything in September.

GIGOT: John, where are the races so far, Senate races, in particular, where this energy issue is really, where you seeing it move numbers, move poll numbers?

FUND: Colorado is one example. Bob Schaffer, the Republican candidate, has closed a ten-point gap to pull even. Minnesota, Norm Coleman, the Republican incumbent senator, is doing much better against Al Franken than he did a few weeks ago, partly because of energy.

I think this could affect three or four Senate races and a dozen House races. I think the Democrats will be under increasing pressure from their moderate members to forget about the November election, allow some kind of vote. And then if they retain big majorities in Congress, they can always change their blind next year and continue to block drilling, as Kim says.

GIGOT: John, very quickly, isn't Louisiana another state where this is an issue?

FUND: Louisiana is a critical state, because the Republican candidate has linked Mary Landrieu, the Democratic incumbent, with an extreme position against even oil shale development, and is running commercials on that. As you know, Louisiana benefits a lot from offshore drilling. And that's an issue where, if Mary Landrieu doesn't bring something home from Washington on that issue, she could be badly damaged.

GIGOT: All right, John, thanks.

Still ahead, federal investigators say they have their man. But are skeptics convinced? We look at the case against alleged anthrax killer, Bruce Ivins, when we come back.



JOSEPH PERSICHINI, FBI: Painstaking investigation led us to the conclusion that Dr. Bruce E. Ivins was responsible for the death, sickness and fear brought to our country by the 2001 anthrax mailing. And it appears, based on the evidence, he was acting alone.


GIGOT: With that announcement Wednesday, Federal investigators effectively closed a seven-year investigation into the anthrax attacks that killed five people and sickened over a dozen more. But did the FBI really get their man?

Joe, the FBI had previously been looking at another scientist, federal scientist, only to find out that they had the wrong man. How strong is this case against Ivins?

RAGO: It is circumstantial over all, but taking all elements together, adds up to a fairly compelling case.

GIGOT: When they say circumstantial, they mean there's no smoking gun, there's no direct eyewitness testimony, there's no confession.

RAGO: Right. They haven't tracked Ivins to the mailboxes where the letters were dropped off, for instance, but they found a lot e-mail evidence that show he clearly had severe psychological problems. But the most compelling evidence really is the DNA fingerprint of the anthrax used in the attacks. And they have apparently been able to trace it all the way down to a specific flask that Ivins had — he was the sole custodian of.

GIGOT: But other people would have had access to that flask, correct?

RAGO: That's true. The FBI hasn't actually released how they ruled out other people. There is still a lot of evidence they should release to actually close this case.

GIGOT: How they ruled out the other 100, for example, and also some of the scientific evidence. Are they going to do that?

RAGO: We don't know yet.

GIGOT: Dan, what does this whole case — first of all, I guess, are you convinced?

HENNINGER: I agree with Joe up to a point. It is a pretty strong circumstantial case. But the problem — the Wall Street Journal, the electronic edition, asked its readers whether they were convinced and 62 percent say they are not. And that, I think, is a bad sign for the government. This thing is beginning to develop into kind of a conspiracy or a thriller. It is a very serious subject. You have got the government's credibility on the line. At this point, the government does not have credibility on the subject of anthrax and bio-warfare.

So I think it would be a good thing if they would put the scientific data out there. let the science community look at it and come to some determination about anthrax as a threat to the American people.

GIGOT: What have we learned from this case and its handling about the FBI and its ability to handle terrorism — bioterrorism.

HENNINGER: Well, we have learned they are not very good at it. And that is really one of the key lessons. I think part of the reason that the government is acting this way is because, in fact, they are very poorly prepared to deal with bio-warfare. They have a lot of people working on it but I think privately even they would acknowledge it is a difficult issue for them to get their arms around. Remember, we were going to develop an anthrax vaccine? It hasn't happened.

GIGOT: All right, thanks, Dan.

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


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, even the double cheeseburger isn't inflation proof — Dan?

HENNINGER: Paul, in the middle of the week I looked at what the most popular stories were in the Wall Street Journal. Was it the stock market? What it Obama's energy plan? Was it the Olympics? No. The number one story is McDonald is considering changes in the $1 double cheeseburger. They may raise the price to $1.09. Some are thinking of take a piece of cheese out and call it a double hamburger.

I mean, what is the world coming to? We have $4 gas. We've got Starbucks closing down a bunch of stores. And now the $1 double cheeseburger is at risk. We have two candidates out there campaigning on the promise of change. I'd like a candidate who would just campaign on a little more stability.

GIGOT: All right, Dan, thanks.

Next, a big hit to U.S. Olympic runner Lopez Lomond — Mary?

O'GRADY: Yes, I am giving a hit to our 1500-meter track star who carried the American flag yesterday at the opening ceremonies of the Olympics in Beijing. Things weren't always so rosy for him. He, at the age of 6, was kidnapped by Sudanese rebels and was one of "The Lost Boys of Sudan." He spent a decade in a refugee camp in Kenya, was resettled as a teenager in Syracuse, New York, and now has made the American Olympic team. And he said that he will act as an ambassador for his country and do the best to represent it well. And I would say he has already done that.

GIGOT: Great story.

Finally, the Dick Cheney snub — John?

FUND: Paul, people running the Republican convention, including the McCain campaign, have been slow in extending an invitation to Vice President Dick Cheney to show up and speak or just to appear at the convention. This is a big mistake. Dick Cheney has a lot of support with the conservative base of the Republican Party. He's been a good vice president. And it traditional for vice presidents to show up. Nelson Rockefeller, who wasn't exactly popular with most his party, introduced Bob Dole as the candidate in 1976. There are more Cheney Republicans in the party now than there were Rockefeller Republicans back then.

GIGOT: All right, John, thanks.

Time now for your "Hit or Miss" of the week.

Edward Shipley of Holmdel, New Jersey, writes: "The 'Wall Street Journal' gets a gigantic miss for taking at face value the recent actions of Muqtada al-Sadr. Rather than a surrender, I think his recent actions are the start of Hezbollah South with strong support from Iran. The real nature of al-Sadr's transformation will become apparent once the United States troops are withdrawn."

GIGOT: Mr. Shipley, we never take Sadr at face value. Our point is that he is retreating because he has been beaten militarily. But thanks for giving us a whack.

And remember, if you have your own "Hit or Miss," please send it to us at or log on to

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

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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