This is a rush transcript from "The Journal Editorial Report," October 25, 2008. This copy may not be in its final form and may be updated.

PAUL GIGOT, HOST: Coming up next on the "Journal Editorial Report," Barack Obama's bonanza. He abandoned his pledge to take public financing and raised record amounts of cash. Now he's outspending his opponent three to one on the airwaves. We'll take a closer look at what all that money can buy.

And he's promising change. But if the Democrats win the White House and build on their majority in Congress, Americans can be in for more change than they bargained for. Coming up, what a liberal super-majority might do in Washington.

The "Journal Editorial Report" begins right now.

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

Americans may not be going to the polls for another ten days but by one important measure, Barack Obama has already trounced John McCain. According to figures released this week, the Democrat raised an astounding $150 million in September giving him a huge advantage over his publicly financed rival in the final weeks of the campaign. He's using the cash to blanket the airways in battleground states with ads like this.

(BEGIN VIDEO CLIP)

AD NARRATOR: John McCain's health care plan. First we learned he's going to tax health care benefits to pay for part of it. Now the "Wall Street Journal" reports John McCain would pay for the rest of his health care plan with major reductions to Medicare and Medicaid. $882 billion from Medicare alone. Requiring cuts in benefits, eligibility or both. John McCain taxing the health benefits, cutting Medicare. We can't afford John McCain.

(END VIDEO CLIP)

GIGOT: Here with a look at what else that $150 million can buy, Wall Street Journal columnist and deputy editor Dan Henninger, columnist Bret Stephens, opinionjournal.com columnist John Fund and Washington columnist Kim Strassel.

Kim, so how big an advantage over McCain, how much is it contributing to the lead of Barack Obama is this financial edge?

KIM STRASSEL, WASHINGTON COLUMNIST: I think his lead is significant. It's not just the ad you were talking about although the ads are important. I was hearing in places like Denver, Colorado, a huge important swing state, that Barack Obama is spending seven times what John McCain is spending on ads there. The more important thing is boots on the ground. This money pays for volunteers to go out and go around these battleground states. In places like Virginia where I live, Barack Obama has more than 50 field offices compared to about 19 or 20 for John McCain. These are the people who get everyone out to vote on the day. This is partly reflected in the polls.

GIGOT: These are the pay operatives because there's an awful lot more than 19 boots on the ground. There are a lot more volunteers.

STRASSEL: No, those are the number of field offices. And, yes, there's a huge number of volunteers throughout the campaign but these are the people coordinating everything. In that Barack Obama has outmatched John McCain.

GIGOT: Dan, one thing we've learned in politics over the years, negative ads work when they aren't answered.

DAN HENNNINGER, COLUMNIST & DEPUTY EDITOR: That's exactly right. And both campaigns have been running a lot of them. Obviously, Obama's been running a lot more.

The other thing we're learning here is Obama has introduced innovations. This is the best campaign that money can buy. Last week he ran 50,000 30-second spots. But he is even running commercials that last a minute or even two minutes, 120 seconds. The innovation there is you can say more in a commercial like that. It's like a mini documentary. It breaks through the normal advertising clutter. It gets people's attention.

The other thing he's done, which no one's noticed is the amount of Internet advertising, which we know is the biggest thing in advertising now. Obama has run 914 million ads on the Internet. By contrast John McCain has run 7.8 million. This is 117-1 ratio in Internet advertising.

GIGOT: Part of the problem, John, is McCain is lacking the money to run all the messages and positive spots. Obama's running positive spots too but to answer some of those negative spots, for example, to claim he would pay for those programs by cutting Medicare by $800 billion. I think that's a rebuttable proposition but you don't have the money to do it, you can't rebut it.

JOHN FUND, OPINIONJOURNAL.COM: Obama's fighting a dozen fronts. McCain because of the lack of money and resources has to respond two or three of those fronts. The rest basically has to go by the boards.

GIGOT: Bret, why hasn't Obama paid a price for breaking his pledge to abandon public financing?

BRET STEPHENS, COLUMNIST: That's one of the great mysteries of this campaign. Who could imagine? No one is reporting that.

GIGOT: Are you giving your fellow presses a pass here for not holding him to task? Remember, most of the Press Corps spent the last eight years applauding John McCain for being a campaign reformer. And he was a good government guy. In his time of need they say, oh well, never mind.

STEPHENS: But we know what campaign reform was all about, which was a political play by Democrats who at the time felt they were at a disadvantage in the money race. When the sides are reversed, they're much less keen on that and they talk about public financing as a matter of everyone handing in their $50 check which, of course, is the opposite. And nontransparent, I might add.

FUND: Paul, should Obama and there's a Democratic Congress be prepared for the Incumbent Protection Finance Act of 2009?

GIGOT: Kim, was John McCain played for a sucker here on campaign financing?

STRASSEL: Absolutely. When you look at these restrictions he is now under and the fact that he has decided because he was a good government guy to go into this public financing scheme for the general election, he is the cause of his own misfortune here at the moment. He is the reason. The Republican National Committee has shown they do have the ability to raise money. They've been doing a pretty good job trying to make up the difference between what Mr. McCain has and what Mr. Obama has. A lot of the restrictions he faces are things he helped create.

GIGOT: John, notwithstanding all that spending, the race -- some polls have showed the race is in fact tightening a bit at the end, although the polls are all over the map. Where do you think the race stands right now?

FUND: If you took an average of all the polls, I'd say Obama has about a 6 point lead. But we've had two previous elections in recent years where there was a late Republican rally. In 1992, the first president Bush was down 11 points. He lost by 5.5. In 1996, Dole was down 14 and lost by 8. It's still a competitive race. If there's a late Republican rally and the race is a 6 point difference now, it could end up very close.

GIGOT: All right, John, thanks very much.

Still ahead, he's promising change if elected. How much change are we ready for? When we come back, a look what could happen in Washington if Democrats take the White House and build on their majorities in Congress.

(COMMERCIAL BREAK)

GIGOT: Well, Barack Obama is promising change if he's elected. And if current polls hold, he could very well win the White House on November 4th. And Democrats could consolidate their congressional majorities, possibly with a filibuster-proof senate. And that might mean more change than many Americans had bargained for.

We're back with a look at what life could be like under a liberal super-majority.

Dan, the last time Democrats ran Congress with more than 60 Senate votes and held the White House was 1977 under Jimmy Carter. What's the lesson of that era?

HENNINGER: Yes, that was Jimmy Carter's first term and...

GIGOT: And only term.

HENNINGER: Right. Well, the first two years. And that Congress had 61 Democratic senators. And it was extraordinary to look into it. One of the laws that they passed was the Community Reinvestment Act, which many of our viewers may be able to identify as the root of the current subprime mortgage crisis.

GIGOT: And made banks lend too often to borrowers who really didn't deserve the credit.

HENNINGER: They also passed the Foreign Intelligence Surveillance Act, FISA. We've been fighting over that for the last three years, as well as the Humphrey-Hawkins Full Employment Act, which basically means that our central bank has to target employment and not merely crisis. It makes it very difficult for the Fed to run monetary policy.

GIGOT: But one of the things about that Carter era, Bret, was Carter came in with a much more moderate agenda than Barack Obama does. He was talking about sunsetting programs. He was for deregulation. He had a budget director, Bert Lance, who was very tough on spending. This is a very different Democratic Party.

STEPHENS: I would say the similarities are striking in the sense that Congress really ran the government the first two years of the Carter administration. They ran Carter. And I think what we're getting -- what we're about to elect now is not so much an Obama administration as a Pelosi-Reid administration.

GIGOT: But Obama isn't running as a moderate like Carter was. He's running in some ways as an undefined candidate. He's trying to sound reasonable and cool but his actual agenda is not as moderate as Carter's was.

STEPHENS: You're absolutely right. Again, it's not clear what Obama's agenda is here. What is clear is that the people, who are really going to be in the driver's seat, the people who have been in government for a long time and waiting for this moment for an even longer time, are people like Barney Frank, Pelosi, Reid and some Democratic retreads like Tom Daschle who are set to come back into government.

GIGOT: Let's talk about some of these agenda items. We've got Medicare for all, a new government program that would take health care not just for seniors and children and the poor but for everybody if you want it. No secret ballots for union organizing, new regulations for telecom, biotech and pharmaceutical companies, higher payroll and income taxes and a variety of voter law procedural reforms.

John, talk about that one.

FUND: Just remember the very first bill that Clinton and the Democratic Congress in 1993 passed, something called the Motor Voter Law, which basically laid the template for much of the voter fraud we're seeing around the country. By the way, the lawyer defending that in court was Barack Obama. If Barack Obama comes back, I know what his agenda is going to be, same day voter registration mandated across the country, allowing you to register to vote, vote at the same time. That's an aggrieved invitation to fraud. Felon voting, basically standardizing the rules when you can vote in this country and dramatically lowering the barriers for voting.

GIGOT: Those voters, most of them will end up voting for Democrats.

FUND: Over 70 percent according to surveys.

GIGOT: How much of this realistically, Dan, can Democrats, if they get 60 votes in the senate, expect to pass? I say that because, in 1993, Democrats also had both houses of Congress with 57 senate seats, just short of a filibuster, and held the White House and that didn't go very well.

HENNINGER: It didn't go very well. There is a big question whether the Democrats will overreach and just try too much. You know, they are under tremendous pressure from the left wing of their party which has been waiting a long time for this opportunity. You know, the so-called...

GIGOT: Since the '70s really.

HENNINGER: Since the '70s. And they feel they have never had a chance to run the government. I think they're going to push those Democrat chairmen very hard to enact as much of this as they can because they'll feel they have a mandate. In 1997, I did note that House Democrats had 293 seats. It was a tremendous majority. While that declined in Carter's -- the second Congress, and when Reagan won, they didn't lose control of the Congress until Gingrich in 1994. So there's plenty of time for them. And they have thought and talked in those terms. Nancy Pelosi says we need two or three Congress' to get all this done.

GIGOT: Kim, how close are Democrats to getting that 60 seats in the senate?

STRASSEL: Well, they're closer than they were. Look, you've got to go out -- there's a couple of senate seats that are lost to the Republicans, probably Virginia and New Mexico. There's a handful of that always been competitive, Colorado, New Hampshire. A couple of others...

GIGOT: North Carolina.

STRASSEL: North -- well, no, then you've got a group now, which is the real concern of the Republican party, North Carolina, Mississippi, Alaska where Ted Stevenson is in trouble and that is what has really scared Republicans in the last month is that you've got people that they were pretty confident they were going to keep. And now those races are looking pretty dire for them. If they get all of them, if they won the tables on this, they might get the 9 they need for a filibuster.

GIGOT: Does this mean, John, that John McCain's best closing argument, the Republican closing argument is you need McCain as a check on the Democratic Congress?

FUND: Independent voters decide elections. One thing we know about Independent voters, they like divided government. They've seen Democrats run everything and not do well and Republicans not do well. The Republican Senatorial Committee ran ads in North Carolina and other states saying don't give the Democrats a blank check. Pick some Republican to vote for.

GIGOT: All right, John, thank you.

Still ahead, Joe Biden taking heat for saying Barack Obama would be tested by a foreign policy crisis in the first six months of his presidency. But is he right? Our panel weighs in when we come back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENTIAL CANDIDATE: Joe sometimes engages in rhetorical flourishes. But I think that his core point was that the next administration's going to be tested regardless of who it is. And the question is will the next president meet that test by moving America in a new direction, by sending a clear signal to the rest of the world that we are no longer about bluster and unilateralism and ideology.

(BEGIN VIDEO CLIP)

GIGOT: That was Barack Obama this week trying to explain exactly what running mate Joe Biden meant when he told a group of supporters that Obama would be tested by an international crisis within the first six months of his presidency.

Bret, when Sarah Palin makes a blunder, it's inexperience. When Joe Biden does it it's a rhetorical flourish.

STEPHENS: It's a gaffe in the sense that he actually told the truth. I think Joe Biden actually did us a public service by saying that Obama is going to be tested. And he's going to be tested from various quarters because America's enemies are going to be probing President Obama's weaknesses. You can expect it to come from the Iranians, the Russians, from the North Koreans. This is not unprecedented either. This is exactly what Khrushchev did to Kennedy after Kennedy blundered the Bay of Pigs.

GIGOT: But every new president gets tested in some way, John. There's no question about that. But do you think might be more tested because of his inexperience?

FUND: Actually, for another reason as well. Remember, Obama will take office saying we're going to present a new face to America, multicultural looking outward rather than inward. Our enemies are still going to be enemies regardless of who is president.

GIGOT: All of us coming together...

FUND: They will want to take him down. They will want to say just because America elected an African-American president doesn't mean the evil empire is changed. They're going to have to discredit Obama in the eyes of the world by forcing him into mistakes and overreacting.

GIGOT: This was a political gaff, Kim, in part because this is the kind of debate John McCain has wanted to have with Barack Obama, questioning whether he is ready on foreign policy, but he hasn't been able to because of the economy.

STRASSEL: Barack Obama has been so fortunate that this election has turned to the economy and away from this issue of foreign policy. Look at the two major issues he has had to address during this campaign, one the Iraq surge. He was totally wrong on that question. Another which happened real time was Georgia and his initial instinct was to come out, condemn both sides and he had to backtrack and go the other way. The problem this week is Joe Biden brought up the thing that Barack Obama had pleasantly not had to talk about.

GIGOT: What are the big differences, Dan, between Obama and McCain on foreign policy? Not just policy at specific places but a kind of attitude and temperament?

HENNINGER: I think one of the biggest, Paul, is John McCain pretty clearly is willing to consider the military option at some point.

The most interesting thing that really hasn't been written about very much on the Obama side is Democratic foreign policy intellectuals have been writing in magazines like foreign affairs that they think the Bush administration overreacted after 9/11, raised defense spending too high. The Democrats want to reprogram quite a bit of money out of the defense budget into what Obama calls investments for domestic spending. To do that they have to resist engaging the United States in events like this because they don't want to have to spend that money and build the military back up. They would like to build it down.

GIGOT: But Obama says he'd be willing to use force. He talks about it all the time, unilaterally, if need be, in the case of Pakistan, Bret. And while he says we need to get out promptly out of Iraq, we can't have an extended deployment there. He talks about Afghanistan which may be a more difficult war in terms of the length. He says we're -- he talks about that's going to be an open-ended engagement of precisely the kind he doesn't want in Iraq. How can you pin this guy down?

STEPHENS: It's true that liberal presidents feel the need to give an appearance of toughness and that's plainly what Obama was doing. But I do think that at the end of the day the issue isn't whether the German's like us or the French or British like us. We're going to have friendly relations with them anyway. The issue is the attitude that our enemies have towards us. One of the few countries where McCain is more popular than Obama outside the United States is Vietnam. They have a sense of the toughness of this guy.

GIGOT: Are you saying that Obama does not really believe we have actual enemies?

STEPHENS: I think that...

GIGOT: Does he believe they're persuadable somehow?

STEPHENS: I think the fundamental Democratic is that almost anyone is persuadable. And see this, above all, with Jimmy Carter, going to people like Kim Il Sung in North Korea and various other enemies of the United States, and thinking that through reason and through showing us how reasonable you are, they can come to your point of view or at least you don't have to have a conflict. The world does not like that. Not everyone is going to like Barack Obama.

GIGOT: And those people will indeed test Barack Obama. All right, Bret.

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, India launches its first moon mission -- Dan?

HENNINGER: Just this past Wednesday morning around dawn, India launched a space probe to the moon. It should go into lunar orbit November 8th. Congratulations to India. It shows that India is going to be a rising economic and scientific power.

But let's think a little bit about our own competitiveness. Anyone who visits an American university these days notices that the campuses are filled with foreign students, many engineering and science students, often from India who would like to stay in the United States and work in American companies. but they can't. We basically kick them out because we have only 65,000 visas for highly skilled workers. This is a congressionally imposed quota. It is really a stupid thing for us to do that. We are shooting ourselves in the foot in a highly competitive world. Congress should lift that quote and let them stay and work for us.

GIGOT: All right, Dan, thanks.

A happy anniversary in Russia -- Bret?

STEPHENS: Yes, today is the fifth anniversary for Mikhail Khodorkovsky's arrest. He spent those five years in a Siberian labor camp. I can't help but feel that...

GIGOT: Former oil executive of Yucos.

STEPHENS: Yucos. I can help but feel he's smiling ruefully. Since July, the Russian stock market has tanked by 70 percent. Now he's facing possibly another 22 years in jail from a Kremlin attempt to keep him in prison.

But really, it's the Kremlin that is finally getting its comeuppance for its assault of entrepreneurs and the rule of law. And he's an emblem of everything the Kremlin has done wrong. Freeing him would be the first sign that the new Russian president intends to reverse the course of the last eight years.

GIGOT: All right, thanks, Brett.

Finally, some thoughts on the kerfuffle over Sarah Palin's wardrobe -- Kim?

STRASSEL: Now that the press corps has trashed on everything else to do with Sarah Palin, we have finally arrived at her wardrobe. They are howling about the fact the Republican Party spent $150,000 on her clothes, hair, makeup.

Presidential campaigns right or wrong are today, right or wrong, about image. These guys spend millions of dollars on lighting and sound and balloons and Greek columns. You know, this is -- and the candidates matter. They also have to look good. In a woman's case it takes a lot of money. This is kind of another silly example of a silly discussion in a serious presidential campaign. It says more about the press corps than it does about Sarah Palin.

GIGOT: Kim, very briefly, does Sarah Palin emerge from this campaign if John McCain loses as a national party figure?

STRASSEL: I think she's got a good shot at it. We'll see how she handles herself the last week.

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

Thanks to my panel and to all of you.

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

Content and Programming Copyright 2008 FOX News Network, LLC. ALL RIGHTS RESERVED. Transcription Copyright 2008 ASC LLC (www.ascllc.net), which takes sole responsibility for the accuracy of the transcription. ALL RIGHTS RESERVED. No license is granted to the user of this material except for the user's personal or internal use and, in such case, only one copy may be printed, nor shall user use any material for commercial purposes or in any fashion that may infringe upon FOX News Network, LLC'S and ASC LLC's copyrights or other proprietary rights or interests in the material. This is not a legal transcript for purposes of litigation.