This is a rush transcript from "The Journal Editorial Report," November 1, 2008. This copy may not be in its final form and may be updated.

PAUL GIGOT, FOX HOST: Coming up next on the "Journal Editorial Report," the frantic campaign finish. John McCain and Barack Obama make their closing arguments as that crisscross the battleground states.

From judges to healthcare to national security, we will tell you what's really at stake on Tuesday and the big differences between the two candidates.

Plus, the other key races to watch. Will senate Democrats get their filibuster-proof majority that they've been waiting for?

And our editors select the most memorable moments of the 2008 campaign.

The "Journal Editorial Report" begins right now

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

In a final frantic push, the presidential candidates are crisscrossing the battleground states this weekend returning to the themes that have marked their candidacies, with Barack Obama calling for change after eight years of George W. Bush, and John McCain challenging his opponents' credentials to lead the country in times of crisis.

Obama spent the day in a Nevada, Colorado and Missouri, four states President Bush won in 2004. John McCain spent the day in Virginia and Pennsylvania, hoping to capitalize on what some polls show is a tightening in the final days of the race.

Joining the panel this week, Wall Street Journal columnist and deputy editor Dan Henninger, editorial board member Dorothy Rabinowitz, opinionjournal.com columnist John Fund, and Washington columnist Kim Strassel.

John, most of the polls, with a couple of exceptions, have this race at about six to eight percentage points for Obama going into this — three days out. Where do you see the race?

JOHN FUND, OPINIONJOURNAL.COM COLUMNIST: Well, Republicans generally have a bit of a surge at the end of their races as issues clarify under real conservative lines. Also, those polls predict a certain turnout model. I think this race is a bit closer. It is clearly Obama's to loose and, more importantly, he is poised to win Colorado and Virginia from McCain. And even if he keeps Ohio and Florida, that would give the election to Obama. McCain can win, but he has to thread a needle.

DAN HENNINGER, COLUMNIST & DEPUTY EDITOR: Well, he has to win Pennsylvania. It's going to be very hard.

GIGOT: Which George Bush lost twice last time, relatively narrowly. Of course, Hillary Clinton beat Obama in Pennsylvania convincingly so McCain has been spending an awful lot of time there. What chances do you get him to give?

HENNINGER: A chance. The reason is that Pennsylvania is politically a very volatile state. It's a big state, for one thing. You have urban areas in the east and urban areas in the west. Politically, it's very volatile. Since 2006, they had a propensity to throw out incumbents. So there's a kind of strange unhappiness in Pennsylvania that maybe could go in McCain's favor.

GIGOT: Kim Strassel, you talked to the McCain campaign. Where are they pinning their upset hopes? What they tell you?

KIM STRASSEL, WASHINGTON COLUMNIST: What they're looking at broadly is they're hoping to see some of what John was talking about, this national timing in the polls going down into the local polls. They are very encouraged by the fact that one out of seven voters, that is 18 million people, have not yet said who they will vote for on Tuesday. And they are really hoping that their goal is that this is going to have a real break toward John McCain in the end. That's what they look for.

FUND: Pollsters say Barack Obama is almost a quasi-incumbent in the way polls are conducted. That means he has to get 50 percent or more in the polls to get a realistic chance of winning, because almost all of those undecided voters, if they waited this long, they probably won't go for Barack Obama because...

GIGOT: Why not, John? Because is this campaign, at this stage, a referendum on Obama and his fitness to be president?

FUND: Yes. That's what I identify as being a quasi-incumbent.

GIGOT: OK.

FUND: In other words, they have basically said they want change. Obama represents the most dramatic change from what they don't like, but he is so untested and there are worries about his tax plan. For example, just this past week, we just had several Democrats slip up. Bill Richardson saying, well, only those over $120,000 are going to get a tax cut, calling into question the premise of Obama's whole economic program.

GIGOT: Dorothy, 104 million people voted 2000. Something like 120 million voted in 2004. People say there could be 130 million or 135 billion people. That means that this could be very difficult ground to determine at least in advance of the polls. Who is going to vote?

DOROTHY RABINOWITZ, EDITORIAL BOARD MEMBER: Well, I think they predict that the youth are going to vote. There is every indication that they may violate their past history of not showing up in mass.

GIGOT: Not sleeping until noon and then...

RABINOWITZ: And doing this like another.

GIGOT: They will be for Obama, by and large.

RABINOWITZ: Yes, but don't underestimate, again, the vote of older people and others. I keep thinking of Ed Rendell's comment, a very strange comment, he said...

GIGOT: The governor of Pennsylvania.

RABINOWITZ: The governor of Pennsylvania. He said don't believe in the polls, talking about Pennsylvania. He said there's a lot of untested feeling, unknown feeling out here. Very strange thing for a Democrat to say.

GIGOT: Kim, you have been watching and listening to the candidates' closing arguments. McCain has been closing on taxes and national security. Are either those issues giving McCain any traction?

STRASSEL: I think they are, especially — when he's talking national security, he is really pounding on the experience point. Again, what they're looking at are those undecided voters. They're hoping there is hesitation among the public out there about how untested Barack Obama is doing.

He's also getting some traction with Joe the plumber. Remember, this is about — people are now saying, OK, maybe the financial crisis, the immediate crisis has passed. What are we going to have to do to get out of this recession, this economic problem? And John McCain is saying, look, low taxes for everybody. That seems to be resonating and played a part in these tightened polls.

FUND: There is a little bit of counter argument here. Rasmussen has a new poll out, 19 percent of conservatives that Barack Obama will lower their taxes. Only 12 percent of conservatives think John McCain will. So Obama has won part of the tax argument. He has convinced people they are going to get a tax cut in some way.

GIGOT: Dan, I was stuck by Obama's 30-minute ad this week that he basically hit — it was middle-class economic anxiety. One real difficult tragic story after another, Obama saying I can help you.

HENNINGER: He was addressing the vulnerability that Hillary surfaced at the end of the primaries in Ohio, Texas and Pennsylvania, which was the strange inability to connect to the middle class. They just didn't feel like they knew Obama. That's what that 30-minute commercial was all about because every single story — and there was a normal middle-class person with a problem with student loans or health care or their jobs. That was him closing the argument with those people.

GIGOT: Kim, in the end did Sarah Palin or Joe Biden matter at all?

STRASSEL: Probably not a lot, except for maybe the mistakes they made, which is what we talked about at the beginning.

GIGOT: Who made more, Biden or Palin? I think Biden made more.

STRASSEL: I think so, at least from a gaff perspective. As John mentioned, this comment recently about the taxing, has put taxes very much is the news. Just what is your level of income at which you get taxed?

HENNINGER: I saw Palin in Florida on Saturday afternoon hammering the Obama tax plan. She was very effective.

GIGOT: All right, Dan. Thanks,

Still ahead, can Democrats hit the magic number? They need 60 seats in the Senate to break a Republican filibuster. We'll take a look at the races Tuesday that they think could get them there.

(COMMERCIAL BREAK)

GIGOT: For Democrats this Tuesday, the magic number is 60. That's how many senate seats they need to break a Republican filibuster.

We're back with a look at the races they think could get them there.

Kim, so how close are they to getting 60 seats?

STRASSEL: They're pretty close. There was always this set of seats that were lost. You got Virginia, New Mexico. Then there were a group of seats that were in a dicey position, like Oregon, Minnesota, Colorado. Now they have a couple seats, like Elizabeth Dole in North Carolina, that they are very worried about. So, you know, you put all these together...

GIGOT: The Republicans are worried about.

STRASSEL: The Republicans are worried about. You put all these together and it's a bad day on Tuesday. They could be close to a filibuster-proof majority.

GIGOT: It seems to me, John, it's a sure thing the Republicans will lose by five, including Alaska, which Kim didn't mention, because Ted Stevens convicted of...

FUND: Refused to step down.

GIGOT: Has refused to step down. Those will be very hard. He's still on the ballot and still trying to win, but it will be difficult for him to do that. Then you have got New Hampshire, which is also in jeopardy. So that gets them down to — Republicans down to 43 pretty quickly. They could be even 41.

FUND: I think Minnesota and North Carolina are critical. Al Franken is competitive in Minnesota, but it's a three-way race.

GIGOT: He is the Democratic candidate, the comedian, if you like that sort of thing.

FUND: Right. Norm Coleman is the incumbent. Coleman leads, but it's a three-way race, which is highly unpredictable. In North Carolina, Elizabeth Dole had a problem. She only spent, a month a year the first few years of her Senator term in the state, so she lost touch of it. She is right now at about that magic 50 percent mark we told people about, which is, it's a referendum on her. She is at 50 percent. So she could lose.

GIGOT: Why did this Independent Dean Barkley decide to get into the race in Minnesota? That's helped Franken, I think.

FUND: Was appointed to the senate for 30 days by Jesse Ventura.

GIGOT: Ego trip? Is that what this is, because he's not going to win?

FUND: But he misses the senate so much, he just wants to have the senate debates perhaps as ego gratification.

GIGOT: That would be something if Al Franken somehow...

FUND: With 40 percent of the vote.

GIGOT: Yes, could sweep in there.

HENNINGER: That's certainly true. The big ringer, I think, in this senate race is — I think could be Georgia, Saxby Chambliss and Jim Martin because you have to weigh...

GIGOT: Saxby Chambliss being the Republican incumbent.

HENNINGER: Being the Republican. You have to win with a majority in Georgia. At the moment, neither one of them looks like he might get a majority. If they didn't, you would have a December runoff.

FUND: And the reason why Chambliss might not get a majority is he has been a big spender in Washington, giving the Libertarian candidate a chance to attack him from the right. And that's hurt Chambliss.

GIGOT: Kim, what about Louisiana and Mary Landrieu, the Democratic incumbent. That's the one seat that Republicans thought maybe they might have a chance to pick up. Do you see that as a possibility? She's running against John Kennedy, who was the state treasurer.

STRASSEL: It seems less likely recently, given just the general environment out there for Republicans, the fact that he is not as well- funded. He's having a hard time in the race. Also, Mary Landrieu was smart. In a way, this discussion about energy that was happening at the end of the summer, beginning in September, she has actually been pretty stalwart on the state on more energy development. She's, for instance, got the endorsement of U.S. Chamber of Commerce. So she has covered herself on some of the big issues down there. And she is a result, may be a harder one to pick up. It might not be possible.

GIGOT: Another race I've been following is New Hampshire where John Sununu is the incumbent Republican who beat Jeanne Shaheen the last time, the former Democratic governor of the state. But this time, he's trailing in the polls. Sununu is a very effective Republican Senator, smart, was right on Fannie Mae and Freddie Mac long before anybody else, when it was politically risky to be so.

Could the tide sweep John Sununu out because Shaheen is not exactly the strongest candidate in a normal year? She is pretty light.

FUND: No, but he's closing, but she's still behind. The problem is the whole northeast is changing demographically. It is becoming a Republican-free zone, with only one Republican congressman in the House.

GIGOT: Yes, Kim?

STRASSEL: Also, New Hampshire and places like Oregon, this is an example of how miserable it is out there for Republicans. President Bush has the lowest approval rating in the nation in New Hampshire. That is dragging down John Sununu. Out in Oregon, you know, Barack Obama is running something like 15 points ahead of John McCain, which means that, in order for Gordon Smith, the Republican candidate, to win, you have got to have a significant number of voters willing to go out there and split the ticket and vote for Barack Obama and a Republican Senator.

GIGOT: To get back to Dan Henninger's second favorite state, Pennsylvania, after Ohio, one place where Democrats are vulnerable is maybe Pennsylvania with Paul Kanjorski in the northeast near Scranton, and John Murtha in the southwest.

HENNINGER: Yes. That's what I meant earlier, Paul, about Pennsylvania being a politically volatile state at the moment. These are two-long serving of a credit congressman. John Murtha is virtually a household name. Both of them could lose on Tuesday. If you see them lose, it could suggest the Pennsylvania boat is going to go against the Democratic ticket.

RABINOWITZ: I just want to say that if Murtha loses, there will always be excuses, like saying that the people in my district are racist.

(LAUGHTER)

RABINOWITZ: I mean it won't be the reason, but this will be what the media reports.

GIGOT: Murtha, of course, is the fellow who said that — basically accused soldiers in Iraq of murder in Haditha.

FUND: Including one from his district.

GIGOT: When most of those people have now been cleared. How is that playing in his district?

FUND: Also, the pork-barrel politics that Murtha has practiced for so long, people like the pork, but they don't like the bad publicity that comes attached to their district.

GIGOT: He makes Ted Stevens look like an amateur earmarker.

FUND: We could see Washington cleansed of a lot of porkers this year.

GIGOT: All right, John, thanks.

Coming up, a closer look ahead at what's at stake on Tuesday. From judges to health care to national security, there are some very big and clear differences between Barack Obama and John McCain. We'll take a look at them.

(COMMERCIAL BREAK)

GIGOT: From judges to health care to national security, we're back with a look at what's really at stake this Tuesday and where each candidate stands.

Dorothy, what are the really big differences, the defining issues here?

RABINOWITZ: The differences are attitudinal and political between two candidates, which is to say how do you feel about America? How to you feel about our place in the world? We've seen a regular line I am afraid from Mr. Obama in which he seems to indicate that the opinions of the united states held in the fashionable sell-on to the left all over Europe and in academia and in darker chambers of our enemies, are somehow something he understands too well. In fact, I suspect we will find a squishy, as someone has put it, multilateralism at best.

GIGOT: All right, Dorothy, why hasn't McCain been able to exploit that? Because in the past elections, that would have been a really costly position for Democrat to take. It is not this time. Is it the war?

RABINOWITZ: I don't think it's the war. I think McCain simple has — though he has this in him, he is so naturally a person opposed to Obama's views, he simply has not said or been willing to say this is how our enemies speak. He said it on the primary campaign trail. One of his finer moments came when he lashed out — I forget which of his opponents said, this is what got us into 1939.

GIGOT: But if he would've said that, Dorothy, the press would've annihilated him.

RABINOWITZ: So you have just given him the reason.

(LAUGHTER)

RABINOWITZ: He has this moral — he has this weakness, this moral vanity sensitivity. He fears what the press will think of them instead of understanding it.

However, putting that aside, McCain is so clearly the person who is not receptive to the ideas held by our enemies. Obama said — the first thing he said was, what will you do when you go abroad? I will go abroad and make amends to our enemies — not to our enemies — to others in the world. He sees this as a fallen nation.

GIGOT: We'll find out and see if that is defining.

Dan, what do you think?

HENNINGER: I think the biggest differences on their idea of the American economy. John McCain, on the one hand, I think remains fundamentally a free-market politician. The Obama campaign has been very interesting to me if you go down through it. He wants to federalize health care insurance. This would be a tremendous entitlement that would never be repealed. His tax policy is actually basically tax credits. It is not using the tax rates. But credits simply transfer income directly, almost like a welfare payment to people. He wants to raise the ceiling on Social Security taxes which — on payroll taxes, which will essentially turn it into a welfare program.

GIGOT: So you're talking about all this kind of moving us in the direction of the European welfare entitlement mentality. Is that what you're saying?

HENNINGER: That's what I'm saying, which is to say that the economy exists not as it has traditionally, to create wealth and jobs, but to protect jobs and protect wealth. In other words, protect what we already have rather than build on what has come before. That's a fundamental change.

GIGOT: But Dan, here's my question. I mean, how much different would it really be between Obama and McCain, since McCain or Obama is likely to have been emboldened and maybe — and certainly a larger Democratic Congress. And in McCain's case, probably a better one. If Obama loses, the Democrats are going to take it very hard. So they're going to be emboldened. What difference would it make in terms of actually being able to stop the trends you talk about, particularly with the mortgage market already being nationalized, the banks being partly nationalized?

HENNINGER: You know, Paul, I wish this question had been put more directly to the American people, because I think you're right. There is a sense that Americans are tired, and that they don't want to just keep going in the direction they have been. Maybe the conditions are ripe for the Democrats to say we want to transition towards long-term, and it would be a long, long-term towards a more European-type model.

GIGOT: Kim, get your licks in here. What is the big defining issue for you?

STRASSEL: Judges. Absolutely. The courts are crucial. Any issue out there we talk about today, abortion, social policy, economic questions, national security, the courts have their say. and these are two very different guys. John McCain will put forward justices forward, like Antonin Scalia, who are strict readers of the Constitution. Barack Obama sees the courts as a way to affect some sort of changes that aren't always possible through the legislative branch.

GIGOT: The word he wants — the word he uses is judges with empathy, I think.

STRASSEL: Judges with empathy that are going to accomplish things that he feels he can't accomplish in office himself. And remember, we're not just talking about the Supreme Court here, which is, of course, important. We have 13 appellate courts out there, and the next president is probably going to be able to do the majority on each of them.

GIGOT: OK, John, you don't have much time, but give us yours.

FUND: Barack Obama has shown a lot of empathy for labor union leaders. He wants to change labor law in a fundamental way. Over the last 50 years, we've had secret ballots in union elections. He wants to change that tradition and go to something called card check. I have to tell you, even Arnold Schwarzenegger attacked this vigorously in his speech for John McCain. And he is a moderate Republican.

GIGOT: All right, John.

Thank you all.

We have to take one more break. When we come back, our panel picks their most memorable moments of the 2008 campaign

(COMMERCIAL BREAK)

GIGOT: Finally tonight, our panel picks their most memorable moments from the 2008 presidential campaign, the very long 2008 campaign. It started in 2007.

HENNINGER: Well, my personal highlight was seeing Bill Clinton, two- term president of the united states, campaigning in a high school gym on the west side of Cleveland in the dead of winter. I fly into the airport there. I knew he was going to be at this gym. I go flying up. When I get there, people are coming out. I fight my way in and I get up in the stands and there is Bill standing under a basketball hoop with about 200 people around him, including some squealing high school girls. And he is smiling. He is shaking hands. He just is loving it. The Secret Service had to literally drag him out.

I am saying, this is like oxygen for Bill Clinton. You know, it raised a question in my mind. Is the adulation of crowds what it's really all about to Barack Obama?

GIGOT: All right, Dorothy?

RABINOWTIZ: My picture is a Barack Obama walking his way, his royal path, through Europe before being elected president of the United States. It was really an astonishing spectacle, talking as though he were himself a head of state, and taking heads of state by the arm, as though he was the host. It was an amazing visual site. It was extraordinary grace.

And I thought, this is the most amazing sense of useful workable ego, but way over the top. And I have to say that it did not do him good. Lots and lots of people, who are Barack Obama supporters, did not like this and afterwards, let me also throw in, MSNBC, the entire season, bad.

GIGOT: OK, Dorothy, thank you.

John?

FUND: I recently met Joe the plumber. Average guy, who thrust into the race because he asked Barack Obama a tax question. I just found it stunning that the attack machines that used to be deployed only against candidates are now deployed against average people that ask questions.

Bureaucrats in Ohio went through his records for child support and taxes Texas, and it clearly was a violation of his privacy.

This is a Rubicon I hope we have not cross in American politics, because it's dangerous.

GIGOT: All right, Kim?

STRASSEL: I think the low point for Barack Obama, April, when he talked about people being bitter about their guns and religion. I think that was the moment when everyone said, who is this guy, because you also had it with Reverend Wright and other things. And that hesitation about him remains to this day.

John McCain, low point, suspending his campaign to deal with the financial crisis and tying himself to a Congress that ended up botching that job. And he has not recovered from it since.

GIGOT: You think that was the point that really was the turning point, Kim, in this race?

STRASSEL: He was ahead in the polls up until then, talking about how he would solve problems like energy.

GIGOT: I think my favorite moment was when Hillary Clinton, at the convention, endorsed Barack Obama because she went through all the motions, she said all the right things, but you could tell there was an enormous amount of pain there and that she should have thought that she was the one who was on that stage accepting the nomination a couple of evenings later.

And if nothing else happens in this election, at least the Clintons will not be back in the White House. You agree that?

HENNINGER: Yes. I think, at the end of the moment machine, it was at extraordinary moment. Barack Obama? Who would've thunk it.

GIGOT: All right, Dan, thanks.

That's it for our pre-election edition of the "Journal Editorial Report."

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

I'm Paul Gigot. We'll see you right here next week for our post-election analysis.

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