This is a rush transcript from "The Journal Editorial Report," January 10, 2009. This copy may not be in its final form and may be updated.

PAUL GIGOT, HOST: Coming up next on "The Journal Editorial Report," Senate shenanigans.

Harry Reid reverses course, says he's behind Illinois appointee Roland Burris.

But Norm Coleman? Reid says he'll never serve in the Senate again, as some dubious recount rulings in Minnesota tipped the scales in Al Franken's favor.

Plus, Israel's assault on Hamas. Is it a fight it can win? What Obama's choice to lead the CIA says about his approach to the war on terror?

"The Journal Editorial Report" begins right now.

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

An unsettled Senate reconvened in Washington this week with two seats still up in the air and embroiled in controversy. Just 24 hours after blocking Blagojevich appointee Roland Burris from taking his seat in the chamber, Senate Majority Leader Harry Reid reversed course, saying there was a path forward for the former Illinois attorney general.

But not so for Minnesota's incumbent Senator, Norm Coleman, after a dubious recount put Democrat Al Franken ahead by 225 votes. Reid said Coleman will never, ever serve in the Senate again.

Joining the panel this week, Wall Street Journal editorial features editor, Ron Pollack; opinionjournal.com columnist, John Fund; and Washington columnist, Kim Strassel.

Rob, first, let's take up Burris. Why did Harry Reid do that very quick switch-a-roo?

ROB POLLOCK, EDITORIAL FEATURES EDITOR: He was in a politically and illegally untenable position. You have the race card being thrown at him.

GIGOT: When you say that, what do you mean?

POLLOCK: Well...

GIGOT: Bobby Rush, the Chicago congressman, had said it would be racist if Harry Reid did not let Roland Burris, an African-American, serve.

POLLOCK: Right. Obama was the only black member of the Senate. He's leaving. If they weren't going to let another one in, the race card was being thrown at them. There was the racial issue. There was the legal issue. Look, Blagojevich, for better or worse, is still the governor of Illinois. He appointed this man. How can he not seat him, especially if you want to seat Al Franken, another controversial candidate? It didn't look right.

GIGOT: The politics didn't look right, unseemly. He was getting a lot of pressure from his Democratic colleagues, too, John.

JOHN FUND, OPINIONJOURNAL.COM COLUMNIST: The rug was pulled out from under him by Dianne Feinstein, who was the incoming chairman of the Rules Committee, who would have ruled on Burris' appointment.

GIGOT: John, let's turn to Minnesota. We ran an editorial this week called "Funny Business in Minnesota," about that Minnesota recount. We were highly critical of it and a lot of people in Minnesota did not take kindly to that, including particularly on the political left. Were we unfair to the recount or to the canvassing board?

FUND: Recounts are traditionally to count the ballots cast on Election Day and see if there were any procedural mistakes. They're not about introducing new ballots and new issues into the race. That's for courts to decide. There are a whole bunch of absentee ballots rejected perhaps illegitimately. Those people have a right to have their day in count.

What I think the recount board did is it made a series of rulings that were inconsistent. On some issues, they said, we're going to count some ballots. I think that should have been considered by courts later, for example, 133 missing ballots in Minneapolis. You can't recount them because they don't exist anymore. They've been lost. I think courts should rule on that.

Then there's the issue of double voting. In 25 precincts, most of them Franken precincts, there were more votes cast than showed up at the polls. Clearly, there might have been double voting. Apparently, some of the ballots might have been run through twice in the machines. There's evidence that that apparently happened.

And thirdly, 87 counties reviewing these absentee ballots that were supposedly rejected improperly, they used different standards to determine whether or not they were rejected. I think there should be a uniform standard.

So all these decisions went in Franken's favor. Minnesota law is very clear. You have the election. You have the recount. Then you have the right of the losing candidate to contest the election in court and have this heard before judges. And that's what been happening.

GIGOT: Well, the Franken campaign, Kim Strassel, keeps saying, look, the canvassing board is a bipartisan body. You have four judges and then you have the secretary of state. The secretary of state is, in fact, a partisan figure, Mark Ritchie. No question, he favored Franken in the election. But then you have these judges who are — at least two of whom are supposed to be Republicans. So did they actually steer this in some direction or are we being unfair to them?

KIM STRASSEL, WASHINGTON COLUMNIST: Well, I don't think that this is — there isn't any evidence so far, outward evidence that there has been a partisan attempt here to swing this election. I think, if the canvassing board is guilty of anything, it's been in being very reticent, very meek about taking a stand and investigating some of these huge problems that showed themselves during the recount.

Now, their argument was we're just a vote-counting body. And, you know, there isn't actually legal discussion about what they were allowed to do under statute. But there's a lot of people in Minnesota who feel it was incorrect for them to sign off on a result that had all the problems it did, which are now tossed to the courts.

GIGOT: Well, Mark Ritchie is a partisan figure, John. Kim says there wasn't a partisan motive. On the canvassing board, some of the people, no question, were partisan, but what about Ritchie?

FUND: Well, Ritchie was supported by ACORN, which is the infamous voter registration group that got into all kinds of legal trouble in the last election. He's part of something call the Secretary of State's Project, which is a George Soros-funded effort to elect liberal Democrats to be secretary of state, to try to have somebody there who will help out in these kind of close elections. I don't think there's clear evidence of Ritchie bias here, but there's clear evidence that Ritchie intended and wanted Franken to win.

GIGOT: Yes, but I have never seen a recount, John, where all of the decisions turned out to help a single candidate, Al Franken. I mean, all of them. And that is passing strange.

FUND: It's similar to what happened in the Washington State recount in 2004 for the governors race, where you went through three or four recounts and, at every turn, new ballots turned up, new issues turn up, and they all went in favor of the Democrat.

I think there is a procedural bias here. And I think it was frankly enhanced by the fact that Norm Coleman's lawyers were not the sharpest tools in the shed here. And they were frankly out-maneuvered by Franken's lawyers.

GIGOT: If you — go ahead, Rob.

POLLOCK: No, look, it's hard to talk about the will of the people in a race this close. What seems to me a tragedy is, even after what happened in 2000, we still don't have an electoral systems in this country in which people can have confidence.

GIGOT: And when you introduce voter intent, it's a very dicey proposition. And you're changing the rules after the game has been played.

FUND: And absentee votes played a big role here. I think the more you have absentee votes, the more you have close election contests and disputes like this.

GIGOT: They gave Franken those absentee votes, 166 extra votes.

When we come back, a closer look at Israel's Gaza assault. Is it a fight that country can win?

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GIGOT: Israel's Gaza offensives continued for a second week with ground troops digging deeper into the Hamas-controlled territory searching for rocket launching sites and bunkers used by militants. And almost on cue come claims this is a war Israel can't possibly win. But is that true?

We're back with Rob Pollock and Kim Strassel. And also joining us, Wall Street Journal foreign affairs columnist, Bret Stephens.

All right, Bret, here we are two weeks into this campaign. Is Israel doing better this time around than it did in 2006 in Lebanon.

BRET STEPHENS, FOREIGN AFFAIRS COLUMNSIT: Yes, it's doing significantly better. It clearly learned the lessons of that war. And the most important lesson was not to delay the ground offensive, which is what Israel did. Don't do it by air strikes alone. They've managed to buy secretary the Gaza Strip. The terrain is easier for them. They took out Hamas's ground control literally in the first three minutes of the attack. I think that, unlike in the past war, they're really poised to win this one, so long as they don't give into increasing pressure by the international community, increasingly, too, by the united states, to call for a premature cease fire that leaves Hamas in control and will lead to another war in two or three year's time..

GIGOT: But you hear a lot of commentary from people who say — and not necessarily anti-Israel folks — who say, look, all Hamas has to do to win this is survive and they can claim victory. And if they do that, they can live to fight another day. So Israel really can't win in the end and therefore has to deal with them politically.

STEPHENS: Hamas is going to survive one way or another as some kind of political organization, but that doesn't mean they're going to survive as an organization able to govern Gaza the way they have for the past 18 months. I think it's important to remember, they came to power in a coup in the summer of 2007. And the legitimate authority in Gaza is Fatah, is the Palestinian Authority, under the control of Palestinian President Mahmoud Abbas.

GIGOT: What does an Israel victory look like tangibly? What specifically would it mean?

STEPHENS: It would mean a number of things. One is Hamas not in power. Number two is Hamas...

GIGOT: So Fatah would come in and take over?

STEPHENS: Sure.

GIGOT: So really, you're talking about regime change? Is that what has to happen here?

STEPHENS: Well, there was regime change — this whole thing started with a kind of regime change.

GIGOT: So a Hamas government cannot be running Gaza after this?

STEPHENS: That's right.

GIGOT: OK.

STEPHENS: I think anything that allows them to do so, is a victory for them.

GIGOT: What else?

STEPHENS: They obviously have to stop firing rockets. Their ability to have the supply lines that they had coming through the tunnels and the Egyptian border has to be stopped.

GIGOT: So Egypt has to cut that off?

STEPHENS: Egypt has to cut that off or you put an international force on the Egyptian side of the Sinai to make sure that it's cut off. No more rocket fire into sovereign Israeli territory is crucial here.

GIGOT: Is that possible, Rob?

POLLOCK: My bar for victory would be somewhat lower than Brad's. I think simply degrading Hamas where it can't fire rockets for several years would be a significant achievement. That may be the kind of cycle we're stuck in at this point.

STEPHENS: The problem you have there is — Hezbollah was massively degraded in 2006. A lot of its heavy arsenal, particularly its medium and long-range rockets, were instantly destroyed. But the problem there is they were able to recapitalize their missile stocks, their weapons stocks very quickly and in part because you had a cease fire agreement there that was supposed to stop the rearmament for Hezbollah. And it turned out to be a paper — a paper letter. Hezbollah is now stronger militarily today than they were before the war with Israel.

GIGOT: A lot of people argue that these bombing attacks, in particular, and some of the casualties of civilians are merely making more — creating more support for Hamas as opposed to supporter for Fatah. Do you agree with that?

POLLOCK: What I think what's interesting, the accuracy of these attacks by Israel has been such that observers are speculating Israel has to be getting help from Palestinians inside Gaza in choosing their targets.

Actually, what we're seeing here is — look, Hamas is not that popular. Are we creating more supporters — is Israel creating more support for Hamas? Maybe.

(CROSSTALK)

GIGOT: Let me get Kim Strassel in here. Kim, I want to ask you about Barack Obama. He's remained very silent about this for the last couple of weeks. Properly so perhaps, because he's not president yet. What do you think is going to happen once he takes the oath of office? Is he going to put pressure on Israel to stop?

STRASSEL: He's going to be faced with a huge choice. You already see — look at all the — look at the U.N. Resolution. Look at the general world sentiment about this. As always, there is intense criticism of Israel, suggesting disproportionate force. All kinds of focus on getting them to agree to a cease fire, which is exactly what Hamas wants.

The problem for Barack Obama is that he is going to be faced with that. As he comes into office, with all of these promises that he's going to restore America and its reputation in the world, he's going to have to decide whether or not he gives into that pressure, because there will be a lot it, and put pressure on the Israelis to stop.

Which the problem for him would be though, if you do that, he's going to be left with the Hamas problem going down the road. He should be wanting right now for Israel to succeed in this because it could help him in his administration in a future peace in that area.

GIGOT: All right. Thanks, Kim.

Still ahead, Obama's intelligence team. What his choice of Leon Panetta for CIA chief says about his approach on the war on terror?

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BARACK OBAMA, (D), PRESIDENT-ELECT OF THE UNITED STATES: I think what you're also going to see is a team that is committed to breaking with some of the past practices and concerns that have, I think, tarnished the image of the agency, the intelligence agencies, as well as U.S. foreign policy.

(END VIDEO CLIP)

GIGOT: That was President-elect Barack Obama this week promising a break from Bush administration intelligence policies in his choice of former congressman and Clinton White House chief of staff, Leon Panetta, to lead the CIA.

Rob, a lot of criticism on the Panetta choice. Fundamentally, on the fact that he doesn't have a lot of firsthand experience dealing with intelligence. He's always been a consumer of it as the White House chief of staff, but not dealing in the business of collecting and discerning intelligence.

POLLOCK: With all things being equal, I think that's a plus for Panetta. What you have in the CIA is...

GIGOT: A plus!

POLLOCK: A plus.

GIGOT: Lack of experience is a plus? Would be a plus if we said, you don't know anything about journalism, but we're letting you run the op-ed page.

(LAUGHTER)

POLLOCK: What we've had in the CIA for the number of years is essentially a rogue agency, going off pursuing its own policies, undermining the president when they think the president is getting in the way of what they want to do.

GIGOT: So you like that he's the president's man.

POLLOCK: Yes.

GIGOT: Or he will impose the president's policies on the intelligence service.

POLLOCK: Exactly.

STEPHENS: But here you have a president who knows nothing about intelligence. And you have a president who's basically said that in the war on terror, we're going to take the defense more often than we take the offense. That's particularly important. If we're not going to be waging war offensively in the Middle East to get the terrorists there, we're going to need an intelligence service that works very well.

And, by the way, it's not true that the CIA has simply been a rogue agency in the last eight years. Under Michael Hayden, who was an intelligence professional...

GIGOT: The current CIA director.

STEPHENS: The current CIA director — not from the CIA itself, but from the National Security Agency, you did have a well-functioning — a well-functioning agency and real successes in the war on terror. I'm not sure Leon Panetta is...

GIGOT: Rob, I talked to a senior administration official this week who said that this intelligence — these leaders, Michael Hayden and Admiral McConnell, who runs — is the director of national intelligence — this is the best and most efficient and competent intelligence leadership he's seen in 40 years in Washington.

POLLOCK: I don't doubt there have been improvements. But if you talk to people who know about this, they'll tell you that we still have basically no covert intelligence inside countries — I mean agents inside countries like Iran and around the world. The agency really has to reorient itself if it wants to get serious about things like counter- proliferation.

GIGOT: Kim, what do you think was the calculation here by the president-elect? And what does he mean when he says he wants to overturn Bush policies?

STRASSEL: Well, you know, you can really look at this in a couple of different ways. I don't know if we are for certain yet — know how Barack Obama's going to act when he's in office. He's put Panetta in there. It is worrisome that there's somebody with little intelligence experience. It's also worrisome that he made a stated goal to stop, for instance, the interrogation policies that have actually been important to American safety.

GIGOT: What are you talking about when you say these policies? Are you talking about enhanced interrogation techniques? Are you talking about surveillance of foreign operatives, warrantless wiretaps, that sort of thing?

STRASSEL: Warrantless wiretaps is now...

(CROSSTALK)

STRASSEL: But, yes, enhanced interrogation. There's been questions of rendition, et cetera. Barack Obama is publicly saying we're going to stop this.

What's interesting is even as he has put Panetta there, he recently asked John O. Brennan to come and be his intelligence adviser in the White House. Brennan was in the running for the CIA, a CIA Veteran. But he took himself out because he had defended some of these policies in the past.

So what we're seeing is a very Barack Obama move here in that he's got someone advising him in the White House, not a position that has to be confirmed, and another that may hopefully be giving him good advice. And then you've got Panetta in the CIA, who is saying publicly they're going to change policies. But we just don't know yet what he's going to do when faced with the situation.

GIGOT: Rob, where do you think he's going?

POLLOCK: Look, I think he definitely believes what he said. He believes the interrogation techniques are wrong. Liberals are counting on the fact that there's going to be this sort of Jack Bower exception, that the agent is going to break the rules when he gets the really bad guy. That's not the way the world works. It's not a ticking bomb kind of scenario.

What we know is, when we get a really high-value target, like Khalid Sheikh Mohammed, that's when we apply those kinds of techniques. Agents are not going to risk their careers putting...

GIGOT: They take signals from the top. And in the wake of the 1970s and the Church Committee, and the attacks on the CIA during the Cold War, a lot of operations are shriveled up because nobody wants to take any risks.

STEPHENS: That's exactly right. The CIA basically died as an organization in 1975, in the wake of Frank Church's investigations. That's precisely the signal president Obama seems to be sending now, that he wants this lily white organization that's going to cow, above all, to the dictates of people like the Daily Kos, the left wing bloggers, who have treated the CIA like the origin of evil.

GIGOT: All right, thanks, Bret.

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

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GIGOT: Winners and loser, picks and pans, "Hits and Misses," it's our way of calling attention to the best and the worst of the week.

Item one, Bret Stephens?

STEPHENS: Most of us think of the U.N. as the organization that brings us oil for food and peacekeepers who rape women and children in the Congo.

(LAUGHTER)

STEPHENS: But it turns out it wasn't all bad. There was an anti- fraud task force that uncovered $630 million in alleged tainted investigations. It opened up 175 investigations, put people — debarred people, debarred firms. It was too good to last. The U.N. is shutting the organization down. I ask, where's John Bolton when you need him?

GIGOT: All right.

Rob Pollock?

POLLOCK: A hit to Barack Obama for his apparent surgeon general nominee, Sanjay Gupta. Gupta is a practicing neurosurgeon and has been a medical correspondent for CNN and has been a refreshingly independent- minded correspondent, taking on, in particular, Michael Moore, over the movie "Sicko," where Moore lauded the Cuban health care system. And Gupta said this wasn't exactly accurate.

Now, this nomination has actually sent the left a bit crazy. John Conyers, a Michigan congressman, says he's going to oppose it. The columnist, Paul Krugman, is apoplectic about it.

Look, we have an independent-minded nominee. That's a good thing. It's change we can believe in.

GIGOT: Great.

OK, finally, Kim Strassel?

STRASSEL: The best news of the year so far, a hit to Chris Matthews, the garrulous host of "Hardball," who has decided he will not be running for the Senate in Pennsylvania in 2010. I'm going to give a new name to this — the Al Franken syndrome — this idea that the Senate is out there and, if you are a celebrity, you deserve to be a U.S. Senator, regardless of your qualifications or regardless of the fact that nobody knows what you even stand for. Mr. Matthews has decided that he's not going to be doing this. He's in contract negotiations and — maybe this was designed to make sure MSNBC knew what they would be missing from him. But you can still watch him on TV if you're a fan.

GIGOT: All that. That crushed Pollock's ambitions to be a Senator.

(LAUGHTER)

GIGOT: 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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