This is a rush transcript from "The Journal Editorial Report," September 5, 2009. This copy may not be in its final form and may be updated.

PAUL GIGOT, FOX HOST: Coming up next, can President Obama make an autumn comeback. From health care to cap-and-trade, a look at the prospects for his domestic agenda and how he'll try to turn the sinking poll numbers around.

After the deadliest month of the war so far, calls from the left and the right to withdraw from Afghanistan. Can the president sell a new strategy there?

Plus, how Muslim immigration changed the face of Europe, and the lessons there for the United States.

"The Journal Editorial Report" starts right now.

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

After a brutal August recess of angry town halls and slipping poll numbers, Democrats and President Obama return to Washington next week hoping to salvage what they can of a faltering agenda. The top priority, health care reform, a debate the president hopes to reframe when he addresses a joint session of Congress on Wednesday night. Can he make an autumn comeback?

Joining the panel this week, Wall Street Journal columnist and deputy editor, Dan Henninger; opinionjournal.com columnist, John Fund; and Washington columnist, Kim Strassel.

Well, Kim, are we going to see a big, different change of strategy for the autumn comeback or not?

KIM STRASSEL, WASHINGTON COLUMNIST: You know what, this White House is realizing it does not have the support it needs for some of its big, grand health care ambitions, but it also understands it would be deadly to not have some sort of health care legislation, having campaigned and worked on this for so long. So you're still going to see — he'll be giving this address to Congress, you're going to see a lot of town halls and a push out there publicly to gin up support. But what you're also seeing is the groundwork laid where they can maybe step this back a little bit. They're talking with maybe working with Republicans for a smaller bill, something that would more about subsidies or more subsidies for people, maybe rules saying that health insurers have to provide insurance to all Americans, a health care exchange where everyone could look and compare health care plans.

The question though, can they do this, and how do they deal with their left flank, which is demanding the whole mantra.

GIGOT: On that point, Dan, the Democratic left, 83 members of the House, sent a letter to the president this week, backed up by Speaker Pelosi, saying any bill without a robust public option will not pass the House. So caught between what Kim says, the demand of the larger country, and the demands of the left, which way does President Obama go?

DAN HENNINGER, COLUMNIST & DEPUTY EDITOR: Well, I think he ought to go right down the center. Look, he got elected to the presidency on the basis of tremendous support from Independent voters. So far, they have given those people nothing in this presidency, nothing at all. He's been running as a progressive president. That may be what he wants to do.

GIGOT: Progressive in the sense of liberal.

HENNINGER: Liberal, left, really, big government, growth in the state, for instance, the response to the economy, the nationalization of the auto industry. All of these things, I think, have startled people in the center and I'm not sure how the health bill gives those people anything other than to pull back on the public option.

GIGOT: On the health care bill, John, the White House really believes that when the public understands the details, support for it goes up and that there's the real problem here is confusion. So the president's going to go out there Wednesday and he's going to say, look, specifically, this is what we're going to do on insurance. Do you think that that is a winning strategy?

JOHN FUND, COLUMNIST, OPINIONJOURNAL.COM: I think the president's numbers will go up. and I think the president will have enough support then to pass a minimal bill. Insurance reform with massive subsidies to get people insured.

GIGOT: Insurance reform with massive subsidies. That's not a minimal bill. That's a big deal. We're talking several hundred billion dollars worth of subsidies, say 300 or 400 percent. That would be a huge victory.

FUND: That's right, and the left wing will be kicking and screaming and forced to vote for us. They won't like it, but they will.

GIGOT: Because they won't have the public option.

FUND: Exactly. And here is the problem.

GIGOT: They will vote for it.

FUND: Yes, they will vote for it. The president will have invested so much time and energy passing the health care bill, minimal or not, that I think he's going to lose the focus on the economy that people are expecting. Unemployment is now 9.7 percent, I think people are asking themselves, we care about our jobs, we care about losing our jobs, why did you spend so much time in health care. I think that's a long-term cost of this president.

GIGOT: Kim, let me ask you about the strategy we're hearing from some people on the left. Tom Daschle wrote about it in our paper. He said this week, the former Senate majority leader says, "The choice between legislative failure and majority rule should not pose a dilemma for any Democratic Senator," which backed up the editorial in The New York Times. And it said, "If the Democrats want to enact health care reform this year, they appear to have little choice but to adopt a high-risk, go-it-alone majority rule strategy," which means ram it through on partisan votes if you have to. And maybe that means a more left wing bill — that would mean a more left wing bill than John is describing.

STRASSEL: You know, the White House bill is very, very worried, to use this process, called reconciliation. It allows it to push through the Senate with 50 votes instead of 60, because it's so against everything that Barack Obama said he was for. It totally...

GIGOT: New tone in Washington, and all of that.

STRASSEL: Yes. Exactly.

GIGOT: The campaign discussions.

STRASSEL: And it's also not something that some of his Senate Democrats who come from swing states want to do either, because it does look so partisan. And by the way, it helps that, going that way, only kind of legitimizes Republicans in arguing that they need to try and stop that. You know, and gives them a little cover rather than saying they're obstructionists. So they can say...

GIGOT: But can that strategy succeed? Can they ram it through on a partisan vote or is this just bluffing?

STRASSEL: I think it's more bluffing right now than anything else. Because, you know, while you've got guys like Chuck Schumer out there, saying, yeah, reconciliation, and the Senator from New York, you've got a lot of guys like, you know, Kent Conrad in North Dakota, who say I don't think my people are going to like that. It's a question of whether they could even 50 people to go with that.

GIGOT: One of the things, the themes of the presidency, so far, has been defer to Congress, particularly the liberal committee chairmen. Are we going to see a strategy that's different there? Is President Obama going to start to try to mold the legislation, these legislative priorities himself?

HENNINGER: Well, I think so, Paul. We always used to say, at the editorial page on foreign policy, you cannot have 535 commanders in chief. That's why the president is in charge of foreign policy. I think he's proving you cannot have 535 policymakers on something as large as reforming 17 percent of the economy.

GIGOT: All right, Dan, thank you.

Well, if you think that President Obama's poll numbers are bad, have you taken a look at Congress's lately? Approval is at a 24 year-low of 37 percent according to a new Pew poll. And that may be in thanks, in part, to folks like Congressman Charlie Rangel. As we report, the chairman of the tax writing Ways and Means Committee has some tax problems of his own.

Earlier this month, he amended the financial disclosure form to the tune of more than half a million dollars in previously unreported assets and income. Well, The New York Post reported this week that Rangel's committee has quietly slipped into the health care bill, brought new provisions cracking down on taxpayers in their dealings with the IRS. The legislation would strip away legal defenses and increase penalties on corporate and individual taxpayers facing IRS scrutiny, even if they erred in good faith.

By the way, Democratic aides said this week, that House Speaker Nancy Pelosi will let Rangel keep his chairmanship despite the ongoing ethics probe.

When we come back, the president's got trouble on the foreign policy front as well. After another bloody month in Afghanistan, calls from the left and the right to withdraw. Can the administration sell a new strategy there?

(COMMERCIAL BREAK)

GIGOT: The news doesn't get any better for the president on foreign policy, with August marking the deadliest month for U.S. forces in Afghanistan since the war began there in 2001. It may come as no surprise that liberals, like Wisconsin Senator Russ Feingold, are beginning to question the administration's military strategy.

But this week, conservative columnist George Will, made the case for getting out of Afghanistan as well. Saying, quote, "Forces should be substantially reduced to serve a comprehensively revised policy. America should do only what could be done from off shore, using intelligence drones, cruise missiles, air strikes and small, potent special forces units concentrating on the porous 1,500-mile border with Pakistan, a nation that actually matters."

We're back with Dan Henninger. Also joining the panel, Wall Street Journal deputy editor & foreign affairs columnist, Bret Stephens; and editorial features editor, Rob Pollock.

Bret, how serious is this revolt against the Afghanistan policy of the administration, left and right?

BRET STEPHENS, DEPUTY EDITOR & FOREIGN AFFAIRS COLUMNIST: It's especially serious, I mean, you have George Will looking like John Kerry, the man who was for the Afghan war.

GIGOT: Ouch, ouch.

STEPHENS: Before he was against it. But it's an important point. Consistency here matters. And when start — when you go into a war, it's important you support it even through difficult times.

Look, two years ago we were in the exact same place in Iraq. You had a new general, a new strategy, and mounting calls from high-profile pundits and congressmen saying this isn't going to work, we need to get out. The experience of the surge should tell us that the U.S. can do counterinsurgency and we'll succeed.

GIGOT: But Will's argument, as I understand it, is, look, we, as Americans, don't do nation building well, which is a powerful point. We haven't done it well, certainly not in the last decade or two, from Kosovo to Iraq or even Afghanistan. And second, we can achieve our strategic goals in Afghanistan from off shore. We don't need to be on the ground. We can take care of al-Qaeda with air strikes and so on. What do you think of that argument?

STEPHENS: Well, both arguments are wrong for — first of all, we're not really doing nation building in Afghanistan. To the extent we can build a nation and create institutions, above all, build a large Afghan Army that can get into the fight effectively. That's important, but that's not what we're there to do. We're the not there like in Somalia, as a sort of humanitarian...

GIGOT: We're there for a strategic interest.

STEPHENS: We're there for strategic interest. Because this is where we were attacked and we don't want to create a base again for al Qaeda to strike Pakistan or to strike...

ROB POLLOCK, EDITORIAL FEATURES EDITOR: Bret, look, I think it's wrong to say we're not doing nation building. What is the counter- insurgency model for Iraq? Clear, hold, build. In Afghanistan — look, I've spent time in Iraq and Afghanistan, and I have to say I was optimistic about the surge working in Iraq. I'm a lot less so about Afghanistan. Why? It's a really primitive country. It's illiterate. There is not much to build or build on.

(CROSSTALK)

STEPHENS: Iraq is not that much more of an advanced stage.

POLLOCK: Much, much more.

(CROSSTALK)

POLLOCK: And Iraq is a rich country. And Iraq is illiterate.

STEPHENS: And when you talk about...

POLLOCK: Iraq has a tradition of central government. Afghanistan has none of those things.

(CROSSTALK)

STEPHENS: When you talk about Afghanistan, you have to bear in mind that most of the country is at peace. The economy is, in much of — in much of the country, the economy is actually doing well. We have a problem in the Pashtun belt. And if you think, going back to George Will's other point, that off shoring is going to work, that's precisely what we were doing before...

(CROSSTALK)

GIGOT: Good point there, Rob.

I think the question isn't — Dan, if you want to get in on this — do you want to get in on this. Can we achieve our strategic goals, military goals of containing and defeating al-Qaeda strictly from off shore?

(CROSSTALK)

HENNINGER: Let me interject. We don't know what the plan is. General McChrystal has submitted his plan to the White House, but they won't release it. So we don't quite know what we're arguing about here, whether it's nation building or a counter-insurgency plan.

GIGOT: It does seem to be a counter-insurgency strategy.

HENNINGER: Right.

GIGOT: That's it is rooted in winning the support of the Afghan populous.

HENNINGER: That's not quite the same as nation building.

GIGOT: No, it's not the same as nation building, but does it require the support of the Afghan people by providing them with security and with a government at that presumably is credible enough and legitimate enough that...

POLLOCK: Let's not hold up Will as a strong man. He goes too far, saying take the war off shore. You've got to keep some number of troops in there. But the question is how many. I think when you look at the political difficulties that President Bush and the Republicans had surging in Iraq, I think it's getting almost impossible to conceive that Obama is going to be able to keep the Democrats on board for a long surge in Afghanistan. So we better have a plan B. That's all I'm saying.

GIGOT: There is a question of can you run a good counter-insurgency, Bret. I tend to agree with you. We should make this effort. If McChrystal asks for 45,000 more troops to do the job and the president says, sorry, I can only politically give you 15, is that enough to succeed?

STEPHENS: It's very difficult to make those...

GIGOT: And McChrystal presumably knows better than we do.

(CROSSTALK)

STEPHENS: And more troops are important because part of it is securing large part of it is securing large population centers, particularly like Kandahar. But you'll remember that part of what made the surge unique wasn't simply the additional numbers of troops. It was a revolution in the way we did counter-insurgency in Iraq, by bringing over people who had previously been against us, bringing them on our side. There's every— there's — precisely that opportunity is with us in Afghanistan because part of the problem we have in Afghanistan isn't simply the Taliban. It's also there are ethic splits within — among the Pashtun, and we can bring over those disaffected Pashtun over to our side.

GIGOT: This debate will continue, gentlemen, here and on Capitol Hill.

Still ahead, a new twist on the immigration debate. Columnist Christopher Caldwell says Muslim immigrants have changed the face of Europe, and not for the better. He'll make his case and tell us what the United States can learn from Europe's experience, when we come back.

(COMMERCIAL BREAK)

GIGOT: In his controversial new book, "Reflections on the Revolution in Europe," columnist Christopher Caldwell, takes on the issue of Muslim immigration of Muslims to the West and argues that Islam is fundamentally challenging the European way of life.

In the middle of the 20th century, there were almost no Muslims in Europe, and today there are as many as 17 million, making up about half of all newcomers there. And Caldwell argues, these immigrants are not integrating, but supplanting European culture, and exhibiting attitudes consistent with a people, quote, "patiently conquering Europe's cities, street by street." I recently spoke with Christopher Caldwell and asked him what he meant by that.

(BEGIN VIDEOTAPE)

CHRISTOPHER CALDWELL, AUTHOR: The point of my book is not so much about conquest as it is about a Muslim population in Europe that is growing without ever really becoming part of Europe.

GIGOT: It's not assimilating, in other words.

CALDWELL: Not really, no, not like here.

GIGOT: Why not?

CALDWELL: I think that there's an economic explanation for it. Europe has a much more generous welfare state than we do. And a lot of our assimilation, I think, happens in the workplace.

GIGOT: Right.

CALDWELL: And our first generation immigrants are all in the workplace, all rubbing shoulders.

GIGOT: So at the lower levels of economic opportunity in Europe, it's just not fair, in part because of the welfare state?

CALDWELL: Well, yes and their asylum policies, which are a big sticking point in Europe over the last ten years, means that in some countries, immigrants are not allowed to work and so there are...

GIGOT: And by asylum, you mean people who are essentially political asylum.

CALDWELL: Refugees from Somalia and Bosnia and in the early '90s, and from Iraq.

GIGOT: They're not allowed to work?

CALDWELL: They're not allowed to work. And the result is you'll never hear — even Americans, who don't like immigration will never accuse immigrants of not being hard working. But you have a situation where in Swedish housing projects, you have, you know almost half the residents in these segregated housing projects are on welfare, first generation. You have the same thing in Amsterdam. And it begins to subsidize a very different form of life. So, for instance, two-thirds of the imams in France are on welfare.

GIGOT: Wow.

CALDWELL: That's part of the story.

GIGOT: But in the other part is it a cultural component? You seem to argue, for example, it's not just the vigorous self-confidence of Islamic culture that is a problem here, but it's also the weakness of Western culture, the lack of self-confidence by European liberals?

CALDWELL: I think that's right. Here is an area where I think my book differs a great deal from other treatments of this — my book tries to be comprehensive and tries to cover everything from, you know, from religion to economics to terrorism, to philosophy, et cetera. I think I differ from other writers on this in I have a generally positive view of the role of Islam, the religion in these communities. I think one of the things happening in Europe is there's no — immigrants come from much more conservative backgrounds than we do in our modern economies. There are a lot of people who have very traditional ideas about the family, about their daughters.

GIGOT: Right. The role of women.

CALDWELL: The role of women, abortion, gay marriage.

GIGOT: Sure.

CALDWELL: The European tendency is to sort of rub this in the immigrants' fixes. The Dutch show them a video of men kissing and women bathing topless on the beach as a way to drive them away.

GIGOT: Because modern secular European culture is so libertine in a sense or just live and let live?

CALDWELL: That's right. And they tend to look at immigrants as backward. At the same time, immigrants don't have a road into mainstream European politics the way a conservative from Latin America, who objects to abortion, say, would find his reoccupations reflected on a national level. So they make their own. They go back to Islam and have their daughters wearing the veil and that sort of thing.

GIGOT: What is the lesson from Europe for America on how to handle immigration and especially Islamic immigration?

CALDWELL: Certain things we have in common. One thing is that, when you commit to immigration, you commit to immigration for the long-term.

GIGOT: They're going to be here.

CALDWELL: Yes, and they're going to be here in ever increasing numbers because we talk about immigrants doing the jobs that Americans won't do. Well, those immigrants, if things work out, are going to become Americans. and then, they will no longer do the jobs that Americans won't do. Europeans are having a very hard time with that concept.

GIGOT: Do we do a better job than Europeans of assimilation?

CALDWELL: Absolutely.

GIGOT: Why is that?

CALDWELL: In part, it's because we went through this before. We went through this 150 years ago. We are now a country of immigrants. They are not. And they're having a hard time adjusting to it. But there's another difference, which is when we became a country of immigrants, there were a lot of people examining where the United States was going, what was happening to the country. In Europe, there are so many taboos about talking about what's happening to Europe, that they haven't had any real discussion and they haven't been ordering it. And it's partly to break those taboos that I wrote the book.

GIGOT: When you say there's a real difference between, say Mexican immigration, which is the dominant kind in the United States, and Islamic immigration, is there?

CALDWELL: Yes, there is.

GIGOT: Would you put a limit on the latter?

CALDWELL: What I put — I'm not a European so I have not suggested any...

GIGOT: I understand, but — but in the United States, would you limit it?

CALDWELL: You know, again, I'm not a politician. But I do think that it will be more problematic for us to assimilate over the long-term than Mexican immigration. The Mexicans come to communities that have religious institution that they already belong to, they speak a European language. They speak a language that Americans learn in high school. It's much less of a gap.

GIGOT: All right, Chris Caldwell, thank you so much for coming.

CALDWELL: Thank you, Paul.

(END VIDEOTAPE)

GIGOT: We will take one more break. When we come back our "Hits and Misses" of the week.

(COMMERCIAL BREAK)

GIGOT: Time now for our "Hits and Misses" of the week.

Dan, first to you.

HENNINGER: A hit to big oil, in fact, really big oil. Oil major B.P. announced a tremendous find in the Gulf of Mexico this week, a place thought to be moribund. Meanwhile, China's state oil company, Petro China, said it is investing $1.7 billion in Canadian tar sands. And we already know about the tremendous finds that have occurred recently on the coast of Brazil, all of which suggest the peak oil theories are wrong and that carbon is going to be around at least the next 50 years. and I think our policy makers ought to start taking this into account.

GIGOT: All right.

Bret?

STEPHENS: This is a big miss, another miss for Moammar Ghadafi. He recently introduced a motion in the U.N. calling for abolition of Switzerland. Why is he doing that? The Swiss arrested his son, aptly named Hannibal, a year ago because Hannibal as badly abusing some of his staff and put them in jail for a couple of days, let them go. Ghadafi retaliated by holding Swiss citizens hostage, threatening an oil embargo on Switzerland. Anyway, when I think of Switzerland, I think of great watches, great banks, beautiful scenery, fabulous cities. When I think of Libya, I think of dictatorship and oil and terrorism. So if we're going to abolish any country, I don't think it ought to be Switzerland.

GIGOT: All right.

Rob Pollock?

POLLOCK: Well, it's Reverend Wright all over again, except this time, he's working in the White House. You remember the green jobs President Obama talks about creating? The green jobs czar, a guy called Van Jones, is a radical leftist and racist who have been caught on tape saying things like White polluters steer poison into minority communities." He signed a petition, calling on the New York State attorney general to investigate whether the Bush administration allowed 9/11 to happen, as a pre-text to war. It makes you wonder when these people are going to stop popping up around Mr. Obama.

GIGOT: All right.

Kim Strassel?

STRASSEL: This is a miss for the news that former New York Governor Eliot Spitzer is debating a comeback, maybe even running for the U.S. Senate. I'm all for political ambition, but this was a guy who, only 18 months ago, resigned in humiliation because he was involved in a prostitution scandal. While I know that New Yorkers are not happy with their current crop of politicians, surely, surely there has to be new blood in the state. He may want to focus instead — he's got a new job. He's going to be teaching at City College in New York, a new course called Law and the Public Policy. Maybe he'll even learn something from it.

GIGOT: All right, Kim, thanks so much.

And remember, if you have your own "Hits or Misses," send them to us at JER@FOXnews.com .

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

Thanks to our panel, and to all of you.

I'm Paul Gigot. We'll see you right here next week.

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