This is a rush transcript from "The Journal Editorial Report," November 21, 2009. This copy may not be in its final form and may be updated.

STUART VARNEY, FOX GUEST HOST: This week on the "Journal Editorial Report," Sarah Palin's re-launch. The former Alaska Governor reemerges on the national stage to mixed reviews. We'll have ours.

And a double-dip recession? President Obama says it's a risk with rising debt. So why is there talk of another multi-billion dollar stimulus?

And Copenhagen's collapse, Kyoto 2 goes bust. As world powers admit that no treaty will come from next week's climate change conference. Has the global warming movement peaked?

Hello everyone, welcome to the "Journal Editorial Report." I'm Stuart Varney, in this week for Paul Gigot.

First up, the re-launch of Sarah Palin. The former Alaskan governor and vice presidential candidate launched a nationwide book tour this week. Fans hope it's the stop of the 2012 presidential contest. But whether or not she runs, Palin's populous appeal gives her enormous influence within the Republican Party.

Though she says the White House is not on her radar screen right now, she told to FOX's Bill O'Reilly, she thinks she has what it takes.

(BEGIN VIDEO CLIP)

BILL O'REILLY, HOST, "THE O'REILLY FACTOR": Do you believe that you are capable, could do the job of the president of the United States?

SARAH PALIN, (R), FORMER ALASKA GOVERNOR & VICE PRESIDENTIAL CANDIDATE: I believe that I am, but that's not to say that I'm putting myself out there to campaign or anything else.

O'REILLY: No, it's not to say that. But you believe that you're smart enough, incisive enough, intellectual enough to handle the most powerful job in the world? Do you believe that?

PALIN: I believe that I am, because I have common sense. And I have, I believe, the values that are reflective of so many other American values.

(END VIDEO CLIP)

VARNEY: Joining the panel this week, "Wall Street Journal" editorial board member, Jason Riley; assistant editorial page editor, James Freeman; and Washington columnist, Kim Strassel.

Jason, to you first.

Do you think that Sarah Palin now looks presidential?

(LAUGHTER)

JASON RILEY, EDITORIAL BOARD MEMBER: Well, I'm less concerned about her qualifications per se for being president, and more interested in the question of whether she's the right person to beat Barack Obama in 2012. If, as we're told by the pollsters, Republicans need to win back these Independent voters, that they lost to Obama last year, is she the right person to do that? And we don't have a huge sample here to go by, but we do have the elections earlier this month. We had two Republican gubernatorial candidates, one in New Jersey and one in Virginia, who both won. Both of them asked Sarah Palin not to campaign for them.

VARNEY: You go to answer your own question. Is she the right person to beat Barack Obama in 2012?

RILEY: I'm doubtful.

VARNEY: Doubtful.

Kim Strassel, clearly, she is back. She has been re-launched. But in your judgment, re-launched as what?

KIM STRASSEL, WASHINGTON COLUMNSIT: I mean, that's the huge question. Sarah Palin's book — I think some of us are waiting. There's so much criticism of her during the campaign about what she believed, what her actual views were. And I think some of us were thinking that this book was going to be on that, but it actually wasn't. It was much more on the campaign, her memories of the campaign, her family, her values. And Sarah Palin's going to have to come out —and I think the big question goes to what Jason says. one of the questions about how she succeeds, if she decides to continue going into higher politics, is, Is she going to revert back to what she campaigned as, as Alaskan governor, which was sort of an inclusive, everyone together, a little bipartisan, sort of very popular, positive governor, or is she going to campaign the way she did in the McCain campaign, which was much more — she was the conservative element of a presidential candidate who was viewed a little bit more suspiciously by Republicans. And she was really the ying to his yang. And that grated on a lot of independents. It's going to be curious to see, if she goes on with this, which Sarah Palin she turns out to be.

VARNEY: James, do you hear enough about here stand on the issues?

JAMES FREEMAN, ASSISTANT EDITORIAL PAGE EDITOR: Well, I think Republicans would be crazy to rule her out at this point. The reason Barack Obama is losing Independents is because of his unprecedented government intervention into the economy, huge deficits, bailouts, government ownership of industry. You look at her record, and what comes through very clearly is she's on the side of free markets. You look at her speech in Hong Kong. She talks about the roots of this crisis, the government roots encouraging housing investment, easy money credit policies at the Fed. Even going back to her debate with Joe Biden, she talked about individual responsibility and people not borrowing more than they can afford. So I think, in terms of the issues, she's meeting exactly not just the political moment, but really the need of our society right now for somebody to say "enough government."

VARNEY: Jason?

RILEY: I think I challenge you on the issues and Sarah Palin, James. Throughout the campaign, she talked about how Wall Street greed is what led to the crisis. She's talked constantly about energy independence for America. These are not free market conservatism, that's reactionary populism. That's Lou Dobbs. I question where she is. It could be that, as Kim said, she was playing a role on the campaign. And that was her job to go out and say those things. But I'd like to know if she really believes that stuff.

(CROSSTALK)

VARNEY: Hold on a second.

Kim, I've got to read something to you. David Hasanni wrote this in "The Denver Post." I want your reaction to it. Here's what he said, "These days, where you fall on the crucial issue of Sarah Palin tells the rest of us all we need to know about your character. You are either, A, a scum-sucking terror-lobbying elitist, or, B, a radical tea-bag loving simpleton.

(LAUGHTER)

Now, Kim, I think that's two sharply drawn, love or hate. I think...

STRASSEL: You think?

(LAUGHTER)

VARNEY: I do think it's too sharply drawn. I think there's no nuance in that. And I think her re-launch puts her in the middle, not just love and hate.

STRASSEL: Look, I think that that's what she is trying to do with this because — and I think that what's so fascinating is that it was written by a writer — one of the reasons that Sarah Palin is such a lightning rod is because of the press. You know, and it's a really fascinating to me what one of the things I think was helpful this week with the book launch was being reminded the role the press has played in portraying her and in driving the debate.

I mean, I don't know if anyone saw the "Newsweek" cover this week. It's amazing. They put her on the front. Instead of choosing one of two million photos of Sarah Palin dressed professionally, addressing, you know, Republican delegates, for instance, or meeting voters, they put her in a pair of running shorts. It's clearly designed to demean her. The press has it out for her. and she has to be aware of that going forward. That is going to be one of her biggest challenges. They are the ones that have driven this debate, so that you either have to be totally for her or totally against her.

VARNEY: Kim, it could be that all this hostility in the media has created the charisma. We'll debate that another time.

Thanks very much, Kim.

When we come back, President Obama warns that too much debt could lead to a double-dip recession. So why are congressional Democrats eyeing a second stimulus? And can they cram it through before Christmas?

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

PRESIDENT BARACK OBAMA: I think it is important though to recognize that if we keep on adding to the debt, even in the midst of this recovery, that, at some point, people could lose confidence in the U.S. economy in a way that could actually lead to a double-dip recession.

(END VIDEO CLIP)

VARNEY: That was President Obama earlier this week. He said very clearly that the economy could slip back into recession. Why? Because we keep piling on the debt. But with congressional Democrats in a panic over double-digit unemployment and next year's elections, there's talk this week that the House will pass a new jobs bill before it adjourns for the winter recess in December.

Now, they're not calling it a second stimulus, but the legislation could run the gamut, from infrastructure spending to small business lending to extra state aid. Many of those states, by the way, are on the brink of insolvency. Can you say budget buster?

Senior editorial writer, Joe Rago, also joins the panel.

But first to you, Kim. In Washington, do you think we'll get a second stimulus?

STRASSEL: They're going to try in the House. Again, we're not getting anything this year because there's no time for this to go through the Senate, which is busy doing health care.

Look, the Democrats have a perfect storm right now. Unemployment has gone above 10.2 percent. They've had this stimulus, all kinds of report coming in that it's not really going out very quickly. It's not doing much. And then these terrible report, all thus reporting about their jobs count, jobs saved or created, and how real those are and not, and so they've got a real mess. And now they're talking about this. But they can't call it a stimulus because the last stimulus hasn't been such a success.

And one of the other problems is that most of the things that they're talking about for their jobs bill are not things that actually would create jobs. So this is a bit of a pickle for them.

VARNEY: Yes.

James Freeman, what about the states? Many are on the brink of insolvency. I see that as a looming crisis. Can I use the word "bankruptcy" legitimately connected to a major American state?

FREEMAN: It could happen. And let's hope it does, if the alternative is another federal bailout. I think that people have grown tired of bailouts. Hopefully, bankruptcy is coming back into fashion now.

And if you want to look at how badly some of the states have managed their finances, California, Michigan, New York, New Jersey, some of these big states, the credit default swap markets say their debt is about as risky as that of Middle Eastern countries, like Lebanon and Egypt. It's unbelievable and you have a feeling that they're not going to reform until they go right over cliff.

VARNEY: Joe, Rago, what would that do? I mean, let's talk double-dip recession. Here we're talking a looming crisis for the states. Do you see a double-dip recession on the cards?

JOE RAGO, SENIOR EDITORIAL WRITER: I think it's certainly a possibility. And I think one of the reasons is you have to look at what the Obama agenda is doing to the economy. And I think that the political uncertainty is inhibiting risk taking in investment that should be leading to a more robust recovery. I mean, if you look just at the health care bill that Harry Reid released to the states, it pushes $25 billion dollars in liabilities on to these state budgets, when Medicaid is already one of their biggest line items. It's got wage controls on health insurance executives. So I think...

VARNEY: You almost say it pushes it onto these bankrupt states. I heard you right there.

(LAUGHTER)

Jason, what should the government do?

RILEY: Well, the number of people unemployed has grown by 3 million since the first stimulus passed, which is quite an amazing number, given what the administration said the stimulus would do for unemployment.

It's— the problem is that it's too expensive to hire people. and if you want businesses to hire people, reduce the cost of hiring. And that would mean reducing payroll taxes. And that's what this administration doesn't really want to talk about. They've talked about temporary job tax credits, which would essentially pay employers to hire people, but they would be temporary, so the job would probably only last as long as the tax credit did. What we really need to do is reduce the cost of hiring people.

VARNEY: James?

FREEMAN: Well, everything you mentioned in the intro to the segment about what's on the table in Washington, it's all new spending by the government.

VARNEY: Right.

FREEMAN: We hear all day from people in business, what we need is an incentive for us, people in the private market to spend. and that's what's missing. There's no tax incentive. Yet, the Bush tax cut is expiring. You have more taxes coming with health care. So there's all of this money on the sidelines and all of these potential job creators, who will not pull the trigger, because they look ahead and they see a bad environment created by Washington, with no incentive to invest.

VARNEY: Kim, there is a proposal from a Connecticut congressman that we use the $200 billion within the bailout fund that's not been spent yet, to spend that on job creation. And that — I don't think that would require big votes in Congress. That could be just done like that, couldn't it?

STRASSEL: You're looking at a big fight here on that. I think they would have to have some sort of discussion. But remember, the White House wants that money. They've got a deficit problem at the moment. They're very worried about what the public thinks about their spending. And they're saying, we're going to use the remaining amount of the TARP money to pay down the deficit. And then you have Congress going, whoa, not even, we're using it to pay for our new jobs bill. So that's going to be a fight.

I think the important word here is "certainty." This administration and this Congress could do a lot for the economy if they were to simply come out and say, we're not going to let the Bush tax cuts expire, we're going to reform corporate tax policy and we're going to do some things and this is what it's going to look like at the end of the year. That would help businesses a lot.

VARNEY: In short, Kim, what expectation do you have of that happening?

STRASSEL: Zero right now.

VARNEY: And that madam, is the last word, everyone.

(LAUGHTER)

When we come back, Copenhagen's collapse. There's a strong word for you. The president acknowledges that no agreement will be reached at that highly anticipated climate change conference in Denmark next month. He may not even go. So has the global warming movement peaked?

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

OBAMA: Once I take office, you can be sure that the United States will once again engage vigorously in these negotiations and help lead the world toward a new era of global cooperation on climate change. Now is the time to confront this challenge once and for all. Delay is no longer an option.

(END VIDEO CLIP)

VARNEY: Remember that? One year ago this week, then President-elect Obama promised to lead the world in negotiating a global warming treaty. It turns out that delay really is an option. This week, the president acknowledged there will be no such treaty coming out of the climate change conference in Copenhagen next month. The president may not go there, even though he's due to accept his Nobel Peace Prize in nearby Oslo just three days after the summit begins.

Joe Rago, I'm coming on strong here. I'm saying that Copenhagen is a bust, that cap-and-trade is dead, that the environmental movement, global warming is in rapid retreat and disarray. Am I too strong perhaps?

(LAUGHTER)

RAGO: Well, I don't think so. You know, Copenhagen has been built up for the last two years, especially after Obama's election, as kind of the Valhalla of climate change success. and this week, they've basically acknowledged the reality that not only are China and India not going to damage their economies in pulling millions of people out of poverty to acquire the West's climate neurosis, but it's going to face a very, very hard run in the united states Senate as well.

VARNEY: Is it the end of these mega-global deals on climate change?

RAGO: No, of course not. The movable feast goes to Mexico City next and it's a very potent political force. But in terms some sort of actual substantive agreement, I don't think we're going to see anything in the near future.

VARNEY: Kim, is it a potent political force here in America? I'm looking at cap-and-trade. I'm saying it's dead. Is it?

STRASSEL: Here is the thing to understand. Environmental regulation, especially the sort that's been proposed with cap-and-trade, is a luxury of wealthy countries. I mean, we've got a whole world full of a lot less wealthy countries right now. and one thing that was remarkable to me was that this administration and all of the people headed off to Copenhagen didn't understand sooner how this recession was going to affect their ability to do this. Countries, even the wealthy western countries, are not willing to double people's electricity prices right now, which would be the basis of this, to double their gas prices, which is what you'd have to do under cap-and-trade.

VARNEY: Even without the recession...

STRASSEL: And so we're going to have to have a pretty big recovery before people even people start talking about this. And by then, people might wonder if it's such a good idea.

VARNEY: That's my point. Even if you did have a recovery, even if we never had this nasty recession, would people be prepared to double their energy bills? I don't think so.

STRASSEL: No. And I think that now that the discussion has turned to the economic costs of this and people are looking at the science, again. But once it became an economic discussion, then the tables began to turn and I think it's going to be hard to turn them back.

VARNEY: James, how about you?

FREEMAN: Well, $800 billion is a lot of money. The cost is huge. and that's probably an underestimate, but, you know, there's also that little detail that there hasn't been any warming since 1998.

(LAUGHTER)

STRASSEL: Right.

VARNEY: What really kills it here? Was it economics? Was it the cost that killed it or something else?

FREEMAN: Well, what is the argument for it? If you're saying this is a massive cost, even bigger than this crazy stimulus, even bigger than the TARP and, by the way, there's no proof that this is happening as a result of man's activities. In fact, lately, it's not even happening anymore. So it basically has no premise right now.

VARNEY: Is the intellectual tide turning, Joe?

RAGO: Well, you know, I think it is. I think it is in part. Even under their own climate models of the U.N. or whoever it might be, it's very hard to get the benefits to justify the costs that it will impose on the economy over time. You know, when they say, well, you know, it only affects 1 percent, 2 percent of growth, you know, when that compounds over 50 years or 100 years, we're talking about huge costs that it will impose. and it's hard to get those to justify the benefits.

VARNEY: Kim, where does it leave Al Gore?

(LAUGHTER)

STRASSEL: Al Gore is still being asked by prominent climate change skeptics to debate. He is still ducking those debates. He'll still be out there making a scene and he'll still be out there trying to make money from this. I mean, let's not forget, a lot of this idea — these ideas were baked into the stimulus. There's a lot of grant money headed out in clean jobs and green jobs and solar and renewable energy. So that part of it's going to continue, even if we don't have a cap-and-trade bill. And that itself could be problematic.

VARNEY: James?

FREEMAN: But it is going to be a hit to Mr. Gore's investment portfolio.

STRASSEL: That's right.

FREEMAN: Because, yes, he'll be able to benefit from a lot of the taxpayer subsidies, but the valuations on these alternative energy companies included the idea that you're going to see some big regulation here. This is going to be a blow financially to Mr. Gore if it doesn't go through.

VARNEY: Up until now he has made money, has he not?

FREEMAN: Yes, well— I mean, possibly. There are no — very few of these venture investments have exits yet, so very few have come to the public market. We really don't know what they're worth. But this is very bad news for its portfolio if cap-and-trade fails.

VARNEY: When we come back — we have to take one more break by the way. And when we come back, our "Hits and Misses" of the week.

(COMMERCIAL BREAK)

VARNEY: All right, time now for our "Hits and Misses" of the week.

And, Jason, you're first.

RILEY: Jesse Jackson recently suggested that Artur Davis, a black congressman from Alabama, is a sell out to his race for voting against Obama care. So let's get this straight. Jimmy Carter says people who oppose — white people who oppose Obama's policies are racist. Jesse Jackson says that the black people who oppose them are sellouts. No liberals keep telling us we're not in a post-racial America, even though we have a black president. But obviously, they have no interest in us being a post-racial America. They would rather play these sorts of identify politics.

VARNEY: Joe?

RAGO: a miss to Attorney General Eric Holder, who obviously hasn't thought through some of the legal consequences of his decision to bring KSM and some of the other 9/11 plotters to New York for a civilian trial. In the Senate this week, he was asked, if Osama bin Laden was picked up in Pakistan, would he need to be read his Miranda rights and was completely flummoxed by the question. So I think this just goes to show the political nature of this decision, and not in the best interest of the U.S. security.

VARNEY: Is that a big miss for Eric Holder?

RAGO: I think it's a huge miss.

VARNEY: Huge, indeed.

VARNEY: It's not CSI Kandahar.

(LAUGHTER)

VARNEY: James?

FREEMAN: This is a hit to the American Bankruptcy Institute. Held a convention this week, lots of esteemed judges and lawyers there basically saying, you know, bankruptcy works and even for big financial firms. You actually can let them fail. So let's hope people in Washington are listening.

VARNEY: The Bankruptcy Institute says let them go? That's interesting. Self-interest perhaps? Who knows?

(LAUGHTER)

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

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

I'm Stuart Varney. Paul is back next week, and we all hope to see you then.

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