This is a rush transcript from "The Journal Editorial Report," December 19, 2009. This copy may not be in its final form and may be updated.

PAUL GIGOT, HOST: This week on the "Journal Editorial Report," the last revolt on health care. Forget the Republicans, could liberals sink Harry Reid's Senate bill?

And it's Obama versus Wall Street once again. But will the president's latest banker bashing do anything to help the economic recovery?

Plus, tensions with Iran come to a head. Is it time for the administration to finally act?

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

Among plunging poll numbers the White House scrambled this week to quell a liberal vote against health care reform. Led by former Vermont governor and DNC chair, Howard Dean, party progressives are attacking the bill as a sell out to corporate interests. And support among the American public isn't much better. According to a new Wall Street Journal/NBC poll, more Americans now believe it's better to keep the current health care system than to pass President Obama's plan, with 47 percent calling the plan a bad idea.

So joining the panel this week, Wall Street Journal columnist and deputy editor, Dan Henninger; senior editorial page writer, Joe Rago; and senior economics writer, Steve Moore.

Joe, so, Howard Dean says that he can't support this bill because it would increase insurance prices, increase premiums basically for individual consumers. Could he possibly be right?

JOE RAGO, SENIOR EDITORIAL PAGE WRITER: Oh, he's actually absolutely right.

GIGOT: No kidding? Mark this down, Rago and Howard Dean agreeing.

RAGO: Well, the insurer Well Point looked at this bill state by state and city by city, and they found premiums are going to rise 20 percent, 30 percent, 150 percent.

GIGOT: In some states.

RAGO: In some states. But the reason isn't the one Howard Dean proposes. It's that the regulations they favor and sort of the brute force central planning that the Democrats want to bring to health care.

GIGOT: And so you impose regulations like you force people to — force insurers to sell certain plans at certain times.

RAGO: At certain prices. And in a way, that encourages young and healthy people to opt out of risk pools, and wait until they're sick to buy-insurance. Plus, the entire regulatory apparatus that's going to come to health care.

GIGOT: And the individual mandate, which would oblige individuals, even people like you, young and healthy, to buy-insurance if they don't have it, even if they have to pay a lot more money for it.

RAGO: Right, and that's really the big complaint of the left and people like Howard Dean, who say, this is a bailout for the insurance industry. And you know, that there's a certain sense in which they're right.

GIGOT: But it's not really a bailout for insurance industry. In the sense that the insurers don't make a big return on equity, what is it, two and a half percent, something like that.

RAGO: Yes, and...

GIGOT: And the difference between what we — where we disagreed, Dan, with the left is that we think we want a more competitive insurance market by competing across state lines, for example. What they want to do, they want the government to play a much bigger role?

DAN HENNINGER, COLUMNIST & DEPUTY EDITOR: A much, much bigger role. I think the big event here, Paul, let's keep in mind, they went ballistic and berserk after the so-called Medicare buy-in died. That medical buy-in was a good deal. Some liberals couldn't believe they would expand to 55 years old. This is what they worked for.

GIGOT: They thought they'd slipped it in the back door.

HENNINGER: Right.

GIGOT: Exactly. After not having talked about it, suddenly, boom, it comes in the last minute.

HENNINGER: And it turned out it was just a political device and they threw it over the side as quickly as it had come in. And I think that is, in part, enraged them. First, they thought they had a public option. They got it in the House bill. It fell out of the Senate bill. And now this fell out of the Senate bill. And you're left with the insurance industry still alive. They can't stand it.

GIGOT: Steve, politically, how serious is this revolt of the left? Could it really take down the bill?

STEVE MOORE, SENIOR ECONOMIC WRITER: There's a bit of a panic in the White House right now, Paul, because they realize now they're trying to sell the Edsel of health care plans. It's the plan that nobody wants. Conservatives are obviously against it for the reasons that you just mentioned, that it leads to a single-payer system and does not increase competition. But now they have this revolt from the left, a kind of mutiny. How serious this is, it is still hard to gage. But what is unquestionable is that Americans don't like this plan. There are polls out now that show this plan is much more unpopular than Hillary Care the day it was defeated in Congress some 15 years ago. They have a problem. This is supposed to be their crown jewel, their crowning achievement, and it's a plan that almost no one wants.

GIGOT: Steve, is the left really going, in the end, to sink this kind of huge expanding of government?

MOORE: No, no.

GIGOT: All right.

MOORE: They will not.

GIGOT: Even though the big unions, Andy Stern at the Service Workers, Richard Trumka at the AFL-CIO, they say they can't support this bill. You don't think in the end they will sink it?

MOORE: I think it's very doubtful, Paul. I think this is something that — the White House has to have this bill. That's what they're telling all of their interest groups. And they're mumbling and grumbling about it. But in the end, they will accept it.

GIGOT: And you've already seen Bill Clinton came back and said late this week that he would support this, not perfect, but from the left wing point of view, but this big expansion of the government. I think it would take the government spending on health care from 46 percent of all spending to 60 percent over ten years, and even more after that. Is that a — is that something the left can afford to give up?

RAGO: No, I don't think so at all. I mean, this is what they've been working for, since FDR. This is the sort of...

GIGOT: Since Otto von Bismarck in Germany in the 19th century, I think.

(LAUGHTER)

RAGO: Exactly. And the liberal interest groups are sort of going to grumble, as Dan said, about losing the public option and the Medicare buy-in and so forth, but you're just going to see a giant expansion of federal spending.

GIGOT: Dan, that's the million dollar question, why was — and Steve pointed out this falling in the polls, this increasingly unpopular, on the right and even in many quarters on the left. Why would Democrats link arms, jump off a political cliff to pass this?

HENNINGER: Well, the Democratic interest groups, I don't think, are — I think they feel they can intimidate the White House and intimidate the Senate Democrats into pushing the bill back in the direction of something like the Medicare buy-in or the public option. They feel they are so powerful within the party that they can push this president. And we are going to find out just how much he can be intimidated.

GIGOT: But the Democrats, Joe, just want this — they're going to, in the end, take the risk, whatever the short-term political risks are, in the hope of getting the longer-term expansion of government, which will help the party of government. Is that the calculation?

RAGO: Yes. This is people have been in Congress since the 70s, Henry Waxman, Pete Stark, this is their life's work. And if they have to lose a few Senate seats or a few blue dogs to make an omelet, they're certainly prepared to do that.

GIGOT: Steve, do you think that the political price that Democrats pay will be very, very large for this short-term?

MOORE: Yes, they — Paul, think if you're somebody like Ben Nelson in Nebraska. We know nationally, there's only about 36 percent approval of this plan. Imagine what the approval rate is in a conservative state like Nebraska. Yes, I think a lot of these conservative Senators are very worried, especially those representing red states. And also, you know, Nancy Pelosi has basically said, look, we're willing to give up 25 seats. Think if you're one of those Blue Dog Democrats who's one of the 25 that's expendable?

GIGOT: OK, well, we'll see.

When we come back, Barack Obama's blame-the-bankers campaign. The president summons Wall Street chiefs to the White House for a scolding. But will his latest populous turn do anything to help the recovery?

(COMMERCIAL BREAK)

GIGOT: President Obama is back in attack mode, calling out fat cat bankers on "60 Minutes" and summoning them to the White House this week for a stern talking to. Amid the Democrat's panic over 10 percent unemployment, the president is not only blaming the bankers for causing the financial crisis by lending too much. He's now blaming them for causing the high jobless rate by lending too little.

Assistant editorial page editor, James Freeman, also joins the panel.

OK, Steve Moore, is the president right that banks aren't lending and, if so, why not?

MOORE: First of all, I think the reason that he went after the banks and called them fat cats, I think he's very frustrated with the fact that his own economic agenda is not working, that we still have 10 percent unemployment and that we've got 15 million Americans unemployed. And he's wondering why is my program not working?

But in terms of the banks, yes, there is still credit gridlock, no question about it. I talk to a lot of small business men and women who say we can't get the loans we used to. But the other side of the equation is did Obamanomics and all the new taxes that are coming, all the new regulations — there's also a problem where a lot of businesses don't want to take out loans now, Paul, because they feel like the opportunity for expansion is not there right now. They're in a hunker-down mode.

GIGOT: But, Steve, is it the supply of credit or is it the demand for credit.

MOORE: It's both.

GIGOT: Or are you saying it's a little bit of both?

MOORE: A little bit of both.

GIGOT: It's a little bit of both. OK, but this supply of credit issue is, in part, a function of low interest rates. A lot of economists think, do they not?

JAMES FREEMAN, ASSISTANT EDITORIAL PAGE EDITOR: Absolutely. The fed has cut interest rates essentially to zero. That means that banks can make an absolutely risk-free transaction of borrowing.

GIGOT: At zero.

FREEMAN: At zero.

GIGOT: Near zero.

FREEMAN: And buying U.S. treasuries and...

GIGOT: At 3 percent or 4 percent.

FREEMAN: 3 to 4 percent, so they're making a nice profit. Why take the risk on a small business owner, on a commercial real estate loan? So the federal policy is driving them toward the safer government investments, instead of the small business loans.

GIGOT: And the administration has endorsed this Federal Reserve policy which, in fact, has helped design, in part, to refinance the banks, right? Help them improve their balance sheet. That was the whole idea of this — of this bailout with the dollars from federal government capital and then from the fed's interest rate cuts?

HENNINGER: Well, that's exactly right. That was the first third or half of the year, right? The experience that the banks came out of, the September 2008 blowup, Lehman Brothers, AIG, banks were being destroyed. What was the problem? It was because they took insane risks on the subprime mortgage market. So the administration spends the first half of the year fixing that problem.

You now arrive at the point Steve was describing, 10 percent unemployment. And they're going to push the banks back into a condition of putting out risky loans? And the banks are saying, we cannot win under those circumstances. But I'll tell you something, they're not going back into that atmosphere of making risky loans.

GIGOT: Steve, here is where I sympathize with the president some. You've got the banks that were bailed out, no question about it. And now that they're making a lot of money, they're going to pay big bonuses again, particularly some of the largest banks that are taking pretty big risks again with their own dollars, investment dollars in the credit markets. They're making — they're doing very, very well. They're going to pay big bonuses. And the American people look at that and say, wait a minute, we're not doing as well as they are. And there's real frustration there.

MOORE: There is, but we've got to decide whether we want the banks to succeed. In fact, as Dan said, the reason we bailed them out is so they could get back on their feet and do the lending they're suppose to, or do we want to be punitive.

My problem with this whole thing, I mean, to Dan's point about, you know, the banks and the conundrum they're in right now, remember, many in Congress are talking about predatory lending laws. So if they go out and make these loans, Paul, they could be accused of being predatory lenders again. Which way is it? Does Congress want them to make loans or not?

GIGOT: Which is it? What does Congress want or they can't make up their mind.

FREEMAN: They can't make up their mind. And I think he's focused on absolutely the wrong issue.

GIGOT: The president?

FREEMAN: The president, and...

GIGOT: He often is, but...

(LAUGHTER)

FREEMAN: But for the moment, Steve is right. The big issue that he's ignoring and that's being ignored in the House and Senate, as they craft a new financial regime here, is how do you let them fail? Yes, we need to let them succeed. The bonuses are coming back now. What the president is not doing and Capitol Hill is not doing is saying, here is the plan that insures next time when these guys go over the cliff, there is a penalty for that, and it's not going to be applied to taxpayers.

GIGOT: So that implicit subsidy still exists and the fact the financial reform that the administration is writing with Congress would institutionalize...

FREEMAN: Bringing more.

GIGOT: ... that too-big-to-fail doctrine.

FREEMAN: Bringing more institutions into that zone. And it's incredibly corrosive. Could we even afford the next crisis? So that's the problem they've got to solve. And the president needs to focus on that.

GIGOT: We are going to have — France and England are proposing a one-time 50 percent tax on bonuses. Good idea?

HENNINGER: No, I think it's a terrible idea. And it drives people out of the business and it just disincentivizes them. You are basically asking the economy to rationalize itself and get back to a system where you are making loans for the right reasons. Right? And all this is bringing them in the wrong direction. The reason they're not making the loans is uncertainty out there in the future. And they won't do it until they get more clarity.

GIGOT: All right, last word.

When we come back, tensions come to a head as a defiant Iran test fires an upgraded missile capable of hitting Israel and parts of Europe. How will the administration respond?

(COMMERCIAL BREAK)

GIGOT: The House voted overwhelmingly this week in favor of new economic sanctions against Iran. The legislation would punish foreign companies that sell refined petroleum products to the Islamic Republic, which imports 40 percent of its domestic fuel. The vote came the day before Iran test fired a medium-range missile capable of reaching Israel and parts of Europe, and the same week that Iran's foreign minister announced that three American detained hikers will face trial on charges they were committing espionage.

For more, I'm joined by Wall Street Journal columnist and deputy editor, Bret Stephens; and editorial board member, Matt Kaminski.

OK, Matt, it's been a year since the president's inaugural, nearly a year, when he said we will — he offered an open hand to Iran, in return, if they would unclench their fist. What does he have to show for it?

MATT KAMINSKI, EDITORIAL BOARD MEMBER: Paul, you've already mentioned some achievements he's gotten so far. To that list I think we might add that this week there was a report that Iran is developing a trigger for a nuclear bomb. We've had other reports in the last few months that they're making progress on developing the weapon, making progress on enriching uranium. So I would say they've very little to show for this.

GIGOT: And, Bret, the American hikers, putting them on trial would seem to be a diplomatic slap in the face. A lot of regimes would use this as diplomacy to use this as a gesture.

BRET STEPHENS, COLUMNIST & DEPUTY EDITOR: Exactly. What Iran does frequently is use these de facto hostages as bargaining chips. There are allegations or rumors that certain Iranian scientists have gone missing and maybe taken by Western intelligence agencies or they've defected. And so the idea is you get these Westerners and try to make a deal, which is — you know, which is not exactly the behavior of a regime that is trying to show its best face to the world, leaving aside everything Iran is doing domestically.

But I would like to, if I can, defend what the Obama administration has been doing, at least in one sense. Throughout the Bush years, the view was that the only thing that's standing in the way of better resolutions with Iran and a resolution of the nuclear program was President Bush.

GIGOT: Was the Bush administration.

STEPHENS: Was American intransigence. And there's a teaching moment, to use Obama's favorite term here. In the last year, this administration has made one overture after to another to the Iranians.

GIGOT: Right.

STEPHENS: And it ought to at least demonstrate that the problem with Iran does not originate in Washington. It originates in Tehran.

GIGOT: But that assumes that now they'll act and do something to really act against the regime and coordinate international response and the U.S. response?

KAMINSKI: Well, I think we cannot go from one deadline to another deadline. Hillary Clinton this summer decided it would be —until September, Iran has the chance to show it would, in fact, act in good faith, or we are going to gather, sort of build the coalition, a national coalition to put pressure on Iran. There's a pretty well-known Shiite document called Tagia (ph), which means that it's all right to lie to the infidel.

GIGOT: That's you and me.

KAMINSKI: Right. Exactly.

(LAUGHTER)

KAMINSKI: And that's been the Iranian policy toward the West for the last 30 years.

STEPHENS: But that's what makes what happened this week fairly significant. The House finally passed, by a vote of 412 to 12, the Iran Refined Petroleum Sanctions Act. It's basically an Iranian version of the Helms-Burton deal against Cuba.

GIGOT: Against Cuba.

STEPHENS: It says to oil companies, if you want to do business in Iran, you can't do business in the United States. As you mentioned, Iran imports almost 50 percent of its refined gasoline products. So it is, in fact, heavily dependent on its ability to get refined gas from foreign sources. This could have a real effect on Iran's domestic politics, particularly when they're at this moment of weakness.

GIGOT: Yes, but you've reported, the administration has written a letter to the Senate Foreign Relations Chairman, John Kerry, saying, look, don't pass this in the Senate, because this would be the wrong moment to do it, when we're still trying to negotiate with Iran.

STEPHENS: This is — I mean, it's almost inexplicable. Here we are now at the second deadline that the administration set for having some progress with the Iranians, and you have overwhelming bipartisan support from liberal Democrats to very conservative Republicans in favor of this bill. It is precisely the kind of sanctions, the kind of tough sanctions that Obama talked about when he was a candidate. I don't — it's hard to account for what the administration is doing.

GIGOT: I want to ask you about this road map. Politically, overwhelmingly supported, Republicans and Democrats. Should this encourage president Obama saying, look, the people of the United States behind you, Congress is behind you, if you take tougher action against Iran?

KAMINSKI: You would hope so. And drawing on the conclusions that he reached in his Oslo speech, he's now trying to sound tougher. But still, they have yet to show they're willing to act on those words.

GIGOT: All right, Matt, we'll see.

We have to 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.

Bret Stephens, first to you.

STEPHENS: Well, you know, these last ten days, leaders of the world have been gathering in Copenhagen to discuss global warming, of course, amid lots of snow.

GIGOT: I know you're sorry you couldn't be there.

STEPHENS: Very sorry. Many leaders, many earnest proposals, but who should get the warmest reception from the audience? None other than Hugo Chavez, who received multiple standing ovations for his 28 minute speech quoting Marx and Jesus and others of his favorite philosophers.

GIGOT: The president of Venezuela.

STEPHENS: The president of Venezuela. He said there's a silent and terrible ghost in the room and it's capitalism. Now, I find this amusing from a man whose sole export is oil.

(LAUGHTER)

GIGOT: All right.

Matt?

KAMINSKI: This is a miss for Luke Ravenstahl, who is the mayor of Pittsburgh, gets a miss this week for trying to shake down students in Pittsburgh. He wants to impose a tax on student tuitions to plug a hole in his budget. He says, if the universities — there are ten of them now in Pittsburgh, who are the biggest employer in the formerly known steel city — that if they voluntarily contribute to his budget, he might forget the tax. I think this extortion as tax policy deserves a failing grade.

GIGOT: All right.

James?

FREEMAN: This is a big hit to the honorable Barney Frank, chairman of the House Financial Services Committee. Paul, as you know, he's got a long losing streak when it comes to financial regulation, but he is...

GIGOT: A fan of yours, too.

FREEMAN: Yes, and he has a terrible bill that just passed the House to reform finance. But one great thing is he reforms the credit rating agency racquet. He breaks it up so the firms Standard & Poor's and Moody's and Fitch who slashed their triple-A rating on mortgage-backed securities, will no longer enjoy the cartel.

GIGOT: All right, thank you, James.

And remember, if you have your own "Hit or Miss," send it in to us at jer@FoxNews.com.

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 so you right here next week.

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