This is a rush transcript from "The Journal Editorial Report," February 20, 2010. This copy may not be in its final form and may be updated.

PAUL GIGOT, FOX HOST: This week on the "Journal Editorial Report," Barack Obama save the Senate tour. The president stumps for embattled incumbents as Evan Bayh's retirement puts the Democratic hold on the Senate further in jeopardy.

And a preview of next week's health care summit as key Democrats call for the return of the public option. How should Republicans respond?

Plus, inside Iran's Revolutionary Guard. Are Hillary Clinton's claims of a military takeover true?

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

Coming off Indiana Democrat Evan Bayh's surprise retirement announcement, President Obama embarks on what some are calling his save the Senate tour. Heading west to campaign for two embattled Democrats, Michael Bennett of Colorado, and even Senate Majority Leader Harry Reid of Nevada. The president is putting his popularity and fund-raising chops on the line as he tries to help his party hold on to the majority in the Senate.

Joining the panel this week, Wall Street Journal columnist and deputy editor, Dan Henninger; editorial board member, Jason Riley; and Washington columnist, Kim Strassel.

Kim, let me ask you first about this remark that Evan Bayh made during his retirement announcement that he's leaving Washington because the bipartisanship and gridlock was too bad, he couldn't take it anymore. Do you buy that?

KIM STRASSEL, WASHINGTON COLUMNIST: No, I think Evan Bayh is leaving the Senate because there were serious questions about his re-election.

GIGOT: Really? He had a $13 billion — he had a $13 million war chest.

STRASSEL: Right, but he was also facing a very potentially strong Republican challenger in a state that — and this is key — with a lot of voters who are very unhappy and growing increasingly unhappy with the agenda coming out of Washington from this majority in the White House. And Mr. Bayh, despite his sort of protest about the problems of partisanship, has voted for a lot of that and agenda. And that was going to come back and potentially hurt him in a re-election effort.

JASON RILEY, EDITORIAL BOARD MEMBER: Bayh is the 5th Democrat to decide that he's not going to run for re-election. And then you've got the slate of incumbent Democrats running for re-election that are struggling, Blanch Lincoln in Arkansas. You mentioned Bennett in the opening, and Harry Reid. You've also got Arlen Specter in Pennsylvania, Democrats are in real trouble right now. The trend is running against them right now. And they need to figure out a way to turn this around. And I think Bayh's indication is that the party's struggling right now.

GIGOT: What about the argument, Dan, before we get to Senate campaign, that somehow all it means is that the U.S. government is broken, the Senate is dysfunctional and the filibuster has ruined everything. And even our constitutional system is breaking down. Do you buy any of that?

DAN HENNINGER, COLUMNIST & DEPUTY EDITOR: No, not really, not at all. I don't think the system is breaking down in the least. There is an argument that if the Senate or Congress isn't doing anything, the country is better for it. I think we're getting to the point where that is a pretty good argument.

(LAUGHTER)

But, look at what's been going on in the Congress. We've talked about these issues for a year, the cap-and-trade bill, the Obama health care bill. The Republican and Democratic parties are just simply far apart on those issues. And the Democrats, certainly with health care, have given no indication that they wanted to push towards the middle. That's not dysfunction. That's simply two parties unable to agree on everything.

(CROSSTALK)

GIGOT: Kim, it does take 60 votes now in the Senate to get anything done. A lot of Democrats argue, look, the filibuster is a relatively modern phenomenon and only developed in earnest the beginning of the last century. It wasn't intended to tie up the Senate on everything. So in that sense, the filibuster has made the Senate dysfunctional. Do Democrats have an argument on that?

STRASSEL: No. They had 60 votes the past year. The real point here — and a huge majority in the House. The point is that the reason this agenda has not passed is because Democrats don't approve, a lot of Democrats don't approve or are very wary of the agenda coming out of this White House and by the leadership in Congress. So the fact that they didn't get anything done this year — I mean, the Republicans were almost a nonentity in this discussion. They were never going to be better positioned to pass their agenda and it didn't have anything to do with dysfunction and partisanship.

RILEY: The irony is a lot of progressives out there are saying "good riddance" to Evan Bayh. But the reality is that the party needs more Senators like him.

GIGOT: You can't have really a functioning majority unless you win — you get anywhere close to 60 votes —

(CROSSTALK)

HENNINGER: And you know, Jason, I think — I think that Evan Bayh is saying good riddance to the progressives. I think he's separating himself from the smoking ruins from the Democratic Party.

GIGOT: And come back — and coming back for a presidential run later?

How in the world —

HENNINGER: Somebody is going to have to rebuild this party.

RILEY: Paul, I would not be surprised if Evan Bayh replaced Joe Biden on a VP ticket in 2012. I think that Obama would welcome that. It would mean he wouldn't face Bayh as a challenger in 2012. Bayh would like it because he would be the frontrunner in 2016.

GIGOT: I think thought that the filibuster has been used excessively in the Senate on things like nominations to prevent a president — not just this president, but even President Bush before him to fill out his government. But on health care and cap-and-trade, 60 votes is stopping some of the really bad legislation that might have gotten through. And Democrats didn't care when they were stopping George Bush's Social Security reform with 60 votes.

HENNINGER: Well, that's the way the system works in country. It's supposed to be difficult to pass legislation. When it becomes difficult, you're supposed to be do politics and find a way to adjust the legislation or the bill so it passes. The Democrats haven't been willing to do that.

GIGOT: Kim, on the political question, can the president put on the rally cap here and help Harry Reid and Bennett?

STRASSEL: Look, this was the promise. The White House said to these guys all along, come with this, come with us on this agenda and then we will be out there with you in full force when it's time for re-election.

The question now is whether or not that the president actually is a help to a lot of these guys in the field. His approval ratings keep falling. Americans view the White House and the president for a lot of the agenda that they don't like. So he's going to go out there and he'll rally up the liberal base, but whether or not he's going to convince Independents or Republicans to go out and vote for some of these incumbent Senators and House members is a big question.

GIGOT: Jason, quickly, I was surprised this week. Michael Bennett came out with the public option, the return of the public option in health care. Is that going to help him in a race next fall?

RILEY: I don't think it's going to help him, but somebody in his polling group is telling him that it will. It's a mystery to me.

GIGOT: All right, Jason, thanks.

When we come back, the strategy behind next week's health care summit. What are Democrats really up to? And how should Republicans respond?

(COMMERCIAL BREAK)

GIGOT: Is the public option back? Ahead, of next week's health care summit, some key Democrats are saying that the government-run plan, which was scrapped to win over Senate moderates, could once again be on the table.

House Majority Whip James Clyburn said this week that the public option could re-emerge if the Senate were to use a procedural tactic called reconciliation to pass additional health reforms with only a simple majority vote. "We were trying to get the 60 votes by dropping the public option," he said during appearance on MSNBC. "So if you're not going to do a 60-vote strategy, but instead 50-plus one strategy, the public option could very well be part of this package."

And late this week, Chuck Schumer became the first member of the Senate leadership to get on board, signing a letter that called on Harry Reid to hold a reconciliation vote on the government-run plan.

Senior editorial page writer, Joe Rago joins us again.

So, Joe, is health reform about to make a comeback?

JOE RAGO, SENIOR EDITORIAL PAGE WRITER: That remains to be seen, but —

(LAUGHTER)

GIGOT: They're going to try.

RAGO: They are definitely going to try.

GIGOT: OK, so what is their strategy for doing it? Two things, they have the health care summit coming up, this sort of bipartisan love fest, or maybe not, and then you have an assault on the private insurers again. What's the strategy behind that?

RAGO: Well, I think it's two pronged. The strategy of the summit is to portray the Republicans as obstructionist and the party of no, so that, that way, they can justify this, what is really an abuse of Senate rules, to ram this through on 50 votes plus the vice president.

GIGOT: Really, so that's one prong of the strategy and then the other one?

RAGO: The other one, it's just to go after the insurers. It's sort of —

GIGOT: Sort of the populous gin up the left?

RAGO: Yes, it's sort of, whenever Democrats get into a jam, the first thing they do is blame the insurance lobby and all of their unconscionable practices.

GIGOT: I want to get to this WellPoint insurance fight, but let's talk about the summit first, Dan. Is this a political ambush?

HENNINGER: You know, Paul, at first I thought it was an opportunity for Republicans to state their case. The re-introduction of the public option really looks to me like a bad development.

For one thing, I think you have to look at it from the point of view of the liberal Democrats, why is this happening? It's happening because they really want the public option.

GIGOT: They believe it.

HENNINGER: They believe it, and they see an opportunity to get it. And they've already, you know, crushed a lot their own to get to this point. But if the Republicans are being expected to go over there next Thursday and talk about health care in the context of something that is already inflamed the American people, damaged a lot of members of the Congress, I'm very reluctant to see why they should go there and participate in that.

GIGOT: They can't really — Kim, if they don't go, there will be empty chairs and they'll just fulfill the president's claim that — the Democratic claim that they're the party of no. Do they have any choice, really?

STRASSEL: No, they have to go. They have got to show up. Because as you said, they'll reinforce the message that they are the party of the no. And the Democrats will say what they were planning to say anyway without anyone to rebut them.

What they need to do is go to this and they need to keep the focus on, not on — the Democrats are going to be talking about insurance prices. They're going to talk about trying to scare people about the Republicans. The Republicans need to keep the focus on this bill, how unpopular the bill is, pointing out it's a Democratic opposition that has kept the bill from passing so far, and keep saying it over and over.

GIGOT: So they're going to send Republicans, Joe. A lot don't understand health care well, because they're much more comfortable on taxes and security. Are they going to send Republicans who actually understand any of this stuff?

RAGO: Yes, I think so. I think you'll see Tom Coburn, a physician from Oklahoma, in the Senate. You'll see Paul Ryan, who has coming out with a very sophisticated entitlement reform. But, you know, I think they go and they think of this as a negotiation, they think of this as —

GIGOT: And at the end of it.

RAGO: Right, I think is going —

GIGOT: That's a mistake.

RAGO: Right. They're sort of going to look sort of like saps.

(LAUGHTER)

I think they sort of —

GIGOT: So what should they do?

RAGO: I think they should go into it with the spirit of it, which is Kabuki political theater, and just, you know — and they know what Obama is going to say. I mean, he's sort of become the Willie Lohman of —

HENNINGER: That being the case, I would send Senator Tom Coburn by himself.

(LAUGHTER)

This is like playing chess with a computer. He's got the whole thing in his head from A to Z, right? And he's fun to listen to on health care.

GIGOT: Kim, the White House assault, the Democratic assault on the insurance company, WellPoint, for its subsidiary in California raising rates as much as 39 percent on its individual market customers. That's out in full throat. What is behind this?

STRASSEL: This is the new font. They are going to try to scare people into passing the health care bill saying, look, this is an example. If we don't do something now, the insurers are just going to keep jacking up health care premiums and health care will become unaffordable. And this is why we must act. It's a little shallow. They've now expanded it beyond WellPoint to talk about any insurer in any state who's been asking for a rate increase.

GIGOT: But is this argument fair? Is that argument correct?

STRASSEL: It's not.

GIGOT: It's not. Why not?

STRASSEL: It's not. Because, actually, what's interesting is these rate increases are an example of what will happen if we have federal health care legislation. because what these insurers are primarily responding to are state regulations, many of them, which look very much like the federal legislation, that require them to insure certain people, in large numbers of people with pre-conditions, without any kind of regard to their actuarial real health benefits and how much it costs. And as a result, they are having to charge more to the rest of their consumers to pay for these.

GIGOT: Yes, they have price controls on what they can charge for these so-called COBRA plan holders. And that is the COBRA is the law that allows you to maintain your health insurance for 18 months, 24 months in some states, I think.

RAGO: Yes —

GIGOT: After you have — after you've lost your job. And in California, they say you can't drop your coverage.

RAGO: Yes, I —

STRASSEL: No, you must keep paying to these people who are older and sicker. And meanwhile, the economic recession has driven a lot of younger, healthier people, who are currently paying into the insurance pool, out because they figure, look, when I get sick down the road, I can always get insurance. I'll pay then. So you've got fewer healthy people paying into a pool, paying for a much more sick unhealthy pool.

GIGOT: All right, Kim, last word.

Still ahead, Hillary Clinton says Iran is drifting toward a military dictatorship. Is she right? When we come back, journalist, Amir Taheri, takes us inside Iran's Revolutionary Guard and the struggle for control of that nuclear state.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

HILLARY CLINTON, SECRETARY OF STATE: We see that the government of Iran, the supreme leader, the president, the parliament is supplanted and that Iran is moving toward a military dictatorship.

(END VIDEO CLIP)

GIGOT: That was Secretary of State Hillary Rodham Clinton warning an audience in Qatar this week that Islamic Revolutionary Guard Corps is taking over the government of Iran, a charge that the country's supreme leader, the Ayatollah Ali Khamenei, calls a lie.

But my guest this week says there's reason for Khamenei to be worried. Amir Taheri is an Iranian-born journalist and the author of the book "The Persian Night: Iran under the Khomeinist Revolution."

Good to have you back on the program. So you wrote for us that Iran was moving towards a military dictatorship even before the secretary of state said it. Who is running Iran now?

AMIR TAHERI, JOURNALIST & AUTHOR: Well, in the reality, it is the Revolutionary Guards, because they have nine out of 22 ministerial posts. They have half of the governorships of the country, many ambassadorial posts. And, of course, they appeared on television almost every night. You see one of resident generals setting the tune. And there was the anniversary of the revolutionary on February 11th, which the revolutionary guard, for the first time, took over and run like a military operation with a code name (INAUDIBLE) so that it was the military running the show at the moment.

GIGOT: Well, we've been trained to — at least I've been raised to think of Iran as a theocracy with religious belief at the center of its governance. Is that no longer true? And what does it mean for how the regime is going to behave?

TAHERI: The regime is a fascist regime, which used religion as its main theme, as Hitler's regime was using nationalism and racism. Mussolini's regime was a fascist regime using historical memories of Italians. So the nature of the regime has not changed. The ruling group has changed because the clerics who were dominant in the system now find out that the majority of Shiite clergy do not support them any longer.

GIGOT: So what does that mean for the ability of the regime to maintain power, first of all, inside Iran? Does it make it stronger or weaker?

TAHERI: Well, it's basically tactically stronger and strategically weaker. Tactically, because the can, of course, always deploy 100,000 men, as they did in Tehran to control the capital and to crush the opposition, if necessary. But in the longer run, looked strategically, of course, the regime would become more isolated and they would lose the base of support that they have among parts of the Iranian population.

As far as the outside world is concerned, it's very bad news because a military regime would mean a more provocative foreign policy because they want to justify their own existence, you know, they're increase in their budget. For example, this year, they are asking for 21 percent increase in their budget. And for that, they would need to provoke conflicts. They claim that they can dominate Iraq and Afghanistan, once the Americans have run away, and in that way, you know, they are very active in most countries. They're active in Lebanon. They're active in Syria, in Sudan and in the Persian Gulf.

GIGOT: But it's really hard to believe that the Iranian regime would get more aggressive with its neighbors. They've been very aggressive in trying to meddle in Iraq's democracy. As you've said, they've armed Hezbollah and others in the region. You're seeing that these changes inside Iran could mean a more aggressive Iran outside the country?

TAHERI: Yes, if you see the history of the past 30 years of Khomeini, this regime has become more and more hard-liner. Many books and articles appear, say well, this is like other revolutions. It's Thermidor, as in the French Revolution. And Iran is coming towards moderation. Six American presidents were fooled, you know, by the idea of this regime becoming moderate. There are some regimes will only become moderate. They will stop only if they hit something hard.

Therefore, you know, I could say, you ain't seen nothing yet. These people are having a messianic madness that could plunge the whole region, indeed, the whole world into catastrophe.

GIGOT: What about implications for the nuclear program, which of course, the rest of the world has been — or most of the rest of the world has been trying to stop. The U.N. nuclear agency this week said that they fear that Iran may already be working on a nuclear warhead. Do you think they're more determined now to move ahead with that?

TAHERI: Yes, I think so, because they have increased the percentage of uranium enrichment from 20 percent, and Ahmadinejad has said the centrifuges will rise — the number of centrifuges will rise to 50,000. When President Obama became president, there were 400 centrifuges working. And today, there are 8,000. And Ahmadinejad is, of course, promising 50,000. So, there's no doubt that the atomic program is going to be accelerated.

GIGOT: All right, do you think — and we don't have a lot of time left. Do you think there's any hope for the economic sanctions, even tougher sanctions that the Obama administration is talking about? Any hope for those stopping this development on the nuclear side?

TAHERI: Well, sanctions would help because my main hope is, from the uprising of the Iranian people inside Iran, if they two are combine, if Iranians are convinced that the democracy, especially the U.S., are not going to make a deal with this regime, it would help them accelerate the regime change, which is now becoming increasingly a policy of a majority of Iranians.

GIGOT: All right. Amir Taheri, thank you so much for being with us. We are going to watch this story carefully.

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.

Kim, first to you.

STRASSEL: This is a hit for President Obama for meeting with the Dalai Lama. This is something the president didn't have the courage to do last year. He was first sitting president since 1991 who avoided meeting with the Dalai Lama on a trip to Washington. He didn't want to upset China and it sent a bad message. But in a way, that's what makes this week more noteworthy. If anything, tensions have only risen over hackers, over currency, over recent arms sales to Taiwan. And so he could have used that as an excuse. Instead, he sat down and sent the messages that presidents are supposed to send, which is we believe in religious freedom and democracy and we won't be dissuaded from that.

GIGOT: All right.

Jason?

RILEY: A local teachers union in Central Falls, Rhode Island, has rejected a plan to reform one of the worst school districts in the state. Something like 7 percent of 11th graders are proficient in math. The plan would have called for adding 25 minutes to the school day and subjecting teachers to more rigorous valuations. The union said no. So the school superintendent announced that she's going to fire the entire staff at the school. And I say good for her. More teachers unions should be subjected to this. The push policies that put their interests ahead of the kids and not enough administrators stand up to them.

GIGOT: All right.

Joe?

RAGO: This is a hit to the five corporations that left an outfit called the U.S. Climate Action Partnership, which was formed a few years back to lobby Congress for cap-and-trade, hopefully, in a more business friendlier or rent-seeking direction. And what you saw this week was some real big companies, Caterpillar, B.P., Conoco, Xerox, who of left this —

GIGOT: Dropped out.

RAGO: Right, and put the interests of consumers and shareholders ahead of politics.

GIGOT: All right, great, Joe.

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.

Content and Programming Copyright 2010 Fox News Network, Inc. Copyright 2010 Roll Call, Inc. All materials herein are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of Roll Call. You may not alter or remove any trademark, copyright or other notice from copies of the content.