This is a rush transcript from "The Journal Editorial Report," May 22, 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," the education wars heat as the next race to the top deadline looms. Teachers unions and ACORN are putting out all stops to kill the charter school movement. We'll talk to a filmmaker who has captured the drama of parent versus unions in a new movie.

And a wild week in politics as Democrats celebrate a big win in Pennsylvania. A Connecticut scandal fuels Republican hopefuls for taking back the Senate.

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

First up this week: the battle over school reform. The already- heated debate over charter schools is about to get few degrees hotter with a nationwide release of a powerful new documentary. "The Lottery" follows four families trying to escape some of New York City's worst public schools, hoping for a coveted spot in the Harlem Success Academy, a charter school. In the process, the film shines a light on the organized backlash against charters by some elected officials and teachers' unions.

Take a look.

(BEGIN VIDEO CLIP FROM "THE LOTTERY")

GRAPHIC: The average black or Latino 12th grader reads at the same level as the average white 8th grader.

UNIDENTIFIED FEMALE: The problem is not parents, the problem is not the children. The problem is a system that protects academic failure.

GRAPHIC: Each year in America, hundreds of thousands of children enter lotteries.

UNIDENTIFIED REPORTER: Parents are literally fleeing their zoned schools as they vie for seats in charter schools.

GRAPHIC: The prize is a better future.

UNIDENTIFIED MALE: A child's destiny should not be determined on the pull of a draw.

UNIDENTIFIED FEMALE: Every year we wait to offer parents the choices they deserve is a year in which children's futures are destroyed.

UNIDENTIFIED FEMALE: A hundred percent of our children aced the exam.

UNIDENTIFIED MALE: These charter schools do not have enough space to take care of all of the people who want to be there.

UNIDENTIFIED FEMALE: The United Federation of Teachers is trying to halt the progress and put the interests of adults above the interests of children.

UNIDENTIFIED FEMALE: You are not welcome here! We will not welcome you here!

UNIDENTIFIED MALE: We are trying to really transform somebody's life. And that is not an easy thing to do.

UNIDENTIFIED MALE: Look at these children. They want to become doctors, they want to become the nation's next president.

UNIDENTIFIED BOY: I am Barack Obama!

UNIDENTIFIED FEMALE: You look a little bit like him in that suit.

UNIDENTIFIED BOY: I feel a lot like him.

UNIDENTIFIED MALE: Every one of us wrote the leadership and said I, demand you take a stand on education. We would make this a better country for all of our children.

UNIDENTIFIED MALE: We've got everybody in Harlem here tonight, huh?

GRAPHIC: One city.

UNIDENTIFIED MALE: What can I do? I'm just waiting for the lotto.

GRAPHIC: Four families.

UNIDENTIFIED MALE: You can see a lot hope in a lot of parents' eyes.

GRAPHIC: And the chance of a lifetime.

UNIDENTIFIED FEMALE: I know this is the moment you've all been waiting for.

UNIDENTIFIED MALE: Here we go.

GRAPHIC: The Lottery.

(END VIDEO CLIP)

GIGOT: "The Lottery" was directed by Madeleine Sackler. She joins me now.

Welcome. Good to have you on the program.

MADELEINE SACKLER, DIRECTOR, "THE LOTTERY": Thank you. Thank you very much.

GIGOT: Why did you make the film?

SACKLER: I made the film for two reasons. The first was a statistic out of New Haven that I heard several years ago, which they called the flip, where 17 percent of the kids at the time were at grade level —

GIGOT: Seventeen percent.

SACKLER: Seventeen percent. It's shocking really. But at a nearby school, it was 71 percent and they were serving the same kids. The second reason was a news clip I saw of the lottery that we ended up featuring in the film.

GIGOT: Right.

SACKLER: I was really shocked by the numbers of families there. There was 5,000 parents, crossing their fingers, hoping to win a chance at a better education.

GIGOT: Why do they have to have a lottery? Why can't the people just get the school of their choice?

SACKLER: They are open enrollment, which means that —

GIGOT: The charters are?

SACKLER: Hm-mm. The charter schools. The public schools can accept anybody who lies, which is writing your name on a piece of paper. There's no real application process. If the demand out paces supply, they are required by law to hold a lottery.

GIGOT: Wow. How many kids are on the waiting list?

SACKLER: For this particular school it's thousands. I mean, nationwide —

GIGOT: Thousands! Thousands of kids, whose parents want them in these higher performing schools, because they're higher performing schools.

SACKLER: Absolutely.

GIGOT: They have to basically sit there and wait and see if their name comes out of the number?

SACKLER: Nationwide, it is in the hundreds of thousands of parents who can't get the school they want.

GIGOT: Wow. You are a filmmaker. You didn't start out in this in any sense political. What did you learn about the politics of charter schools and school choice as you got into this project?

SACKLER: It was very interesting. I set out really just to tell the story of four families, who were forced to rely on chance to get their kids the education they deserve.

GIGOT: Right.

SACKLER: What I found was, the logical question is, well, if there are these great schools in under-performing districts all over the country, why aren't there more of them? And what I found is the obstacle is really political. So that became sort of the second storyline in the film.

GIGOT: Political in what sense?

SACKLER: There are forces that are really, you know, interested in things staying the same. There's a movement to reform the education system that is nationwide and President Obama supports it. But there are people and organizations that believe that things should stay the same.

GIGOT: Elected public officials, unions and some of their allies, the people who are now working in some of the schools that aren't working. They just don't like the idea of having these competitive schools?

SACKLER: I think there's many reasons for it. I think change is scary in some senses.

GIGOT: Right. Right.

SACKLER: The fact is there are thousands of parents. There's a myth that the achievement gap exists because parents don't care or because of poverty or culture.

GIGOT: And when you say achievement gap, you mean between white and Latino children or African-American kids.

SACKLER: Any way, by class or race, there's an enormous gap. And I think on average, like the trailer shows, the average African-American and Latino 12th grader is performing at the same level as the white American 8th grader.

GIGOT: All right.

SACKLER: I don't think that's because of poverty or culture. It is a failure — it's a systemic failure.

GIGOT: It's a systemic failure.

OK, we have a clip that gives a sense of the passions of people opposed to this. Let's see it.

(BEGIN VIDEO CLIP FROM "THE LOTTERY")

EVA MOSKOWITZ, FOUNDER, HARLEM SUCCESS ACADEMY: The unions are playing to win. And because they don't want to be the face of the opposition to charters — as a largely white-dominated leadership organization — and because it would be so obvious that they are protecting the interests of their members and so forth, what they will often do is hire an outside group, like an ACORN, which is a community-based organization, and they will bus in hired guns, protesters, who will protest charter schools in general or a particular school.

(END VIDEO CLIP)

GIGOT: So you found some of these protesters weren't even — from in the district where the schools are?

SACKLER: They weren't. At that rally, I couldn't find anybody that was from the district.

There was a couple of — a couple of parents there. Most were from —

GIGOT: So it's rent a protest basically.

SACKLER: Yes. It really is, yes.

GIGOT: And that voiceover was by Eva Moskowitz, who started the Harlem Success Academy.

SACKLER: Yes.

GIGOT: And she was a member of the New York City Council but she lost —

SACKLER: She's the chair.

GIGOT: And she lost her — of the education subcommittee. She lost her race because of her support for this kind of education reform.

SACKLER: That's what she says. Exactly. She ran for borough president and lost.

GIGOT: So what is the most important message you would like to leave with people who see this film?

SACKLER: I think there's two things. I think first of all, it is absolutely a myth that parents don't care. There's hundreds of thousands of parents that want something better.

GIGOT: Right.

SACKLER: The second message is really I think, I think, that it is a hopeful time. It is not a mystery any more that all kids can learn at high levels. We see it happening all over. I highly recommend visiting a high-performing school. I think they're very exciting. So I think it is incumbent upon all of us to do what it takes.

GIGOT: All right, terrific.

"The Lottery" opens nationwide June 8th.

Madeleine Sackler, thanks for being here.

When we come back, it is not just happening in Harlem. The charter wars are going on all across the country as the Obama administration puts billions in aid to schools on the line.

(COMMERCIAL BREAK)

GIGOT: Education Secretary Arne Duncan waded into the school reform wars this week paying a visit to a charter school in Brooklyn. He's encouraging states to revamp their education laws to compete for more than $3 billion in grants under the federal Race to the Top Program. States can improve their chances of winning the money by increasing the number of charter schools they will allow. Applications for Race to the Top are due June 1st.

Wall Street Journal editorial board member Jason Riley and assistant editorial features editor Bari Weiss, join the panel.

Bari, you have been following this story. Do you think film has the potential to change the debate on school choice? What is it — tell us about the state of that debate.

BARI WEISS, ASSISTANCE EDITORIAL FEATURES EDITOR: I think it tells us two fundamental things. First, parents are impressed when they see results. What this film shows is there is a deep parent desire for these schools. In New York, there are 40,000 parents — correct me — on the wait list for these schools, 11,000 of which are in Harlem. There's one spot in a charter school for every five parents. So parents are voting with their feet and seeing the difference. The problem is what Harlem Success Academy founder Eva Moskowitz called the union political educational complex. That complex — basically, it's a fancy term. But it is simple. It is the forces that are allied —

GIGOT: The status quo.

WEISS: Yes.

GIGOT: It's the political opposition to this change, this kind of competition and school choice.

WEISS: Exactly.

GIGOT: Jason, you and I have been following this debate too long.

Are we finally making progress? Breaking through?

JASON RILEY, EDITORIAL BOARD MEMBER: I think maybe we are. Credit does go, in some respects, to the Obama administration, which has highlighted this. Arne Duncan, the education secretary, has made it a priority. I'm not sure how influential the second of Race to the Top is.

GIGOT: Race to the Top.

RILEY: Because it kind of coincides with political season. What I expect them to do is spread around a lot of money to — or a little bit of money to a lot of states.

GIGOT: Even some of the mediocre reforming states

RILEY: Exactly.

GIGOT: Yes.

RILEY: But, yes, film can be powerful. We saw it in "Stand and Deliver" with Jaime Escalante, the famous teacher.

GIGOT: Right.

RILEY: So this medium can be powerful. It highlights the problem that our public school system isn't serving the needs of all the kids. This does not necessarily mean we need to trash public schools generally.

GIGOT: Well, charter schools are public schools.

WEISS: Exactly.

RILEY: Charter schools are public schools. But I mean traditional public schools. They are working for some people. But in many inner cities, they are not working. The same statistic out there said 2,000 schools in America produce half of all school dropouts.

GIGOT: What is the evidence, Bari, that charter school performance are actually better than a lot of these traditional failing public schools?

WEISS: I think a wonderful case study is a school that is on 118th Street.

GIGOT: In New York?

WEISS: In New York, in Harlem. On one side, you have a traditional public school, which is called the Zone School. On the other hand, you have Harlem Success Academy, which is a public charter school. The disparity is striking. Harlem Success Academy is number one in the entire state of New York en masse, beating areas like Scarsdale and the Upper Eastside.

GIGOT: Wow. All of New York state?

WEISS: All of New York State. They are number one in the state en masse.

GIGOT: The other school is?

WEISS: The other school is — and the comparisons are — I think the statistics is, 3rd graders in Harlem Success Academy pass the English Language Arts exam at something like 95 percent and the public school was somewhere around 50 percent.

GIGOT: Jason?

RILEY: What you see going on in Harlem and in what Bari is describing is a sort of education marketplace developing where schools have to serve the needs of kids or risk losing customers.

GIGOT: Imagine that?

RILEY: You have charter schools, parochial schools, regular old private schools, Catholic schools and so forth, all these are all competing for children. And that is an incentive for schools to do better. And that's what we need on a more — to scale-up nationally. Charter schools are now in 40 states, and the District of Columbia, serving around 5,000 kids. That's still a very small percentage. But what you need are a critical mass of these charter schools applying pressure on traditional public school system to improve.

GIGOT: All right, Jason, thank you very much.

Still ahead, a scandal in Connecticut throws open a race the Democrats thought they had in the bag. When we come back, details about another controversy involving Attorney General Blumenthal and renewed hopes that Republicans can take the seat and maybe the Senate.

(COMMERCIAL BREAK)

GIGOT: A wild week in politics brought good news and bad for both parties. The bad news for Republicans came from southwestern Pennsylvania where the GOP lost the race to replace the late Congressman Murtha — it's a district John McCain carried in 2008. The national party poured about a million dollars into the contest. Yet, Republican businessman Tim Burns, was crushed by former Murtha aide, Mark Critz, 53-45 percent.

And Democrats are now sweating a Senate seat they thought they had in the bag as revelations surfaced this week that Connecticut Attorney General Richard Blumenthal lied about his service in Vietnam, putting the election to replace retiring Senator Dodd into the toss-up category.

We're back with Jason Riley. And joining the panel, Wall Street Journal editorial board members Matt Kaminski and Steve Moore.

So Matt, you were up in Pennsylvania in week talking to Ed Rendell, the current Democratic governor and renowned political handicapper, who is not on the ballot this year.

What lessons are the Democrats taking for their strategy for the fall from in week?

MATT KAMINSKI, EDITORIAL BOARD MEMBER: I think they have some reason to be optimistic after this week.

GIGOT: Really?

KAMINSKI: I think —

GIGOT: Supposed to be a great Republican year.

KAMINSKI: It is supposed to be, but I think they —

GIGOT: It could still be, I suppose.

KAMINSKI: It could still be. I think they had good jobs news coming out. They think they will be able to sell the stimulus better —

GIGOT: So the stimulus as a success with 9.9 percent unemployment?

KAMINSKI: Well, if the jobs numbers keep coming on stronger, I think they can sell. They can say, look, GM is turning a profit. Wall Street is paying back its TARP money. So all the unpopular policies from the last year can be re-spun to — as something that is going not so great. They know they are going to lose seats, but whether it is 50 or 25 in the House, they are hoping to minimize that down to say 20, 25.

GIGOT: OK Steve, is that strategy going to fly?

STEVE MOORE, EDITORIAL BOARD MEMBER: Well Republicans, Paul, better figure out how they are going to deal with candidate like this candidate who ran in that Pennsylvania race, the Democrat who basically ran as a Republican, Paul.

He ran as an anti-tax message, against Obamacare. He really did sound like a Ronald Reagan candidate. I predict a lot of these Democrats in these marginal districts Republicans hope to pick up are going to borrow that message of trying to move away to the right.

What is also interesting about what happened Tuesday, is you are really seeing again the polarization of the two parties where in the Republican, that Republican Kentucky Senate race, where you had Rand Paul win against the establishment candidate. And then same on Democrat side of the aisle, where you had kind of left-wing candidates funded by groups like MoveOn.org taking out some of their establishment candidates. So I think that is a very interesting development. There's no middle now. It is the extreme right and the extreme left that have taken over the two parties.

GIGOT: Extreme Steve, does that mean you are extreme?

MOORE: Well, you know, I think it —

GIGOT: I think we are mainstream, Steve! I think we're mainstream.

All right, let's talk about Connecticut, Jason. Richard Blumenthal says he misspoke about his having fought in Vietnam, nothing intentional. Is that defense going to fly as well?

RILEY: It definitely shouldn't. It is hard to get lower than embellishing your record by lying about military service.

GIGOT: He was a Marine Reservist, but he didn't see duty in Vietnam.

RILEY: Exactly. Exactly, and saying you had to veterans groups, of all people, is particularly egregious. I think it not only disqualifies him for the Senate, he should resign from AG, as far as I'm concerned.

GIGOT: Really?

RILEY: Yes.

GIGOT: What else about Blumenthal's record should we care about?

KAMINSKI: He's been in public life for a long time. And the whole time —

GIGOT: Turned AG since 1991.

KAMINSKI: 1991. He has always wanted to be the Eliot Spitzer of Connecticut.

He's now discovering that image cuts both ways. This does raise fundamental questions about his character. But there are other issues. He's portrayed himself as being this very crusading prosecutor. It turns out he has been more of a bullying prosecutor, very much focused on his political career and prone to power. We found one case, he sort of sued hundreds of small companies —

GIGOT: Small businesses.

KAMINSKI: Small businesses. In one case, early this year, he lost a judgment for $18 million. He had gone after a small computer company that was a supplier to the Connecticut state.

GIGOT: $18 million, yes.

KAMINSKI: He tried to get $1.7 million out of them. She turned around — the owner of the company —

GIGOT: Sued him.

KAMINSKI: Sued him and won a judgment for $18 million, because she said this man has ruined my business, ruined my life and abused his power. And the jury agreed.

GIGOT: All right Steve, let me ask you about the Senate. Do you think, the way this is lining up, can Republicans — do they have a chance at taking back the Senate?

MOORE: It is drawing to two inside straights, Paul, because, as you know, they would have to win every competitive race. They would have to pick up 11 seats. But I think it is still possible. But you know what? I don't feel as confident today about Republican chances in the House and Senate as I did last week because the Democrats seem to be one step ahead on the chessboard than the Republicans, and they keep losing races they should win.

One other point that we saw, the Tea Party movement is alive and well and it is influencing elections. These aren't people who are carrying around posters. These are people going to the polls and influencing the outcomes of these important elections.

GIGOT: Rand Paul, Jason, a mistake this week about the Civil Rights Act.

RILEY: Big mistake. Sort of reminded me of Trent Lott's flub a few years ago where he said the country would have been better off if we had elected a segregationist president. Although, Rand Paul is backtracking.

GIGOT: And said he would, in fact, have voted for the 1964.

RILEY: He said I would have voted for it. And also that the federal government had a role in ending Jim Crow.

GIGOT: All right, thank you, Jason.

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

(COMMERCIAL BREAK)

GIGOT: Time for our "Hits and Misses" of the week — Jason?

RILEY: The Supreme Court ruled this week that it is cruel and unusual punishment to send people under 18 to life in prison unless you committed a homicide. Whether you agree or disagree with that decision, it was irritating to see Justice Kennedy, who wrote the majority opinion, citing international opinion about this influencing of the court. Foreign sources should not be influencing U.S. judges interpreting the U.S. Constitution. If they want to be statesmen, instead of judges they should quit the bench.

GIGOT: Matt?

KAMINSKI: A big hit to the new Miss USA, Rima Fakih, who is the first Muslim-American to wear that diamond tiara. Fakih is a product of Dearborn, Michigan, as well as Seretha (ph), Lebanon, where she has born, has been embraced by Muslim-American groups, in spite of wearing a bikini on stage. I guess this illustrates the power of both our high and low culture to assimilate newcomers.

GIGOT: All right.

Steve?

MOORE: A big hit to "24" and Jack Bauer. One of the great TV shows of all time comes to an end this week. Paul, it taught us an important lesson, which is there are bad people throughout are trying to destroy our country and we have to do whatever it takes to win the war against terrorism.

GIGOT: All right, Steve.

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 all right here next week.

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