This is a rush transcript from "The Journal Editorial Report," May 29, 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 oil spill that threatens to engulf an administration. As the blame game continues, a look at the political fallout and the future of oil drilling in the U.S.

Plus, President Obama's immigration scramble. By demonizing the Arizona law, has he ruined any chances for bipartisan border reform?

And a national security shake-up leaves the administration without an intelligence chief. It's being called the job nobody wants. And it may not be making us safer anyway.

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

President Obama made his second visit to the oil-soaked gulf Friday, capping a week in which the spill and criticism of his response threatened to engulf the administration and its agenda. A day earlier, the president responded to those who have said that the White House was not sufficiently engaged in the disaster from the beginning.

(BEGIN VIDEO CLIP)

PRESIDENT BARACK OBAMA: And we understood from day one the potential enormity of this crisis and acted accordingly. So when it comes to the moment this crisis occurred, moving forward, this entire White House and this entire federal government has been singularly focused on how do we stop the leak and how do we prevent and mitigate the damage to our coastlines.

(END VIDEO CLIP)

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

OK, Dan, the president is getting criticism on this from the right and left and from the mainstream media. Does he deserve it?

DAN HENNINGER, COLUMNIST & DEPUTY EDITOR: You know, Paul, we've managed to elevate the status of presidency of this country to the status of fairy god mother in the United States. Whenever anything goes bad the fairy god mother will wipe our tears and make all the bad things go away and deploy all of her minions to make everything better again. No, it's not fair at all. The United States government doesn't have that much power.

Having said that, yes, he is getting attacked by the right and by the left. The right, in part, because of what happened with George Bush and Katrina. There's a point up to which, yes, the government must take some responsibility. But this idea that the president is not fully engaged has become a weapon of political destruction. And so the White House overreacts the way it does. And I think we've seen an example of that yesterday with the president shutting down oil exploration and the letting of leases all across the coastlines of the United States.

GIGOT: Hasn't the president, Jason, given the impression, through what he's done in his first 18 months, that government really is the answer to so many problems.

JASON RILEY, EDITORIAL BOARD MEMBER: Yes.

GIGOT: He's fed us this view, which I agree with Dan on, is widely held, that the government should — should spare us. You know, it should do miracles a mile below the surface.

RILEY: He's certainly eager to expand government into every aspect of our lives, whether it's taking over the health care system and financial industry, car industry, you name it. So, yes, he's given people this impression. And it's come back to bite him a little bit on this.

When President Obama was asked yesterday at the press conference about the Katrina comparison, he sort of said, I'll let you guys in the media make that comparison. But it's true, as Dan said, these unreasonable expectations that, not just Democrats and Republicans are throwing at him for political reasons, obviously, but that the general public.

GIGOT: Right. The American people have come to expect —

RILEY: That natural disasters and rare accidents never occur. And when they do, that somehow the government is supposed to have the perfect response immediately.

GIGOT: Kim, the president is taking some heat for not having reformed the Minerals Management Service, which he said he had a plan to do. Ken Salazar, his interior secretary, had a plan to do that, just didn't implement it fast enough. I don't remember hearing about that plan until after this disaster. Why didn't we hear about it?

KIM STRASSEL, WASHINGTON COLUMNIST: Yes, the super seeker plan that nobody knew about. In fact, including apparently the woman who headed the MMS who was fired this week and who'd only been nominated last year, and lauded by the president.

Look, the MMS has now become the convenient whipping boy in this. It's always easy to blame the federal bureaucrats for something. So everyone is looking at this. But one thing to bear in mind is actually the agency has a really great track record. And more importantly, there's a big difference between inspector general reports that talk about a few bad apples, employees are using government computers to look at pornography, and the legitimate questions about whether or not the agency did something substantively wrong that led to what happened out in the gulf. And no one's made that yet. This is a convenience.

GIGOT: But the charge, Kim — the charge, Kim, was a — as the president put it, a cozy relationship between the bureaucrats, who approve these leaves, and the oil industry. And you have written that the MMS is an agency that does tend to promote drilling. What do you think about that coziness charge?

STRASSEL: Well, it is true. I mean, I guess it's how you want to look at government agencies. One of the benefits of the MMF — and again, I think you've got to look at its record. It's actually been really good. We don't have oil spills like this very frequently. And part of the reason is because they work with the industry to promote safe and effective drilling.

And you know, we have adopted this mentality in the country that the government agency who exist is to simply work against industry and what they're doing, and to regulate them and create red tape and bureaucracy. But, again, I think the record is what matters here.

GIGOT: So have the Republican distinguished themselves here? They're beating up on the MSS too. And you had and Sarah Palin weighing in and saying, look, the president is too close to BP because he receives campaign contributions. That sounds like the kind of thing you hear from Democrats about George W. Bush.

RILEY: Yes, no one's really distinguished themselves in this debate. And there are some statistical realities that should guard against the type of rhetoric we've been hearing of late. In 1970, the lower 48 states produced 10 million barrels of oil a day. Today, they produce about three million barrels a day.

GIGOT: Right. Wow.

RILEY: We're increasingly dependent on oil from Alaska and from offshore drilling. And that is the reality. That is the reality that caused the president to initially call for more off-shore drilling. And that reality has not changed because of this accident. Anyone who wants to reduce our dependence on foreign oil going forward should be in favor of offshore drilling.

GIGOT: On that point, Dan, are we looking at this event — and it's a catastrophe, no question. Are we looking at this event being something similar to the Three Mile Island accident, a nuclear power in 1979? And we've never built another nuclear plant in this country since.

HENNINGER: Yes.

GIGOT: Is that of this political magnitude?

HENNINGER: God forbid that should happen. If, I think, if the oil spill got to the point where it was really impinging on the southern United States, something like that could happen. I mean, if the oil just doesn't stop coming.

GIGOT: Right.

HENNINGER: But that would be catastrophic for American energy, because the rest of the world is not going to stop drilling for energy. Fifty percent of this ultra-deep oil is off the coast of Brazil. The Brazilians have every intention of exploiting that oil. The Saudi Arabians, Venezuela and Russia, western Africa will all continue to produce oil and we're either going to import that oil or try to exploit our own resources. At the moment, he's shutting it down.

GIGOT: Kim, briefly, a Three Mile Island moment?

STRASSEL: I don't — I don't think so, not yet. But I agree with Dan, it could be. Just bear in mind, this is sort of what happened after Exxon Valdez. We decided not to open ANWR, and instead moved more production to the gulf. So this is the worry here.

GIGOT: There are trade-offs, no question about it.

When we come back, President Obama's immigration scramble. His administration has trashed Arizona's new law, even as he calls for bipartisan border reform. Can he have it both ways?

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

OBAMA: What my administration is doing is examining very closely this Arizona law and its implications for the civil rights and civil liberties of the people in Arizona, as well as the concern that you start getting a patchwork of 50 different immigration laws around the country, in an area that is inherently the job of the federal government.

(END VIDEO CLIP)

GIGOT: President Obama, voicing once again his opposition to Arizona's new immigration law and calling on Congress to come up with a federal solution.

Earlier this week, the president ordered 1,200 additional National Guard troops to the Mexican border, but the move is unlikely to win him much Republican support for comprehensive reform this year after the drubbing the Arizona law and supporters have taken from Democrats and members of his own administration.

So, Jason, 1,200 National Guard troops, what are they supposed to be doing and are they going to make a difference?

RILEY: They're supposed to be giving the impression that we're serious about securing the southern border.

(LAUGHTER)

GIGOT: This is about optics.

RILEY: Bush did something similar in 2006. He sent 6,000 troops down for a two-year stint. And what the president is trying to accomplish here, is win some good favor from the other side of the aisle in terms of showing Republicans that he's serious about reform and perhaps getting them to meet him halfway on a more comprehensive solution. But it might be too little, too late.

Obama said at the press conference, you know, we're now examining the laws closely. I'm glad they're doing it now because they came out earlier denouncing the thing before they had examined it.

GIGOT: Before some of them had even read it.

RILEY: Not only that, the top immigration enforcement official in the United States said he won't necessarily even cooperate with Arizona in terms of the illegal aliens that are referred to him because he's got higher priorities.

HENNINGER: Yes, on this idea of getting the Republicans to participate in a comprehensive reform, there's an interesting political by-play this week. You know, Obama went up to the Hill.

GIGOT: Right.

HENNINGER: Had lunch with the Senate Republicans.

GIGOT: Senate Republicans.

HENNINGER: And they talked about immigration, John McCain, Lindsey Graham. Border guards did not come up. He left that lunch, went back to the White House and announced that he was sending the border guards down. And I know that McCain and Graham are extremely upset about this. They said, why didn't he tell us in the lunch that he was going to do this? I suspect it was because he knew they would whine about border security. Asked them what he had to do, then he goes back and announces, I did what you wanted, guys. Why can't you help me now? I've given you what you wanted. It was a trap.

GIGOT: Kim, what was the White House thinking when it so aggressively went after this Arizona law, which, after all, is not that big a deal in the sense that it doesn't differ that much from federal immigration law and what federal enforcement agencies can do. Yes, state agencies can now do that and arrest illegals, but why did they jump on this law so aggressively?

STRASSEL: If one were a cynic, and, of course, I'm not, but if one were a cynic —

GIGOT: No cynics here.

STRASSEL: You could argue the administration is really playing politics with this. Look, there's an election coming up and the Hispanic vote matters a great deal. You go out and you say — you know, you really demonize something that the Republicans have gravitated to, and sort of talked about the law, and you said — and used it to cast them in a bad light. But this is going to be a problem for him down the road. If he really does want to do immigration reform, and that wants to be one of his accomplishments, he's building a great deal of bad will that may be difficult to get past.

GIGOT: Well, are Republicans going to come around? The president said, I don't need you to come halfway, just come a quarter of the way and I'll bring enough Democrats around.

But I think he may be poisoning the well not just for this year.

RILEY: Yes, I think they have.

GIGOT: Not just for this year, but even two years, then the last two — the second two years of his first term, if he gets them.

RILEY: It's hard to see anything happening before November.

GIGOT: Right.

RILEY: And then, after November, you're getting into the presidential season again, and who wants to talk about this in the run up to 2012. And it's unfortunate, because I think comprehensive reform is the answer to actually solving the problem. We've got to give people more legal ways to enter the country that will reduce illegal immigration and it will free up Homeland Security resources to focus on real threats. Would you rather have border patrol chasing down people coming here to work or trying to prevent the next Times Square car bomber?

GIGOT: For those of us who supported immigration reform, whether a Democratic president was proposing it or a Republican president, this has been a pretty demoralizing month, because the debate has just gone really to the extremes. A lot of the Democrats say, look, you guys are racist on the right and if you are in favor of any security, and the right says, you can't have immigration reform until you have — secure the borders. But as Jason points out, you can't secure the borders unless you have more legal avenues to come into the country.

HENNINGER: I think we make more progress on the subject while we're not talking about it. I mean, for a while, it was on the back burner and so progress was made. It's on the front burner again. And any time it's out there in public, it only disadvantages Republicans because they start tearing each other apart over this issue. And again, to Kim's point, you can suggest that the Democrats know that. They want the Republicans to fight with one another over immigration.

GIGOT: What about the Arizona Senate race, Kim. You've got J.D. Hayworth taking on John McCain. John McCain has supported immigration reform in the past. Now he's been much more aggressive in securing the borders. But has Obama's stance made it that much harder for John McCain, who might compromise with the president on this, made it that much more difficult for him to win the primary?

STRASSEL: It's notable that John McCain's big news this week was that he'd come out of a committee meeting with language to send something like 6,000 National Guard troops down to the border. So he's certainly having to respond to this. He is upping the president's ante, as it were, in terms of how many should go down there. And that's coming from pressure from his right to be much more aggressive on this immigration issue.

GIGOT: OK, Kim, thank you.

Still ahead, President Obama's national security shuffle leaves the top spy post open. But is it a job anybody would want? When we come back, a look at what drove Dennis Blair out and why we're no safer now than before that office was created.

(COMMERCIAL BREAK)

GIGOT: It's being called the job nobody wants. President Obama last week fired his director of national intelligence, Dennis Blair, without an immediate successor in place. And now it's becoming clear just how difficult filling that position may be.

The Wall Street Journal reported this week that a number of candidates, including CIA Director Leon Panetta and former Nebraska Senator Chuck Hagel, have turned down the job, which was created by Congress in 2004 after the 9/11 Commission identified shortcomings in the coordination of the country's 16 intelligence agencies. But the legislation that established the DNI doesn't clearly define what authority the office has. Mr. Blair was the third director in five years.

Gabriel Schoenfeld is a senior fellow at the Hudson Institute and author of the new book, "Necessary Secretary: National Security, the Media and the Rule of Law."

Gabe Schoenfeld, good to have you here.

GABRIEL SCHOENFELD, FELLOW, THE HUDSON INSTITUTE & AUTHOR: Nice to be here.

GIGOT: OK, so why do you think that Dennis Blair was fired?

SCHOENFELD: A series of screw ups, starting with the very beginning of his tenure in office. The first mistake was trying to appoint Charles Freeman as director of the national intelligence, of the National Intelligence Council.

GIGOT: Somebody very close to the Saudis.

SCHOENFELD: Right, and to the Chinese.

GIGOT: That's right.

SCHOENFELD: Had said that the massacre at Tiananmen Square, the Chinese hadn't been tough enough in cracking down. I mean, just an unthinkable appointment.

GIGOT: But could anyway make this DNI work?

SCHOENFELD: No, I don't think so, the way it is structured is wrong. It's a lot of responsibility and not enough power. And it's basically been what many of us predicted that they've grafted a new level of bureaucracy over the existing —

GIGOT: 1,500 people in that office.

SCHOENFELD: Right, they have a lot of power. They tried to exercise power over these bureaucracies but actually it's just a lot of in-fighting. And I think the chaos now is quite alarming inside the intelligence community. Who is in charge? We have competing power centers, the White House, director of national intelligence, the CIA all basically at war with each other at a time when we should be fighting our adversaries.

GIGOT: What if the president said, in appointing a replacement, look, you're my guy, you run the show. Told Leon Panetta, look, you need to answer to him. He told the head of the Pentagon, intelligence service, you answer to him. Could the president direct that and make it better?

SCHOENFELD: I don't think so, without changing the legislation, because the budgetary authority is the key thing here. And the director of national intelligence doesn't have that, particularly over the large chunk of intelligence that's spent by the Defense Department.

GIGOT: So it sounds like you're saying you're better off — just don't appoint a replacement, just kind of let the agency melt away and go back to what we were before.

SCHOENFELD: We do need to revisit the reform of 2004. It's not worked out well and it really creates dangers for the country because we have the mounting intelligence channels, not just terrorism. We have a budding crisis in North Korea. We need to focus on that rather than our internal organizations.

GIGOT: OK. Let's turn to your book. You argued — the book is about the tension between the national security and the public's right to know. You argue that we're not doing enough now. The government is not doing enough now to protect its secrets. Why not and what should we do about it?

SCHOENFELD: Really, it's an astonishing thing, but after the attack of September 2001, we've had some astonishing leaks, leaks that really compromise some of our basic counterterrorism programs. Two of these appeared in The New York Times.

GIGOT: Right.

SCHOENFELD: One in 2005, one in 2006.

GIGOT: One was the communications intercept capability with terrorists overseas. And the other was the terror financing links. And you think that those really did compromise our security?

SCHOENFELD: Right. I think there's little, little doubt that they did compromise. Look back at the Times Square bombing of last month. The man, the perpetrator of that was communicating by disposable cell phones. That's a way of abating NSA surveillance. He was using — his funds didn't come by wire transactions. They came by courier, which is a hard way to move money. But it's a way that leaves us blind. And those are — those techniques are really perhaps a result of those leaks.

GIGOT: Why is the federal government so leaky?

SCHOENFELD: Well, it's always been that way. And I think that's part of our system of rule. The Senate Intelligence Community did a study, just of one six-month period. One hundred forty seven different pieces of classified information made their way into the press. And that's the — that's normal though. What's abnormal is when you have operational intelligence programs —

GIGOT: Right.

SCHOENFELD: — published in the press, details that are really key in the giveaway of our sources and methods.

GIGOT: What do we do about it?

SCHOENFELD: We need to change the climate first of all. And I think that's what I'm hoping to do with my book is to try to explain to the press and explain to the public what's at stakes in the publication of these things. That's — that's the first and essential step. But beyond that, I think. When you have truly egregious leaks, one, you can go — you can, under certain circumstances, go after journalists who are publishing things that endanger the public. You can also —

GIGOT: Prosecute journalists! No what about — no wait a minute. Why not just prosecute the leakers, who are, after all, take an oath and are violating the law.

SCHOENFELD: Absolutely. And I think that's the first place to go. However, in practice, it's extremely hard to uncover them. Just think, in our entire history, there have only been three successful prosecutions of leakers. And —

GIGOT: Is that all?

SCHOENFELD: That's it. And one of them under the Obama administration and now they are prosecuting a second. So Obama, in some ways, if he's — the second case goes to trial and can at least do a conviction, he'll be the first president to put two of them in prison.

GIGOT: But if you prosecute journalists, you're talking about an uproar. I mean, even subpoenaing a journalist in a national security case is an uproar. Isn't it — wouldn't the president be inviting a huge backlash?

SCHOENFELD: I think it would be a real battle. However, if the consequences of the leak are grave, I think the president would be justified. And we had a case like this in World War II where Roosevelt started the prosecution of The Chicago Tribune for revealing the fact that we were breaking Japanese codes. It turned out the Japanese hadn't noticed the story. But if they had, that prosecution would have gone forward and there would have been a conviction.

GIGOT: Yes, I think the answer is media self-restraint, not for prosecution. But this is an interesting debate that you've opened up.

Gabe Schoenfeld, thanks so much for being here.

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 Strassel, first to you.

STRASSEL: Way back in February, Congressman Joe Sestak put it out that the White House offered him a job if only he would quit running in a primary against Arlen Specter for the Senate in Pennsylvania. It's only been since he won that primary, Mr. Specter, that this has become a big deal, since it turns out it could be illegal if the White House interfered in an election. The more the controversy has grown, the less anyone has wanted to talk about it. So this is a hit to Illinois Senator Dick Durbin and Pennsylvania Governor Ed Rendell, both Democrats, both who called this week for Sestak and the White House to come clean.

GIGOT: All right.

Jason?

RILEY: The NFL announced that the Super Bowl in 2014 will be played in New Jersey. The league should be congratulated for choosing an outdoor stadium in a northeastern state where the temperatures in February are typically in the 30s. That's not cold weather, Paul, that's football weather. It's how the game was meant to be played.

GIGOT: Well, it should be in Lambeau Field, not New York.

All right, Dan?

HENNINGER: A big miss to Kim Jong-Il of North Korea for raising the specter of another Korean war this week by really quite significantly raising military tensions with South Korea after an international investigation said that North Korean had, indeed, torpedoed a boat killing 46 South Korean sailors. We've had a policy of engagement with North Korean and all it has done is push us to the brink of another conventional or nuclear war. It is not working.

GIGOT: All right, Dan.

That's it for this week's edition of the "Journal Editorial Report." Thanks to my panel, and especially to all of you for watching.

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

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