This is a rush transcript from "The Journal Editorial Report," January 1, 2011. This copy may not be in its final form and may be updated.
PAUL GIGOT, HOST: This week, a special New Years edition of the "Journal Editorial Report." We'll take a look back at the biggest stories of 2010, as well as the winners and, of course, losers of the year that's passed.
Plus, a look ahead to 2011. What stories will you be talking about? Which public figures will grab the headlines? Our panel is here with their predictions next.
Welcome to this New Year's Day edition of the "Journal Editorial Report." I'm Paul Gigot.
First up this week, a look back at the biggest stories of 2010 with our all-knowing and all-seeing panel, Wall Street Journal columnist and deputy editor, Dan Henninger; and editorial board members, Jason Riley, Dorothy Rabinowitz and Matt Kaminski.
So, Dan, we'll start with you. What's your call for the big story of the year?
DAN HENNINGER, COLUMNIST & DEPUTY EDITOR: Well, Paul, I think clearly the biggest story of the year November's off-year elections. And I don't think it was the biggest story because the Democrats were swept out and Republicans swept in. I think this was the beginning of a historic reform. Occasionally, the American people rise up and try to cleanse their system. And I think that the Tea Party was simply the leading edge of a huge wave that's sweeping not merely through Washington, but Sacramento, Albany, Trenton, Illinois. Congress' approval rating has fallen down below 20 percent. It's essentially a vote of no confidence in government.
GIGOT: Right. But here's the thing, Dan. You're right. A historical repudiation, 63 seat House gain. The Republicans will have a bigger majority since anytime since 1946.
HENNINGER: And down even to the state legislature.
GIGOT: Yes, more than 700 state legislator seats. So it really was historic change. On the other hand, the Democrats say this is the greatest Congress in 50 years. Historic, they passed all of this great legislation. Explain that paradox.
HENNINGER: Well, they passed Obamacare, which was the greatest entitlement since Medicare, and they didn't win the election. There has to be a certain degree of causality and connect the dots in America.
GIGOT: They don't see the connection. So this historical change hasn't sunk in.
HENNINGER: They were standing on the beach and they said, look at the big wave coming. That's going to sweep us into office. It swept them out to sea. What more can they say.
GIGOT: All right, Matt Kaminski, your biggest story?
MATT KAMINSKI, EDITORIAL BOARD MEMBER: I would Dan's point and broaden it globally. The biggest story in the developed world this year was that we start out the year with the age of insolvency. Government everywhere was broke. In Greece you had rioting, the deficit was out of control with the country about to default. England had had a huge deficit too. But this has brought about the age of austerity. We've had incredibly deep cuts pushed through by new governments in Greece, in the U.K., in New Jersey, and —
GIGOT: And New Jersey.
KAMINSKI: In Asia and maybe California. We'll see.
GIGOT: And Ireland.
KAMINSKI: And Ireland, of course. And I think we'll see that the people are realizing that their government cannot provide what it used to provide with this overspending grossly.
All right, Jason?
JASON RILEY, EDITORIAL BOARD MEMBER: I think a very big story this year was the Obama administration's decision to regulate the Internet, which is something that just happened this month.
GIGOT: That was a December action.
RILEY: Exactly. And this is a significant pivot away from the hands- off approach that has been taken by Democratic and Republican administrations alike. And I think it's a very big deal. And the good news is that, with the new Republican House taking over next year, perhaps some of the regulations will not be implemented.
GIGOT: Jason, explain this — the motivation here, because what we've seen also this year is an incredible proliferation of successful innovations, on the other hand. You have the development of the Apple Tablet, the iPad, and its imitators, and we've had huge investments in broadband across the United States. Why does the Obama administration —
RILEY: Which is exactly the point.
GIGOT: But why do they think they need to do this?
RILEY: I think it's a pure power grab on the part of the FCC, Julius Genachowski, the chairman of the Federal Communications Commission. It is something that Obama campaigned on. He said this was going to happen. The left wing of the party, the MoveOn.org wind, the Soros-funded activist groups are all in favor of —
GIGOT: They want to put themselves at the decision point, the inflection point, where they can decide who wins and who loses.
GIGOT: It comes down to that.
RILEY: And this is being done in the absence of any true market failure. Like you said, innovation is moving along and investment is strong in the telecom sector. There's no market failure that this regulates — that these regulations would be addressing. This is a pure power grab on the part of the administration. It could do a lot of harm.
GIGOT: It's not getting enough attention either.
Dorothy, your biggest story of the year.
DOROTHY RABINOWITZ, EDITORIAL BOARD MEMBER: My biggest story was the immigration bill in Arizona that Jan Brewer passed and which caused a tremendous conflagration and revealed the depths of the passion and all the demagoguery that attaches the entire issue of immigration. You have the attorney general of the United States making legal war on this state. You have the president of Mexico coming before Congress to denounce the bill, and receiving a standing ovation before Congress. You've had tremendous misinterpretation and distortion of the bill itself, which said, well, among the demagogues, it said everybody who goes out for a milkshake, who is Latino, could be picked up.
GIGOT: Could possibly — could possibly be arrested. OK. Do you think it played a role in the election?
RABINOWITZ: It plays an enormous revelatory role in the election and it's going to be picked up in the next year. The passions were extreme and divided in a way that you could not imagine.
GIGOT: That immigration debate is going to be with us.
RABINOWITZ: It's going to.
GIGOT: Dorothy, I want to get in my choice before the segment is over of the biggest story of the year. I think it is the passage of Obamacare, because notwithstanding that repudiation by the voters, the truth is, the 111th Congress passed Obamacare and that's one bill that they passed that actually, if it's not repealed or changed fundamentally, could really change the nature of this country and move us towards the European welfare state, where taxes, to be able to afford it, 30 to 40 percent of GDP from 20 percent now, and change the fundamental character of American medicine. We're moving in this direction, bureaucratically with more government control, but politics is, from now on out, from here on out, if it is not repealed, politics is going to determine who gets what kind of care and how much.
HENNINGER: I think, Paul, what you're talking is precisely the issue that was put on the table by these elections, to Matt's point as well. Electorates everywhere are trying to decide whether they want, over the next generation, to have their society and their economy directed by government or by the private sector. And there's a huge division of wealth that's taking place. And Obamacare means the public sector will take most of the wealth.
HENNINGER: What we're talking about, I think, is that the private sector will pull it back in its direction. That's the choice.
GIGOT: The warning from Europe, if you go down this path, it's incredibly difficult to change.
GIGOT: You will have to change. Otherwise, you can't afford it.
KAMINSKI: And in Europe, you seeing that actually they're pushing to retrench while we're going in this direction.
GIGOT: All right, thank you, Matt.
We have to take a short break. When we come back our panel's picks for the winners and the losers of 2010.
GIGOT: Time now for the biggest winners and losers of 2010. We'll start with the fun list, the losers.
Dorothy, who is on your list?
RABINOWITZ: Where to begin? Michael Bloomberg is one. A man who was given —
GIGOT: Mayor of New York.
RABINOWITZ: The mayor of New York. I thought he was a national figure —
— who wanted to become, I believe, a national figure. And this is the year that did him in. He's given sanctimoniousness a new meaning, an entirely new one. He has called these New Yorkers and everybody else who opposed the mosques at Ground Zero or near Ground Zero — people who should be ashamed of themselves, morally inferior, and you can continue the list. And appointed, as education secretary of New York, Cathleen Black, a person who has no experience, because he could.
GIGOT: All right.
RILEY: I'm going to go with Randi Weingarten, head of the American Federation of Teachers, one of the nation's largest teacher unions. I think she had a very tough year. There was a popular film documentary, well received, called "Waiting for Superman," released this year. It really illustrated the extent to which the teachers unions have been a barrier to education reform. And then you Obama administration pushing charter schools very hard this year. Unions don't like charter schools because most of their teachers are not unionized. I think that the unions had a tough year which, of course, means the kids had a very good year.
GIGOT: All right.
KAMINSKI: I think the people of Haiti had one of the worst years in their history from a catastrophic earthquake and cholera epidemic —
GIGOT: That's saying something.
KAMINSKI: That's saying something. Exactly. And lastly, a very flawed election. This is a nation that can't cut a break.
GIGOT: It shows that governance matters because it is ill governance that has ruined that country.
All right, Dan?
HENNINGER: My loser of the year is Senator Russ Feingold, of Wisconsin, who was defeated by a rookie, Ron Johnson. And I think the interesting thing here is Senator Feingold was one half of the McCain- Feingold campaign finance reform. And it's ironic indeed that this representative of good government was swept out and defeated by a wave of reform. I think he missed the fact that good government no longer means more government, but less government.
GIGOT: All right, and my loser of the year, John Maynard Keynes, the great economist, dead economist, who was the patron saint of many on the left for spending stimulus, their ideas that dominated 2008 and 2009, were tried, and seen, I think, by the American people, through the election, to have been a failure. So — but while Keynes was a better economist, many of his supporters, nonetheless, his ideas, I think, have been repudiated again.
All right, now, we're going to the winners of the year.
And, Jason, we'll start with you.
RILEY: I'm going with Governor Chris Christie of New Jersey, who I think had a great year. He's taken on the powerful public sector unions in his state, and has become a YouTube sensation and a Republican rock star in the process, so I'm going with Chris Christie.
GIGOT: Do you think it's going to work this year? He's going to keep moving on that.
RILEY: I hope so. Although, there has been a lot of talk about urging him to run for president. So we'll see.
GIGOT: He says he's not going to do it.
All right, Dorothy?
RABINOWITZ: Another rock star, Paul Ryan, a congressman from Wisconsin, who took on the health care bill, and who proved that he could still have a rarity. He is a ferocious debater and manages civility. This is something rare in politics. He took on the president, mano-y-mano.
GIGOT: On health care.
RABINOWITZ: On health care.
GIGOT: In a public forum.
RABINOWITZ: He succeeded in every single debate in crushing the opposition and coming out smelling like a civilized man. That's somebody to watch.
GIGOT: OK, Dan.
HENNINGER: No one would call John Boehner a rock star.
GIGOT: Hey' what have we got, the trifecta of Republicans here?
We have — all right, you have Boehner?
HENNINGER: Yes. Boehner is now going to be the speaker of the House. It kind of fell into his lap. But on the other hand, John Boehner is a guy from Cincinnati. His parents ran a shop and a beer bar and he has about eight brothers and sisters. And he now has the historic opportunity to lead the reform of the government.
GIGOT: But is he really a reformer, Dan? That's the question or is he just —
HENNINGER: That's what we're going to find out.
GIGOT: — who managed to be on top of the wave when it crashed.
HENNINGER: The reform is about helping average Americans. If John Boehner remembers where he came from, he has the opportunity to step up and lead that reform.
GIGOT: OK, Matt Kaminski?
KAMINSKI: Look, I think the bad news for the GOP is the biggest winner this year is Barack Obama.
He pushed through almost his entire agenda —
KAMINSKI: — entire agenda, starting with, most of all, with Obamacare. He paid a price for it in November but that was probably his lowest political point. But he has now pivoted in the month and a half since.
GIGOT: Did he pay a price, or his party did. He didn't necessarily. He wasn't on the ballot.
KAMINSKI: And he still stayed fairly popular. It wasn't referred on him, but he's gotten some of these old war horses out of the Congress and he can pivot more to the center, which he did in the lame-duck session. He got through his arms treaty. And I think he's looking fairly good coming into the election cycle for a second term.
GIGOT: Do I hear dissent?
HENNINGER: He pivoted — pivoted to the center. He's now in a land that he doesn't understand, is totally unfamiliar with —
— and it makes him uncomfortable. I think it's going to be very hard for him to operate going forward as a centrist.
GIGOT: He doesn't have that feel for the center.
HENNINGER: Bill Clinton could do it like that. I don't think it —
GIGOT: Obama is from the left. He will have a hard time adjusting.
KAMINSKI: He is a man of the left. But this tax deal he got, this is actually good for the economy, which, in the end, would be good for him.
GIGOT: At least in 2011 and '12, right?
KAMINSKI: Well —
GIGOT: Whether or not it's just a sugar high, and that means it will wear off, is another question.
I want to get in my pick for the winner of year, and that's David Petraeus. The president picked him to head his Afghan campaign after he fired Stanley McChrystal. If anybody can do it, David Petraeus is the guy who can, that is prevail in Afghanistan and prevailed by winning in — defeating Al Qaeda in Iraq. He knows counterinsurgency. And he just might rescue the president's policy, if he is given the chance to do what needs to be done, going into the sanctuaries in Pakistan where the Taliban can hole up. I hope, for the sake of the country, he's the big winner in 2011.
Still ahead, what to look for in the next year. Our panel gazes into their crystal balls to bring you the stories and the people you'll be talking about in the year ahead.
GIGOT: Well, health care reform, the midterm elections and the global economic crisis dominated the headlines in 2010. What will the New Year bring?
Our panelists are gazing into their crystal balls for the big stories to watch in 2010.
RABINOWITZ: Yes, this story will be the effort to repeal health care and it's gotten a tremendous boost. And we now know, certainly as a result of the elections, that the more Americans learned about health care the less they liked, which was contrary to everything the administration asked. And I think that you're going to see, with a surge of real relief they can do it, which wasn't there before, with a court ruling against.
GIGOT: That said it was unconstitutional.
RABINOWITZ: That said, yes, it's unconstitutional. This is tremendous. And I think this will be the story.
GIGOT: But the House probably will pass a repeal bill. But it will be interesting to see how many Democrats they get. I'm certain the House will pass it. The question is, in the Senate, run by Democrats, how many will repudiate their earlier vote. Or say, will Joe Manchin, newly election, and is up from West Virginia, will he vote to repeal? The president may veto it. But you have the issue framed for the election?
RILEY: Yes, you also have a Republican House there when it comes to funding, the implementation of this thing. They'll have a say in that.
GIGOT: That's another thing they can do —
RILEY: And hearings, they can both slow the process so —
GIGOT: And educate people about what it's actually doing, the insurance market —
RILEY: But they can throw a lot of sand in —
GIGOT: Raising prices, for example, limiting choice.
HENNINGER: I think life in doctor's offices and hospitals is going to educate people. There are internists all over Manhattan opting out of Medicare as we speak.
HENNINGER: And I think this is the thing that Dorothy's talking about. People will be shouting over the effects on —
KAMINSKI: I think it will be very hard to sustain the outrage you saw last month in elections.
GIGOT: It will be unless the prices keep rising. And people will hopefully — and they own it. They own the health care system now, lock, stock and barrel. And that's something that the field promoters can work on.
RILEY: I think one of the big stories for the nonpolitical junkies in America will be whether we will have a NFL season next year. The collective bargaining agreement expires in March and if the players unions and owners cannot agree to a new deal, we may not have a football season next year.
GIGOT: Well, why would they jeopardize an $8 billion —
— which is the most successful sporting league in America?
RILEY: Why have other sports have lockouts, baseball, hockey. I mean, it happens. And its owners are driving a tough bargain here. So we'll see.
GIGOT: All right.
KAMINSKI: I think the biggest story next year will be foreign policy, which will come up in the election in November.
KAMINSKI: Absolutely. After all, it's a make-or-break year in Afghanistan. And we'll see this, whether the new counterinsurgency push is working. And you have North Korea working up and the Iran problems, which is still unresolved. And the other issue, which is present too, is, this summer, you'll probably see secretary of defense, Bob Gates, leave and you'll have to get a new chairman of the Joint Chiefs of Staff. So, you know, we don't know what the crisis will be. But I will see that foreign policy will be back on a top-line issue next year.
GIGOT: And the biggest issue will be Iran, North Korea or Afghanistan?
KAMINSKI: I think that Afghanistan is the crucial issue here. You have already a push to try and de-surge Obama's troops. General Petraeus has said that he has a fragile progress, but you won't see whether it's working until spring. You can't say the violence, which has been brought down the last few months, is really going to stay down. And you also have to see whether you have the improvements on governments in Afghanistan.
All right, Dan?
HENNINGER: Well, Paul, I think the big story is going to be finally the emergence of the Republican presidential campaign. People talk all the time.
GIGOT: Is that good news or bad news, Dan?
HENNINGER: I don't know either.
People talk all the time about how the campaigns are too long. I've been getting asked for a year by people, who I think the Republican nominee will be.
GIGOT: Well, that's because there's no clear frontrunner and nobody knows.
HENNINGER: By mid year 2011, they'll be coming out of the woodwork and we'll be spending the next 18 months talking about frontrunners and also-rans.
GIGOT: You're out on a limb. Who is the frontrunner a year from now on the Republican side?
HENNINGER: The frontrunner a year from now?
GIGOT: Jeb Bush?
HENNINGER: I'm not going to give that away, Paul. I'm not going to give that away.
I've got — I think the most interesting story is who are the dark horses. I think the current frontrunners are probably going to fall back and people like Mitch Daniels and Haley Barbour, and I would even throw Arizona's Senator Jon Kyl into the mix. That's the sort of person I see.
GIGOT: A couple of governors, all right.
So my biggest story I think for 2011 will be, can the Republicans cut spending? I don't think we know that. They tried in 1995 and '96, when they last controlled Congress. They succeeded modestly for a year or two and gave up the game. The question now is, can they do big cuts, major entitlement reform? I think with President Obama opposing them every step of the way, they're not getting too much done in the next two years. But they can frame the issue for the election in 2012.
HENNINGER: Do you think the incoming freshmen are going to have an impression on the old bulls in the Republican Party?
GIGOT: There's no question. They're already having that effect. They've already stiffened some spines. They're stiffening even John Boehner's spine and some of the appropriators. And Paul Ryan, as Dorothy mentioned, will drive this in the House. I think they'll do it in the House, but Obama is going to try to frame every cut they make as somehow, what they always do, which is throwing grandma into the snow bank, cutting school lunches for children. The question is, once that political debate is joined, can the Republicans stick it out. And —
RILEY: And then we'll see weather the Tea Party can be sustained. A lot of these freshmen being brought in were put in there or helped gain office because of efforts by the Tea Party. And those are the real anti-spenders out there. And whether they can light a fire under the established Republicans and say you've got to change, is what we need to wait and see.
KAMINSKI: And can the party in power sustain the enthusiasm of the Tea Party grassroots.
GIGOT: Because if they, for example — the Republicans look to be cynical. If they look to be, for example, funding ethanol, if they look to be picking their own corporate welfare agents to support, the Tea Party is going to get — they're going to get skeptical and get upset, and then they're going to lose that enthusiasm and find they don't want to come out and vote in 2012. So this is a difficult managing act for the Republicans. But I think that they should keep in mind what they were elected on, and then follow through on that mandate, and go toe to toe with President Obama.
All right, we have to take one more break. When we come back, our panel's picks for the people to watch in 2011.
GIGOT: And finally this week, our panel's picks for people to watch in 2011.
RABINOWITZ: Mitch Daniels, the governor of Indiana, who has all the seductiveness of a dark horse and —
— I know seductiveness is not a word you attach to Mitch Daniels. But you think he is charismatically challenged I offer you confidence, which sounds pretty good, next to the charisma we see in the White House.
He has, in fact, said some strong things that give us a sense of who he is.
GIGOT: All right.
RILEY: I'm going to be watching a group of people, Paul, and those are the Ivy League presidents, and whether or not they're going to allow military recruiters back on campus in the wake of the repeal of "don't ask, don't tell," the ban on openly gay men and women serving in the military. The policy was and long cited as a reason to keep ROTC off campus. Let's see if the colleges were arguing in good faith.
GIGOT: All right.
KAMINSKI: I'm going to go with Israeli Prime Minister Benjamin Netanyahu, who has been patiently watching the U.S. try to walk — walk and talk back Iran from getting nuclear weapons. Israel is terrified of Iran going nuclear and, at some point, will decide to handle this problem on its own, if we don't.
GIGOT: And that could be this year, possibly?
GIGOT: All right, Dan.
HENNINGER: Paul, the people of South Carolina, a state that is routinely ridiculed in the public media, have just elected to their governorship Nikki Haley. Who is Nikki Haley? A Republican woman of Indian descent, and she looks like she's going to be capable. She's very smart. I think it's a very good development for the Republican Party. And if she does well, I think we're going to be hearing a lot more about Nikki Haley of South Carolina.
GIGOT: As a symbol of the Republican governors who have commented. There's a lot of them.
I've got two people to watch, and they're Democratic governors, Jerry Brown, governor of California, on his second tour of that job, and Andrew Cuomo, going to be governor of New York, son of the former governor, Mario Cuomo. And both of those Democrats are going to be leaning to Democratic blue states that are busted, no money. And they're going to have to reform. And they've got Democrats mostly in control of the total legislature in California, half of the legislature in New York. And the Senate's liberal anyway. They're going to have to govern against their own constituencies to be able to reform. And the question is, will the Democratic governors be able to reform.
We'll have two models going forward. We'll have Republicans on one hand, seeing what they can do with their new majority, and a couple of old blue-line states that are broke, seeing if they can govern the same way. It will be a fascinating market test of who can accomplish what.
HENNINGER: I think that California and New York to succeed would give New Year's optimism new meaning.
GIGOT: I'm not optimistic myself, Dan. But for America, I'd love to see two of our biggest states and most important states succeed. And I'm afraid that hasn't been happening in a long time.
HENNINGER: The alternative, you move out of those states and go to nicer climates, like Texas and Tennessee.
GIGOT: That's what's happening. You'd still like to see California, the 7th largest economy in the world, actually get a reason to get some reform energy to be able to revive that economy.
KAMINSKI: And it's interesting, Jerry Brown, this will be his last job, and he does have nothing to lose except his legacy, and that's one reason to be trying to be optimistic.
GIGOT: Very good point.
That's it for this week's edition of "Journal Editorial Report." Thanks to my panel and to all of you for watching.
I'm Paul Gigot. Happy New Year. We hope to see you right here next week.
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