This is a rush transcript from "The Journal Editorial Report," March 29, 2008.
PAUL GIGOT, FOX HOST: This week on the "Journal Editorial Report," should Hillary quit? Clinton insiders put her chances of winning the nomination at 10 percent. So what's keeping her in the race?
Plus, the presidential candidates unveil their strategies for saving the slumping housing market. But what do their plans tell you about the kind of president they'd be.
And lawyers gone wild. A look at the lineup of trial attorneys headed to the big house.
But first, these headlines.
GIGOT: Welcome to the "Journal Editorial Report." I'm Paul Gigot.
Hillary Clinton spent the week campaigning hard in Pennsylvania ahead of next month's primary. But even with a big win there, her own campaign acknowledges there's no way she'll finish ahead of Barack Obama in pledge delegates.
And at least one Clinton insider has gone so far as to estimate that she has no more than a 10 percent chance of winning the nomination. So is it time for her to get out of the race?
Joining the panel this week, "Wall Street Journal" columnist and deputy editor Dan Henninger, editorial board member Jason Riley and Washington columnist Kim Strassel.
Jason, so we're hearing it from a lot of Democrats. Bill Richardson, governor of New Mexico, and others saying time to end this thing. Hillary Clinton can't win.
Should she get out of the race now to save the party from more in- fighting?
JASON RILEY, EDITORIAL BOARD MEMBER: Of course she should get out of the race now.
She's got the delegate deficit that you mentioned. She's also behind in the popular vote. It's nearly mathematically impossible for her to make up this gap. And the only way for her to win is that the superdelegates put her over the top.
And if you think Jeremiah Wright's conspiracy theories are bad now in the black community, wait until to see what happens when the superdelegates take this nomination away from Barack Obama and give it to Hillary. It'll be madness.
GIGOT: But the superdelegates, of course, were designed as a system to select the nominee if, in fact, we got to this kind of situation where the pledged delegates didn't...
RILEY: Sure. But they will be doing something extraordinary. And to some extent, the conspiracy theorists will be right. A bunch of higher ups in the Democratic Party will have conspired to do something out of the ordinary to give the nomination to Hillary Clinton.
GIGOT: OK, Henninger...
DAN HENNINGER, COLUMNIST & DEPUTY EDITOR: Let's take that point a little bit further. We have elevated this race as though it's simply Barack Obama against Hillary Clinton. There's a little bit more to it than that. And we found that out this week when 15 or so of Hillary's biggest donors sent a letter to House Speaker Nancy Pelosi saying a couple of things — one, the superdelegates ought to be able to vote for whoever they think is most electable, and remind Speaker Pelosi, they give a lot of money to the Democratic House campaign committees.
This fight is about the entire architecture of the Democratic Party and control of the Democratic Party. And it's either going to flow down out of Hillary Clinton or flow down out of Barack Obama and the Obama insurgency.
You're talking about a structure of the party that goes down to the state and local level. And there's just so much at stake here and it's so close that I think there ought to be a while to fight it out going forward.
GIGOT: Kim, where do you stand on this in terms of whether or not Hillary should get out — should get out?
KIM STRASSEL, WASHINGTON COLUMNIST: Yeah, Hillary Clinton's going to make the argument, and it's a decent argument, she's going to say it doesn't matter who has more delegates. The rules say you have to have 2,025 to win. And otherwise, the superdelegates get to make the call.
So I'm Hillary Clinton and here's what I'm going to do. I'm going to win big in the states that are coming up. I'm going to do it by making a lot of traction with middle-class white voters, who are concerned about the economy. I'm going to sit back now that the press has focused on Barack Obama and see if they dig up another Reverend Wright.
And then, you know, you want to talk about electability in the fall? Let's talk about the states that I have won. Let's talk about the southwest, California, Florida, where John McCain is going to be making in- roads. I can hold those for you.
And by the way, I don't see any evidence of a split out there. You know, Democrats are pumped. They're primed. Look at the turnout. They're all going to get behind the nominee. That's what she's going to argue.
RILEY: Well, there is empirical evidence that this fight, the longer it goes on, is hurting the party, which is another reason for her to get out.
I have some figures from a recent CNN poll that said, "the percentage of Clinton votes, who say they would be upset it Obama received the nomination, has jumped from 35 percent in January to 51 percent this month. And the percent of Obama supporters, who said that they would be upset if Clinton got the nod, has risen from 26 percent to 41 percent."
So the longer this drags on, the more it is hurting the Democratic Party.
STRASSEL: If you want to talk about polls, there was another one out this week that said 22 percent of Americans think Barack should get out; 22 percent think Hillary should get off. So there's a difference between insiders and the population.
GIGOT: I think there's another issue here. It's something that is not said overtly, but you know it's being said behind the scene by the Clinton supporters, and that is, well, you saw what happened with Jeremiah Wright. We didn't know that was going to break. And look at the damage that has done to Obama. And look what the Republicans are going to do with that.
What if there's more? What if the Rezko trial, which is this fraud trail in Chicago — you know, we find out more about Barack Obama's friends.
HENNINGER: Yeah, well, and as well what the Jeremiah Wright issue did was force Obama to give this extraordinarily enormous speech on race in America. That issue got brought to the surface.
Certainly, black American Democratic voters are supporting Barack Obama. If this thing gets pulled away from him, where are they going to go?
We have said on the program before, if 20 percent of the black vote were ever to go to the Republican Party, it's over for the Democrats.
GIGOT: I think it would be great for the country if both parties, Jason, had to compete for the black vote. Instead of Democrats being able to say take them for granted.
RILEY: That's a fair point. But we all have a vested interest in the Democratic Party not imploded.
RILEY: I've been reading the recent biography of Alexander Hamilton by Ron Chernow. Excellent biography. He talks about the formation of the political parties in the late 1700s. And he says that one of the reasons it was so contentious was because there was no idea of a loyal opposition at the time.
Today, we have a loyal opposition. And it's a good thing. And it's what we want in our country. And it's why everyone has a vested interest in not only the Democratic Party not imploding, but the Republican Party not imploding, no matter what party you belong to.
GIGOT: All right, I'll tell you this though, Jason. I don't think Senator Clinton is going to take your advice.
GIGOT: That's a different question.
All right, still ahead, the candidates roll out their plans to save the sinking housing market. We'll tell you what they're proposing and what it means for your wallet, after the break.
(BEGIN VIDEO CLIP)
SEN. BARACK OBAMA, (D), PRESIDENTIAL CANDIDATE: If we can extend a hand to banks on Wall Street when they get into trouble, we can extend a hand to Americans who are struggling, often through no fault of their own.
SEN. HILLARY CLINTON, (D), PRESIDENTIAL CANDIDATE: Well, if the Fed can extend $30 billion to help Bear Stearns address their financial crisis, the federal government should provide at least that much emergency assistance to help families and communities to address theirs.
SEN. JOHN MCCAIN, (R), PRESIDENTIAL CANDIDATE: I've always been committed to the principle that it's not the duty of government to bail out and reward those who act irresponsibly, whether the big banks or small borrowers.
(END VIDEO CLIP)
GIGOT: All three presidential candidates delivered what were billed as major economic speeches this week, using the housing market upheaval to offer a window on what their presidencies would look like.
We're back with Dan Henninger and Kim Strassel. And also joining the panel, "Wall Street Journal" editorial board member Brian Carney.
Brian, what's the big difference here between the two Democratic candidates on the one side and what they're offering and — and I want to get into those differences later — but between those two and John McCain?
BRIAN CARNEY, EDITORIAL BOARD MEMBER: I think the best way to think about it is the question, was there a housing bubble and did it lead mistakes to be made by all parties, by borrowers, leaders, investors, house buyers, house sellers?
GIGOT: An old-fashioned mania. We got carried away.
CARNEY: Right. McCain's view is we all got carried away; we all made bad decisions. People got in over their heads because they figured they could always sell their house for more than they bought it for. Lenders got carried away because they figured the house could be always be sold for more than the mortgage was worth.
And if you begin from that premise that everybody got carried away, it was an old-fashioned mania, then your answer is quite different if, like Hillary and Obama, you basically believe that financial engineers on Wall Street gave loans that were designed to fail and took advantage of the...
GIGOT: The lenders were the evil players here.
CARNEY: Right. That lenders and investors were somehow at fault.
GIGOT: That's the difference in philosophy and explanations of what happened. What's the difference in terms of what you do now that they're proposing?
CARNEY: Well, the difference in terms of what you do now emerges from what you think happened.
CARNEY: So Hillary and Obama want to spend billions of dollars trying to keep people in their homes because homeownership is the American dream and...
GIGOT: Salvage the borrowers. They were taken advantage of by the lenders.
GIGOT: Salvage the borrowers. So give them $30 billion to help keep them in their homes. Forgive their mortgages. Get the FHA and the Federal Housing Administration in there to guarantee the borrowers. So a kind of homeowner bail out?
CARNEY: Yes, exactly.
GIGOT: Now, what about McCain?
CARNEY: McCain says no bail outs, as we just heard him say. No bail outs either for small borrowers or for big lenders who made mistakes. He would like to appeal to a kind of civic, or something to convince some of the lenders to...
GIGOT: Do the right thing voluntarily.
CARNEY: Do the right thing voluntarily and kind of take it easy on the people who might be on the cusp, who might be able to salvage their home and actually live in it and want to stay.
GIGOT: There's an economic question here, Dan, I think, which is, if the government does come in and does bail out the housing market and borrowers, you run of the risk of kind of maybe not letting the market settle and find a floor. And if you don't find a floor, you can't have a recovery.
HENNINGER: Yeah, that's right. I mean, I think there's an enormous amount of hubris involved in the proposals of Obama and Hillary in that they're both saying that there's a big problem here now and we're the government and we're here to help. This is about crisis for these houses, for these properties.
The idea is that they will come in and do these things to make it all better for the mortgage holders. But I think they're getting themselves involved in an extremely complicated area of the market that really does need to work itself out on its own. And their intrusion is probably going to make it worse than it is. It will sustain this problem longer than it might otherwise be.
GIGOT: Kim, let me ask you a political question because both Obama and Clinton attacked McCain this week very quickly for doing nothing, not carrying about the issue, for almost a laissez faire approach. They seem to think this is a big advantage for them politically. Do you agree with that?
STRASSEL: I think as the moment it is. We had debates on this show about whether or not that intervention of Bear Stearns was good. But what you got from those clips earlier is Democrats are using this. They're saying, hey, you step in and you help Wall Street, you have got to help Main Street.
GIGOT: This is what the Federal Reserve did last week in helping Bear Stearns — well, it was actually a forced liquidation of Bear Stearns more of less. But some people call it a bail out.
STRASSEL: Yes, right. And they are saying that's what it is. And they are using it as a reason for why now the federal government must step in and offer equal help to borrowers. And that's going to make it really difficult for people like John McCain to continue to make his argument for the White House, to hold ought against a huge housing bail out. Congressional Republicans are worried.
CARNEY: I'm not sure that Kim is right about that. I think that for every borrower who may be in trouble that's going to be helped, there's millions more who are stretching to pay their mortgages and are conscious of the sacrifices they make all the time. Maybe they bought a smaller house to be sure that they could afford the payments. Maybe they forgo eating out so they can make their payments.
And for those people, the idea that somebody else is going to get help on their mortgage, is a political loser. They say, look at me, where's my money? How do I get in or this racket?
GIGOT: Yeah, and those are the people that John McCain is going to playing to if, in fact, he doesn't do anything.
Up next, is it America's most wanted or the trail bar? There's a string of high-profile lawyers headed to jail. We'll tell you who they are and what they did and why it's costing you a bundle.
GIGOT: Wire taps, secret meetings, code words — it was all part of the case against famed Mississippi trial lawyer Dickie Scruggs, who pled guilty earlier this month to bribing a state judge. But Scruggs, best known for his role in bringing down big tobacco and portrayed in the movie "The Insider," isn't the only trial lawyer headed to prison these days.
Kim, Dickie Scruggs — you've written about him and some of his lawsuits. Why should Americans care if he's a crook?
STRASSEL: Because Dickie Scruggs is the personification of big billionaire trail lawyers. These are guys who have made into an art manufacturing lawsuits, bringing in hundreds of thousands of clients, teaming up with state attorney generals so they can get more attention to their cases and push companies into settlements.
The fact that we now know he was doing dirty business means there should be a more skeptical eye placed on a lot of these trial lawyers across the country who are involved in the same kind of rackets.
GIGOT: And these were tobacco, asbestos. This is not to say that some of these cases weren't justifiable wrongs. But they turned into the mass tort cases — tens and hundreds of thousands of plaintiffs.
RILEY: People hear the term "tort reform" and their eyes sort of glaze over. What we're really talking about with tort reform is lawsuit abuse, the attempt of some people to use our justice system to pretty much redistribute wealth in America. And what that does is crowd out legitimate claims.
You're right. There are some legitimate claims mixed in here. But these guys are turning this into a big business.
This is an important issue for us because lawsuit abuse affects the business climate of cities and states and even our nation, which means it affects the competitiveness of the marketplace. It goes down to consumers and prices and it's important.
GIGOT: There's another group of lawyers, Dan, that were in the dock and pled guilty — Mel Weiss and Bill LeRach, formerly of the Milberg Weiss Law Firm, which pioneered another kind of lawsuit abuse called the strike suit against corporations. How did that work?
HENNINGER: Well, when there are fluctuations in the share price of corporations, they often blamed it on the companies not divulging information to the marketplace and they would file class-action suits on behalf of shareholders.
GIGOT: And claim fraud.
HENNINGER: And claim fraud. Do you know how much money Milberg Weiss pulled out of that industry over the time it was done? $45 billion. That's a tremendous amount of money. That was transferred to the private sector where it could have gone to things like developing technologies, pharmaceuticals. I mean, these were like...
GIGOT: But suits in the name of shareholders cost shareholders the money.
GIGOT: And the lawyers got the bulk of the loot.
HENNINGER: Yeah. And this is the textbook definition of abuse because they were simply making an industry out of this sort of thing.
GIGOT: And now we find out, Kim, that these suits — in fact, because of these prosecutions, that these suits were, in fact, manufactured because the lead plaintiffs' actually got kick backs for becoming the plaintiffs.
STRASSEL: Yeah, they got paid to do this. I mean, which is just the whole wrong way around the justice system.
GIGOT: No kidding.
STRASSEL: But you know, Dan used the correct word here, "industry." The thing that's the most amazing is we have to explain who these people are out there. If they were the guys up at the top of Enron or WorldCom or any other these people who had perpetrated fraud — you know, this was all the discussion and argument in the newspapers. These guys are crooks.
STRASSEL: There just hasn't been that much about it.
RILEY: Kim's right. There's a political point to make here. Democrats always talk about executive pay and the little guy. But here you have these trial lawyers turning themselves into mega millionaires. And the people they were supposedly representing got a pittance of the pay. The silence on the left is deafening.
GIGOT: But will there be anything to come out of this?
GIGOT: Given these prosecutions, because you're talking about a series of these prosecutions by the biggest names. As Kim says, this would be like the CEOs of General Electric and General Motors and the biggest corporations of America all at the same time being proven to be criminal.
HENNINGER: Yeah, it does nothing too much about the industry, which has — we should quickly point out has a political element. There are now at least 80 bills in over two dozen states around the country to pair back tort reforms so that the lawyers can, in conjunctions with a lot of politicians in these legislatures, keep this game going because they give money to those politicians — and let's be honest about it — mostly the Democratic Party.
GIGOT: Yeah. There are some Republicans. But the senate in the United States in particular is pretty much a wholly owned subsidiary of the trial lawyers lobby. And I don't think that's an exaggeration. They are more powerful than the NRA or any other lobby in American.
OK, we have to take one more break. When we come back, our "Hits and Misses" of the week.
GIGOT: Winners and losers, picks and pans, "Hits and Misses," it's our way of calling attention to the best and the worst of the week.
Item one, Ford says Tata to Jaguar and Land Rover — Dan?
HENNINGER: That's right, Paul. One more miss for the British Empire. Jaguar and Land Rover, the epitome of oh-so-British achievement, are now being sold by Ford to India's Tata Motors. One can hardly overstate the irony of this or the lesson. I mean, we all grew up on movies of the Brits in India and their impeccable whites being waited on by Indian servants.
Well, the reason the Brits have to let go of these to storied automobile brands have nothing to do with that, but it has a lot to do with production costs and highly unionized England, as it was true in Dearborn, Michigan.
I mean, here in the U.S., we have two presidential candidates proposing trade protection as the answer to companies like this moving off shore. But make no mistake — Jaguar's passage to India has little to do with trade, and everything to do with the West's ability to stay competitive in the global marketplace.
Let's just hope the Brits don't lose B.P. or gin.
GIGOT: OK, Dan, thanks.
Jason, justice for satellite radio?
RILEY: Yes. This is a hit for government regulators. How rare is that? Particularly the Justice Department's Anti-trust Division, which is run by Thomas Barnett — this week, it approved the merger of XM and Sirius satellite radio companies.
And what was particularly impressive about this was the rational behind the decision. They said these two companies are not competing so much with each other as they're competing for consumers in this huge media marketplace that includes, of course, traditional free radio and IPods and Internet radio services and all the rest. And it was really nice to hear a government bureaucrat, a regulator, acknowledging the dynamism of this marketplace.
GIGOT: Jason, thank you.
Finally, the other Spitzer scandal. How many are there, Kim?
STRASSEL: You know, he's gone now because of the prostitution scandal. But what everyone has forgotten is he was involved in a flap over whether or not he misused state troopers to tail and smear his Republican political rival, State Senate Leader Joseph Bruno.
Now this was looked into by state prosecutors, the state attorney general, commissions, and he was largely exonerated for the simple fact that no one wanted to tackle a sitting governor.
It is now coming out that, of course, he was deeply involved. He checked in on it. It has aides looking at it. He looked at documents. But it took the prosecution thing for it to come out about this much greater abuse of his power.
So a miss to the entire Albany political culture. New Yorkers are sick of them and this is another reason why.
GIGOT: All right, thanks, Kim.
Thanks to my panel and to all of you for watching.
I'm Paul Gigot. We hope to see you here next week.
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