'Journal Editorial Report,' July 10, 2010

This is a rush transcript from "The Journal Editorial Report," July 10, 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," suing Arizona. Are the administration's immigration tactics ruining any real chance for reform?

And President Obama dodges a tough confirmation fight for a top health care post, but Dr. Donald Berwick's views are hardly a secret. We'll take a closer look at his love of Britain's National Health Service and more.

Plus, under fire for the Deepwater Horizon disaster, BP is the company everybody loves to hate. Was the oil giant also behind last year's release of the Lockerbie bomber?

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

The Justice Department filed suit this week against the state of Arizona over its new immigration law, requiring local police to enforce federal immigration statutes. But despite repeated claims by the president and other administration officials that the law could lead to racial profiling, the feds aren't suing Arizona on equal protection grounds. So what's the suit all about?

Joining the panel this week, Wall Street Journal columnist and deputy editor Dan Henninger; editorial board member Dorothy Rabinowitz; and columnist Bill McGurn.

Bill, like you, me, you're a long time supporter of immigration reform.

BILL MCGURN, COLUMNIST: Right.

GIGOT: Does this lawsuit get the president any closer to that end?

MCGURN:Of course not. It's like giving a speech in July. You're not going to get the legislation there.

GIGOT: Before the end of the year.

MCGURN:Before the end of the year. It's not about this. This is just going to create bad feelings. But then again, the Arizona law, I think, was not meant to fix immigration in Arizona. I think it was meant to flush out people that were opposed to enforcement and to poke the federal government.

GIGOT: So it was really symbolic in its own right?

MCGURN:Yes. It was designed to go to the Supreme Court. It's designed to make an issue of this and to show the government has made a big hash of our policy. Where it goes from there, I don't know. But I think they've succeeded in that part.

GIGOT: We have a clip of some statements by administration officials about the law before the suit was filed. Here, let's watch.

(BEGIN VIDEO CLIPS FROM ABC'S "THIS WEEK")

JANET NAPOLITANO, HOMELAND SECURITY SECRETARY: Unfortunately, I think it does and can invite racial profiling. I think it's bad for law enforcement.

UNIDENTIFIED MALE: What is happening is you do have laws that come up that end up creating the kinds of injuries that are being talked about, where there is racial profiling, and real potential.

ERIC HOLDER, ATTORNEY GENERAL OF THE UNITED STATES: It's certainly one of the concerns that I have that you will end up in a situation where people are racially profiled.

(END VIDEO CLIPS)

GIGOT: So, Dorothy, three there saying this would lead to racial profiling. Yet, they didn't sue on equal protection grounds, which would essentially be antidiscrimination grounds.

DOROTHY RABINOWITZ, EDITORIAL BOARD MEMBER: That's right.

GIGOT: Why not?

RABINOWITZ: Three demigods.

Yes. They didn't sue on antidiscrimination. But as you say, it's a good way of getting in there and possibly winning. But, you know, there are these nuances. Everybody's got to be sitting back and saying, wait a minute, all of the towns and cities across the country had their own little refuges where illegal aliens have been decreed to be free and easy. And there's been no government intervention to say, wait a minute, you're preempted, you're preempting our laws. This is one of the great paradoxes.

GIGOT: Why didn't they sue on equal protection grounds? Because if — they say that this is their great fear. Is this a tacit admission that, in fact, on legal grounds, they have no case? Because this doesn't lead to racial profiling?

RABINOWITZ: The law itself is carefully designed to evade that.

GIGOT: Ah.

RABINOWITZ: They added this, and it's very clear that it says, you have to be arrested in the course of some illegal action.

GIGOT: So it's really not that sort of a law?

RABINOWITZ: It's not. They couldn't —

DAN HENNINGER, COLUMNIST & DEPUTY EDITOR: Not only was it carefully crafted but, in many ways, it mirrors federal law. So, in fact, the Department of Justice has filed its suit under the Supremacy Clause, which argues that federal law preempts state law. That's when it gets kind of — first of all, I think they're probably going to win on that.

GIGOT: I agree.

HENNINGER: All right.

GIGOT: I think they're going to win on that. This is something that's actually in the Constitution.

HENNINGER: Yes.

GIGOT: And Congress has the power to control naturalization.

HENNINGER: I think, at that point, it's going to get political. And it will go to the Supreme Court. Justices Sotomayor and Kagan will vote for the federal government. And those people who are currently upset about federalism are going to get more upset.

Secondly, one of the arguments that the Justice Department makes is that federal laws is full of complexity and nuance and their law, gets —

GIGOT: No kidding?

HENNINGER: — in the way of enforcement by the State Department, Department of Justice, the Department of Homeland Security and other federal agencies, who are required to enforce the immigration laws. And that's why they don't work. They're so complex —

GIGOT: Which leads to the question, all right, let's say the feds win in court, what does it get them? What are we left with?

MCGURN:We're back to square one.

GIGOT: Where —

MCGURN:I think though it does get the people that crafted this law — I think they were very clever. They got attention on the issue. So they kind of win, whether they win or lose.

GIGOT: What's the motive here driving this lawsuit, Dorothy?

RABINOWITZ: Well, exactly, they're not back to square one. They're behind. Because what really happens is that people are engaged and all it does is agitate. The assumption that all Hispanics are going to come fleeing to the side of the Democrats as a result of this is, I think, very faulty. If you look back at all of those propositions, say, in California, at least in the 90s, over 30 percent of Latinos voted against — voted for propositions.

GIGOT: But is the motive here then for the president a political one —

RABINOWITZ: Of course it is.

GIGOT: — that he hopes to define Republicans as somehow anti- Hispanic because they are in favor of this law? Is that what is driving this?

RABINOWITZ: That's the motive and it's blatantly that this is the case. And people are not going to respond. The realities of illegal immigration are so overwhelming.

GIGOT: Bill, you were in the previous administration as a speech writer and wrote some of President Bush's immigration speeches. There was a big effort in 2007 to pass immigration law.

MCGURN:Exactly.

GIGOT: What role did Barack Obama play when he was in the Senate?

MCGURN:It's very interesting, because we start out — a lot of people point out the similarities between President Obama's speech and President Bush's speech on the general issues.

GIGOT: And on the substance, they weren't that far apart.

MCGURN:That's what I mean, they weren't that far apart. It was a careful compromise. Kennedy, McCain, all of these people involved, and Barack Obama was in on that, in on the drafting. But then, at the end, he started voting for these amendments backed by Labor that were amendment killers — I mean, bill killers. So he played a double game. He was for immigration reform while making it more difficult. He voted for a Dorgan Amendment that passed by one vote.

GIGOT: Byron Dorgan, the North Dakota Democrat.

MCGURN:Right. Attacking the Guest Worker Program. It would have sunset it out. That was the big necessary thing for the business buy in. And Jim DeMint, who was totally opposed to the bill —

GIGOT: South Carolina Republican.

MCGURN:South Carolina — never votes for a labor provision, voted for that one, because he said it would help kill the bill. So it's very, very duplicitous. And I see this again, it's just coming full circle. When you give a speech in July and you need a bipartisan consensus and you attack Republicans in the speech, you're not going to get —

GIGOT: You don't want the partisan consensus —

MCGURN:You want the issues, you don't want reform.

GIGOT: I think the shame is that this is going to poison the well, Dan, not just this year, and nothing — nobody expects this year. But I think even to 2011 and 2012, because he's polarized the debate using the Arizona law as a prop.

HENNINGER: Yes, and I think that may be the point. Bill is suggesting it's Labor that opposes a solution, which would include a Guest Worker Program for these people to work.

GIGOT: Legal avenue to come.

HENNINGER: Legal avenue. Recall that labor is the one that opposed Mexican trucks coming into the United States under NAFTA. So I think the president is kind of carrying water for Labor on immigration.

GIGOT: Dan, last word.

Still ahead, the president bypasses the Senate to fill a key health care post. Dr. Donald Berwick's will oversee Medicare, Medicaid and much of Obamacare's new bureaucracy. And he's apparently found his model in Britain's National Health Service. Worried? Maybe you should be.

(COMMERCIAL BREAK)

GIGOT: Well, when Congress is away, the president will appoint. Mr. Obama used his recess appointment power this week to name the new head of Medicare and Medicaid Services, bypassing the Senate's confirmation process to install Dr. Donald Berwick in the post. Without any public vetting, Dr. Berwick will now assume control of a bureaucracy with a budget larger than the Defense Department and play a key role in the implementation of the president's new health care law.

So, just who is Donald Berwick?

Senior editorial writer, Joe Rago, is here to tell us.

First, let's talk about what this job really is because it's so easy to lose sense of that in the alphabet soup that is the federal government.

JOE RAGO, SENIOR EDITORIAL WRITER: Right.

GIGOT: What does the head of Medicare and Medicaid do?

RAGO: They run the two largest health care entitlement programs in the government.

GIGOT: Right.

RAGO: It's a giant department. It's the single largest item in the entire federal budget.

GIGOT: Four percent of GDP. The entire economy, four percent.

RAGO: Right. Headed to up to six percent 10 years from now.

GIGOT: And it determines what doctors get paid, what hospital get paid for specific services.

RAGO: It has enormous power to shape the practice of American medicine.

GIGOT: And even more under this new health care law.

RAGO: Far more, with the bill that Congress passed three months ago.

GIGOT: OK, why would the president give a recess appointment to Dr. Berwick, even though Democrats hadn't yet scheduled a hearing? They control the Senate. They could have scheduled it at anytime.

RAGO: He's got a long history of controversial statements that even Democrats were worried about. You know, about European health care systems that ration care through government.

GIGOT: He likes it?

RAGO: He's a huge fan. The British system, the NHS, National Health Service, he called it a seductress, that he said he was in love with, a global treasure, a model for the U.S. And so he's got this very voluminous paper trail.

GIGOT: They didn't want to debate that? They didn't want to debate that?

RAGO: Well —

GIGOT: I thought Obamacare was supposed to become more popular? Bill Clinton, for one, and I think even the president's political aides told Democrats, you vote for this, it's going to be more popular after it passes than during the ugly debate. I would think they would welcome a debate on this?

HENNINGER: Paul, I think this Berwick recess appointment is literally the biggest political event in the summer, of the summer. This is outrageous. I think his appointment should have hearings that are as important as those for Elena Kagan's nomination to the Supreme Court. They are huge issues at stake here. And this is the first individual person who has emerged from the Obama health care plan. And Dr. Berwick is a living representative of what Barack Obama and all the health care economists in the White House want to do, which is to transform the American health care system in a way that kind of levels it out, rather than emphasizes the cutting edge research for which this country has been famous. There's so much at stake here.

GIGOT: On this point, I want to read something, a quote from him. This is — "The decision is not whether or not we will ration care, the decision is whether we will ration with our eyes open."

Now, Republicans say this is a radical statement. You say it isn't, why?

RAGO: No, I think it's — at first, it's conventional among the entire health policy and academic left.

GIGOT: That you have to ration this way?

RAGO: Right.

GIGOT: They all agree with this?

RAGO: And it's not rationed through prices and individual decisions. It's rationed through brute government force and raw government power.

GIGOT: We have another clip I want to show. This time a quote — this time it's a clip. Let's listen.

(BEGIN VIDEO CLIP FROM JULY 2008)

DR. DONALD BERWICK, DIRECTOR, MEDICARE & MEDICAID SERVICES: Any health care funding plan that is just, equitable, civilized and humane must, must redistribute wealth from the richer among us to the poorer and the less fortunate. Excellent health care is, by definition, redistributional.

(END VIDEO CLIP)

GIGOT: Joe the plumber, where are you when we need you? This is what they said would happen during the campaign. Again, I don't think this is all that radical in White House circles. This is what the health care bill does.

HENNINGER: The current issue of health affairs, which is kind of the bible for these people, has an article by Harvard political scientist, Thedus Scupcal (ph), who says, "We can predict that much of the intended redistribution will be reversed because so many people are going to try to game the system and fight the taxes and fees that are embedded in it." That's what it's about.

GIGOT: But when the government tries to subsidize everybody, then it becomes very, very expensive, and then you have to make decisions about rationing care for everybody.

RAGO: Right. And what you're getting in a situation live the British system that Donald Berwick loves so much, where cutting edge treatments, the sort of most advanced —

GIGOT: A vast (ph) in, say, for colorectal cancer or something like that?

RAGO: Right. Where you're getting very specialized treatments tailored to individual patients. It just all sort of gets flattened out. And if some people suffer, that is sort of the price of having —

GIGOT: An egalitarian health care.

RAGO: Exactly.

GIGOT: You've been following Massachusetts, which was a prototype of what we're going to get nationally, passed in 2006. How is that working out?

RAGO: It's kind of a rolling disaster. It's — every week, there's sort of a new controversy. The latest one that's going on right now is Mitt Romney's predecessor, Duval Patrick —

GIGOT: Successor as governor.

RAGO: Successor, excuse me — has imposed price controls on Allstate Insurance plans, so he says, well, medical costs are rising at eight percent a year —

GIGOT: We have to clamp down on prices? We have to —

RAGO: Right. And you're seeing — he doesn't only want to attack the insurers, but now he's starting to move into doctors and hospitals and other forms of providers as well.

GIGOT: And this is the debate we're going to see nationally.

All right, Joe. We've got to go.

HENNINGER: That they're not letting us have.

GIGOT: That they don't want to have in Congress. Exactly right, Dan.

Still ahead, it's under fire for the Deepwater drilling disaster, but there may be an even better reason to dislike BP. Did the oil giant profit from the Lockerbie bomber's release? The answer when we come back.

(COMMERCIAL BREAK)

GIGOT: Well, BP has come under blistering criticism in recent months as oil from its Deepwater Horizon well continues to spill into the Gulf of Mexico. But Wall Street Journal foreign affairs columnist, Bret Stephens, says there may be better reason to dislike the oil giant as evidence grows that BP profited from last summer's release of Lockerbie bomber, Abdelbaset al Megrahi.

Bret joins us know.

Bret, what's the connection between BP and the release of Megrahi?

BRET STEPHENS, FOREIGN AFFAIRS COLUMNIST: Just a few weeks ago, the Libyan government announced BP would begin deepwater drilling in its —

GIGOT: Off of Libya?

STEPHENS: Off of the Libyan coast.

GIGOT: Notwithstanding the Gulf of Mexico?

STEPHENS: Definitely, notwithstanding the Gulf of Mexico. And, in fact, that Libya might take a strategic stake in BP. Now this follows news also in recent days that al Megrahi, the only man convicted for the 1988 Lockerbie bombing, who was released last year under compassionate grounds that he only had a few months to live, and is still alive. Might, in fact, live another 10, 15, 20 years. That was a statement by a doctor who offered the three-month prognosis but now says that he more or less gave that prognosis because he thought it could be, quote, "sort of justified."

GIGOT: Let's take this in turn. This offshore drilling in Libya is very big. It's something like a $900 million project. So it's a very big contract. BP itself said it was something like the equivalent of 2,000 blocks, exploration blocks in the Gulf of Mexico.

STEPHENS: Oh, it's absolutely enormous, because these are oil blocks right off the coast, which Libya itself doesn't have to — the Libyan oil company doesn't have the technology to explore. But they need a big Western oil company that can do the deepwater drilling. The question is, how did BP get itself to get these contracts.

GIGOT: That's the question, because the British deny any quid pro quo between the release of Megrahi and the contracts. BP denies it, I'm sure. So what's the evidence?

STEPHENS: Look, in 2004, when Gaddafi came in from the cold. Then —

GIGOT: Gave up his nuclear program.

STEPHENS: Gave up his nuclear program.

GIGOT: Said he wanted to normalize relations.

STEPHENS: Tony Blair paid a number of —

GIGOT: Former British prime minister.

STEPHENS: Former British prime minister paid a number of visits. And on his second visit, in 2007, BP and the Libyan government inked an oil exploration deal. But there was a hic-up. The Libyans were insisting on what they call a prisoner transfer agreement between the two countries, which sounds like one of these vanilla agreements that the two countries reached. But the man that was plainly in question in any prisoner transfer agreement was Megrahi, the guy who was then in a Scottish jail cell.

GIGOT: Yes.

STEPHENS: So they made this agreement and then the U.K. took its time with the prisoner transfer agreement. So the Libyan government started said, we're not sure we're going ahead with the BP deal. At this point, we know that BP admitted that it raised the issue of the prisoner transfer agreement with the then labor government in Britain. It had a special adviser, a former MI-6 intelligence official, who was well connected with Labour Party officials, and who also raised the subject of the prisoner transfer agreement. Lo and behold, at the end of 2007, the U.K. finally gets around to signing — to signing this agreement. And it's at that point that the BP deal starts going forward.

GIGOT: We also have a statement from Gaddafi's son, who has wanted to open up to the West, and it's well-known in British circles that the oil contract was at issue.

STEPHENS: No, it's clear both from what — not only from what the Libyans have said, save Gaddafi, but also from correspondence that was obtained by The London Sunday Times in which then Justice Minister Jack Straw writes to Scottish counterpart, talking about the, quote, "overwhelming interests of the U.K. in getting this agreement passed." And it's funny. The Libyans kept dragging their heels all the way up until Megrahi was released.

GIGOT: Here's the question though. Why shouldn't Britain do this? It's in their national interest obviously to have the oil exploration company do this. Megrahi is ill. We don't know how ill, that's true. And this is 20-some years ago. Here is the question, if Gaddafi wants to come in from the cold, maybe shouldn't we just move on?

STEPHENS: I would say there are 270 reasons not to do that, and those are the 270 people who were murdered on Pan Am 103. There's no question, the oil companies go into all kinds of dangerous places with regimes that we don't necessarily like, which have spotty human rights records. But Lockerbie is a case apart.

And it's also in the U.K.'s national interest to have good relations with the United States. This was a signal case in the war on terrorism, so there was a line to be drawn, and the British crossed it, in my mind.

GIGOT: All right, Bret, thank you.

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

(COMMERCIAL BREAK)

GIGOT: As a follow-up to the previous segment, we did ask BP for comment. They promised to get back to us, but never did.

Time now for our "Hit or Misses" of the week.

Dorothy, first to you.

RABINOWITZ: Yes, well, right to it. Our NASA chief, Charles Bolton, our new NASA chief, announced to Al-Jazeera, quite unbelievably, that one of the things he was told to do was, and I quote, "to reach out, above all, to predominantly Muslims nations to make them feel good about their contributions in math and science and engineering," unquote.

Now, this is a lot like the teaching in self-esteem they give to inner-city children. And this is what our NASA chief has been told to do. We can think about this as one of the naked revelations of the Obama administration's remarkable tendency to politicize every function of government, including the space age. And you can put this down as one of the many, many things that this administration is going to be found unbelievable about.

GIGOT: Joe?

RAGO: I want to give a hit this week to LeBron James for choosing the Miami Heat in the NBA. Not for anything to do with the team, but because he chose low-tax Florida, actually zero-tax Florida —

GIGOT: State taxes.

RAGO: — over Cleveland, which has a six percent rate in the city. And the Tax Foundation calculates that he made millions of dollars on this. And just wait until all-state championships are a function of state tax law.

GIGOT: All right.

Bret?

STEPHENS: Like a stop clock, a totalitarian regime is right maybe twice every 30 years. The government of Iran, which stones women, hangs homosexuals, has banned the mullet and the male pony tails. I think this is actually a credit to the Iranian regime for showing, for once, a little bit of good taste.

GIGOT: Good taste.

All right, 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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