This is a rush transcript from "Journal Editorial Report," August 20, 2011. This copy may not be in its final form and may be updated.
PAUL GIGOT, HOST: This week on the "Journal Editorial Report," who is Rick Perry? We'll take a closer look at the record of the three-term Texas governor and now top-tier presidential candidate.
Plus, if the GOP primary field is finally set, why are so many big donors sitting on the sidelines? Is there room for one or two more in the race?
And Obama's Midwest tour. The president visits three states he won handily in 2008. Why it won't be so easy this time around.
Welcome to the "Journal Editorial Report," I'm Paul Gigot.
First up this week, who is Rick Perry? The three-term Texas governor jumped into the GOP presidential race last weekend and quickly established himself as a front-runner. And those 10 years in the governor's mansion, they've given his critics plenty to dislike, supporters plenty to like, and Texas insiders plenty to fight about.
Here to sort it all out, Wall Street Journal columnist and deputy editor, Dan Henninger; assistant editorial page editor, James Freeman; and editorial board member, Jason Riley.
So, Dan, the Texas governor got in, saying, looking -- look at my jobs record. I can bring this Texas record to Washington, to the rest of the country. The left is saying it's all a mirage. Sort it out for us. Who is right?
DAN HENNINGER, COLUMNIST & DEPUTY EDITOR: Well, I think Governor Perry gets the best of this one, Paul. In June, the net job increase over the last 24 months in Texas was about 261,700 jobs, which is about half of the new jobs created in the United States over that period. Now, the criticism is, there are some of them are mac (ph) and not great jobs or so forth.
GIGOT: Or a lot are in energy.
HENNINGER: A lot of them are in energy.
GIGOT: Or you'd expect Texas to grow because, hey, the population is growing.
HENNINGER: That's the point.
In the last 10 years, the Texas population increased 21 percent, whereas New York, which also has a low unemployment rate, has been losing hundreds, tens of thousands of people over that time. So, New York has the greatest welfare system in the United States. Texas is criticized for its social services, but people are pouring into Texas for jobs. So if the issue right now, at this point in the campaign is, can I get a job, then I think Rick Perry has a pretty good story to tell.
JASON RILEY, EDITORIAL BOARD MEMBER: Yes, and this argument that this job growth has nothing to do with the tax or regulatory structure in place in Texas that Perry helped to create and preserve is ridiculous.
GIGOT: What are the secrets of that success? No income tax. That's one thing.
RILEY: No income tax and low regulation. And it's encouraging businesses to move there and it's encouraging people from other parts of the country to move there.
GIGOT: What about tort reform. Perry points to that and says, look, we've got lawsuit reform the rest of the country could use.
RILEY: That adds to the business climate, a favorable business climate. And as -- and an unemployment rate below the national average.
GIGOT: They put a cap on damages, pain and suffering damages.
RILEY: Medical malpractice.
GIGOT: Medical malpractice. And 26,000 --
HENNINGER: And Haley Barber, of Mississippi, told Rick Perry, if you pass that tort reform, you are going to have to --
GIGOT: User pays.
HENNINGER: You're going to have to put a turnstile in front of Texas --
RILEY: And all of these jobs --
HENNINGER: -- people roaring into the state.
HENNINGER: And they passed it.
RILEY: And all of the jobs are not in the oil and gas industry. Almost a third, 31 percent, are in health care.
GIGOT: And the loser pays. If you sue and lose your case, you have to pay the court costs --
GIGOT: -- of the people you sued, which is the British system. And is -- it's a major, major reform.
So, what are Perry's other strengths as a candidate, James?
JAMES FREEMAN, ASSISTANT EDITORIAL PAGE EDITOR: Well, I think you saw some exuberance. People might say a little bit of an over-the-top campaigner, but this is a guy who's done this a lot. He's never lost an election. He's been in office 11 years. He campaigns hard and effectively. He knows how to do, the give and take with the crowds as he moves through a state fair, this kind of setting. So, I think you're seeing a first-tier candidate in terms of experience, in terms of running a big state.
GIGOT: Also, social conservatives, he has -- there won't be any doubts about social conservatives, where he stands. So, he can assume a lot of that support.
But what about his weaknesses, Jason?
RILEY: Well --
He's from Texas and George W. Bush was from Texas, and a lot of people say that that's a non-starter. The country has had enough of that. But, you know --
GIGOT: Why would that be? Because Bush was not seen as successful?
JASON: Bush left office as a deeply unpopular president. And the questions is, how much of that will carry over onto Rick Perry's shoulders. But they're very different candidates. Not only biographically -- Bush grew up privileged, Perry grew up poor -- but also in terms of some policies. We've had an incident with Ben Bernanke recently on monetary policy where Perry said some things and didn't put them well. But the bottom line is that he showed a difference between his beliefs on monetary policy and Bushes. Bush pushed easy money. He pushed a weak dollar. Perry's comments made it clear he believes in a strong dollar and he doesn't believe we can print more money to bring prosperity to this country.
GIGOT: The cliché in the media is "Perry is Bush on steroids," to elaborate on Jason's point. Is that going to sell in Milwaukee?
HENNINGER: Bush with no brains, dollar Bush.
GIGOT: Yes -- Milwaukee; Toledo; Montgomery County, Philadelphia, is that going to play in those suburbs?
HENNINGER: I don't think that's going to play. The intellect issue is kind -- he has a kind of propensity for malapropism. He says weird things. And just jumps out. It's kind of amusing in a way. But they'll raise the intellect issue.
The other one is I think they're going to throw the religious right thing at him, big time. He leads these prayer meetings and prayer rallies. And if you're going to try to disturb Independents, you're going to try to attach him to the religious right label, which hasn't been around for quite a while.
GIGOT: What about the crony capitalism issue, James. There an episode involving an issue involving the HPV virus that he pushed when one of his staffers, former staffers had been linked to a company called Merck.
FREEMAN: Gardasil. That story has both the crony capitalism problem and a problem with the religious right, which I think that won't be an issue for him on the campaign. But basically --
GIGOT: He's now backed down from it.
FREEMAN: Basically, it goes to sort of his philosophy of governing. What he's doing with the vaccine was basically trying to dictate that all teenage girls would get this vaccine which really is only applicable to ones that are sexually active. Just the idea that the government was doing this was offensive to a lot of people. He backed off.
But you have the same issue with the crony capitalism charge, which is, what does he see -- does he really see himself in a limited role as the governor of the state, where he has been managing investment funds, putting a lot of money into companies, some of them led by people who donated to his campaigns.
GIGOT: OK. I think that's going to be a big, big vulnerability.
So is Rick Perry the last candidate to throw his hat into the ring or just the latest? When we come back, some big Republican donors are sitting on the sidelines. So what or who are they waiting for?
GIGOT: A new poll out this week shows Rick Perry taking his place in the top tier of GOP presidential hopefuls, along with former Massachusetts governor, Mitt Romney, and Minnesota Congresswoman Michele Bachmann. But many big Republicans donors are still sitting on the sidelines, perhaps waiting for a late comer to jump into the race. So is the field set or is there room for one or two more?
So, Jason, who is the front-runner now, coming out of Iowa, where Bachman won narrowly over Ron Paul and knocked Tim Pawlenty out of the race?
JASON: I think that Romney remains the front-runner, but he also remains the weak front-runner. Remember, up until now, he's been able to run a general election campaign, ignoring his rivals. Now that Perry is in the race, he can't do that. He has to take on Perry.
At the same time, however, his biggest strength has always been his electability. No one out there is as electable as him. But when you look at President Obama's poll numbers falling, now in the high 30s, you look at the Federal Reserve saying we're going to keep easing money going for a while, unemployment is probably going to be around where it is now 15 months from now on election day. Others are going, wow, maybe electability is the not enough to go with Romney.
GIGOT: Anyone who gets it is could win the nomination?
Is it going to come down if -- assuming the field stays as it is, as a fight between Bachmann and Perry, who is the main challenger to Romney?
FREEMAN: I think you could still get another challenger because --
GIGOT: But let's say it's --
FREEMAN: Assuming no one else gets in --
FREEMAN: -- I think that's basically your contest for the -- the conservative -- your basic Republican primary voter is not comfortable with Romney so that's the opener here. He's got a lot of --
GIGOT: Then why is he the front-runner?
FREEMAN: Because he's got the name and he's been there. He's put a lot of money into it. He's got a lot of endorsements.
GIGOT: He bought it?
FREEMAN: He is better than anyone. He's gone around the country and built relationships with Republican state, county chairmen everywhere, so he's got the machine. What he doesn't have is the heart of Republican voters. And that's still up for grabs. And you're seeing Bachman and Perry fight over it.
HENNINGER: I think -- I think Perry is going to knock Bachman out. I think it's going to be Perry and Romney. Because Michele Bachmann is essentially anger and emotion candidate. She had this thing that she brings out of people. Rick Perry is going to do that. He's that, we've see it. The thing that he has that she doesn't have is experience and governing credibility.
GIGOT: 11 years, nearly 11 years as governor.
HENNINGER: Pawlenty and Santorum were right. There is not much in Bachmann's record --
GIGOT: But, hey, Dan, that didn't help Pawlenty.
HENNINGER: It didn't help --
GIGOT: Bachmann knocked Pawlenty out of --
HENNINGER: But Rick Perry --
GIGOT: -- two terms.
HENNINGER: -- is not Tim Pawlenty. Rick Perry is a much more charismatic candidate. And I think he's going to trump Bachmann's strength at this point.
RILEY: Dan, I think is right that Perry's first focus has to be on Bachmann, and that's going to work to Romney's advantage. He likes a three- horse race. He likes Perry and Bachmann going at it because they can help splinter a vote in the Republican Party that Romney hasn't traditionally done well with. These are evangelical Christians and people without a college degree. To the extent that Bachmann and Perry split that vote, it works to Romney's advantage. And he's traditionally --
GIGOT: But sooner --
RILEY: -- done better with Republicans with a college degree.
GIGOT: But sooner or later one of those two would emerge and then you'd have a one-on-one contest going into maybe New Hampshire or certainly South Carolina.
RILEY: Sooner other later, but in the primaries, time spent -- Perry's time spent focused on Bachmann means time that he can't spend focused on Romney.
GIGOT: All right, what we need to do is I want to shift gears here, James. I want to shift to these donors who are sitting on the sidelines and saying, we don't like -- we really don't like this field. What is it that's -- that this field doesn't have, and what are they waiting for?
FREEMAN: Well, I think that there's a sense that we're at this bizarre point where most of the stars of the Republican Party are not in this race. And you think about Paul Ryan in terms of among the Washington-based --
GIGOT: House budget chairman.
FREEMAN: -- elected officials -- the House budget chairman -- giving you the intellectual force on these big questions over spending. You look at Chris Christie in New Jersey, who has become kind of the defacto leader of the Republican Party nationwide, making the case against government employee unions and overspending, so I think there's dissatisfaction that we're not seeing the Republican Party's best field right now.
GIGOT: Not seeing the A-team, the A-team.
Do you think that either Christie or Ryan could get in at this stage, Dan, and really have a shot at the nomination?
HENNINGER: Yes, I think they could both compete. I think Ryan more so than Christie. And I think it relates to the contributors. The contributor pay sitting on the sidelines has got two attributes. They're fighters and they really want to fight, and they fancy themselves as policy wonks. They do pay attention to policy. And in the candidates we've got now, they see neither one of those things. Mitt Romney, for whatever reason, is kind of gliding forward. So, if you've got a fighter like Perry, they like that, but they're going to wait to see what his policies are. With Ryan, you get both a fighter and a guy who can talk policy the way those contributors want a candidate to talk policy. And Christie is a fighter as well. If either one got into the race, the money would come in behind.
GIGOT: I think a lot of Republican are saying, for 10 years now, we haven't really he's a candidate who could articulate the conservative vision of economics and make the case intellectually against Barack Obama or any of these Democratic candidates. In Ryan and Christie, you have candidates who really know the substance and can really go after Obama on the merits. So you'd really have one heck of a debate. The questions is, getting in late, would they have enough money to do it. And number two, Ryan has some bad votes. He voted for TARP, for example, for the auto bailout. Christie is -- he's only at about 50 percent, even in New Jersey.
RILEY: Mentioning the votes that Ryan has had to make as a House member, this is something that Michele Bachmann's going to have to deal with, too. And why historically members of the House have not successfully run for president.
GIGOT: I don't think the field is done yet. That's the last word.
When we come back, President Obama visits three states he won handily in 2008, but things may not be so easy this time around. Michael Barone on why the Midwest economic model has failed and what's there to replace it.
(BEGIN VIDEO CLIP)
PRESIDENT BARACK OBAMA: We have to acknowledge we've got some big challenges. Now, some of the challenges are not of our own making. We had reversed the recession, avoided the depression, got the economy moving again, created two million private-sector jobs over the last 17 months but, over the last six months, we've had a run of bad luck, some things that we could not control.
(END VIDEO CLIP)
GIGOT: That was President Obama, defending his economic record on a three- day bus tour of Minnesota, Iowa and Illinois this week. But when it comes to jobs, Midwesterners don't have much to be grateful for. All three of the states the president visited have seen an increase in unemployment since he took office. In Minnesota the jobless rate has jumped from 5.3 percent to 6.7.; in Iowa, from 4.3 to 6 percent; and in Illinois, from 6.4 to 9.2 percent. So what does the president have to offer the Midwest?
Let's ask Michael Barone, senior political analyst for the Washington Examiner and co-author of "The Almanac of American Politics."
Michael, great to have you back with us.
MICHAEL BARONE, SENIOR POLITICAL ANALYST, WASHINGTON EXAMINER & AUTHOR: Nice to be with you, Paul.
GIGOT: So what do you think about the president's Midwest bus tour? Did he accomplish what he wanted to?
BARONE: He took a bus tour through some of the rural and small town counties in one splotch of rural and small town county areas that he carried in 2008. But I don't think that he accomplished very much. A run of bad luck is not an alibi that I think most Americans are going to accept. And the policy ideas that he ladled out were pretty thin gruel. I mean, we're going to attract more doctors to rural counties and stuff. This is the sort of thing a congressman runs on, not a president.
GIGOT: Let's step back and look at the big picture. You wrote this week in the Journal, that in 1970, when you started following some of the American politics for a book you wrote, that the economic model in the Midwest that was involved, big companies and big unions really seemed to be the future of America's political economy. But it hasn't turned out that way. What's happened?
BARONE: Well, the Michigan model, as I called it, a name for my home state, which is sort of an extreme example where you had the big three auto companies that were behemoths in the American economy. John Kenneth Galbraith told us they can sell as many cars as they wanted because they could do manipulative advertising. The United Auto Workers, one of the largest unions, nearly two million members, and they thought they had a lock on the economy, they said, this is the progressive way to run a country. You have to have high taxes. You have to have high government spending on schools and unionized teachers, and so forth to progress.
There was another model called the Texas model. And I remember reading Texas liberal writers back then. And they said, well, Texas just needs to catch up with states like Michigan. Texas didn't have many unions. It had low taxes. They said this is unprogressive.
Well, Texas has adhered to its model. And the census tells the story. In Michigan in 1970, there were nine million people. In 2010, 40 years later, there were 10 million people, minimal population growth. Texas, in 1970, had 11 million people, not much more than Michigan. In 2010, Texas had 25 million people. Americans and immigrants have been voting with their feet for the Texas model. And that's been generating most of the jobs, or nearly half the jobs in the country since the end of the recession officially.
GIGOT: But the president would respond I think, and say, look, we helped the auto companies come back with our their government rescues and we have been investing in green jobs, so the government can direct capital into companies and battery companies for electric cars, for example, wind power, solar power, and that's where the future job growth is going to be. Is that something that can sell in that -- in those former industrial -- current industrial states?
BARONE: Well, I don't think it can stand up in the light of day. I mean, the other day, I read a story about one of the green job companies going bankrupt. Another one has generated as many as 14 jobs.
The fact is that, you know, the green job thing is basically all hype. The government has not proven to be a good investor over time. In fact, what this administration has done with the NLRB is to tell one of our major companies and our number-one exporter, Boeing, you can't build a plant in South Carolina, which is already more than halfway built. Somehow, it's got to go where the union tells it to go.
GIGOT: That's the National Labor Relations Board.
Now, how do you read the outcome in Wisconsin after all of the last six months of fighting and the recall elections where Republicans held the state Senate, but lost two seats? Still held the majority though. What ultimately -- what's the meaning of all of that?
BARONE: Well, I think the meaning is that it's a severe defeat for public employee unions, which have been a mainstay of the Democratic Party, and a mainstay of today's Midwest. The old private-sector unions like the United Auto Workers have really been replaced by teacher unions. They poured huge amounts of money, millions of dollars into Wisconsin, $30 million by some estimate. They ginned up a lot of enthusiasm the in the state capital of Madison, which is basically a state government and a major public university town. It's got a sort of left wing street culture that we saw in violent action. They were unable to win. They were unable to convince the people who voted 56-42 for Barack Obama in 2008 to recall the Republican State Senators and give the Democrats control. I think it's a major defeat for the public-employee unions. In effect, it's a reversal, Paul, of the 2005 referendum in California --
BARONE: -- where Arnold Schwarzenegger tried to limit the power of the public-employee unions. They spent $100 million and walloped him.
GIGOT: All right.
BARONE: This is a reversal, a defeat for the public-employee unions.
GIGOT: OK, thanks, Mike Barone. Thanks for being here.
We have to take one more break. When we come back, our "Hits and Misses" of the week.
GIGOT: Time now for our "Hits and Misses" of the week -- Dan?
HENNINGER: Paul, Exxon recently made what looks like the biggest oil find ever in the Gulf of Mexico, about a billion barrels of oil. The last time I looked, the Gulf of Mexico was not in Saudi Arabia. This sounds like purely a good thing for the United States. Not for the Obama Interior Department, which ruled that Exxon's lease in the gulf had expired, a technicality. So now Exxon, along with its partner, Norway Statoil, is suing the Interior Department to get back that lease. Which means, rather than drilling for those billions of barrels of oil, Exxon is going to disappear down a black hole of litigation. Sounds like a miss to me.
RILEY: This is a hit for Philadelphia Mayor Michael Nutter. After some recent rioting by black youths in the city, the mayor spoke out about how ghetto culture is a major barrier so socioeconomic progress in the black community. It reminded me of some comments Bill Cosby made to the NAACP a few years ago. And it's nice to see a black politician not blaming on discrimination and racism.
GIGOT: All right.
FREEMAN: Paul, you know there's so much pessimism out there. And with the Obama economic program, we can understand why. So this is a hit to Eli Manning, the Giants quarterback, New York Giant football, Giants quarterback, for his note of optimism, saying this week he's in the same class as legendary Patriots quarterback Tom Brady. Some claim this is going too far, but I think it's nice to see Eli Manning stepping up and providing some much needed optimism.
GIGOT: Optimism is good, even if it's false optimism.
FREEMAN: Well, you know, when they faced each other, and it counted in the Super Bowl, Manning was the better man.
GIGOT: All right.
FREEMAN: So I think it's justified.
GIGOT: That's it for this week's edition of the "Journal Editorial" Report. Thanks to my panel and to all of you for joining us.
I'm Paul Gigot. And we hope to see you right here next week.
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