JOURNAL EDITORIAL REPORT

The Price of Obama's Jobs Plan

President proposes $1.5 trillion in new taxes

 

This is a rush transcript from "Journal Editorial Report," September 24, 2011. This copy may not be in its final form and may be updated.

PAUL GIGOT, HOST: This week on the "Journal Editorial Report," the president's job pivot turns into a sharp left turn as he puts $1.5 trillion in tax hikes on the table. Even some Senate Democrats are skeptical. So, will any of it pass?

Plus, Rick Perry, versus Mitt Romney, round three. Did either deal a knockout at this week's GOP debate?

And is Obama losing the Jewish vote? And was his pro-Israel speech at the U.N. an attempt to win it back? There's a debate ahead.

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

First came President Obama's $447 billion Jobs Act, loaded with new spending and temporary tax cuts. And then came his plan to pay for it. On Monday, he proposed $1.5 trillion in permanent tax hikes, including the so-called Buffett Rule, to raise taxes on Americans earning more than a million dollars a year.

Joining the panel this week, Wall Street Journal columnist and deputy editor, Dan Henninger; editorial board member, Jason Riley; and assistant editorial page editor, James Freeman.

So, James, we may be headed toward recession. We may already be in one.

JAMES FREEMAN, ASSISTANT EDITORIAL PAGE EDITOR: Very slow growth.

GIGOT: Very slow growth. Very slow jobs growth. The president wants to run on presumably his economic record, will have to. What's the strategy behind introducing this tax hike, about $1.5 trillion? How is that going to help?

FREEMAN: It's kind of mind-boggling. And I think that's what investors around the world are looking at. We have a banking crisis in Europe. We have the consumer in Europe pulling back, the American consumer pulling back. Asia's economy, India and China, slowing down, and his answer is increased taxes. It really -- it defies political odds. I guess we're going to get to that. But on the economics, you don't see how this is a growth agenda and that's what we need.

GIGOT: I guess they think that's because the tax cuts would only start in 2013, somehow, that wouldn't affect the economy now.

FREEMAN: People would ignore the future and assume they live for today and pay big tax bills later, but who is go to invest when they know the taxes are coming down the pipe.

GIGOT: Milton Freedman taught us that people invest based on their expectations.

FREEMAN: Permanent income.

GIGOT: Permanent income, yes.

Dan?

DAN HENNINGER, COLUMNIST & DEPUTY EDITOR: Well, the mistake you two are making is that --

(LAUGHTER)

GIGOT: Only one of many.

(LAUGHTER)

HENNINGER: You're trying to have a conversation about economics and this is not economics, it's social policy. All right? This is a wealth tax. It's like the wealth tax socialists passed in 1981. It was called the Solidarity Tax on Wealth.

One of my favorite Obama documents is his February 2009, two months into his presidency, his economic statement to the president, and everything that he's saying now is it in that original statement. Millionaires and billionaires paying their fair share is in there. and we know that in the campaign, Obama said many times that he thought people in the upper brackets were absorbing too much of the nation's income and it was -- the middle class was suffering and this had been going for 10 years.

His idea is to reprogram all of this wealth back down into what he describes as the middle class. It's a social policy. Just as he spent a year fighting for his health care law, I think he's willing to spend political capital, to achieve these wealth taxes on the assumption -- and we'll get into the debate later -- that looking at the array of Republican candidates running against him, he could win next year.

JASON RILEY, EDITORIAL BOARD MEMBER: The election maybe 14 months away, but our president is in full campaign mode now. And I don't think this has anything to do with economics. I think it has to do with politics. He's looking at the polls out there.

GIGOT: Who is he trying to appeal to, Jason?

RILEY: Two people, the base -- the two sets, I should say, of voters, the base, which believe in wealth distribution, and also Independent voters. There are a couple of polls out there, one by CNN and one by Gallup. Both said more than 60 percent of Independent voters think we should reduce the deficit by raising taxes on the wealthy and corporations. Obama thinks he can appeal to those Independent voters. Those are the people that brought him over the top in '08 and bring them back into the Democratic Party.

GIGOT: But Independent voters say, above all, they care about jobs and economic growth.

(CROSSTALK)

JASON: And spending.

GIGOT: And if the economy isn't growing, I mean, an appeal to a wealth tax isn't going to make them feel any better about Obama's economic management, is it?

RILEY: I don't think it is either and I don't think the strategy will work. I think the independent voters care more about spending than raising taxes on the wealthy.

GIGOT: James, let's talk about the political reaction to this in the president's own party.

FREEMAN: It's been weird, because I think if you're setting up for a political play, normally you would expect him to call, let's say Harry Reid, and perhaps brings some Democrats to the White House and say, what are the five things we can put into a package that all of the Democratic Senate Caucus could go for but Republicans will not want to vote against, but we'll make them, and put them in a tough spot going to in an election year. I guess this conversation never happened.

(LAUGHTER)

FREEMAN: It makes you -- people have question how much --

(CROSSTALK)

GIGOT: But Democrats are emerging --

(CROSSTALK)

FREEMAN: They're now rebelling in different parts of the country, representing different constituency, Mary Landrieu in Louisiana, Mark Begich in Alaska.

GIGOT: The oil and gas.

FREEMAN: Don't tax the oil industry. Even John Kerry in Massachusetts saying, I don't think is going to fly, at least not in the current form. It's a political strategy and he seems to be --

(CROSSTALK)

HENNINGER: Yes, look at proposals on individual rates. His definition of millionaire is somebody making, single, $200,000, $250,000. Who is objecting to this? Senator Chuck Schumer of New York, saying the cost of living in New York is so much higher than in Mississippi, there should be a differential. Look, some of those people making that money are, in fact, Democrats, and do give money to the Democratic Party. Even in its design, it insults people. If he had just raised marginal rates or done a surtax, people go, well, I'm willing to pay my fair share. He's reducing their deductions and their exemptions. He's giving it to them in the neck and they're infuriated, and that's what Chuck Schumer is hearing.

GIGOT: All right, last answer, Dan.

When we come back, it was their third debate in as many weeks, and this time, Rick Perry stepped up his attacks on chief rival, Mitt Romney. Did it work?

(COMMERCIAL BREAK)

GIGOT: Nine GOP presidential candidates took the stage Thursday night at the Fox News/Google debate in Orlando, Florida. It was their third debate in 16 days. And once again, the two frontrunners, Texas Governor Rick Perry and former Massachusetts Governor Mitt Romney, squared off.

(BEGIN VIDEO CLIP)

PERRY: I think Americans just don't know sometimes which Mitt Romney they're dealing with. He's for Obamacare and now he's against it. I mean, we will wait until tomorrow and see which Mitt Romney we're really talking to tonight.

(APPLAUSE)

DEBATE MODERATOR: Governor Romney?

MITT ROMNEY, R-FORMER MASS. GOVERNOR & PRESIDENTIAL CANDIDATE: I'll use the same term again, nice try. Governor, I wrote a book two years ago and I laid out in that book what my views are, on a wide range of issues. I'm a conservative businessman. I haven't spent my life in politics. I spent my life in business. I know how jobs come, how jobs go. My positions are laid out in that book. I stand by them.

(END VIDEO CLIP)

GIGOT: We're back with Dan Henninger and Jason Riley. And Wall Street Journal editorial board member, Dorothy Rabinowitz, joins the panel.

GIGOT: So, Jason, Rick Perry once again the main target for many of the other candidates. Did he do better this time?

RILEY: I still don't think he's given a debate performance that justifies his frontrunner status in the race. That's for sure. He can't seem to land a solid punch on Romney. I think that Romney has become a better debater than four years ago, so it's not entirely Rick Perry's fault.

But as we saw in that piece, he's struggling with the attack lines.

(CROSSTALK)

RILEY: They're not exactly rolling off the tongue there.

(LAUGHTER)

And it's frustrating because Romney is vulnerable on some very serious issues. his defense of Social Security, I think, is subject to -- could be subject to attack by Perry, if Perry could articulate a proper response. And then, of course, there's Romneycare. Why isn't Rick Perry pointing to Obama administration officials who cite Romneycare as a justification for -- or a template for Obamacare?

GIGOT: Dorothy, Rick Perry has been in the series (ph) two or three times in the last couple of years.

DOROTHY RABINOWITZ, EDITORIAL BOARD MEMBER: Yes.

GIGOT: We've seen him for an hour or more. Is this the same Rick Perry that we've seen in those meetings?

RABINOWITZ: Magically, you've touched on the exact point. The trouble with Rick Perry, in public, is he's not the Rick Perry that we see in private. The Rick Perry we see, with that aggie (ph) ring standing there --

(LAUGHTER)

RABINOWITZ: -- this military man, is one tough customer. And the first impression you get is, not only does he look tough, he is tough. What happens when you put him in the public arena? He becomes an inhibited person, suppressing all of that arrogance because he thinks this it wasn't necessary. And this makes him constricted performance.

GIGOT: Over handled by the political advisors, stuffing him with this or that.

RABINOWITZ: Possibly. You can't conceal who you really are. And here he is, being this nice guy, smiling over these assaults on him. Whereas, when you confront him at some -- across some table, you don't want a fight with this guy.

GIGOT: What about Mitt Romney, Dan? He certainly is practiced, as Jason says.

HENNINGER: He's very practiced, Paul. But I have to say, I was put off by his performance last night on the substance. His opening remark about -- when he was responding nominally to the question about our editorial on jobs, at the end of it, he said, we have to crack down on China's trade practices. And his definition of the middle class, more or less, come ports with Barack Obama's. He's going to raise -- not give a tax cut to people making over $250,000.

On issue after issue, it seems to me that Mitt Romney was just responding in a way that comports with opinion polls. If he's done an opinion poll or a focus group and you've got 60 percent of the people holding a position, that's where Mitt Romney is going to be. I just felt that his answers screamed polling and that it does make you wonder, in fact, what kind of a campaigner, what kind of leadership he's going to provide.

GIGOT: Go ahead.

RABINOWITZ: Here is the thing. the fact that is true, which I agree with, is apart from the fact that he does this with so much assurance now, so much improved assurance, so much sense of authenticity, even falsely achieved authenticity --

(LAUGHTER)

RABINOWITZ: -- that it's impressive, comparatively speaking.

RILEY: He looks very presidential.

RABINOWITZ: Yes.

RILEY: And he seems to be playing to the general electorate, Romney does, which much frustrates Perry to death, but that is what Romney is able to do up there on the stage --

(CROSSTALK)

HENNINGER: I find myself increasingly frustrated by the format. You've got eight people up there. Every debate has given them 30 seconds to talk about Pakistan, Afghanistan, solving the nation's problems. And I think -- the one guy up there who probably knows more about this than everybody is Newt Gingrich. And even Newt isn't going that deep. And while I criticize Perry for not doing his homework, how deep is he going to be able to go in these formats.

GIGOT: What about Huntsman versus Santorum, Dan? There was a big, very hot exchange on foreign policy where Jon Huntsman basically said, let's bring all of our troops home. We've got to worry about the economy first. Will that sell in Republican ranks?

HENNINGER: Oh, it might sell. Again, this is a question of how things are polling out there. For Jon Huntsman to stand there and say he's served his country four times overseas in diplomatic posts and then say, we should let Pakistan figure out its own problems, after Gingrich had rightfully said that Iran's nuclear capabilities are prospective, but Pakistan could have a hundred nuclear devices, for Huntsman to say we should walk away from Pakistan, I thought was a disqualifying statement.

RILEY: Yes. But the biggest problem with that exchange, Paul, it that it was between Huntsman and Santorum, neither of whom is going to be the nominee. Perry and Romney were not brought into that discussion and that speaks to these debate format, where you want to hear on the most likely candidates on these serious issues and, instead, two second-tier candidates get to debate it.

(CROSSTALK)

GIGOT: All right, we've got to go, Dorothy. Sorry. Apologize. We'll have plenty more to talk about, about this election.

When we come back, is President Obama losing the Jewish vote? Some say this week's U.N. speech has designed to court that group ahead of a tough reelection bid. So will they go Republican or stick with the president, despite his record on Israel?

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

PRESIDENT BARACK OBAMA: Peace is hard work. Peace will not come through statements and resolutions at the United Nations. If it were that easy, it would have been accomplished by now. Ultimately, it's the Israelis and the Palestinians who must live side by side. Ultimately, it's the Israelis and the Palestinians, not us, who must reach agreement on issues that divide them.

(END VIDEO CLIP)

GIGOT: That was President Obama, speaking before the United Nations General Assembly this weekend, arguing against a U.N. vote on Palestinian statehood. Some say the speech was an attempt to court Jewish voters ahead of a tough reelection bid in 2012. The lost last week and supposedly safe House seat in a heavily Jewish New York City congressional district raised questions about the level of support that Obama has with this traditionally Democratic group.

We're back with Dan Henninger and Dorothy Rabinowitz. And Wall Street Journal foreign affairs columnist, Bret Stephens, joins the panel.

So, Bret, has President Obama been anti-Israel?

BRET STEPHENS, FOREIGN AFFAIRS COLUMNIST: Yes. Yes, he has.

GIGOT: How so?

STEPHENS: Begin with the immediate hostility towards Benjamin Netanyahu, who is the prime minister of Israel. A number of meetings in which Netanyahu was ushered out the back door, occasions when he was publicly berated by senior administration officials, a speech earlier this year, in which he created a formula in which Israel was expect today withdraw from territories without actually getting an end to its conflict with the Palestinians. So what you've seen in the last few days, with the speech, at the U.N., is more of a reflection of a president sensing there's a political problem rather than reaching out in friendship to Israel.

GIGOT: Here is what the administration would say, we've cooperated militarily behind the scenes with Israel more than any recent administration, we've cooperated on missile defense, we've shared intelligence, and we've stopped terrorist threats. So what's wrong with that argument?

STEPHENS: Well, the level of cooperation, actually, is pretty much identical to almost every previous president. This is this line that basically -- the order working from state to state relations between Israel and Obama represent something, something new. And frankly, they don't. One of the reasons why Israel is getting more money is because the United States is selling a lot of arms now to Saudi Arabia and other gulf states. So that accounts for it. But the question is, the decisions by this president, to put daylight, public daylight between himself and the government in Israel, in a way that would have been unthinkable either under George W. Bush, or Bill Clinton.

GIGOT: Dorothy, what about this speech? Do you think it's going to reclaim, for the president, support domestically for -- from the hawks in American foreign policy, and particularly American Jewish voters?

RABINOWITZ: I don't. I think it's just going to be a revealing moment in which it shows just how obsessed the administration is on this issue of the Jewish vote. The effort, the all out effort, sending out people, issuing talking points about how not only is president fine with Israel, but he is the best president that Israel will had. This is such an extreme reversal of obvious truths. And yet, they're marching forward. The effort is very telling.

GIGOT: Well, Bibi Netanyahu came out off the speech this week and said it was fantastic. The members of his administration were ecstatic. Shouldn't they be -- shouldn't American supporters of Israel be pleased?

RABINOWITZ: Well, Netanyahu is a political leader and he says what he has to say, and, indeed, he had good reason to be grateful that the Americans did not -- were going to veto the Palestinian effort. But the fact is that the track record of this administration, which has created an atmosphere as never before, that Israel is essentially at fault. Basically, Obama speaks as though he were the voice of, say, he were The New York Times editorial page, where one line always reads, "most of the problem is the middle east falls on Netanyahu's shoulders. He's responsible." That was unspoken and spoken.

GIGOT: What impact is that going to have, do you think, on the Jewish vote in 2012? We hear, every election cycle --

RABINOWITZ: Yes, we do.

GIGOT: -- this time, they're going to vote Republican, and they never have.

RABINOWITZ: They've never had reason before. And this is the fact. The sense of regret in the air of people, the big donors is very palpable. And I think that Washington knows very well that there's something to fear. I --

(CROSSTALK)

STEPHENS: There is -- there is -- I'm sorry, to disagree. But, look, a lot of American Jews don't like the president's policy on Israel. But American Jews are like any Americans and they vote across a wide spectrum of issues. So while they will have misgiving on the Israel subject and maybe you won't get quite the level of support that he did in 2008, President Obama is still going to get a majority of the Jewish vote because Jews are social -- typically social liberals and they're going to look at a Republican candidate whose, say, vice-president they don't like and they'll say, well, I almost voted Republican ticket, but for this one thing.

GIGOT: Can they --

(CROSSTALK) STEPHENS: It happened -- it's happens election cycle, after election cycle.

GIGOT: But can they really vote for Rick Perry, briefly?

RABINOWITZ: Yes, I think they could vote for Rick Perry.

(LAUGHTER)

Briefly and forever, I do think they could. He -- Mr. Perry came to New York last week. He did extremely well and walked away with a lot of money and was talking only to Jews. and they were not unusual Jews. Things change.

GIGOT: All right. We're going to be watching this one as we go forward.

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

(COMMERCIAL BREAK)

GIGOT: Time now for "Hits and Misses" of the week.

Dorothy, first to you.

RABINOWITZ: Well, hard as it is to believe that the once terrible famous singer, Tony Bennett, appeared on the "Howard Stern Show" this week to announce, that, yes, America was responsible for 9/11. 9/11, following the fashion of the political mindset now. He then went on to say, who where the terrorists, us or them. We bombed them. Well, facing the usual outrage of these insane -- things produced, Mr. Bennett went on to say, well, I'm very sorry that you didn't understand that this is an expression of love for country. So, Tony, here is the point there. If you have this twisted mind, pathological mindset, you ought to stand by your absurdities.

GIGOT: All right.

Jason?

RILEY: This is a miss for Netflix customers, Paul, who were complaining that the company raised their monthly rates by a grand total of $6. So now, for $25 a month, you can rent movies by mail, or stream all the movies you want over the Internet. It's a bargain. They should quite whining.

GIGOT: OK.

Bret?

STEPHENS: America's first hostage crisis with Iran lasted 444 days. With the latest hostage crisis, involving some hikers who strayed over the border, lasted 783 days. It ended this week with the release of two of those hikers, Shane Bauer and Josh Fattal. A moment to celebrate marred slightly by one of the hikers saying that he calls for the release of all unjustly imprisoned people in Iran and America. It's good he's back in a free country where he can say silly things without consequences.

(LAUGHTER)

GIGOT: OK, Bret. We are glad to have him back.

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 right here next week.

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