JOURNAL EDITORIAL REPORT

Can Herman Cain's Candidacy Survive?

Harassment allegations rock campaign

 

This is a rush transcript from "Journal Editorial Report," November 5, 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 sexual harassment allegations against Herman Cain, and his campaign's shifting response. Does he have what it takes to go the distance?

Plus, as world leaders scramble to contain the European debt crisis, we'll have a U.S. investor's guide to the rocky road ahead.

And a new Obamacare mandate has Catholic groups up in arms. Could it cost the president a key voting block in 2012?

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

First up this week, can Herman Cain's candidacy survive? His campaign is reeling from allegations of sexual harassment by as many as three former employees, offering a haphazard response to the story and accusing a rival of being behind the leak. Despite that, a poll taken this week after the scandal broke shows Cain still leading the GOP pack with the support of 26 percent of likely primary voters.

Joining us this week, Wall Street Journal columnist and deputy editor, Bret Stephens; and editorial board members, Dorothy Rabinowitz and Jason Riley.

Dorothy, with the accusations and the responses, what have we learned about Herman Cain's candidacy this week?

DOROTHY RABINOWITZ, EDITORIAL BOARD MEMBER: We've learned that it's fallen to its predictable point, which is this is a campaign run, as we say, by the seat of your pants. The response is by the seat of your pants. This wasn't what was required in this situation and we got a certain amount of loss of his usual affable cheery nature. That's not surprising. He has a lot of fire and intimacy and that's what ignited audiences. And I wouldn't have expected him to be deeply diplomatic, but let me say, this was not a good outcome. The explanations were not good. The inconsistencies are perhaps predictable, but there's a kind of rip-roaring hostility, which you can understand. He's being accused by anonymous people.

BRET STEPHENS, COLUMNIST & DEPUTY EDITOR: Only in the world of ESPN political critics does this seem to resonate. You just saw the poll numbers. Cain remains on top. It has a lot to do with his personality. It has a lot to do with, so far, the vagueness of the accusations. People understand that sexual harassment claims can be serious but many of them can also be frivolous. Until we have some idea of who the accusers are, what the credibility of the accusations really is, I think that voters are -- GOP voters are going to give him the benefit of the doubt. This exists as one of the classic Washington attacks coming from god knows where, and leaving a candidate in a position of trying to sort out accusations that he or she may not really understand.

JASON RILEY, EDITORIAL BOARD MEMBER: I don't know how long he'll continue to get the benefit of the doubt. You're right about the vagueness of the claims. We don't know who the people are. We don't know the specifics of the accusations. But here's what we know from this week's events. We know that a man who was running for president on his business experience is not adept at crisis management. And for people who are already suspect of his policy expertise, this doesn't help matters, Paul. It really doesn't help matters.

GIGOT: Well, we did know, Bret, too, as far as a legitimacy of the story, there were settlements. Your right that settlements often are made as kind of a routine matter when these calls are made --

STEPHENS: Cost of doing business.

GIGOT: Cost of doing business. Let's get it behind us. But nonetheless, having been formally done, the settlements, you knew as a candidate they were going to come out eventually. Shouldn't you be prepared for that?

STEPHENS: Yes. And there are two issues, one of which is the competence of the campaign, whether these guys are running it as -- as Jason said --

(CROSSTALK)

GIGOT: On that point, what do you think?

STEPHENS: As a business? Not particularly -- not particularly well. But is that what we're really rating as a president. Obama ran a peerlessly confident campaign and it didn't tell us what kind of president he was.

RABINOWITZ: Bret, there's one thing you have to take into account. The nature of the vociferous support that Herman Cain has enjoyed. I think even if these were highly specific charges and women were trotted out, there would be a very large volume of voters saying, we don't care. We don't believe this. This is a malevolent charge. You feel in your bones a kind of perverse -- we don't care about this press assault. This is our job.

GIGOT: And, yet, you're saying you care. You're saying it reflects upon how you think he would perform as president.

RABINOWITZ: Yes, I do think that.

GIGOT: Why?

RABINOWITZ: Well, I think because it is a completely, kind of combustion going on there, out of control. But you know, you could get over that kind of non-management. This is a very difficult time for anybody to have this thrown in his face. What I'm talking about is the push for Herman Cain that's particularly passionate, kind of perverse in insistence that there's no ills attached to him, that's out there too.

RILEY: One of the reasons, Paul, some of us like a longer primary process versus a short primary process is because it gives voters the chance to vet the candidates, to find how they respond to setbacks and controversies and so forth. Herman Cain is failing that test right now. He's failing it badly and it could be fatal.

GIGOT: If you knew that this existed, why wouldn't you preemptively get this out? Inevitability, in modern politics, Bret, this is what happens. Every story comes out. You're under withering scrutiny. And what would a Republican say if he got -- if he gets the nomination and this story came out after Labor Day, when he's already the nominee.

STEPHENS: The comparison is often made to George W. Bush's DUI story that came out days before the November 2000 election.

GIGOT: It really hurt Bush.

STEPHENS: But that allegation was true. That's the difference. We don't yet know whether these allegations are true and --

(CROSSTALK)

GIGOT: No, but we do know that there were settlements, so we do know that that story would have come out regardless.

STEPHENS: Look, I think people are asking -- a lot of people who support Cain want to move away from a certain kind of "business as usual" politics --

RABINOWITZ: Exactly.

STEPHENS: -- where everything is strategy. And let's assume for a moment that Cain is innocent of the charges, that they were frivolous allegations that the National Restaurant Association simply settled as a course of doing business. Perhaps, a very human reaction is, there's no truth to the story, so why do I want to get a story out that isn't really there to begin with. That's a perfectly normal thing to do.

(CROSSTALK)

RABINOWITZ: He has been an ecstatic high in a very real and infectious way. And you don't think about that. Did John Edwards think what might happen if he actually won the nomination and this child emerged in the world?

GIGOT: That's a little different circumstance.

Very briefly, Jason.

RILEY: This is also reinforcing the notion this is not a serious candidacy, that he doesn't have the infrastructure in place. And again, that's not going to help him. And it's going to test the GOP voters sticking with him in the polls --

(CROSSTALK)

STEPHENS: But Mitt Romney is a serious candidate.

(LAUGHTER)

GIGOT: All right, that's a different subject, Bret.

When we come back, as world leaders scramble to salvage a Greece rescue plan, has Europe's debt crisis already reached American shores?

(COMMERCIAL BREAK)

GIGOT: The political and economic turmoil in Greece and Europe's debt woes took center stage this week at the G-20 summit in Cannes, France, where President Obama and other world leaders meet to try to head off another global financial meltdown. So what can the U.S. to do to keep the Eurozone crisis from spilling over to American shores, or has it already?

We're back with Bret Stephens. And also joining the panel, Wall Street Journal columnist and deputy editor, Dan Henninger; and columnist, Mary Anastasia O'Grady.

So, I think Americans look at the stock market here and it goes up and down, seemingly, in response to event in Europe, even in Greece, which is a tiny economy relative to others. What's the U.S. stake in this Euro crisis?

MARY ANASTASIA O'GRADY, COLUMNIST: You know, Paul, I think you have to divide it between the financial sector and the real economy. I think in terms of the financial sector, probably, the U.S. is not in a lot of danger, because, I think there's been a lot of advanced warning, even with money market funds. You know, they --

GIGOT: Who had invested in the debt of European banks.

O'GRADY: They were looking for yields. There was higher yields there. But I think they -- they've pulled back there.

GIGOT: What about the inner bank market, where banks obviously lend to other banks?

O'GRADY: No, I think there is some risk there, but as I said, I think that the warning signals are out there so they've had a chance to -- it's not a surprise for them.

But I think on the real economy is where the risk for the U.S. comes. We had a banker into the Wall Street Journal yesterday who talking how the Midwest is still a strong manufacturing area and Europe is a very important market for the U.S.

GIGOT: Right.

O'GRADY: And, for sure, the European economy is going to go into a recession. We don't know how sharp, but I think it's pretty clear that they'll have a recession.

GIGOT: Dan?

DAN HENNINGER, COLUMNIST & DEPUTY EDITOR: Well, on that point exactly, I'd like to turn this around. I think the United States has a lot to answer for amidst this crisis, specifically the Obama administration. Europe is on the brink of going into another recession. We have just come out of a recession. Our growth rate should be, Paul, a lot higher than 2 percent. It should be four or five percent, coming out of a recession.

GIGOT: So we're more vulnerable to a European recession than we should be?

HENNINGER: We're not only vulnerable, but asking the Greeks to impose a severe austerity package while they're going into another recession. Yes, they should do this, but it's really hard to ask the Europeans to do the right thing when there's virtually no growth in the world economy.

STEPHENS: Historically, when there were major economic crises elsewhere in the world, you could count on a strong America as an engine of global growth. That's just what happened during the Asian crisis in the 1990s. Now the Europeans are looking at the possibility of the implosion of their currency zone at precisely a moment when the United States has had years of anemic growth and looks like it might have years more to come.

GIGOT: What about the company M.F. Global, which was run by former governor of New Jersey, Jon Corzine, former Goldman Sachs executive, former Senator of the United States from New Jersey? It declared bankruptcy this week having bet on European sovereign debt.

(CROSSTALK)

GIGOT: -- used to be a sleepy broker dealer, and suddenly decides we're going to be with it, hip-hop, and we're go all into European debt. Exploded. When you get crises like this, don't you get the surprises here or there --

STEPHENS: Yes, and --

(CROSSTALK)

GIGOT: And couldn't we see more of those?

STEPHENS: And risk management could have been part of --

(LAUGHTER)

STEPHENS: -- of Governor Corzine's portfolio. Part of the problem I think is intellectual. There's a view that -- that it's Greece, Portugal, small European economies that have been most at risk during this European crisis. What we've been learning very clearly the last six months is that it's Spain, Italy, third-largest economy in the Eurozone. It might possibly be France. In fact, Germany, which is the only country that undertook pro-growth reforms in the last decade, may be the only economy standing in Europe. And Germany alone can't carry the Eurozone.

GIGOT: What should we want to happen, Dan, in Europe? What would be the best outcome for the United States?

HENNINGER: I think theoretically the best outcome for the United States would be if they found a way to salvage the Euro. The Eurozone theoretically, as an integrated economic zone, is a good idea. and if we had growth in the world, between the United States, Europe, and Asia, those zones of growth, with the common currency for Europe isn't a good idea.

GIGOT: Why is it a good idea, Dan?

HENNINGER: Because it creates more efficiencies in the way they do business among each other, simply the way we do in the United States.

GIGOT: New Jersey and --

(CROSSTALK)

HENNINGER: Yes.

GIGOT: -- and New York don't have to worry about currency risks?

HENNINGER: But the creation of the Euro was supposed to discipline economies like Greece and Spain and Italy, and that's why investment banks thought investing in sovereign debt was the sure thing. That's the problem. The Euro has not, in fact, imposed that discipline on this country.

STEPHENS: And the most depressing aspect of this is that Europeans are talking about larger bailouts and hair-cut schemes for things for banks. They're not talking about the growth. The World Bank came out with a survey of the ease of doing business and finds that it's easier to do business in Yemen than in Greece.

GIGOT: Yet, every time we get a bailout report, Mary, the U.S. stock market seems to go up. They're saying we seem to like bailouts in Europe, in the United States.

O'GRADY: Well, I think the stock market is responding just -- we just want this problem to go away.

(LAUGHTER)

But I think -- every time you see that bailout, you have a kind of a bump in the stock market, but you have most analysts saying, look, until they -- the creditors take the hit, take the hair cut, accept the fact that they put money in a place where they're not going to get it back, and Europe recapitalizes its banks, you're not going to really be able to move forward.

GIGOT: So what's the main lesson here, briefly, of the Euro crisis for the United States?

O'GRADY: For the United States, the main lesson, we have to be a leader in the world. And I think that the idea of austerity and Keynesian economics, whether in the U.S. or in Europe, is not -- is not going to lead us out of these kinds of crises.

GIGOT: Don't become a slow growth entitlement state.

(LAUGHTER)

That's the lesson.

When we come back, President Obama's Catholic problem. Two recent administration decisions have church leaders and some former supporters in revolt. Will it cost him the support of a key constituency in 2012?

(COMMERCIAL BREAK)

GIGOT: Well, he won 54 percent of the Catholic vote in 2008, but it might not be so easy for President Obama this time around. The battle is brewing between Catholic groups and the administration over a proposed Health and Human Services mandate that would require all private health insurance plans in the United States to cover contraception and sterilization, in violation of church teachings. The religious exemption clause to the mandate is so narrowly written that Catholic colleges, hospitals and social services organizations would not qualify, forcing some to drop coverage altogether.

We're back with Dan Henninger and Dorothy Rabinowitz. And also joining us, William McGurn, Wall Street Journal columnist.

Explain the nature of this dispute over Obama-care.

WILLIAM MCGURN, COLUMNIST: Well, it's what you said. It's a rule that if imposed, would go into effect next August, that would requiring all employers -- it's not just targeted at religious groups -- to provide contraception and sterilization services and, in at least one disputed case, drugs that may cause abortion.

GIGOT: But I thought this was all settled in the debate over Obama- care.

(CROSSTALK)

GIGOT: -- Bart Stupak, the former Democrat --

MCGURN: Right.

GIGOT: -- from the upper peninsula of Michigan, said, I'm not voting for that legislation unless this is settled.

MCGURN: And what's different about this one is, in that case, abortion in the Obama-care, there's a lot of debate and a lot of people, a lot of the Catholics sided with President Obama. In this, a lot of the people that supported him last time are complaining. There's not a lot of dispute about the facts in this one. Father Jenkins, at Notre Dame, Sister Carol Keenan, who got one of the famous pens for Obama-care --

(LAUGHTER)

They're saying this goes too far.

GIGOT: She was there at the signing.

(LAUGHTER)

MCGURN: Yes. And it's going to lead to classic unintended consequence that some of these universities and hospitals and service agencies cutting insurance coverage.

GIGOT: Dorothy, what about this other dispute over the Aid to Catholic charities and what they can do abroad?

RABINOWITZ: The Catholic bishops, they've have for a long time had the charter to go and help women who have been victims of sexual trafficking, essentially. And they have been acclaimed, essentially, as -- and -- and --

(CROSSTALK)

GIGOT: Very effective.

RABINOWITZ: Yes, very effective. And suddenly, in comes that typically reputable source of unreason, ACLU --

(LAUGHTER)

-- who filed suit. And suddenly, the government withdrew the contract on these grounds and gave it to someone else. And this --

(CROSSTALK)

GIGOT: Because -- because they say Catholics could not refer people - -

(CROSSTALK)

RABINOWITZ: Catholics -- because the Catholics --

(CROSSTALK) GIGOT: -- would not refer people for contraception and would not refer them for abortion.

RABINOWITZ: And abortion. As though this were the only thing required to help these women, to save these women, and so, there we are. They have this double shot now, the universities, and this.

GIGOT: Dan --

(CROSSTALK)

HENNINGER: Can I put --

(CROSSTALK)

GIGOT: -- you've followed this usual for years.

HENNINGER: Yes, I have. And the Catholic bishops and the church and the state.

(LAUGHTER)

Let me play the devil's advocate here for a second. A spokesman for HHS, after this decision to demote the bishops over the human traffic funding, said, you know, since the mid 1990's, the Catholic groups have received $800 million from the federal government, nearly a billion dollar.

GIGOT: Wow.

HENNINGER: OK? And over that period, the Catholic Church has really gotten in bed with the federal government. So as Bill says, when they passed Obama-care, the Catholic Church is right there cheering for it. Look, you sign up for $800 million and they're going to call the tune. And what's going to happen at a point like this is you're going to have to support their abortion policies or you're out of the game.

(CROSSTALK)

GIGOT: It's their point, Bill?

MCGURN: Further to Dan, I'd say, look, this is the problem with Obama-care from the beginning. It wasn't just that it had abortion provisions. It's based on force. It's forcing people to buy insurance. It's forcing people to provide services that they regard as immoral and so forth. It's all based on force. And now people are finding their ox being gored.

GIGOT: Well, so who is right here? Are the Catholics really --

(CROSSTALK)

MCGURN: Well, I think they're right. This is a monstrous thing, to require these free associations and free institutions to provide this coverage that they regard as immoral.

I think President Obama is not going to let this drop in August before a presidential election. People expect that they will expand the exemption for religious institutions. However, I'd like to see Sister Keenan and Father Jenkins also stick up for individuals and insurers who also have objections and who also may be forced into things that they don't want. I mean, it shouldn't just be for Catholic institutions.

GIGOT: Dorothy?

RABINOWITZ: I can only say that this whole thing has a bright side for me, which is I finally see resurgence of opposition from the Catholic Church to all of this, and a -- which, by the way, is remarkably rare, when you see this kind of suppression of rights.

GIGOT: I can't remember them being -- the bishops being this angry, Dan --

(CROSSTALK)

MCGURN: In fact, their spokeswoman --

(CROSSTALK)

HENNINGER: Yes.

MCGURN: Their spokeswoman called it the ABC rule at HHS, anyone, but Catholics. They've never spoken that frankly before in their lives.

HENNINGER: But once President Obama steps in and exempts them and takes the problem away from them, they'll go silent. And these delusional Catholics will vote for Obama again in 2012.

(LAUGHTER)

And then, in 2013, you can bet that hammer will come down.

(CROSSTALK)

RABINOWITZ: This cynicism is uncalled for, Dan.

(LAUGHTER)

GIGOT: When you equate social justice with government action, that's the fundamental mistake.

MCGURN: That's right. Yes.

GIGOT: All right, 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.

Jason, first to you.

RILEY: This is a hit for the people of Colorado, who voted this week to reject higher sales taxes and higher income taxes, and in favor of school of choice for low-income families. Colorado is a swing state that President Obama won in 2008. And the White House cannot be happy with these results as it prepares for the election next year.

GIGOT: All right.

Mary?

O'GRADY: This is a hit for the Captain Wrona, the 54-year-old pilot for the Polish airliner, LOT, who did a perfect belly landing on the tarmac in Warsaw this week. It was a happy ending, Paul, but it was far from certain outcome. And I think it's very clear that, although the plane was designed for these kinds of emergency landings, the captain's skill was what gave us 231 passengers who walked away unscratched.

GIGOT: All right.

Bill?

MCGURN: A miss to the students at Harvard, who walked out on an introductory economics course taught by Greg Mankiw. They did it in solidarity with the Occupy Wall Street movement. And, of course, Professor Mankiw served in the Bush administration, which makes him an enemy of the people, by definition.

(LAUGHTER)

And the irony is that was the day he was discussing income inequality. And even the "Harvard Crimson" editorialized, calling these students -- saying that they "showed ignorance and a lack of self-awareness." So I think the fraction of the students that left, the lesson is they're the ones that really need to be in at that classroom and learn a little more.

GIGOT: Bill, the question is, how in the world did Greg Mankiw ever get tenure at Harvard in the first place?

(LAUGHTER)

MCGURN: That's right.

GIGOT: That's what I want to know. When you've lost the "Crimson" --

MCGURN: You've lost America.

(LAUGHTER)

GIGOT: All right.

And remember, if you have your own "Hit or Miss," please send it to us at jer@FOXnews.com. And be sure to visit us on the web at foxnews.com/journal.

That's it for this week's edition of the "Journal Editorial Report." Thanks to my panel, and especially to all of you for watching.

I'm Paul Gigot. Hope to see you right here next week.

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