JOURNAL EDITORIAL REPORT

Obama Abandons Hope and Change?

President unveils 2012 campaign strategy. Will it work?

 

This is a rush transcript from "Journal Editorial Report," December 10, 2011. This copy may not be in its final form and may be updated.

PAUL GIGOT, HOST: This week on the "Journal Editorial Report," with under a month to go to until Iowa, Newt Gingrich and Mitt Romney battle for frontrunner status. Is the race set at the top or can another candidate break through?

Plus, President Obama channels his inner Teddy Roosevelt and lays out his 2012 campaign strategy. Will it work?

And a showdown looms over the payroll tax cuts. Could Republicans blink?

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

With less than a month to go until the Iowa caucuses, Newt Gingrich and Mitt Romney battle this week for frontrunner status while some second- tier candidates took to the airwaves to try to knock them both down a peg or too.

(BEGIN VIDEO CLIP)

AD NARRATOR: And we don't want government mandated health care, yet, Newt Gingrich supported it and Mitt Romney. It put it into law in Massachusetts. And worse, Barack Obama forced it on the entire nation. Rick Perry? He'll repeal it starting day one.

UNIDENTIFIED MALE: Everything that Gingrich railed against when he was in the House, he went the other way he when he got paid to go the other way.

UNIDENTIFIED MALE: He's demonstrating himself to be the very essence of the Washington insider.

UNIDENTIFIED MALE: It's about serial hypocrisy.

(END VIDEO CLIP)

GIGOT: So will voters give other GOP candidates a second look, and should they?

Let's ask Wall Street Journal columnist and deputy editor, Dan Henninger; editorial board member, Dorothy Rabinowitz; and assistant editorial page editor, James Freeman.

Dorothy, let's talk about Ron Paul. He's a solid third in Iowa. Could he break if he does well in that state?

DOROTHY RABINOWITZ, EDITORIAL BOARD MEMBER: I don't think so and I don't think he's doing that well in that state. And the reason is, is I think that people may perceive a certain odiousness about his foreign policy views.

GIGOT: Isolationist.

RABINOWITZ: He's an isolationist. A very long -- but his is a particularly repellent sort. We won't go into that now. And he's also given aid and comfort to the enemy. People see this. And I think that is one of the strong --

GIGOT: That's a cap on his potential support?

RABINOWITZ: Absolutely.

DAN HENNINGER, COLUMNIST & DEPUTY EDITOR: I think that if you add together the isolationist -- they do exist in the Republican Party -- and the protest vote against the candidate that are up there running, Ron Paul gets 10 percent, but I think that Paul topped out at 10 percent.

GIGOT: Rick Perry, James, came in, Texas record, good strong jobs record. Tried to make that a theme, hasn't really caught on, why not?

JAMES FREEMAN, ASSISTANT EDITORIAL PAGE EDITOR: The theme is good. Obviously, the debate performance is weak. The dramatic pause, forgetting which cabinets he wanted to close, even though he ought to close all of them, once he can remember them. But I think he needs to stick to that record because that meets the moment. It is an amazing record from Texas. And he now has a very competitive tax plan, optional flat tax of 20 percent, slashes corporate rates. And I think that Texas economic story, if he can tell it, is a good one.

GIGOT: And Michele Bachmann, Dorothy, she was once the star. She was a shooting star at least for a time and now back down, and can't seem to get back into the front tier.

RABINOWITZ: Yes, that's because of her overexposure and people, as they see her more and more, keep saying, can this be the president of the United States, and they say no. One reason is a continuous harping, I was born in Iowa. There's a sense of a lack of breadth, a lack of depth, a lack of education, despite her hard comments on issues. And there is a kind of mystique. There is nothing in there that says president.

GIGOT: interesting. You know, you've got Rick Santorum, also, who is --

HENNINGER: Yes.

GIGOT: -- has a respectable record, two-term Senator in Pennsylvania, very knowledgeable on foreign policy. Yet, he's been focusing most of his attention on the social conservatives in Iowa and trying to press the values issues, yet, he hasn't really gone anywhere there.

HENNINGER: Yes, and I think, Rick Santorum seems strategically disorganized, in the sense that, what is this campaign about primarily? It's about the poor state of the American economy. If you're going to run for president now, you have to be able to talk in some depth about the economy. And he has never really done that in these debates, choosing, instead, to say, to run on social issues or foreign policy issues that may not be exactly germane to what we're arguing about.

GIGOT: James, our colleague, Kim Strassel, made the case this week that even social conservatives in Iowa, for them, like everyone else in America, the economy is the major issue. Unless you keep pushing that theme you're not going to get the traction you might have in previous years.

FREEMAN: And they know all the candidates in the Republican field are better than the president on social issues.

But I think, getting back to Santorum, I think he's one of those guys better where he's better than you've seen in the debates. For example, he's occasionally talked about his manufacturing tax cut and people who don't work in manufacturing might say, well, what good is that? But the truth is that his plan actually cuts taxes for everybody and for all businesses. So he's a guy -- he's got a background of pressing economic freedom in the House and Senate.

GIGOT: Dorothy?

RABINOWITZ: But if you talk about partial birth abortion almost exclusively, which he has been doing in Iowa, you're showing a deadly tone deafness, which means instance political death.

HENNINGER: but, Paul, if what we're saying is true, why isn't Jon Huntsman doing better? Because Jon Huntsman probably has the strongest economic plan of all the candidates up there on taxes and the rest of it.

GIGOT: Too big to fail.

HENNINGER: Too big to fail.

(CROSSTALK)

HENNINGER: He did excellent on those things.

GIGOT: He's the one candidate who endorsed Paul Ryan's Medicare reform totally without -- without --

HENNINGER: Yet, he's at sitting at the bottom of the polls.

GIGOT: Well, explanations?

RABINOWITZ: Well, I mean --

FREEMAN: He hasn't -- again, he hasn't set the world on fire during debates. He, at times, seems a little bit of a downer.

(LAUGHTER)

HENNINGER: I think --

(CROSSTALK)

FREEMAN: -- in the way that he describes America's problems. But he's also someone -- you mentioned some of his economic program. He also gets regulation and he's talked seriously about the need to cut back.

GIGOT: One other point, Dorothy, John Weaver, his campaign manager, had him come right out of the box and start running against Republicans and some saying that Republicans are anti-science, for example, they're know nothings. That was the Weaver strategy with John McCain, the maverick. This is not a campaign --

(CROSSTALK)

HENNINGER: That's the Obama strategy.

GIGOT: Yes, that's right.

(CROSSTALK)

GIGOT: Also, you can't win a Republican nomination by running against Republicans, particularly this year.

RABINOWITZ: And you can't -- you can't sound as though you belong to the Obama administration. There's a strong element of sanctimoniousness that comes out in almost everything he says, and I think people pick that up.

GIGOT: You don't hold against him the fact that he served as ambassador to Dick Cheney, do you?

RABINOWITZ: No. No, I don't.

(CROSSTALK)

GIGOT: But you say he echoes some of Obama's --

(CROSSTALK)

RABINOWITZ: Yes, the fact that -- the fact that he spews these things about how we have to worry about our image in the world and we have to worry about all sorts of secure measures, have we not been listening for four years of how we have to be good in the world?

GIGOT: James?

FREEMAN: Just think, the good news is, when Mr. Huntsman has talked about environmental regulation, global warming, the good news is I think he's insincere, because when he visited us, he said basically, I listened to my father who started a chemical company to learn about economic policy. And so, I think voters should be reassured that he's actually got a more pro business outlook than it might seem.

GIGOT: He's better than he sounds? Is that the argument?

(LAUGHTER)

OK. When we come back, it's the speech that liberals have been waiting for. President Obama lays out his 2012 election strategy. And it's a long, long way from hope and change. Will it work?

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

PRESIDENT BARACK OBAMA: There are some who seem to be suffering from a kind of collective amnesia. After all that's happened, after the worst economic crisis and worst crisis since the Great Depression, they want to return to the same practices that got us into this mess. In fact, they want to go back to the same policies that stacked the deck against middle class Americans for way too many years. And their philosophy is simple. We're better off when everybody is left to fend for themselves and play by their own rules.

(END VIDEO CLIP)

GIGOT: That was President Obama delivering an address on the economy in Kansas this week. The White House said it wasn't a campaign speech, but it sure did sound like the blueprint for his 2012 reelection bid.

Wall Street Journal Washington columnist, Kim Strassel, joins us with more.

Kim, is this the president's campaign strategy and what should we make about it?

KIM STRASSEL, WASHINGTON COLUMNIST: Yes, Paul, the battle lines are drawn. Here is the problem if you're President Obama. You can't run on the economy because it's in the tank. You can't necessarily run on accomplishments, if anything, they've made things worse. Instead, you ride to the bad times. You harness them politically. You run a pure class- warfare argument. You tap into American resentment, bash on wealthy Americans and corporations. You make the argument that only government the size that Obama prefers can make sure everyone gets their quote, "fair share." You fearmonger about Republicans and say they will take us back to the sweatshop days of yore. And make the bet that this is one theme that will allow you to ally your liberal base and also send an argument, make an argument to the middle class.

GIGOT: So, Dorothy, a long, long way from hope and change. What do you make of its prospects as a strategy?

RABINOWITZ: I think he can rally the liberal base, but he will also enrage everyone else. You may have noticed that Obama has been in office for three years now and everything he says has this tinge, a futuristic, why are we in the mess we're in now? All of the things he's talking about, there's not a single practical way-- how can he tell us how we're going to get these students to learn to do all of these technological things?

GIGOT: Right.

RABINOWITZ: The list of advancements is wrong. All this is the pure rhetoric on which he came to power.

GIGOT: You know, but he's also making a moral argument here for redistributing income, saying government needs to be the engine of spreading the wealth. That argument isn't very frequently made in American history. It's worked in the '30's, I guess, but I haven't seen it work too much more in other decades.

HENNINGER: Well, that speech in Osawatomie, Kansas, was an exercise in extraordinary populous demagoguery, but it was also an exercise in presidential demagoguery. Let's not forget that Barack Obama is the president of the United States. That carries some inherent power. And he when the president does this, it puts the opposition back on its heels. They're going to have to address this inequality issue that he's brought up.

GIGOT: The Republicans are going to have to?

HENNINGER: The Republicans are going to have to.

GIGOT: How would they do that?

HENNINGER: I would think the way the way we're going to have to do that, as were you suggesting, Obama and liberals generally see American society as utterly static. It's almost a 15th century view of the world. The poor are always down here. The wealthiest are the same people and they're always here. And the masses are in the middle, always struggling and going nowhere. When, in fact, America has been a dynamic society with people moving up and down. I think that Republicans have to describe how and why America is much more dynamic than Obama is describing it.

GIGOT: But he could win, it seems to me, Kim, if he gets the Republicans on the run here and claim defensible and not making a comparable moral argument that defends capitalism and defends the ability to keep what you earn and defends the classic American opportunity. If you only make a practical argument that says, well, his jobs -- he hasn't created enough jobs, I think they run the risk of losing this election.

STRASSEL: You know, that's been one of the Republican's problems. For instance, one argument they like to make, and it's a good one, is for instance, well, a lot of the wealthy Americans that he likes to bash and are, in fact, small businesses. I think that resonates with people. But as you said, they've got to go beyond it. They've got to make the broader case.

You've got people, Eric Cantor, a majority leader in the House, starting to do stuff like that and making the case, we can agree with the president about the situation, the fact that there's crony capitalism and some inequality. What we disagree with is the means by which you fix it. We, the Republicans, would make it a level playing field so everyone has a fair shot. And the president would take everyone's money and redistribute it and force equalism in this country.

GIGOT: What do you think, Dorothy?

RABINOWITZ: I think that Obama has done, enlarged dramatically, the same position he came to power with as president, and that is that America was in a desperate state and we were at the abyss, and his coming would save us. And here we are three years and a half years later, and we're at the same role (ph), only it's the economic status and only it's the impoverishment. You would have thought America were a third-world country about to go down when he was running for office. He has not changed his theme. He's just enlarged it with the assault on Wall Street, with the assault on the rich.

GIGOT: But the rich are not popular and Wall Street is not popular. Why isn't this going to work?

RABINOWITZ: It's not going to work because, in the end, if you think that America is a dynamic society, I'm afraid you have to remember that Americans are also a sensible people now, and they recognize the country they live in, not the one he's describing. And I think that you will -- it will be wrong to underestimate --

(CROSSTALK)

HENNINGER: You cannot ignore the realty of unemployment, and either he has produced jobs or he hasn't. And he's got to take some responsibility for that.

GIGOT: All right, Dan, last word.

When we come back, with Congress and the president set to go on Christmas vacation in a matter of days, a showdown looms over extending the payroll tax cut. Who will blink? Our panel weighs in after the break.

(COMMERCIAL BREAK)

GIGOT: Among the economic priorities promoted by President Obama in his speech was the payroll tax cut, which is set to expire at the end of the month. It's a battle that could keep Congress in session past their planned holiday recess at the end of the coming week.

So, James, President Obama is saying, extend the tax cut that was temporary for one year, make it into 2012. Aren't Republicans for tax cuts? Why is this proving to be so difficult for Republicans?

FREEMAN: Well, he they certainly are. That's why he made it tougher on them than he usually does. Usually he says let's spend more and make the government bigger and they say, no, let's cut taxes. In this case, he was saying, let's do a temporary tax cut of this payroll tax and they realize it's not really a growth creator, but they aren't sure how to oppose it. So there was a cheering in the House this week when they said, OK, you want growth, you can have the payroll tax cut but you've got to give us the Keystone Pipeline. Build the pipeline, the infrastructure you've been saying you want.

GIGOT: This is the pipeline that goes from Canada's oil sands down to the Gulf Coast.

FREEMAN: That's right.

(CROSSTALK)

GIGOT: Obama has delayed this decision for a year.

So, this is the trade off they're going for.

Kim, why are so many Republicans having a problem with the extending this payroll tax cut?

STRASSEL: There's a lot of things. There's a lesson here, by the way, for Republicans, which is, you want to know why they won the House in 2010? It was because Mitch McConnell, the Senate leader, Republicans, and John Boehner, in the House, kept their caucuses united on major issues. And this is what happened, they get sort of run around when they are divided. They have been divided on whether or not this tax cut has been effective and helps the economy and they've been divided how big it should be and how to pay for it. They've been divided on whether or not to put political things in like Keystone in and force the president to swallow some of this. And so they're scrambling around. And it has allowed the White House to paint them as though they're against tax cuts.

GIGOT: Interestingly, some Senate Democrats want to pay for it by raising taxes in 2013.

HENNINGER: Yes.

GIGOT: So you get a temporary tax cut for 2012 and you turn around, and when that expires, you compound it with another tax increase.

HENNINGER: They want 3.25 percent surcharge on rich people to pay for the 3 percent drop in Social Security. Now --

(CROSSTALK)

GIGOT: That's temporary.

HENNINGER: Temporary. But what I would like to align myself with here is with the real liberals in the Senate, like Tom Harden, in Iowa, and Bernie Sanders of Vermont.

(CROSSTALK)

HENNINGER: Who had been pointing out since the last time we went through this, that what they're doing is undermining support for Social Security. Because it is exposing the fact that Social Security is, in fact, something that comes out of the general fund, that your Social Security taxes are not over there in a special place.

GIGOT: Just to tell our readers, the temporary tax this year was about $150 billion.

HENNINGER: Yes.

GIGOT: That's a lot. That was about 15 percent of the overall deficit. Next year, if you have the Obama plan, it is well over $200 billion.

HENNINGER: Yes. So I think that the Republicans should pick up on the argument and add it to their argument that the payroll tax doesn't work.

Obama is involved in this like Lou Goldberg-economics here. You do a tax cut from the Social Security and you grab the money from the rich and patch it into the system. It's ridiculous.

GIGOT: James?

FREEMAN: And the reason that Dan's friends on the left were squawking is because --

(LAUGHTER)

-- they have enjoyed making the argument that entitlement programs don't cause any deficits. Because of Washington's bogus accounting, they can say these programs are in great shape. But when you start cutting the payroll tax, it takes away their argument, not that it was valid, but it takes away their argument that you don't need informed entitlements to deal with the deficit problem.

GIGOT: Kim, one Republican in the Senate, Susan Collins, of Maine, said she would endorse the surtax on millionaires to pay for this. There's some concern about a couple of other Senators on the Republican side might go with her. Why -- how has McConnell, the minority leader, Republican leader, managed to have his caucus divided while Reid keeps his together?

STRASSEL: I mean, this is pure victory for Harry Reid. And it goes back to our last statement. This is a Democratic strategy, it is to hold a vote again and again and again to force Republicans to say, we refuse to tax millionaires, so Democrats could run on this next year, and clearly that pressure is working. And you have some of the Republicans deciding that they're not going to go on the record against these sorts of -- these tax hikes. And so, this has been -- this is going to be Mitch McConnell's big task over the next couple of months is holding the caucus together and coming back and with a unified argument about why it doesn't work economically.

GIGOT: Under pressure, James, if you just tell Republicans, just extend the tax cut rather than appear to be against it?

FREEMAN: Not if it comes with a tax increase.

(CROSSTALK)

GIGOT: Leave the tax increase out. Just extend the payroll tax if it comes to that?

FREEMAN: Generally, I'm for starving the beast whenever you can.

(LAUGHTER)

GIGOT: The beast being the government.

FREEMAN: Yes, you don't want tax hikes to come along with it.

GIGOT: All right.

Thanks everybody.

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.

Dan, first you.

HENNINGER: Paul, forget that payroll tax cut. A miss to the Democrats because an economic -- in any economic crisis, their default is raise taxes. Governor Andrew Cuomo reneged on his promise not to, and he's going to raise taxes on the wealthy. Governor Jerry Brown of California is just proposing a huge income tax increase, up to over 10 percent. And of course, you have Harry Reid's famous 3.25 percent surge charge on millionaires. This is the Democratic policy in an economic crisis. It's a triple miss for them.

GIGOT: All right.

James?

FREEMAN: It's a miss to Gary Gensler. He runs an agency called the Commodity Futures Trading Commission, which oversaw M.F. Global, which went bankrupt. The firm should be allowed to go bankrupt. But the problem is it's still missing hundreds of millions of client's money. This is unacceptable. and Mr. Gensler has been trying to remake the whole financial system, putting taxpayers on the hook for derivatives trading when, what he should have been doing, is making sure that M.F. Global was not stealing customers' money or losing it.

GIGOT: Give me more power because I couldn't use the power I had before.

FREEMAN: Exactly. It's an outrage.

(LAUGHTER)

GIGOT: Kim?

STRASSEL: This is a giant hit to the Pearl Harbor Survivors Association, which this week celebrated the 70th and last day remembrance of that day of infamy. when the group started, it 28,000 members, but with so many having died or are over the age of 90, now down to about 10 percent of their number, and are calling it a day. This is a moment for the younger generation to remember that we're going to have to start doing the remembering and honoring for these people.

GIGOT: All right. Kim, thank you very much.

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

That 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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