Does Obama have an enemies list?

New evidence of president's campaign targeting private Romney donors

This is a rush transcript from "Journal Editorial Report," July 21, 2012. This copy may not be in its final form and may be updated.

PAUL GIGOT, HOST: This week on the "Journal Editorial Report," the big theme of the presidential campaign takes shape, and it's a fight over whether government or private enterprise is the best path to job creation. So who is winning that argument so far?

Plus, anticipation grows as Romney nears a VP pick. Is an early announcement smart? And who is most likely on the short list?

And is the federal government targeting Mitt Romney donors? Our own Kim Strassel reports on what's happened to one donor singled out by the president's reelection campaign.

(BEGIN VIDEO CLIP)

PRESIDENT BARACK OBAMA: Governor Romney his -- his main claim to fame, the reason he says he can fix the economy is because of his business record.

(SHOUTING)

OBAMA: It turns out that his business record was starting a company that has been investing in what were called pioneers of outsourcing.

(END VIDEO CLIP)

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

That was President Obama on the same day of his now-famous "you didn't build that" comment going after Republican rival, Mitt Romney, for his time in private business and repeating the claim that Bain Capitol sent jobs overseas. The president's line of attack fits into what is fast becoming the central fight of the presidential campaign, whether government or private industry is best suited to create jobs. So who is winning that argument so far?

We'll ask Wall Street Journal Political Diary editor, Jason Riley; assistant editorial page editor, James Freeman; and Washington columnist, Kim Strassel.

So, Jason, candidates don't typically keep repeating an argument or hitting a theme unless it's working. Is this one working for Barack Obama?

JASON RILEY, POLITICAL DIARY EDITOR: The closeness of the race nationally might suggest it's not working. But this race is going to be fought, for one, in a handful of swing states, Paul. What the White House believes, in some of those states, particularly the Rust Belt, Ohio, Pennsylvania, among working-class voters, among people without a college degree, plant, factory workers, that those tacks can be effective, and that is why they're doubling down on them. Even though some Democratic believe, like Newark Mayor Cory Booker and Steve Ratner, don't like them. It's working with some Obama voters or voters Obama is trying to reach.

GIGOT: James, still even in polls. In fact, what is striking is that while Mitt Romney suffered, his negatives have gone up with these attacks, but it hasn't helped President Obama.

JAMES FREEMAN, ASSISTANT EDITORIAL PAGE EDITOR: No. It's a big drag for the president, the fact the economy stinks.

(LAUGHTER)

It's a problem for an incumbent president a few months out from an election. For Romney supporters, the concern is that, boy, the economy is so bad. The stimulus didn't work. The health care plan is unpopular. Why doesn't Romney have a big lead? That coupled with the fact the Obama campaign is spending money on these ads suggests to people maybe the Bain tactics are working.

GIGOT: Do you think it's working?

FREEMAN: I think they were working. I think the "you didn't build that" issue of the past week has allowed Romney to go on the offensive a little more. And he can do better on Bain and I think he will.

GIGOT: Kim, initially at least, the Romney campaign didn't want to engage on Bain because it wanted to focus on the economy and the failings there. Was that a mistake?

KIM STRASSEL, WASHINGTON COLUMNIST: Absolutely. This week, they rolled out their seizing on executive contrasts, as you pointed to. Difference between Obama's centric view, government-centric view of the world and they're free market view of the world. They've done an effective job of tarring the president's view. And they seized on this week's "you didn't build it," helped them.

What they haven't done is they have been more wary to make that contrast, to -- saying, yes, we believe in free markets, but won't embrace Bain or talk about off-shoring. And they won't because I think there is a belief, a fear that maybe the president's arguments about class warfare, the top 1 percent, Occupy Wall Street might resonate. They haven't gone out and done that. But they just keep getting hit on it. They're going to have to.

GIGOT: What should they say? What more can they say?

FREEMAN: You mean the Romney campaign?

GIGOT: Yes.

FREEMAN: You notice in that ad, the president said, I found the company where they did some outsourcing. Bain invested in more than 350 companies and 80 percent of them grew revenues. You look on the investment side, a Journal analysis earlier this year said that Romney was delivering investment gains of over 50 percent per year. This is one of the great performances in business history. Mr. Obama's friend, Warren Buffet, probably never had a run that good.

(LAUGHTER)

Granted he's been doing it for longer. But if they can't make this case, I -- I don't know what case --

(CROSSTALK)

GIGOT: Let's take a look at one of the ads Romney is running to fight back.

(BEGIN VIDEO CLIP)

ANNOUNCER: Where did the Obama stimulus money go? Friends, donors, campaign supporters, special interest groups. Where did the Obama stimulus money go? Solyndra. $500 million taxpayer dollars, bankrupt. So where did the Obama stimulus money go? Windmills from China, electric cars from Finland.

SEN. CHUCK SCHUMER, D-N.Y.: 79 percent of the $2.1 billion in stimulus grants awarded through it went to overseas companies.

MITT ROMNEY, R-FORMER MASSACHUSETTS GOVERNOR & PRESIDENTIAL CANDIDATE: I'm Mitt Romney, and I approve this message.

(END VIDEO CLIP)

GIGOT: Jason, this message basically says Obama is an outsourcer, too.

(LAUGHTER)

Is that an effective response?

RILEY: I think it is. I think Romney is getting that message across. In these swing states, Florida, Virginia, Colorado, polls show voters trust them more on the economy. It's explains why --

(CROSSTALK)

GIGOT: Trust Romney more?

RILEY: Trust Romney more. It explains why Romney only wants to talk about the economy. It also explains why Obama would rather talk about anything but the economy.

But I agree with Kim. It's incredible that Romney could have been caught flat-footed on this issue. He saw all of these attacks in the primary race from his Republican rivals. He knew they were going to come from the Obama campaign. He should have started what you just saw in that ad a long time ago.

GIGOT: And what about the tax return issue, Kim? The Romney campaign released one year, 2010. And they say they're going to release 2011 when those are done. That was an issue in primaries too. They've been reluctant to release more. And Democrats are pounding on that. Is that a mistake?

STRASSEL: I think it is. He's going to be put in a position the pressure is going to be so great to get it out there. It has raised all these questions, saying, why won't he release them. Of course, the Democrats are suggesting there is something shady or nefarious. It's hard to believe that. This guy has been running for president for years. Who is going to put something in their tax returns that could get them in trouble?

(CROSSTALK)

GIGOT: Well, but, OK, why isn't he releasing them then? What's the rationale?

STRASSEL: I think that -- I think that goes back to what he said before, which is that there is a great reluctance in the Romney campaign to talk about anything that has to do with his wealth or his time at Bain. There is a fear that this class warfare message from the president is resonating. They just don't want to have that discussion. But they're just going to keep getting hit on it, again and again.

GIGOT: You guys, any difference on the tax returns? Should he get rid of them?

(CROSSTALK)

FREEMAN: The sooner the better. I mean, I'm not one that thinks 12 years necessarily is the right number. But he ought to get the recent ones out there and he ought to do it at the same time he says look at all the companies I've built through Bain Capital.

(CROSSTALK)

GIGOT: Should have gotten them out last year.

FREEMAN: Yes.

GIGOT: Puts this issue behind him.

All right. When we come back, as Mitt Romney closes in on a VP pick, our panel handicaps front-runners for the job. And with the Republican National Convention still over a month away, is it too soon for Romney to make his choice public?

(COMMERCIAL BREAK)

GIGOT: Speculation grew this week about Mitt Romney's VP pick, with reports the former Massachusetts governor's short list had gotten shorter, and that an announcement was imminent. Who is likely on that list and how soon is too soon to announce?

We're back with Jason Riley, James Freeman and Kim Strassel. Wall Street Journal editorial board member, Dorothy Rabinowitz, also joins the panel.

So, Kim, quickly, about this issue of when to announce the pick, mistake to do it now before the convention or wait until the convention?

STRASSEL: I don't think so. They're looking back at 2008 and the McCain decision to choose someone relatively unknown, put them out at the convention. As a result, Sarah Palin became sort of the subject of the media frenzy. It overwhelmed the campaign. They don't want a repeat of that. They're going to get it out, get the news out so, by the time of the convention, they can have two guys focused on the message.

GIGOT: So you think it's a good idea to get it out early?

STRASSEL: I think so. Romney has wanted to make this about the economy. Keep it on message. He doesn't want to throw someone out there in September and have the news media spend the next two months focused on his VP pick.

GIGOT: OK.

Dorothy, John McCain, in picking Sarah Palin, took a risk. It was high risk, high reward. You can decide whether that worked out or not. But now, Mitt Romney is even in the polls. McCain felt he needed the long ball. He was behind. What does Romney do? Does he need to do the same thing? Take a risk?

DOROTHY RABINOWITZ, EDITORIAL BOARD MEMBER: This is never going to happen again.

(LAUGHTER)

We learned a lot from the Sarah Palin --

(LAUGHTER)

And despite faulty memories, this was not an instant hit. People were worried immediately.

GIGOT: OK. But this should -- should Romney take the risk? Or go with a safe pick?

RABINOWITZ: He should go with a safe pick. There's no question about it.

GIGOT: Someone that has been vetted? Somebody --

RABINOWITZ: Yes. And he is never going anyway to go do this other long-ball hit. It's simply impossible to have another Sarah Palin experiment. He doesn't have anybody like that. He's going to have a safe pick. It's within his nature to have a safe pick.

RILEY: It's a close race. It's going to be a close race by all accounts. You go with a "do no harm" pick --

(CROSSTALK)

RILEY: -- who only has an upside.

GIGOT: Who can fill that pick?

RILEY: I think someone like a Marco Rubio can do that. He can help you in an important --

GIGOT: Florida senator.

(CROSSTALK)

RILEY: And he might help you with the demographic group like Hispanics out west in other swing states.

GIGOT: He's a Cuban-American, through. Is that going to help with Latinos in western states?

RILEY: It could. It can't hurt.

GIGOT: All right. But he's -- he's still relatively young and untested.

Who also fits that bill, James, of someone who is a safer pick, solid and experienced?

FREEMAN: Safe, solid, I think you'd probably think of Tim Pawlenty.

GIGOT: Former Minnesota governor.

FREEMAN: Former Minnesota governor. I think the appeal of him as a presidential candidate was he can go into the Midwest and win over some blue collar voters. So whether he can actually --

(CROSSTALK)

GIGOT: His working class roots?

FREEMAN: Yes. Whether he can move votes as the VP or nominee, I'm not sure. But I think, solid states, he'll probably be your guy.

GIGOT: Go ahead, Dorothy.

RABINOWITZ: I was thinking about Pawlenty now. We were all charmed by him and impressed by him when he came to visit us. I remember that. Then there was this wonderful moment when, one minute after he lost the straw poll in Iowa, he, overnight decided he's not up for this. He may have an excessive tendency to pessimism overnight. It's all over for him. Or he may just take bad advice.

(LAUGHTER)

But --

(CROSSTALK)

GIGOT: That is a judgment as a candidate. Not necessarily --

RABINOWITZ: But he's very --

(CROSSTALK)

GIGOT: -- a virtue of him as a vice presidential candidate.

RILEY: I would say something about a guy who was put out there as a safe pick, Senator Rob Portman of Ohio. I'm not so sure how safe of a pick that would be. I think there is a down side to Portman. And it's similar to a down side with Condi Rice, and that is their affiliation --

GIGOT: Former secretary of state.

RILEY: -- with the Bush administration. In Portman's case, he does not only give an opening to the Obama administration to say Romney wants to take the country back not only in terms of policies but personnel. He was also Bush's budget director.

GIGOT: Right.

RILEY: People forget that a lot of the Tea Party sentiment about over spending started under Bush. I'm not sure he's as safe a pick as people present him to be.

GIGOT: I agree with you that they should steer clear of a Bush association. That's a risk. But Portman is a very, very capable man. There's no question about hat.

Kim, let me ask you about another scene. This is the idea of going with the young reform generation of the Republican Party, either in the states, as governors, or in Congress. Someone like Paul Ryan versus a more established pick. Which way do you think he should turn on that question?

STRASSEL: That's the only real choice in my mind, Paul, is that everyone is saying, can the vice president win a state? A region? Help us with the subsets? History shows none of that actually makes much difference. The question facing Romney right now is this is a split, a growing split in the Republican Party ever since they got tossed out of Congress in 2006. The old guys, the earmarkers, the non-reformers versus new, young generations who want to deal with the deficit, reform the tax cut, attack the entitlement problem. Those are the guys that are going to give them some shine, reassure voters that he can actually -- he's got some big ideas and some big plans. Those are guys like Marco Rubio or a Paul Ryan, for instance, the House budget leaders. He needs some of that to rub off on him.

GIGOT: Dorothy, Paul Ryan is favored by an awful a lot of people. On the other hand, he has that Medicare proposal that some people in the establish wing of the party think is too risky.

RABINOWITZ: Yes. On the good side, of course, he's willing to touch the third rail, as Romney is. On the other hand, he's a rather younger version of Romney. This is not good. He's is wonkish. He is business like. He's, in many ways, colorless. He's strong and admirable in many ways. His youth may appeal to --

(CROSSTALK)

GIGOT: He can make the argument on all of these issues of substance much better than Mitt Romney can.

RABINOWITZ: Yes, he can.

GIGOT: With all due respect to Mitt Romney.

FREEMAN: Yes. That is where I think the Romney campaign -- even if you're thinking just win, baby, what can get us this election --

(LAUGHTER)

-- I think you might want someone that can help make arguments. Because he does, at times, seem to struggle with the big government versus small government clear debate with the president.

GIGOT: When we come back, a wealthy businessman targeted for donating to Mitt Romney. First, he was singled out on the Obama campaign web site. Then his divorce records were tossed. But it doesn't end there. Kim Strassel has an update, next.

(COMMERCIAL BREAK)

GIGOT: Does President Obama have an enemies list? Our own Kim Strassel caused a stir in April when a column suggesting that he does, pointing to an Obama campaign web site that targeted private citizens who donated to Mitt Romney. Eight donors were highlighted on the web sites with claims that they have, quote, "less than reputable records."

In a follow-up column, Kim noted that a Democratic operative had been digging into the divorce records of one of those contributors, Idaho businessman, Frank VanderSloot.

Kim is back this week with more.

Kim, what is the latest on the government and Mr. VanderSloot?

STRASSEL: The latest is that Mr. VanderSloot, the president calls him out by name. A couple of weeks after, he gets targeted by the most powerful person on the planet. We have this private investigator. now, it turns out, he's being audited by not just one agency, but two. He and his wife are being audited by the IRS for two years of their tax returns. and then a couple weeks after they got a letter informing them of that, he got a letter from the Department of Labor saying he was also being audited there for some workers he hires from a ranch in Idaho that come in on temporary agricultural visas. They're from Mexico. They're looking into that aspect of his life as well.

GIGOT: So I guess the question is, mere coincidence that these two bureaucracies decided to investigate him at the same time? Or was someone either giving orders or just sort of looking at the public records and saying, hmm, that might be a good idea. Do we know?

STRASSEL: No. And that's the problem, we don't know. It's why presidents shouldn't do things like this. You don't go after private citizens for their politics because what happens is that the president goes out and isolates this man, names him, as you said, then on, the public is full of doubt. Is he being -- is Mr. VanderSloot being targeted because he actually deserves to have his taxes audited or is it because the president doesn't like him? Or because someone working in the president's administration decided to do the president a favor? Or because simply the president named his name, did someone in the IRS feel obligated to look into him? But none of those reasons are good ones to be going after a citizen.

GIGOT: Some of us have been audited, an unpleasant experience.

(LAUGHTER)

It probably wasn't political in my case. But when it comes to the Labor Department, you reported this week that VanderSloot only has three employees who might have to be investigated on his ranch.

STRASSEL: Yes. I think that is what also makes it feel fishy. Every year, tens of thousands of migrant agricultural workers come into the United States. He employs three. They worked on his ranch for the past five years running. Two of them are brothers. But to suddenly come out and put so much attention and focus on this, it seems a little unusual.

GIGOT: So why did the campaign, the Obama campaign single out these people?

STRASSEL: They're feeling a lot of heat right now. Most of the people that they identified were people who gave money to a Romney- supporting super PAC, OK?

GIGOT: A lot of money. A lot of money.

STRASSEL: A lot of money. Yes. These are big donations. That shouldn't make a difference in terms of the rights these people are entitled to. But they were big donations. The Obama campaign has had a great deal of trouble raising similar amounts of money. They know they're outmatched. So their goal has been to smear and besmirch those donating to the Romney super PAC to embarrass it and make it look like it's all illegitimate in terms of its support of Mr. Romney.

GIGOT: What does this tell you, briefly, Kim, about this whole move for disclosure of campaign contributors? This has become a big Democratic theme. I used to be in favor of disclosure. But, boy, when it's used to become -- makes these people a target, it raises questions in my mind.

STRASSEL: It's incredibly frightening because you wonder what the alternative is. What the Democrats on the left have been doing has been using disclosure to harm people. They go after organizations or individuals and smear them and hurt their businesses. And I think it must make everyone have to rethink disclosure.

GIGOT: OK, Kim, thanks so much for that report.

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

(COMMERCIAL BREAK)

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

Kim, first to you.

STRASSEL: This is a miss to the great Green Fleet, a collection of U.S. Navy war ships and fighter jets that, this week, began flying on biofuel, namely chicken fat and algae. It turns out though --

(LAUGHTER)

-- the cost of these biofuels are $26 a gallon, or six times of cost of regular fuel. The Defense Department is facing crippling cuts because of the Defense sequester. And the idea the president is doing this, wasting tens of millions of dollars to make the Navy a poster child for his green ambitions is crazy.

(LAUGHTER)

GIGOT: OK.

Jason?

RILEY: This is a hit for Gary Johnson, the Libertarian Party candidate for president, a former governor of New Mexico. According to polls, he's helping Mitt Romney close the gap with Obama in New Mexico. Obama had a 14 point lead back in April. Now it's down to about five points. And pollsters say it's because Johnson is winning support from Democratic-leaning Independents. Who knew that the Libertarian Party could be so helpful, Paul?

GIGOT: All right.

James?

FREEMAN: Paul, the tragedy at Penn State, we're learning a big part of the story is a president and the university administration that resisted independent oversight by their board. This is unfortunately a problem nationwide. This is a miss to the NCAA and college presidents who have resisted oversight. And a hit to Ann Neil (ph), on the American Council of Trustees and alumni that has been pushing for stronger boards for years. Let's hope people start listening.

GIGOT: OK, James, thanks so much.

That's it for this week's edition of the "Journal Editorial Report." Thanks to my panel and especially to you for watching. I'm Paul Gigot. We hope to see you right here next week.

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