This is a rush transcript from "Journal Editorial Report," July 20, 2013. This copy may not be in its final form and may be updated.
PAUL GIGOT, FOX HOST: This week on "The Journal Editorial Report," race, politics and the Zimmerman verdict. As protests continue and calls grow for civil rights charges, President Obama weighs in on the controversy in very personal terms.
Plus, remember those rogue Cincinnati IRS agents? New testimony confirms that Tea Party targeting came straight from Washington and involved an Obama appointee.
And the war on Wal-Mart continues. Why the latest push for higher wages could end up hurting the very workers it claims to help.
(BEGIN VIDEO CLIP)
PRESIDENT BARACK OBAMA: Trayvon Martin could have been me 35 years ago. There are very few African-American men in this country who haven't had the experience of being followed when they were shopping in a department store. That includes me. There are very few African-American men who haven't had the experience of walking across the street and hearing the locks click on the doors of cars.
(END VIDEO CLIP)
GIGOT: Welcome to "The Journal Editorial Report." I'm Paul Gigot.
That was President Obama on Friday speaking in very personal terms about race in the wake of George Zimmerman's acquittal in the murder of Florida teen, Trayvon Martin. The president's comments came as protests continue across the country and pressure grows from some corners to bring federal civil rights charges against Zimmerman.
Wall Street Journal editorial board member, Jason Riley, joins me with more on reaction to the president.
Jason, that could have been -- Trayvon Martin could have been me 35 years ago. What's your reaction to that and his remarks?
JASON RILEY, EDITORIAL BOARD MEMBER: Well, Paul, he's right. That could have been him. It could have been me 10, 15, 20 years ago. The question is, why is that? Why have perceptions of black male criminality persisted for so many decades in this country? It can't be because we haven't made progress on race. He's saying that as president. So what's behind this perception? I would argue that it is hard statistical data showing young black males, just like they did 35 years ago, continue to commit a disproportionate number of crimes, and that's what's feeding this perception.
GIGOT: But I thought he responded -- you wrote a column making that point that was controversial in some quarters but got a lot of response. I thought the president was responding to you at one point in that speech where he said that doesn't mean the African-American community is na
RILEY: I think that needs to be the whole discussion. Clearly, I think President Obama wanted to drag other ill-relevant factors into this. But that needs to be the whole debate. If we want to change the black male perception or perception of black males in this country, young black men need to change their behavior.
Again, Paul, this is not just whites who have these perceptions. Remember, Jesse Jackson famously said, "When I'm in a dark alley and I look behind me and see white people, I feel relieved." This is something that permeates both races, all races. And it is common sense. This is not an irrational response given the data on crime statistics.
GIGOT: It is interesting. The president talked in personal terms -- so did Eric Holder -- earlier this week to the NAACP. He said basically I had been stopped in Georgetown as a young prosecutor when I was late to a movie, running to a movie. And they are both saying that this is why this case resonates so much with people in the African-American community. Isn't that -- isn't responding to that sense and it becomes anger at some point, frustration certainly. Isn't that an appropriate role for the president of the attorney general?
RILEY: Well, I think -- the more responsible thing for them to do in the positions that they hold is to say that the black community needs to talk with black leaders, parents, children, ministers, teachers, what have you, but this is a conversation we need to have about black behavior.
But what I saw the president do in this conference, Paul, I saw Barack Obama as community activist here.
RILEY: Real activists typically do not unite people. They divide people. Here we have the president dragging race into a case and giving sort of comfort or justification to the black civil rights leaders and -- who have been trying to racialize this case from day one. I think that Holder and Obama's responsibility here was to cool down the temperature. And, in fact, what they were saying, what they both have been saying, is that there is some justification for what he has been hearing from the Al Sharpton and Jesse Jacksons out here. And that is not helpful.
GIGOT: But he did say that the jury has spoken and that we are -- he did say there is no justification here for any kind of violence.
RILEY: That was a concession there. Because it looks like justice has month case, that they can't go after Zimmerman on a hate crime, which is what some of the civil rights community are hoping the Justice Department - -
GIGOT: I think I heard the president actually say -- at least as I interpret it, I heard him say to his supporters, look, I don't think there is a case here and I don't think that we are going to be able to bring it and, therefore, I'm siding with you. I'm going to show you, demonstrate to you, how much I -- I understand where you are coming from here. You think that was part of the political calculation?
RILEY: Sure. But we also know that the political calculations, speaking of political calculations, that this president has not hesitated to use racial division to further his political agenda. I think this is of a piece of calling, you know, voter I.D. laws throwbacks to Jim Crowe, saying the civil rights -- Voting Rights Act of 1965, every as peck of it, is still relevant today. If you don't think so you are a racist. Of continuing to -- racial preferences and high education. This president and his attorney general and this administration has not hesitated to drag race into issues and divide the country along racial lines when it serves their political agenda.
GIGOT: All right, Jason Riley, thanks very much. Glad to have you here for this.
When we come back, Cincinnati strikes back. One of those rogue agents in the IRS scandal testifies before Congress and confirms that the Tea Party targeting came from Washington and may have involved an Obama appointee. Will it matter?
(BEGIN VIDEO CLIP)
UNIDENTIFIED CONGRESSMAN: The former commissioner, IRS commissioner, Miller, blamed all of this targeting on two rogue agents.
ELIZABETH HOFACRE, IRS EMPLOYEE: Correct.
UNIDENTIFIED CONGRESSMAN: I would suspect that you would be one of those two rogue agents.
HOFACRE: It would refer that I was one of them.
UNIDENTIFIED CONGRESSMAN: Is that true? Where you --
HOFACRE: No, it was not. I was following directions from management and they were aware of what I was doing.
(END VIDEO CLIP)
GIGOT: Testimony this week from Elizabeth Hofacre, one of the so-called rogue agents in the IRS Cincinnati office, initially blamed for the improper targeting of Tea Party groups. Both Ms. Hofacre and Carter Hull, a veteran IRS lawyer, testified before Congress Thursday, and confirmed that officials in Washington, including an Obama appointee, had a direct hand in delaying the tax-exempt applications of conservative organizations.
For more, I'm joined by Wall Street Journal assistant editorial page editor, James Freeman; senior editorial page writer, and all things IRS, Collin Levy; and editorial board member, Steve Moore.
Collin, give us the summary here of what we learned at the hearing on Thursday.
COLLIN LEVY, SENIOR EDITORIAL PAGE WRITER: Right, Paul. We basically learned at the hearing Thursday that this scandal didn't end in Cincinnati. It went through the office of Chief Counsel William Wilkins and it went through the office of Lois Lerner. What you heard from Elizabeth Hofacre there was very clear. She said she was getting her orders from management in Washington and knew exactly what she was doing.
Now, her management in Washington was Carter Hull. He was the IRS attorney looking at these cases in Washington. He said specifically that when he had a couple of test cases, he was required to run them up the chain to Ms. Lerner and Ms. Lerner's office and to the office of chief counsel and unable to sign off on those cases essentially without their permission.
GIGOT: All right.
LEVY: So it is very clear that this connects the dots.
GIGOT: The general counsel's office's role is interesting here, William Wilkins, because there's only two political appointees at the IRS, general counsel, Mr. Wilkins, and the -- and whoever is running the IRS. This is significant. What's the IRS saying about Wilkins' role now that it -- his office has been linked to this?
LEVY: Well, the IRS has been at some pains to say Mr. Wilkins wasn't at a key meeting where his office was reviewing some of these applications. But I think it is very interesting because one of the reasons that Mr. Wilkins was hired presumably when the White House hired him, they said specifically that they admired his expertise in dealing with non-profit organizations. So the idea that he wasn't in the loop on any of this and all of this was happening in his office is a little bit of a stretch for the imagination.
GIGOT: He was involved, was he not, in the campaign in 2008, when Jeremiah Wright, then-Senator Obama's pastor, when he was investigated or his church was investigated for tax-exempt issues, correct?
LEVY: Right. That was a case where that -- where Reverend Wright's church was questioned, whether or not its involvement with President Obama was jeopardizing its 501(C)3 status. Remember, (C)3s are not allowed to have to have any political activity. So that's --
LEVY: And he was defending the church in that case.
GIGOT: So Mr. Wilkins did not testify this week. I assume he will be given that opportunity at some -- at some --
JAMES FREEMAN, ASSISTANT EDITORIAL PAGE EDITOR: It should be.
GIGOT: So what do you make of this, James?
FREEMAN: Well, I think that's the next place where this investigation has to go. What I make of it is, what we are hearing this week is the exact opposite of the story that the government told us in May when this first came out that it was the rogue employees and it was low level and it was bureaucratic bungling. This is going right to the top. And what with Mr. Hull made clear is that --
GIGOT: The top of the IRS.
FREEMAN: The top of the IRS. These reviews, this additional scrutiny only of these Tea Party and conservative groups was unprecedented. This was -- he had been in the IRS for decades and he's never seen anything like it. And it is coming from the chief counsel's office. And so I think Mr. Wilkins is the next one to get under oath. If he lawyers up and pleads the Fifth, as Ms. Lerner did, perhaps others in that office can tell us what happened. There's also a lot of document requests from the Hill that may shed light on this.
GIGOT: The Tea Party groups, Steve, are saying that they are still not getting fair treatment by the IRS, even now.
STEVE MOORE, EDITORIAL BOARD MEMBER: They haven't.
And by the way, let me just say one thing about those hearings this week which was that the amazing thing was that Democrats and the way they roughed up the witnesses and roughed up the inspector general. You know, this was almost unprecedented. The Democrats originally said we want to get to the bottom of this. It became very clear that they -- they treat this as a partisan witch-hunt, beating up the inspector general. They don't want transparency here. They want to sweep this thing under the rug.
Now, the issue with these groups that were unfairly treated by the IRS, Paul, they have gotten letters from the IRS saying, well, we will give you your tax exempt status but you are going to have to live under different rules than liberal groups do. And I talked to a lot of the heads of these Tea Party organizations who said this is blatantly unfair, why are we being held to a stricter standard than liberal groups. That's really at the heart of what this gamble is all about.
GIGOT: What about the argument, Collin, that we are hearing from some Democrats that the progressive groups, so-called liberal groups, were treated like the Tea Party groups, were also singled out. Does that have any factual basis?
LEVY: No. We haven't seen any factual base for that yet, Paul. What you are hearing are these claims that progressives were targeted equally. We haven't seen any of the same kind of scrutiny, the letters, the harassment, et cetera, that you heard from Tea Party groups. None of that is coming out progressive groups. Russell George said that of the 293 groups that were screened for additional political activity, there were six that had the word "progress" or "progressive" in them, and so they are going to look into that. He said his office will look into that further but there's just nothing there yet.
GIGOT: Russell George being the inspector general.
FREEMAN: The inspector general.
GIGOT: So late word, James.
FREEMAN: Well, July 29th, investigators on the Hill are expecting documents from the executive branch on communications among the IRS, executive office of the president, related to the elections, and Tea Party groups. And here is another opportunity for the Obama administration to be helpful here. Let's see if they take.
GIGOT: And if you want to follow this story, you'll have to follow it right here because the rest of the press corps seems to have gone into summer hibernation.
FREEMAN: And wouldn't it be great if the Justice Department cared about it?
GIGOT: When we come back, Wal-Mart says it will pull the plug on at least three new stores in Washington, D.C., after the city council there passes a so-called super minimum wage of $12.50 an hour. Is it a victory or a defeat for that city's workers?
GIGOT: Wal-Mart said it is scrapping plans to build three new stores in Washington, D.C., and is considering pulling the plug on three others currently under construction after the city council passed a bill that would require large retailers to pay workers at least $12.50 an hour, 50 percent higher than D.C.'s current minimum wage. Last week's vote was just the latest development in an ongoing development over Wal-Mart's expansion into urban areas. The chain has encountered fierce resistance in New York, Los Angeles, Chicago and other big cities.
We are back with Jason Riley, Collin Levy and Steve Moore.
Steve, what's it against -- what does the city council have against Wal-Mart?
MOORE: If you want to understand, Paul, why major cities like Detroit are going bankrupt, just look at what's happening in Washington, D.C. What happened was that the -- you have major developments, shopping centers, in low-income areas in Washington, D.C. The city actually was suitors, trying to get Wal-Mart to build stores there. Wal-Mart agreed to build six. No good deed goes unpunished in politics. What happened was the city council, in the middle of the construction of the stores said, by the way, we are going to require you to pay a $12.50 an hour minimum wage. Now, as you just said, Wal-Mart is threatening --
GIGOT: Yes. OK, Steve, all right --
MOORE: -- to pull back and not open up the stores.
GIGOT: Good. But why? What's the nature of their opposition to these stores? Why are they doing this?
MOORE: Well, the left has always hated Wal-Mart, mainly because Wal-Mart is nonunionized. What's incredibly unfair about this law is that would not apply to unionized stores, only big-box stores that don't have unions.
GIGOT: So each store is supposed to bring in -- estimated to bring in 300 jobs and a million dollars in tax receive knew for D.C. It sounds like a win-win.
RILEY: It is a win-win. This is a classic example of Democrats putting a special interest, in this case labor unions, ahead of their constituents. Paul, you're talking about a company in Wal-Mart that has a tradition of placing a majority of its stores in less-affluent neighborhoods. That's what it does. That's what it prides itself on doing, bringing those communities low-cost goods and services and jobs. And it is amazing because what -- what the Democrats and the liberals, who are anti-Wal-Mart, are saying is we would rather these folks stay unemployed than work at Wal- Mart.
GIGOT: So, Collin, this same kind of fight occurred in Chicago. It had a happier ending because Richard Daley, then the mayor, vetoed the bill. How have things turn out?
LEVY: Well, it turned out just fine. That battle waged for a long time. But it's waned now. You have about eight Wal-Mart stores --
GIGOT: Inside the city in -- right, interesting.
LEVY: Yes, inside Chicago. And Daley, at the time, said something very interesting I thought, which is, he said, we never objected to the stores opening in the suburbs so why are we opposed to them opening in the city? That gets to Jason's point, about jobs and the need for these jobs in the inner city and why is there that sort of thing?
Now, there's something else here interest being the minimum wage because you have, too, a tacit acknowledgement that the minimum wage drives business drives way. That's what these city council members are saying, hey, if we raise the minimum wage, businesses aren't going to want to come here. Wal-Mart will not want to do it if we do that. So I think that's --
GIGOT: You know, there's an irony here, Steve -- Steve, there is an irony here that Wal-Mart, which is not above political cynicism itself -- I mean, it favored an increase --
MOORE: That's for sure.
GIGOT: -- in the minimum wage several years ago. And I thought that, in order to punish its competitors, it might not be able to support it.
GIGOT: So what is Vincent Gray, the mayor of D.C., going to do?
Moore: Well, by the way, you are right. Wal-Mart is no saint here.
But I want go back to that point Jason made. One of the great things about Wal-Mart for low-income people is it provides low prices and makes things affordable for people. I believe, Paul, that at the end of the day, the mayor is going to veto this bill because it is so contrary to economic development and jobs and opportunity in the city of Washington, D.C. If Wal-Mart pulls out, a lot of these entire shopping centers may fold as well.
GIGOT: What do you think, Jason? Is he going to do that? And the example of Detroit, right, where there are 78,000 abandoned buildings --
-- all right, it is astonishing -- shows you what happens when you get economic decline.
RILEY: It shows you that poor people can't catch break from the left. Wal-Mart is trying to give folks jobs. The left wants to give them food stamps, Paul. I mean, it's ridiculous.
GIGOT: Is that going to be an example for Washington and is Vincent Gray going to step up to the plate?
RILEY: I hope so. And there is some precedent for these mayors at the last minute doing the right thing.
GIGOT: What's that precedent?
RILEY: Well --
-- Chicago --
RILEY: -- is one example. There are some other places down south. I believe New Orleans was faced with this at some point. Wal-Mart eventually got in there. So it's possible.
MOORE: Yes, but, Jason, New York will not allow Wal-Mart into the city. It is amazing.
GIGOT: No, that's true, that's true, particularly in the outer boroughs. Manhattan doesn't care as much --
GIGOT: -- but in the outer boroughs.
All right, we have to take one more break. When we come back, "Hits and Misses" of the week.
GIGOT: Time now for "Hits and Misses" of the week.
Steve, you're first up?
MOORE: If you are wondering why gas prices are hitting $4 a gallon in many markets, look no further than your favorite subsidy, Paul, ethanol.
The federal government has been mandating the amount of ethanol that is put into gallon of gasoline and it is driving up the price of gasoline by as much as 10 cents a gallon. It is a $14 billion a year ethanol tax on consumers. And what this means, Paul, is not only does ethanol drive up food prices, now it is driving up gas prices, too. Only in Washington.
GIGOT: One of the great scams of all time, Steve.
All right, Collin?
LEVY: Paul, this is a hit to the Fourth Circuit Court of Appeals, which this week became the third federal court to invalidate President Obama's non-recessed recess appointments to the National Labor Relations Board. A few -- a little while ago, the president basically made those appointments by just ignoring the Senate's role of advising consent. And both the D.C. Circuit and the Third Circuit have said that was an overreach of presidential power. That case is going to go up to the Supreme Court. So I'm happy to see the positive momentum.
GIGOT: All right, great.
FREEMAN: This is a hit to Dean Metropoulos, the private equity executive, who this week brought back the great American institution, the Twinkie. Hostess, who makes Twinkies, failed last November. Heavy union costs basically destroyed it. So now leaner and meaner, the Twinkie is back. I would note Mr. Metropoulos also owns that other great American institution, Pabst Blue Ribbon.
GIGOT: So you are glad he resurrected two of your favorite products.
FREEMAN: I'm a fan of domestic macro brews. But --
-- should have pointed to Metropoulos when he was trying to make the case for private equity last year.
GIGOT: All right.
And remember, if you have your own "Hit or Miss," please send it to us at jer@FOXnews.com. Be sure to follow us on Twitter, at JER on FNC.
That's it for this week's show. Thanks to all of you for watching. I'm Paul Gigot. We hope to see you right here next week.
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