This is a rush transcript from "Journal Editorial Report," May 31, 2014. This copy may not be in its final form and may be updated.
PAUL GIGOT, FOX HOST: This week on "The Journal Editorial Report," Big Labor's big regret. They were key to ObamaCare's passage, but as insurance costs skyrockets, unions are balking at paying the tab.
Plus, it was billed as a major foreign policy address, but what was missing from President Obama's West Point speech?
And Eric Shinseki resigns amid outrage over a new report that says V.A. delays and cover-ups are happening nationwide. We'll bring you one doctor's war stories from his time in the system.
Welcome to "The Journal Editorial Report." I'm Paul Gigot.
First up this week, is big labor having big regrets about ObamaCare? Unions, of course, have been among the president's most loyal allies and were critical to the passage of his Affordable Care Act in 2010. But now some are threatening to strike if they're forced to absorb the higher costs that come with the law. The "Wall Street Journal" reported this week that unions and employers nationwide are squaring off over who will pick up the tab for new mandates, such as coverage for dependent children up to age 26 and the so-called Cadillac Tax on premium health care plans starting in 2018.
For more, I'm joined by "Wall Street Journal" columnist and deputy editor, Dan Henninger; editorial board member, Joe Rago; and assistant editorial page editor, James Freeman.
So, Joe, just how much costs are going up for union plans? And weren't they supposed to go down?
JOE RAGO, EDITORIAL BOARD MEMBER: Exactly. That's why they're going up for union plans just as much as employer plans and the individual market.
GIGOT: What kind of magnitude are we talking about?
RAGO: We're looking at about a 10 percent increase, just year over year. So pretty significant. And then that ramps up in 2017 when this Cadillac Tax goes in. And this is targeted at very gold-plated health plans, you know, the richest benefits. And those often are union plans.
GIGOT: Why is that? I mean, when you think about gold-plated plans, you think of Goldman Sachs, you think of the big CEOs. But that's not true. Unions also have these very, very rich benefit packages. Why is that?
RAGO: Well, for years they have traded increases in wages for richer benefits, for more generous benefits.
GIGOT: Meaning sometimes no co-pays, almost no premium contributions. And the employers now are asking the unions, look, our costs are going up. We've got to pass that along to you. So you're going to have to start making premium payments. You're going to have to get lower raises. Or you're going to have to start paying more -- some -- some percentage more than what you've been paying.
RAGO: Right. The same thing we have seen in the private sector, where workers are shouldering more of their health care costs, that's coming to union plans now. It's sort of reached a breaking point. And they're really balking at making contributions that ordinary workers do.
DAN HENNINGER, COLUMNIST & DEPUTY EDITOR: And some of the union plans are fairly complex. There's about 20 million unionized workers in so- called multi-employer plans.
GIGOT: That means there is a single plan, but many employers contribute to it.
HENNINGER: Yeah. That's right. So they're fairly complex. And they have been -- they have negotiated these plans over decades, really. And they're very good plans. For instance, their insurance tends to be portable, which means to say, if you're a construction worker and go from job to job, your insurance follows you --
HENNINGER: -- which is a terrific provision for everybody to have.
GIGOT: We should have more portability for everybody.
GIGOT: And the reason for that is because these tend to be cross- industry plans. So that if they -- they're in the construction industry, say, as you point out.
JAMES FREEMAN, ASSISTANT EDITORIAL PAGE EDITOR: Yeah. I mean, I think a big question is, construction industry, casino industry, wherever you happen to work outside of health care, if you're a union worker, what was in it for you? And I think this is a question for the union leadership that all signed on to ObamaCare, is were they fooled like everybody else? The "you can keep your plan" rhetoric, nothing is going to change except costs are going to go down, or did they think they were going to get a lot of exceptions that haven't come?
GIGOT: Well, they couldn't have been fooled by the Cadillac Tax, because that was advertised.
GIGOT: What they did get was a delay in it. But even if it kicks in 2017, 2018, what happens is, the contracts are being negotiated now. So the employers are anticipating the increase in costs.
FREEMAN: Right. I think what you're seeing is the costs that -- rank-and-file union workers are paying for union leadership's alliance with the Democratic Party. There's nothing in this for the union workers.
GIGOT: All right, Joe. So what does this mean politically?
RAGO: Well, I think this highlights the split that James is talking about between the union leadership, which is really kind of a wholly owned subsidiary of the Democratic Party, and the rank and file, the construction workers, the hotel workers, hospitality, grocery workers and so forth. I think you might see a widening split. And it's actually interesting, if you look at the unions objecting, they're all concentrated in those industries that I talked about, the sort of traditional unions. It's -- it might be coming to public-sector unions, as well, which is -- which have generally been a lot more supportive of the Affordable Care Act.
GIGOT: But these union leaders are asking for exemptions from the White House.
HENNINGER: They are.
GIGOT: And they haven't been getting it.
HENNINGER: No. And this points to another rift in the Democratic Party between the labor-union left and the social-engineering left, the progressives, who are more interested in things like health care reform and alternative energy. This is why the Keystone XL Pipeline has become such a point of tension inside the party. And I think they could have a turnout problem in November if some of these union workers decide these guys really don't represent me.
GIGOT: I've heard that, in Michigan, in particular, from some politicians, that they're really subdued across the union, rank and file.
GIGOT: All right. When we come back, it was touted by the White House as a major foreign policy address but did President Obama's West Point speech leave out a few things?
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Here's my bottom line. America must always lead on the world stage. If we don't, no one else will. But U.S. military action cannot be the only or even primary component of our leadership in every instance. Just because we have the best hammer does not mean that every problem is a nail.
(END VIDEO CLIP)
GIGOT: President Obama Wednesday delivering the commencement address at West Point. It was billed by the White House as a major foreign policy speech, meant to answer the president's critics and lay out a coherent vision of American leadership. So did it do either?
We're back with Dan Henninger; columnist, Mary Anastasia O'Grady; and editorial board member, Matt Kaminski.
Dan, as the president said, I want to lay out my vision. Is there such a thing as an Obama Doctrine?
HENNINGER: An Obama Doctrine? That's an interesting question. I think I finally figured it out. It's taken about five years. There is a - - there are several components to what he is trying to say. One is that -- and it's in this speech -- that we will only attack an act against direct threats to the U.S. homeland. That we will not necessarily act against indirect threats. And if we are going to take action against an enemy, it is going to almost always be done in concert with others. The United States will not act unilaterally. It will always bring institutions along. And I think the third component, quite frankly, is contained in this phrase: that we have been using the money we saved over the last four years, quote, "for our investments in a growing economy." He wants to re- flow the money saved by not getting engaged overseas into education, health care and alternative energy -- domestic spending.
GIGOT: Mary, does that fit the mood here in the United States? I mean, we've been involved in Afghanistan and Iraq, and the American public does seem to want to, you know, look inward. So is the president, politically, really tapping deeply into the American mood?
MARY ANASTASIA O'GRADY, COLUMNIST: I think he is, but it's hard to know whether that's cause or effect. I mean, he hasn't shown any leadership as to, you know, what is in the U.S. interest around the world and how we should act. So people, I think, are less inclined to get behind somebody who they don't feel confident about, and go into a battle. I mean, his biggest military victory is his retreat from Iraq. That's his victory.
GIGOT: Well, he would say we got Osama bin Laden, we prosecuted the war with drones against al Qaeda. He would point to that.
O'GRADY: Well, you know, as far as military intervention goes, we lost a lot of blood and treasure in Iraq, and we won. We had established a base there. And he gave it back. You know, after you do that, you think you're going to get the American public to go, OK, let's go into Syria now and start over? And that's what he's reflecting, that people don't want to do that. But I think a lot of it has to do with the fact that they don't want to go into battle behind him.
Matt, one of the points the president made was that he cited as an example of a successful American diplomacy and coalition building what happened in Ukraine. Getting monitors in there to help with the election and try to separate the two sides, the Russian nationalists and the Ukrainians. You just returned from Ukraine. How does it look on the ground?
MATT KAMINSKI, EDITORIAL BOARD MEMBER: Well, I was in eastern Ukraine in Donetsk, which is basically a kind of a badlands of Ukraine with no Ukraine authority. So on Sunday, you had an election that went very well. But, you know, there was no election in that part of Ukraine, which basically meant that four million people couldn't vote. And the Crimeans couldn't vote because they have been annexed by Russia.
GIGOT: But is it a successful example of diplomacy?
KAMINSKI: It's certainly not. I think he's saying that I'm building coalitions but you have to find an example of where coalition has worked. It hasn't worked in Ukraine in stopping the -- Putin's ability to take over chunks of that country --
KAMINSKI: -- destabilizing that country. It hasn't worked in Syria either, where he didn't build a coalition to do anything to push back Assad or help the rebels. So I don't see where this coalition building has actually made a difference. It's been an ineffective policy.
GIGOT: Where is the perception in Ukraine and Eastern Europe? You've been across Eastern Europe in the last few months. What is the perception of American authority there, American power and influence?
KAMINSKI: I think it's disenchantment with the U.S. in that part of the world. But it's really among our friends. What President Obama has managed to do in the last five years is to alienate or make very anxious a lot of American allies, while obviously encouraging American enemies. I think people still obviously turn to the U.S. for leadership. Europe is not there yet. But it's true across the board. It's true in Europe. It's true in the Middle East. It's true in East Asia. It's also true in Pakistan and Afghanistan, where, this week, he announced he's put basically zero troops in Afghanistan by 2016.
HENNINGER: Direct quote from the speech: "From Europe to Asia, we are the hub of alliances, unrivalled in the history of nations." It's not true. Our allies -- at the moment, do not trust. Saudi Arabia has separated itself from the United States. So there is a kind of other -- literally, other worldliness about Barack Obama's view of the world. And that's the thing that is so troubling about it. Much of what he said is not true.
KAMINSKI: I think it's a very narrow definition of what American interests are. He has really put a bar so high on military intervention that, you know, Haiti in the '90s, the Balkans in the 90s would not have been done under the definition of this Obama Doctrine.
GIGOT: Mary, can you point to a foreign policy success of the last five years? Can you cite one?
O'GRADY: Well, as I say, the retreat from Iraq is one.
I guess he got Osama bin Laden. But I think one of the reasons why the U.S. looks so weak is because our economy is weak. And he also has a lot of responsibility there.
GIGOT: All right. Mary, thank you.
Still ahead, Eric Shinseki resigns amid outrage over care delays and cover-ups at V.A. hospitals nationwide. So will his ouster make a difference? We'll ask a doctor who has been in the system, next.
GIGOT: Veterans Affairs secretary, Eric Shinseki, resigned Friday amid outrage over an inspector general's report that says delaying medical care to veterans and manipulating records to hide those delays is systemic throughout the V.A. system. Something my guest this week says he and many other physicians have long known.
Dr. Hal Scherz is a surgeon who trained in San Antonio and San Diego. He joins me now from Atlanta.
Dr. Scherz, thank you for being here.
DR. HAL SCHERZ, TRAINED AT V.A. HOSPITALS IN TEXAS & CALIFORNIA: Paul, thank you for having me.
GIGOT: So the Shinseki resignation, many people thought it was coming. Is that a step forward?
SCHERZ: Well, I think that it's nice to have accountability, but I'm not sure that it's really a step forward unless the entire system is looked at and revamped. I don't think that just replacing somebody who heads it is the solution for the systemic problems we have at the V.A. And the problems are long standing. They date back decades. And it's part of the problem with the government-run health care system that the V.A. represents.
GIGOT: Yeah, I want to explore that. But it's very interesting. The president on Friday said that the waiting lines, these really hadn't surfaced, that the -- they somehow had not got to the top of the V.A. to General Shinseki or the rest of the government. Does that sound plausible to you?
SCHERZ: It really doesn't. But I can understand why there might be some hiding of information by lower-level bureaucrats. But ultimately, the buck stops at the top, whether that's the head of the V.A. or it's in the White House. And I think that this is not really a political issue, Paul. This is a bureaucratic issue. And it really is nonpartisan. Everybody is responsible for this.
GIGOT: Yeah, you wrote for us this week that you described the "culture of bureaucracy" has to change. What do you mean by that? How does that work within the V.A. system?
SCHERZ: Well, the V.A. is just like any other bureaucracy in Washington. You have people who are government employees. They have government unions. And so there's people who work there who feel like they're bullet-proof. They don't worry about their jobs. The longer that they put in, the more job security they have. And they're really not concerned about patient care. And I view the V.A. hospital as a government jobs program that dabbles in health care.
GIGOT: Well, so how -- look, you probably -- you've got to have some doctors and providers there. And you trained at one, or two. That really do -- I mean, they take the Hippocratic Oath too and want to do their best for patients. So how does the incentive system work differently at a V.A. hospital than it does, say, at a private hospital?
SCHERZ: Well, in a private hospital, there's -- the clock doesn't tick and the day doesn't end at 3:00, which happens in the operating rooms at the V.A.s around the country, where I have operated at and where many of my colleagues have. So just like any other federal bureaucracy, there are people who are punching a clock, and they're more concerned about taking breaks and about getting out at 3:00 than they are at getting the work done. So -- and the experiences that I've had, we have had a truncated operating day. And as opposed to a public hospital, where you work as long as there's work to be done, at the V.A. hospitals, you are given a certain amount of time to do a large amount of cases, and so this whole business about waiting lists is not a new phenomenon. Every doctor who has trained there has kept those lists for years.
GIGOT: So the waiting lists are a natural function, a result of the fact that you just had this truncated workday. It's hard to believe that the actual operating day actually stops at 3:00 at most of these hospitals?
SCHERZ: They do. And, in fact, not only do they stop at 3:00, but the work is slowed down way before that because they don't want to run over at 3:00.
SCHERZ: I have stories that have been shared with me from hundreds and hundreds of doctors around the country, who share the exact same experiences that I've had, that just echo and mirror everything that I have written in the "Wall Street Journal" article this week, and that doctors have talked about for years. And doctors -- the majority of doctors know this, because the majority have trained or spent time as a medical student at the V.A. hospitals.
GIGOT: So we only have about 30 seconds, but just briefly, is the solution here to close down the V.A. hospitals and then get those veterans a card that takes them into the -- allows them to go to private hospitals?
SCHERZ: I think so. I think that if you got the V.A. out of acute care, and converted the V.A. hospitals into rehab facilities, mental health facilities, both of which the V.A. does pretty well --
SCHERZ: -- and long-term care facilities, and let the veterans have a card that enabled them to enabled them to get their acute care in the community, I think that that would solve all of the problems.
GIGOT: All right, Doctor, a very constructive suggestion.
Thank you for being with us. And thank you for writing for "The Journal."
We have to take one more break. When we come back, our "Hits and Misses" of the week.
GIGOT: Time now for "Hits and Misses" of the week.
Dan, start with you.
HENNINGER: Well, we may actually have a hit in the IRS scandal, Paul. A federal judge could be the camel's nose under the tent of this scandal. There was a group down in Pennsylvania called Z Street, and their interest was actually Israel and the Middle East, nonprofit. Well, they got investigated by the IRS, and they filed a lawsuit. And a federal judge has just ruled that the IRS cannot claim protection of two federal laws that they normally do to resist this kind of investigation. He says they have got to answer this group. So we could see depositions coming, even of Lois Lerner. Remember the words, Z Street.
GIGOT: All right.
O'GRADY: A miss for Michigan Governor Rick Schneider and the Michigan legislature for passing an increase in the minimum wage. It will go from nine -- sorry, from $7.40 to $9.25 by 2018. Now, the governor says they did it to avoid a worse outcome if it became a ballot initiative in the fall. I think that he was afraid it would track Democrats, and that would be rough on his re-election chances. But I don't think he helped himself.
GIGOT: I think you broke that code, Mary.
All right, Joe.
RAGO: Paul, this is another miss to New York City Mayor Bill de Blasio, who is lifting the municipal ban on keeping ferrets as pets. This ban has been in place since 1959, because these weasels were crawling through the walls of apartment buildings and viciously attacking children and spreading disease. A New York City mayor once said the ferret lobby had a sickness, and he's right. This is animal rights run amuck.
GIGOT: The ferret lobby?
RAGO: The ferret lobby. People love these little monsters.
HENNINGER: Only in New York City.
GIGOT: Bill de Blasio, the gift that keeps on giving to journalism.
And remember, if you have your own "Hit or Miss," please send it to us at jer@FOXnews.com. And be sure to follow us on Twitter, @jeronfnc.
That's it for this week's show. Thanks to my panel and to all of you for watching. I'm Paul Gigot. Hope to see you right here next week.
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