This is a rush transcript from "Journal Editorial Report," December 27, 2014. This copy may not be in its final form and may be updated.
PAUL GIGOT, HOST: This week on the "Journal Editorial Report," from the Republican midterm sweep and President Obama's rule by regulation, to the rise of Islamic State and decline of America's global influence, we'll take a look back at the biggest stories of 2014.
And from an embattled Washington bureaucrat to a Silicon Valley CEO, our panel's pick for the winners and losers of the year.
Welcome to this special edition of the "Journal Editorial Report," our look back at the biggest stories of 2014. I'm Paul Gigot.
And joining our final panel of the year is Wall Street Journal columnist and deputy editor, Dan Henninger; foreign affairs columnist, Bret Stephens; Washington columnist, Kim Strassel; and assistant editorial page editor, James Freeman.
Let's get right to it with the biggest political story of 2014, the Republican Party's historic midterm gains, not just in the House and Senate but in statehouses across the country.
Kim, why do you think this is the big story of the year?
KIM STRASSEL, WASHINGTON COLUMNIST: Think of this as the revolt against the president's agenda. The American public remains deeply unhappy with a lackluster economy, the president's handling of foreign affairs and regulations that are destroying the economy, ObamaCare. And it was his members who took the hit for it. Republicans now have a bigger majority in the House since they have had since 1929. They hold more state legislative streets since prior to the Great Depression and they picked up nine Senate seats. We're going to see now what they can do with that. But this was a big one for the history books.
GIGOT: Kim, I keep reading that now and the end of the year here that President Obama actually had a great year. In certain public prints, the columnists think this has all turned out splendidly. What --
STRASSEL: When you get pummeled that bad, you have to have some sort of answer for it. Look, they are going to pretend this didn't happen because the president will segue right into the next strategy, which is to keep ruling by regulation and move on. He has never really thought he needed Congress anyway.
GIGOT: James, you wanted to jump in here, I could tell.
JAMES FREEMAN, ASSISTANT EDITORIAL PAGE EDITOR: It definitely was the vote of no confidence in the president from the American people, absolutely.
I think also for particularly in the Senate, this was kind of the no- excuses election for the Republican establishment, they got the candidates they wanted in the places they wanted to run, and to their credit, they nearly ran the table. Other than New Hampshire, and I guess there was hope of maybe stealing a seat in Virginia, it was a real blowout. And I think now the question is how can they govern.
GIGOT: Is you look at the post-election polls, Republicans have popped up in terms of public approval. Democrats have gone down. Now you have them at 26 percent of the public identifying themselves as Democrat, the lowest level in recent poll --
DAN HENNINGER, COLUMNIST AND DEPUTY EDITOR: Paul, it could potentially be a big shift. The Republicans now control 68 of 98 partisan legislators around the states. Through entire second half of the last century, Democrats controlled most of those chambers. Now Republicans are beginning to take control of them. I think the Democrats could be looking at a generational period in the minority if they don't get their act together.
BRET STEPHENS, FOREIGN AFFAIRS COLUMNIST: If this becomes the party of Elizabeth Warren, the --
GIGOT: The senator from Massachusetts.
STEPHENS: Right -- and we should only be so lucky, which is a return to what the Democratic Party was before Bill Clinton, the unreformed, unreconstructed party of wealth redistribution, of envy, of hating the rich. That's not a party the Americans are going to like.
GIGOT: Yeah, but they have to deliver now. This is the challenge to Republicans. They have to make the most of that opportunity. They can't do everything with the president still having a veto, but they better deliver something.
FREEMAN: Also, they need to work on the turnout and social media game if they want to win next time as well.
GIGOT: All right.
Let's talk about our second big story in 2014, President Obama's attempt to govern by regulation, with the administration bypassing Congress and issuing enormous and sweeping new rules on carbon emissions, an executive order on immigration among other things -- James?
FREEMAN: I think the big theme of the year is related to the first theme, the pounding that the president took at the polls. You see a president looking to do, with his executive authority or beyond his executive authority, things that he cannot get the Congress and most of Americans to agree with. The fight with Congress has been well publicized. You mentioned immigration and other executive orders. He's also increasingly got a problem in the courts. The Supreme Court knocking down his effort to determine for himself when the Senate is in recess, for example. Also, the Supreme Court agreeing here next year the big challenge to ObamaCare, which is the King v. Burwell case, and this is really saying whether the government can unilaterally rewrite the law to suit its policy --
GIGOT: This concerns the subsidies on ObamaCare.
But here's what I wonder about, Kim. Is the president getting away with this, despite the fact that some of the challenges are taken up in court? The truth is he's pushing boundaries of executive power. And Congress is limited on what it can do because it only has the power of the purse really, and if he's willing to use the veto, he can stop them, for example, probably from doing anything to stop his immigration order, for example.
STRASSEL: Yeah, this is what the president has learned in office is that that there isn't much anyone can do. Congress, for instance, it does have the power of the purse. It also has things like the Congressional Review Act, which is a rule -- a law that allows them to override federal legislation. But they -- again, he has veto power over that too. Congress is also -- for instance, the House filed a lawsuit against him to go to court. Really they are very limited. I think what you're going to see is, instead, the Republicans pushing a more restrictive restrained attempt to roll him back and some places like getting Democrats to come on with them and perhaps try to pressure him to roll back some of this stuff.
HENNINGER: I think that last point is very important that Kim has made. President Obama is essentially reducing the Democratic Party to a nullity. In other words --
GIGOT: What do you mean by that?
HENNINGER: What are they going to do in the next term to contribute to -- I mean, the American people could not rate Congress lower. These are politicians who want something to show. And to show something, they are going to start doing deals with the Republicans because Barack Obama is running the party from the Oval Office, and they are not participants.
GIGOT: What else is the president going to do, Bret, in the next year, the next two years. He could push a lot -- I think I think he's going to do a unilateral deal with Iran, if he can all get away with it. I wouldn't be surprised if he unilaterally closes down Guantanamo, the prison there. And I wouldn't be surprised if he really pushes a climate deal in 2016 as well. He's going to keep pushing the boundaries of this.
STEPHENS: Right. I think we're going to see the most unbound executive that we've had possibly since a war time president. You might have to go back to Franklin Roosevelt to look for a precedent. Look, he knows he's not going to be impeached. He's going to run out the clock. There's no support in Congress. Frankly, it's very, very difficult to stop a sitting president by any other means other than either Supreme Court decisions or by impeachment. So he really has a tremendous opportunity politically from his point of view.
GIGOT: Try to use the power of the purse to the extent he can, get unified approach in the House and Senate, but, again, that has limits here as well.
Much more to come as we look back at the biggest stories of 2014. We'll turn our attention to events around the world right after this break.
GIGOT: Welcome back to this special editorial of the "Journal Editorial Report," as we look back at the biggest stories of the year.
And on foreign policy, we saw the rebound of global terror in a big way in 2014, with the rise of ISIS in Iraq and Syria, the lone-wolf attacks in Canada and Australia, and last week's brutal Taliban massacre of Pakistani school children.
HENNINGER: Yeah, well --
HENNINGER: -- you know, Paul, last year, President Obama gave a major speech in May in which he said the global war on terror is over. Well, alas, the global terrorists did not get the memo this year.
He mentioned a couple, the horrific attack in Peshawar school, murdering school children, ISIS, or Islamic State, rising in Iraq taking over a third of the country, the war there continues. In Nigeria, Boko Haram, Islamists kidnapping 276 school girls. They haven't been seen since. The slaughter in Nigeria continues.
GIGOT: We did do a hash tag.
HENNINGER: We did do that, Save our Girls.
GIGOT: Save our Girls, and that's been really effective.
HENNINGER: Yemen, a U.S. ally, has been disintegrating under the onslaught of Islamists. Libya is fighting for control of its control and oil ports against the terrorists. We had the Sydney hostage crisis, which resurrected the idea of Islamists being recruited on the Internet. Finally, jihadist tourism. American citizens, European citizens going over to Iraq to fight with Islamic State, and then actually going home to recruit more of them.
STEPHENS: But what's very disconcerting is that all of this --
GIGOT: That's not enough?
STEPHENS: But this is worse, OK, because all of this was predicted and foreseen before the president gave the speech at the National Defense University saying the war on terror was over. The Rand Corporation did a study that noted, in the first four years of the Obama administration, the number of jihadist organizations, the simple number of groups rose by 58 percent, the number of jihadist fighters, and this was before the consolidation of ISIS' takeover in northern Iraq, more than doubled. So the president was telling Americans that al Qaeda was on a path to defeat while all of the streams of intelligence were telling us that the offshoots of al Qaeda, other jihadist groups, some of them even worse, were gaining strength, gaining power while we were lulling ourselves into inaction.
GIGOT: Kim, my thinking is, as I look at the polls, this turn on terrorism also contributed to the president's Democrat Party's defeat in the election because it contributed to a sense of disorder and disarray, and the sense that we really need some alternative voices in Washington. You agree with that?
STRASSEL: Yeah, lack of effective management, that was one of the verdicts of the voters out there.
But just to add one slight hopeful note here, amid all of the doom and gloom, one thing we did see this year, we're actually having a national debate on the subject. That is not something that has happened in a long time. You saw it in the midterms. It's been a decade since you had Republicans and Democrats on the campaign trail having an honest discussion about the way forward on foreign policy. It's been good for the Republican Party too, which has been unwilling to talk about this for a while but seems to be getting its mojo back on national security.
GIGOT: The drift to isolationism within the Republican Party seems to have been stopped. There are still voices out there but they lack credibility amid all of these growing threats around the world.
FREEMAN: I think even more than a debate, it does allow a new consensus. If there is a silver lining in this horrible set of circumstances, I think it does remind people that within the Republican Party or country as a whole, we might debate how involved we want to be in a certain region of the world, whether we should be trying to nation build or not. But we can all agree terrorists who are trying to kill us need to be eliminated. And I think there is a kind of a new consensus on that.
GIGOT: I'm not sure I agree with that consensus point yet, but maybe we'll get there.
All right, the other big theme was the decline of America's global influence and the rise of regional threats with Russia at the top of the list -- Bret?
STEPHENS: All of this was predicted. You had a president who came to office promising nation building at home, promising abroad, sounding the retreat from American -- traditional American commitments all over the world, pressing imaginary and mistranslated reset buttons with various rogue regimes. Not surprisingly, when you go around the world creating power vacuums, whether it's in Iraq, whether it's in central Europe, whether it's further afield, those vacuums are going to be filled, often by people we don't like. When the president retreated from his red line in Syria, not only did it embolden Assad but it emboldened Putin to take Crimea. When we didn't really react to Crimea, Putin proceeded into eastern Ukraine. You have the Iranians who are mocking us at the negotiating table by refusing to make any really substantive concessions while we continue to play for time. So you now see the rest of the world having serious doubts, including our allies, about the credibility of traditional American security.
GIGOT: All of which makes the next two years particularly dangerous because world leaders can see President Obama is going to be out of office in two years, so let's see what we can get away with here before that term ends. And particularly Iran, I think, will want to strike a deal that puts them on the cusp of having a nuclear weapon, even if they don't ever explode one, so that the world will know that, if they want to, they can. Meanwhile, I think the West would be claiming relief. Oh, we've got a great victory. That's the biggest danger I see in 2015.
FREEMAN: We're talking about credibility. To me, the contrast is so striking to the Reagan years, where President Reagan rarely committed U.S. troops, but when he did, he came with overwhelming force. Grenada, a small operation, but what it did was it bought him credibility around the world where bad guys weren't sure what he was going to do and how hard he was going to react. There was a general message that the United States meant what it said. And now we're seeing kind of the opposite where allies and adversaries as well can't quite figure out the message.
HENNINGER: Well, we talked about having to get through -- everyone talks about getting through the next two years in a world that Bret just described.
GIGOT: I should say, this isn't just, you here in the United States. We talk to foreign leaders all the time who come through --
HENNINGER: Everyone. Everyone.
GIGOT: -- on and off the record. They all say the same thing. I talked to a foreign minister of a major Western country this week. He was scathing about the dangers presented, that this administration has presented to the world.
HENNINGER: Well, look, middle of next year, the presidential campaign is essentially going to begin and, at that point, I think certainly the Republicans who want to get that nomination are going to have to be giving speeches on this subject about what they would do, at least to reassure our allies that this policy of nonfeasance will not continue.
GIGOT: Kim, briefly, do you see anybody in Congress stepping forward to kind of emerge as a strong foreign policy voice?
STRASSEL: I mean, what's been nice is that he's given them a lot of opportunities, and that the Republicans have had to put forward a lot of proposals that could put pressure on places like Russia and China, things like energy proposals, et cetera, so they are getting a little bit of a workout here.
Still ahead, as we look back at 2014, our panel's picks for the biggest losers of the year.
GIGOT: Time for some fun, and our biggest winners and losers of 2014.
Let's start, of course, with the losers -- Bret?
STEPHENS: Look, obviously, the biggest loser of the year is the president of the United States, Barack Obama. Among other things, he's the leader of the Democratic Party that has just taken one of its biggest drubbings in history. I think the verdict is almost unanimous, despite the last flurry over Cuba, that this has been a disastrous year, from a foreign policy perspective, for the president. Around the world, he's seen as weak, feckless, indecisive. The judgment has been rendered on this president, a failure.
GIGOT: All right.
STRASSEL: My big loser is the IRS and its new commissioner, John Koskinen, who came in earlier this year promising to restore trust in the agency but has instead, spent the year stymieing congressional investigations into the targeting scandal, and even climbing on board with an Obama rule that would further crack down on political speech. This was an enormous opportunity to fix things at the agency. He's largely blown it, and that's a big missed opportunity.
GIGOT: Well James, try to out-do that one.
FREEMAN: I can't.
There's no way I can out-do that one.
By the way, I thought the other part of the show was fun, too, but --
-- the loser -- another big group of losers, America's 9600 state and local governments who thought this was the year Congress would finally give them new powers to reach outside their borders and harass web merchants all over the country. It didn't happen. Good news.
HENNINGER: My big loser is the national security of the United States for the second year in a row. Last year, it was Edward Snowden and the compromise of the National Security Agency, cutting down their legitimacy. This year, it's the so-called torture report that the Democrats on the Senate Intelligence Committee put out, led by Senator Dianne Feinstein, suggesting that CIA's response to 9/11 was a mistake. The good news, the American people are not buying it. Polls show they still want both agencies to protect them.
GIGOT: All right.
So my big loser is the government, the federal government, particularly confidence, public confidence in government, from the disastrous ObamaCare rollout, the Veterans Affairs scandal, and even the Secret Service, the vaunted Secret Service, who let an intruder into the White House proper. We saw the government look inefficient, corrupt, dishonest, and incompetent this year. No wonder the faith of the American public has gone down. We need a smaller government that is a more effective government.
We have to take one more break. When we come back, our panel's picks for the biggest winners of the year.
GIGOT: Time now for our biggest winners of 2014.
Bret, break type and tell us who you like?
STEPHENS: It's not someone I like --
-- it's someone I detest.
But the big winner of the year is Omar al Baghdadi, for sure. The man emerged from nowhere, to be precise, from an American prison, not only to start this extraordinary terrorist movement but to really initiate the beginning of an Islamic State, even an Islamic caliphate. He has seized more territory in a shorter space of time than anyone I can think of since maybe Hitler marched into France in 1940. He is a terrifying threat to the world. He needs to be taken with the utmost of seriousness. Without question, few people left a bigger geopolitical mark than this terrorist.
GIGOT: All right.
STRASSEL: Surprising as this may sound, my big winner is Congress. I bestow that honor for it having accomplished the remarkable fete of having done almost no damage to America this year.
It's extraordinary. Normally, when Congress is rolling, especially over the last six years, we've got cliffs, we've shutdowns, we've got grand compromises. They managed to get through 2014 without doing most of that. All in all, a good result. We'll see if the Republicans can change that equation.
GIGOT: All right.
FREEMAN: I think the big winner of the year is the U.S. consumer. Oil prices dropping roughly in half since the summer. And as we mentioned, no new Internet taxes. So it's a good year.
GIGOT: You're pretty happy about that. All right.
HENNINGER: Well, my winners of this year's Nobel Peace Prize, Malala, the 17-year-old Pakistani woman who had been shot in head by the Taliban but survived to continue her defense of human rights. And I think, after the murder of the school children in Peshawar this year, Malala's Nobel Prize is especially poignant.
GIGOT: All right.
My big winner is an American CEO. We can't ignore the private sector entirely on this show.
I guess, James, getting a little ahead. So we like the private economy. So I'm going to pick Tim Cook, the CEO of Apple Computer, who took over from the legendary Steve Jobs. And a lot of people predicted him for failure. But instead, the company has kept rolling out new product after new product, iPhone after iPhone. It's now market capitalization is $640 billion. The biggest company by market cap on the face of the earth. And so it's been a splendid performance. And what's great to see that an American company can still show the world, lead the world in innovation, even in consumer products.
You guys all have one of those, don't you?
GIGOT: You don't. We have to get Henninger something --
HENNINGER: I got mocked for not owning one.
GIGOT: Still typing on your Blackberry?
HENNINGER: Still typing on my Blackberry.
GIGOT: All right.
And remember, if you have your own winner or loser of the year, be sure to tweet it to us at JERonFNC.
That's it for this week's show. Thanks to my panel and to all of you for watching. I'm Paul Gigot. Happy New Year. We hope to see you right here in 2015.
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