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Journal Editorial Report

Is America still the best place to invest?

This is a rush transcript from "Journal Editorial Report," August 29, 2015. This copy may not be in its final form and may be updated.

STUART VARNEY, GUEST HOST: This week on the "Journal Editorial Report," the Biden buzz grows louder as new polls suggest new trouble for Hillary Clinton. Are some Democratic donors getting ready to jump?

Plus, a wild week on Wall Street. Stocks way down, way up, all over the place. Is America still the best place to put your money?

And the fight to raise the minimum wage is the latest and greatest liberal cause. So why is big labor looking for an out?

Find out after these headlines.

(FOX NEWS REPORT)

VARNEY: Welcome to the "Journal Editorial Report." I'm Stuart Varney, in this week for Paul Gigot.

Well, the Biden buzz is growing louder with reports this week that the vice president is meeting with top Democratic fundraisers, key labor leaders, even Massachusetts Senator Elizabeth Warren as he nears a decision on a 2016 White House run. Some new poll numbers may help his case. They show him running stronger than Hillary Clinton against top Republicans, including businessman, Donald Trump, and former Florida Governor Jeb Bush.  Look at this. That same poll asks voters what word comes to mind when they think of Hillary Clinton, and "liar" tops the list.

Here with reaction, Wall Street Journal columnist and deputy editor, Dan Henninger; Washington columnist, Kim Strassel; and assistant editorial page editor, James Freeman.

Dan, the word "liar" is a very tough word association for any candidate to get over.

DAN HENNINGER, COLUMNIST & DEPUTY EDITOR: Yeah. As is the "untrustworthy." It is a problem, and I think that Joe Biden boomlet, really, Stuart, is a direct consequence of Hillary's problems and her decline in the polls. The Democrats are beginning to worry that there is no plan B. At the moment, Joe Biden is simply plan B. It could have been Elizabeth Warren before this. They're not very comfortable with Bernie Sanders. But the Democratic bench is very weak. Other than Biden, you might come up with John Kerry. Beyond that, there is no one. At the moment, the Biden boomlet is very hot.

VARNEY: They're stuck at the moment with Hillary.

HENNINGER: They are.

(CROSSTALK)

HENNINGER: She's raised over $130 million. She's got organizations out in states. It's a little difficult for me to see how Joe Biden walks in from the White House and takes over the campaign from Hillary Clinton as this point, unless another shoe drops on her.

VARNEY: Kim Strassel, did President Obama tilt ever so slightly towards Joe Biden because he knows something about the FBI investigation that we don't know but is very important?

KIM STRASSEL, WASHINGTON COLUMNIST: You know, it wasn't even just a tilt.  It was remarkable this week. The White House press conference, White House spokesman, he wasn't just polite about Biden. He was abusive about Biden.  Talking about how much the president admired him and how he was one of the smartest guys in politics. It does raise the question of what does the president know. This is a president who cares more than anything else about preserving his legacy from his time in the White House. He cares deeply about getting another Democrat in that position. If he does know something about what's coming down the pike in terms of that investigation and how that could damage Hillary Clinton, it could be that he is deciding to back another horse.

VARNEY: Do you think the president prefers Joe Biden at this point, flat out?

STRASSEL: I don't know if you are there yet. But, again, since no decisions have been made, what he is doing is making sure that all options are available. This is one point. You know, in addition to whether or not there's another shoe that drops for Hillary Clinton, imagine the president of the United States did decide to come out full bore for Joe Biden. That might make a big difference in fundraising and everything else.

VARNEY: Fair point.

James, why doesn't Hillary Clinton just come clean?

(CROSSTALK)

(LAUGHTER)

VARNEY: I'm not joking. Why don't you just say, yeah, I used a private server because I wanted to be in control and be private?

JAMES FREEMAN, ASSISTANT EDITORIAL PAGE EDITOR: And I wanted to keep from the American public the things I was doing. I think, in political terms, coming clean may not be an option for her because if her name was not Clinton, of course, she would be probably under a criminal investigation, if she's not now. We published in our paper this week a letter from career Foreign Service officer reacting to one of Kim's columns describing how seriously they took classified data and how harshly they disciplined people for much less egregious offenses than what we've seen with her setting up her own private network, walled off from public scrutiny. I think she may conclude that she's got to just do the traditional Clinton strategy of moving forward, stonewalling, and then once it comes out, pretending it's old news.

(CROSSTALK)

VARNEY: Kim?

STRASSEL: But this is the other problem. Stuart, she can't get it out.  She has now put herself in a situation where she's handed over these e-mail records to the State Department, and they are in control. They're under this rolling release scenario under court order and stuff is going to come out months after month after month.

VARNEY: That's the worst possible thing is the campaign drives along.

Dan, go ahead.

HENNINGER: I'd like to make one political point on Hillary's side of the ledger. In this Quinnipiac poll that everyone is talking about, the thing that really doesn't get much attention is the fact that Donald Trump was put in a head-to-head against -- with the American people, against Joe Biden, Hillary Clinton, and Bernie Sanders. Guess what? He loses to all three. He lost to Bernie Sanders. The Republican nomination at the moment is a morass with Trump leading, Ben Carson in second place. And I think the Clinton people can say, look, net-net their problems are a lot worse than ours right now. As long as Donald Trump is leading, we are going to be sitting pretty.

(CROSSTALK)

HENNINGER: -- the American people?

VARNEY: Kim, what happens if Joe Biden doesn't get into this race? Then what?

STRASSEL: Well, look, I think that there are some Republicans who, for a while, they wanted to see her pushed out. They were beginning to wonder if it isn't a better scenario for them in the long run. Their view is this primary will get sorted out and, hopefully, in a way that produces for them a good nominee. At that point, they could well be facing a former secretary of state and Democratic nominee who is still dogged by this scandal and, for whom most Americans, the first word that comes to their mind is "liar." They're not necessarily unhappy about that scenario.

VARNEY: James?

FREEMAN: Well, just to underline the Biden buzz, that boomlet, it's about Clinton weakness and not Biden strength. This is a guy who has run two national campaigns for the presidency. Here's how many delegates he got.  He pitched a shut-out. This is desperation on the part of Democrats.

VARNEY: We hear you. I like that word, "desperation."

All right, James.

Now, when we come back, after a week of big ups and big downs on Wall Street, some better-than-expected news on economic growth. Could it be that the U.S. is still the best place to put your money?

(COMMERCIAL BREAK)

VARNEY: It was a wild week on Wall Street, wasn't it? With stocks way up, way down, all over the place. Why? And is America still the best place to invest?

Let's bring in Wall Street Journal columnist, Mary Anastasia O'Grady.

3.7 percent annualized growth in the second quarter of this year. Started a big new expansion -- Mary?

MARY ANASTASIA O'GRADY, COLUMNIST: Well, it's a great number. And I'll tell you why it sounds so great. In 2008 and 2009, we had a recession, right? We had a big attraction in 2009. In 2010, the economy grew at a measly 2.5 percent. Since 2010, that is 11, 12, 13 and 14, we have not had even 2.5 percent growth. In the first quarter of this year, we didn't even make 1 percent. So the 3.7 percent is a fantastic number. It puts us at 2.2 percent for the year. But I'll tell you, Stuart, there are very few people who think we can keep that pace going for the rest of the year.

VARNEY: Wait a second, you don't think you can keep 2.2 percent --

O'GRADY: No, no.

VARNEY: -- or 3.7?

O'GRADY: That we can keep the 3.7. In fact, what's expected is that we're still going to come in somewhere in the 2 percent range, which is not enough to satisfy the huge number of people that we have unemployed or underemployed and to start to get the economy back. We should have had a very strong rebound off of such a big attraction. We never had that. I would say that the economy, we're happy about what this number, but I don't think we should overrate it. The bottom line is that the Fed is still keeping interest rates very low, and it can't do what we need, which is actually tax, trade and regulatory policy being more attractive to investors.

VARNEY: James, is America still the best place to invest?

FREEMAN: Well, I'm feeling more optimistic after this quarter because as we said, might be the way of a few years in a row here where we'll have a great quarter and then we're back to kind of the Obama era, new normal of 2 percent. What's interesting here is you have low oil prices, which a lot of people in the markets don't like if they were betting on higher prices, starting to really exert themselves, help the economy. You see consumers buying bigger cars, driving more, consumer spending coming up, also business investment, which has been lagging. The consumer and the businessperson are more confident now. Maybe that's because they're seeing the light at the end of the tunnel, the ultimate end of the Obama presidency year and a half from now. But --

(CROSSTALK)

VARNEY: Things are slowing down.

FREEMAN: Yeah, but --

VARNEY: Japan's recession, Europe's recession, I mean, we look -- I hate to say it, are we the prettiest horse in the glue factory? I know I shouldn't say that kind of thing.

FREEMAN: I think that has been -- you know, best house in a bad neighborhood, that's been the story for a few years. But let's not under estimate the power of $2 a gallon gasoline to get consumers fired up and spending.

VARNEY: OK, James.

HENNINGER: Stuart, when you say, is America the best place to invest, I mean, what do you suggesting that they invest in? I mean, if you're a business, sure, there's places to invest. If you are on Wall Street, a banker, or if you have a substantial amount of money, it's great. Maybe America is a great place to invest. The Federal Reserve has been running essentially zero percent interest rates for nearly six years. If you were an average person who normally invests in things like certificates of deposit or have your money in -- you are making no money at all. Then the zero-bound interest rates drove a lot of these assets, money into the stock market. The stock market has indeed risen, and then you have a week, like the one we've just been through, where you go down 1600 points over two days. And these poor people are saying what have I gotten myself into?  This partially in my mind, Stuart, really does explain the Donald Trump phenomenon. There are people out there, who are just normal, average people, who feel that the system is out of control. Why have they not been able to invest in a normal way that they always have in their lives the past six years? Because the Fed didn't want them to.

VARNEY: Mary.

O'GRADY: Well, if you look at what happened in 1937 when the U.S. fell back into recession again, the main driver of that was an administration that was hostile to business, that, whether it was on taxes, regulation, trade, it was against investors. I think that message has got to change.  I want to have the optimism that James has. But it doesn't happen because you catch up to 2.2 percent growth. It has to change by policy initiative on the part of government.

VARNEY: Yes, it has to be -- it has to be political change that introduces economy change.

Doesn't it, James?

FREEMAN: Yeah. I think if you look -- you could say we've started to see a turn, starting with last year's election. Maybe the war on business is starting to end now. Again, it's early days, but what's different about this quarter is that it suggests, as opposed to a lot of activity in the market lately in the last few years where people look to the Federal Reserve and China to pull the world economy, you have a sense that maybe we're getting back to what should be the normal, which is the U.S. economy leads the world.

(CROSSTALK)

FREEMAN: That's what we're hoping to see.

VARNEY: How could you possibly sit on and restrict the great American private enterprise machine for another few years. You can't do that, surely.

(CROSSTALK)

HENNINGER: -- to Hillary Clinton and it sounds like that's exactly what she intends to do, is continue the war on business.

VARNEY: On that note, we'll end this little segment.

(LAUGHTER)

Thank you very much, Henninger.

(LAUGHTER)

Still ahead, they're the driving force behind a nationwide campaign to raise the minimum wage, but now some unions want an exemption from paying their own members that high rate. The full story after the break.

(COMMERCIAL BREAK)

VARNEY: It's called the Fight for 15, the union-backed campaign to raise the minimum wage to $15 an hour in cities all across the country. So far, Seattle, Los Angeles and San Francisco are onboard. And this summer, New York City raised the pay of fast-food workers. But now those same unions are busy making sure they don't have to play by the new rules, lobbying for an exemption from these new wages.

James Freeman, tell me what's going on here.

FREEMAN: It's the continuing political fantasy that governments can legislate higher wagers and more wealth for all of us. You're basically seeing reality. Higher wages are mandated, companies can't just pass it along to customers, so they look for technology to reduce number of workers, cut their hours. That's what you're seeing at McDonald's and Wendy's. At the same time, unions, who have been pushing all of these minimum wage increases, are saying they want to be exempted from it. I think it doesn't make any sense unless you hypothesize that they're really not about workers' welfare, they're about power and dues for themselves, and this is a way to gain market share by being able to undercut the new legislative minimum.

VARNEY: They're saying to employers, hey, you don't have to pay the $15 an hour if that worker joins this union. That's basically it, isn't it?

(CROSSTALK)

FREEMAN: That's our hypothesis because it's very bizarre behavior, isn't it? You have unions saying you have to make these wages higher, oh, except for us. Why do they not want higher wages for their own members? I think the only explanation is, what they really want more than worker welfare, worker income is dues. And the more members, the richer the unions get.

VARNEY: Dan, an interesting development from the National Labor Relations Board, out with a big ruling this week. What did they say and what's the impact on business?

HENNINGER: Well, this ruling, which I must point out was based along partisan lines, three Democrats to two Republicans, say if they affected businesses like franchises, it says that the parent company, say McDonald's, is now responsible for the wage and labor practices of all of their franchises which, by and large, are independent businesses. If that were true, if that holds, it will give the unions a huge lever to go in and start unionizing most of these businesses, if the parent company is responsible. It would affect restaurants, hotel businesses, part-time workers. It would completely disrupt a business model that is currently driving much of the economy, and it is an extraordinarily important decision. The question is, how are they going to be able to turn this around, because you cannot get a bill to overturn it through the Senate at this point.

VARNEY: At this point, you can't overturn this thing. You can't change it.

HENNINGER: You can appeal it legally but that is a tortuous process, probably taking a couple of years.

VARNEY: Mary, is it a purely political move on the part of the administration which is representing the unions to get inside more businesses? Is that it?

O'GRADY: It certainly seems that way. It's obviously a very populous move and it will hurt the weakest people in our society, not the politically powerful people. If you are an unskilled worker and you need your first job, whether you're in high school or you're a college dropout, and you need a job, it's going to be harder and harder to find a job. If you're an employer who can hire two people at $7.50 an hour or one person at $15 an hour, you've just knocked off one job. And also, there are plenty of states in the south where the cost of living isn't as high, and so having a federal minimum wage at that level, again, is good for sound bites because it's sort of this idea that everybody is going to be richer. But what it means, actually, fewer unskilled people will be employed.

VARNEY: It sounds like a big, last-minute, desperate push to get the $15 minimum wage in there, get the NLRB in there before the change of politics in 18 months' time.

HENNINGER: They installed the $15 minimum wage for hotels in Los Angeles a couple years ago and Moody's reported that, for the first time, job growth in hotel workers is down 2 percent over the past six months.

VARNEY: I do believe that tells the story.

Thanks, everybody.

We have to take one more break. And when we come back, our "Hits & Misses" of the week.

(COMMERCIAL BREAK)

VARNEY: It is time now for our "Hits & Misses" of the week.

And, Kim, first to you.

STRASSEL: Stuart, yet another miss to the Obama green energy program. The EPA inspector general released a report this week about Solyndra, that infamous solar panel maker that took a gigantic federal loan guarantee from the government and then went bankrupt. The I.G. found out that a decree that not only had Solyndra management misled government officials about its finances and prospects but, more importantly, that those government officials missed clear warning signs about the company because they were so eager to push out a new loan. More evidence, Stuart, that government should not be a venture capitalist, not only because of the political pressure but because when you're playing with other people's money, taxpayer money, you make bad calls.

VARNEY: And sooner or later, when you get Socialism, you run out of other peoples' month.

(LAUGHTER)

I think Margaret Thatcher said that.

Mary, hit or miss?

O'GRADY: This is a miss for Venezuelan president, Nicolas Maduro, who is generating a hateful witch-hunt against foreigners in order to explain his country's economic crisis. This week, he deported some 1,000 Colombians.  He's threatening to close the border. Now, Maduro is not the first populist demagogue to scapegoat immigrants and blame his neighbors for economic weakness. But in Venezuela, as in any other country, scapegoating foreigners will not cure what ails the economy.

VARNEY: You've got that right.

Dan?

HENNINGER: My myth is to the Russian consumer protection authority.  Believe it or not, there is such an agency in Russia.

VARNEY: No.

(LAUGHTER)

HENNINGER: And they decided this week that they would order all foreign- made detergents removed from supermarket shelves in Russia, which meant Procter & Gamble laundry detergent was gone. So the Russian people, to their credit, took this in stride and started taking photographs of themselves with big, brown blocks of Soviet-era soap sitting in front of them --

(LAUGHTER)

-- and people sitting hoarding cans of bottles of Procter & Gamble detergent.

(CROSSTALK)

VARNEY: You my vote for the best "Hits & Misses" of the week. Excellent, Dan.

(LAUGHTER)

And if you have your own hit or miss, 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 Stuart Varney. Catch me weekdays on "Varney & Co.," the Fox Business Network, 9:00 a.m. sharp. Paul is back next week.

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