This is a rush transcript from "Journal: Editorial Report," October 1, 2016. This copy may not be in its final form and may be updated.
PAUL GIGOT, FOX NEWS HOST: Welcome to the "Journal: Editorial Report." I'm Paul Gigot.
Both Donald Trump and Hillary Clinton took their campaigns to battleground states last week following Monday night's face off at Hofstra University at Long Island. It was the most-watched presidential debate in history. And both candidates landed some blows, with Hillary Clinton going after Donald Trump for refusing to release his tax returns and Donald Trump attacking Clinton for her record in Washington.
(BEGIN VIDEO CLIP)
HILLARY CLINTON, D-PRESIDENTIAL CANDIDATE: Maybe he doesn't want the American people, all of you watching tonight, to know that he's paid nothing in federal taxes because the only years that anybody's ever seen were a couple of years when he had to turn them over to state authorities when he was trying to get a casino license and they showed he didn't pay any federal income tax.
DONALD TRUMP, D-PRESIDENTIAL CANDIDATE: That makes me smart.
CLINTON: So, if he paid zero, that means zero for troops and zero for vets, zero for schools or health.
TRUMP: I'll just ask you this, you've been doing this for 30 years. Why are you just thinking about these solutions right now? For 30 years, you've been doing it, and now you're just starting to think of solutions. I will bring --
TRUMP: Excuse me. I will bring back jobs. You can't bring back jobs.
CLINTON: Well, actually, I have thought about this quite a bit and --
TRUMP: Yeah, for 30 years.
(END VIDEO CLIP)
GIGOT: Joining the panel this week, Wall Street Journal columnist and deputy editor, Dan Henninger; editorial board member, Dorothy Rabinowitz; Main Street columnist, Bill McGurn; and Potomac Watch columnist, Kim Strassel.
So, Kim, you saw the debate. Who is coming out of this debate with the most momentum this week?
KIM STRASSEL, POTOMAC WATCH COLUMNIST: I was among those that thought that Donald Trump did what he needed to do, talked to the people that he needed to talk to in that debate and, in some ways pass, that hurdle of showing himself as presidential to an extent. That being said, I think Hillary Clinton landed some blows during that, which had dominated this week's news cycle, for instance, the tax question --
STRASSEL: -- which has continued to dog Mr. Trump. Also, this question of the Miss Universe person that Donald Trump was -- she felt was too rough on at some point, and she has now since been vetted in a bunch of Hillary Clinton events and talks. So this is I think, in some ways, has taken over from Donald Trump talking about his policies and issues this week.
Dorothy, the tax return question was -- she really carved that one up. She thinks that's a big advantage.
DOROTHY RABINOWITZ, EDITORIAL BOARD MEMBER: Yes, well, it is a big advantage, but it wasn't really the issue. It was what they call the optics. Here you saw this extraordinarily composed Hillary Clinton and you had Donald Trump interrupting, and it did not look good visually, it did not look tonally. I have a lot of trouble believing that there was much that Donald Trump came away with outside of the blows he landed in initially.
GIGOT: On the economy?
RABINOWITZ: On the economy.
GIGOT: On the economy.
Dan, let's talk --
GIGOT: Go ahead.
DAN HENNINGER, COLUMNIST & DEPUTY EDITOR: I was going to say, let's talk about the raw politics of this. Right after that debate, and this week, her super PAC, Priorities USA, has been saturating battleground states with Trump tax videos, Florida, Ohio, North Carolina --
GIGOT: These are the tax returns issues?
HENNINGER: These are the tax return issues. We've said many times, Trump does not have the resources to counteract those ads with his own ads in those states, so she is using this process to define him. And we always worried that Trump wouldn't have the resources to counteract that in those battleground states, on the ground where voters are seeing it.
GIGOT: We warned, Bill, we warned Trump and the Republican voters in the primaries, release your tax returns early, just like we warned Mitt Romney four years ago, get your tax returns out there, have them vetted, have the issues. Whatever hits, you're going to take, get them out nine months before the election, not two months.
BILL MCGURN, MAIN STREET COLUMNIST: Right.
GIGOT: And now he's taking it because she can make up whatever she wants about his taxes because they aren't out there.
MCGURN: I say three things. One is, yes, he hasn't released his tax returns. I don't think he's going to release his tax returns.
GIGOT: I agree with that.
MCGURN: I'm not sure it matters. I also think people watch these debates differently from you and I. I don't know about you, but when I watch the debates, I have a computer screen of instant snark from Twitter and e-mail from family. I'm not sure people watch it in quite the same way. They're looking for general impressions. What I thought was Donald Trump's weakness was we saw Donald Trump on defense a lot of that evening. That's a new Donald Trump. He's always on offense Donald Trump. When he's on defense, I hate to say it, like the Notre Dame defense --
-- he's not getting the job done.
GIGOT: A Notre Dam grad there.
But is he -- Dan, you wrote this week about the change theme. That's one thing that Trump was hitting on very hard. Did he score with that?
HENNINGER: I think he scored some points. He scored enough to keep his head above water, talking about her 30 years of political experience with very little to show for it, attaching her to Washington, saying that on the extraordinary amount of urban violence taking place in the country right now, she's talking about gun control, and he said, look, you won't say law and order, and we know we need law and order. That it how, what I think puts him in synch with the mood of the country and she's struggling to get in synch with that mood.
GIGOT: Dorothy, that would seem to be a place where he did score points.
What do you think?
RABINOWITZ: I don't think he actually scored those points because he said them before and the context in which he scored them was so questionable. He looked so uncomfortable scoring them. And every time that Mrs. Clinton opened her mouth to respond, it was with the most extraordinary, vulnerable look, not the person who had pneumonia, but a very radiant different kind, and those things matter. The vision of this candidate, who has always been terribly strong, looking flustered, sighing, sniffling, all the rest of that, that matters.
GIGOT: Kim, sighing, sniffling, was it a visual difference that put Trump on defensive?
STRASSEL: No, I think I would have to disagree with that. The biggest problem for Trump in that debate was missed opportunities. I agree. He sent a message on change that was a valuable one to get out there, but one of the things he has hit on so effectively in the campaign up until now is talking about Clinton corruption and the risk of having the Clintons back in the White House, and yet we heard only a kind of passing reference or two to her e-mail scandal. He never brought up the Clinton Foundation. So these were some moments that he really I think could have drilled home some messages to the American people, but for whatever reason, he chose not to.
GIGOT: And Alicia Machado, the former Miss Universe, Trump can't seem to let that issue go, and Hillary Clinton has almost made her her running mate now instead of Tim Kaine. That's in every ad and every meeting, their conference calls with reporters they have.
Why can't Trump let that go?
STRASSEL: It's another personal thing. This is how he operates. When people directly challenge him on something to do with his business or his past, it seems to get in his head, but -- and he has allowed this to overwhelm the airways by continuing. He's still talking about it. So, I mean, he's got to get back on the policy issues.
GIGOT: OK, Kim, I think that's good advice.
With the first presidential debate behind us, the running mates take their turn in the spotlight as Senator Tim Kaine and Governor Mike Pence gear up for Tuesday's vice presidential showdown. A look at what each candidate brings to the ticket.
GIGOT: With the first presidential debate behind us, all eyes are on the running mates this weekend as Virginia Senator Tim Kaine and Indiana Governor Mike Pence prepare for Tuesday night's face off at Longwood University in Virginia. So just what have these two brought to the presidential tickets and will their performance Tuesday night make a difference in this tight race?
So, Bill, you know the cliche about vice presidents is you only want to hear from them three times, when they're announced, when they give the speeches at the convention, and then the debate. And if you hear nothing else, then they've done their job.
MCGURN: Right. On the other hand, the classic thing is that the vice presidential debate doesn't matter unless someone blows it or looks stupid on TV or has an Aleppo moment as Gary Johnson had.
On the other hand, this is such a tight race. You don't know what's going to affect people at the margins. And if it's spirited -- I mean, these guys are so opposite, the top of the ticket. Usually, you look for things together. At the top of the ticket, you have this hot sauce and, at the bottom, you have these mild-mannered middle-aged men.
It's very different.
GIGOT: So how do you think -- let's take Pence and Kaine in turns. How do you think Pence has done so far?
HENNINGER: I think he's done just fine. He was especially good at the convention. I think that, given the interest in this election, that debate is probably going to get pretty good viewership. And what they're likely to see is a Mike Pence who is able to articulate the Trump agenda on lowering taxes and why we need to lower taxes and why we need to help the economy by a deregulation. He can talk articulately about national security. Let's face it, in effect, it makes him Donald Trump's interpreter, no question about it.
GIGOT: Does that make Trump look good or bad?
HENNINGER: It connects people who are starting to find a reason to vote for Trump, build a better understanding of why they would vote for him rather than Hillary Clinton. What is at stake beyond those two personalities such as the economy?
GIGOT: Maybe Trump can pick up a few lines from Pence.
HENNINGER: He better be watching.
GIGOT: Dorothy, Tim Kaine, how do you think he's done as an advocate for Secretary Clinton.
RABINOWITZ: I think he's done less well than Mike Pence, and that is a great surprise. Here is this lively, vital man walking around with the right attitudes, and here is this buttoned-down person, who is Mike Pence, who actually does the service of supporting his candidate in a very elegant way. And he has the harder job.
He is the guy that has to pour the water on all of this explosiveness, and he does it with some kind of magical skill and confidence. That's not to say Tim Kaine doesn't do it well. He's a deal maker and charming, and he's almost middle-of-the-road, and he can bring Virginia along with a few points. He is the Senator in Virginia.
GIGOT: The thing about Tim Kaine that might be effective in the debate, Kim, is he sounds -- he looks like a bit like a Dominican friar, nice guy, but he can deliver really nasty hits nonetheless in politics.
GIGOT: But it doesn't sound nasty.
STRASSEL: No, I mean, it's been a very interesting race, so far, because one of the things that vice presidential candidates do for the person who hired them is they are the attack dogs. But what we have in this case here, which is odd, is that the people at the top of the ticket, Trump and Clinton, are good at attacking each other on their own. So they've been playing very different roles. For Mike Pence, for instance, a very behind- the-scenes role and he's been crucial in shoring up support for Mr. Trump among members of the House and Senate and Republican caucus. He's been out there working down-ballot, being the person who appears with Senate candidates and House candidates up for reelection. And Tim Kaine has been doing an interesting thing, too. He's been the outreach person for Hillary Clinton, going along and meeting with some of the smaller groups like minority groups like the LGBT community and people with disabilities community, trying to collect every little faction of the Obama coalition and pull them in. So, they're playing very different roles here.
GIGOT: One of the things, Bill, I expect Kaine to do is try to separate Pence from Trump on issues.
GIGOT: Particularly on trade, for example, and others.
MCGURN: And similar in the way we saw at the Democratic convention where Donald Trump was presented as the aberration. Look, it seems to me Tim Kaine's job is to make Hillary likeable enough for a lot of people --
GIGOT: Do you think that's going to work.
MCGURN: -- and Mike Pence, further to what Dan was saying, at the margins. Trump is struggling with about people who identify as Republicans and they're worried. They might have -- they might not identify with Donald Trump, but they might identify with Mike Pence.
HENNINGER: And I think they've been both used in a more pointed way than vice presidents normally are. Kaine and Pence are doing turnout out there. Pence was out in Arizona talking to Christian conservatives. Tim Kaine was down in Miami-Dade College talking to Millennials, college students. He went into Texas because they think Texas is tightening. I think both of these really rather attractive politicians are being used to try to generate enthusiasm and turnout in the battleground states.
GIGOT: Dorothy, last word.
RABINOWITZ: The one thing about Mike Pence, the one thing he does is separate himself when it matters, as when he said, yeah, I personally do believe Barack Obama was born in the United States. He's managed to maintain his dignity in a really serious and useful way.
GIGOT: OK, Dorothy.
Thank you all. Thank you very much.
When we come back, FBI Director James Comey in the hot seat amid questions about his handling of the Hillary Clinton e-mail case.
(BEGIN VIDEO CLIP)
JAMES COMEY, FBI DIRECTOR: You can call us wrong, but don't call us weasels. We are not weasels. We are honest people.
(END VIDEO CLIP)
(BEGIN VIDEO CLIP)
REP. TREY GOWDY, R-SOUTH CAROLINA: When you have five immunity agreements and no prosecution, when you are allowing witnesses who happen to be lawyers, who happen to be targets to sit in on an interview, that's not the FBI that I used to work with.
COMEY, FBI DIRECTOR: I hope some day when this political craziness is over, you will look back again on this, because this is the FBI you know and love. This was done by pros in the right way.
(END VIDEO CLIP)
GIGOT: FBI Director James Comey in a heated exchange with South Carolina Congressman Trey Gowdy. Comey faced a grilling on Capitol Hill Wednesday following revelations that the FBI granted immunity to Hillary Clinton's top aids as part of its probe into whether she mishandled classified information during her time as secretary of state.
We're back with Dan Henninger, Bill McGurn, Kim Strassel. And Wall Street Journal editorial board member, Collin Levy, also joins us.
So, Collin, let's start with the immunity question. Was the way that this was handled by the FBI normal?
COLLIN LEVY, EDITORIAL BOARD MEMBER: No. Nothing about this was normal, Paul. I think that's what everyone is so upset about here. You have a lot of lawyers out there looking at this and saying this is not the way we handle immunity deals. This doesn't look like anything we recognize. I understand he's trying to say he's not a weasel, but the thing is, in every situation where there was a questionable judgment, they all seems to sort of go in Hillary Clinton's favor. When you hand out immunity deals, you do it typically in pursuit of a larger prosecution, and so to hand out as many as they did as easily as they did without actually prosecuting anyone just-- you know, it smells.
GIGOT: In a hearing, Comey said, Collin, that he, that the FBI didn't make those decisions on immunity. This was just the Justice Department deciding it. And yet, it's really unusual for the FBI to advocate, influence in that kind of decision, because the FBI is conducting the investigation.
LEVY: Right, for sure. Comey seemed to be wanting to take his lawyer hat on and off here. This is exactly as you say, it would be very strange for the Justice Department to make that decision without having some consultation with the FBI where they said, well, this is what we're going to do, how is it going to affect your ability to investigate.
Bill, you were very critical of this, this week.
GIGOT: Why did Cheryl Mills even need immunity if, as her lawyer --
MCGURN: That's the question. This was not testimony. Usually, immunity is given -- this is evidence.
Look, James Comey, I think, just raised more questions about what the FBI does. The FBI investigates. DOJ prosecutes. But he wasn't shy when he called a press conference to effectively take the indictment decision away from the DOJ. Now, on every issue, he says, oh, it wasn't my call.
They had 12 people in on this interview. It was a circus. The question is, did he push back. I mean, the U.S. attorney usually works with the FBI. Did he push back on any of those things, because this involved the integrity of his investigation, the interview?
MCGURN: And we know the FBI had issues, because one agent asked Cheryl Mills questions and she stormed out of the room when she was being interviewed and then came back and didn't have to answer them.
GIGOT: What else did we learn that you found striking this week, Kim, during the hearing?
STRASSEL: One of the most important things was that Mr. Comey essentially admitted that Cheryl Mills and Heather Samuelson got these immunity deals because they are acting in a capacity of Hillary Clinton's personal lawyers and therefore are claiming attorney-client privilege. So they, in essence, said we don't have to turn anything over to you. The only way the Department of Justice and FBI can get a hold of their laptops was therefore to agree to their terms of immunity.
GIGOT: How convenient. OK, they are her aids, who are crucial as witnesses in this case, and they can say we're representing her as her lawyers. I mean, you get both -- you get a coming and going.
STRASSEL: Yeah. You get it all, which, by the way, was purposeful. The Clintons do this all the time.
But I think the important thing here is that the FBI has allowed that to stand. They would never tolerate this in any other case. I mean, the only reason Cheryl Mills is getting away with this is because she claims she didn't know about Hillary Clinton's server until after she left the State Department. There's proof that that's not true. But rather than go after her for perjury, rather than impanel a grand jury and force her to hand over her laptop, Comey just wanted this to be easy, quick and go away.
GIGOT: Dan, most of the press corps has basically said we don't want to think about this or talk about it, but this goes to the core of the integrity of law enforcement and the Justice Department. The reason we give FBI directors 10-year terms is so they can be independent of these kinds of political influences.
HENNINGER: Yeah. Paul, some of this should sound familiar to you. This is the origins of the word "Clintonian."
And what I'm talking about is the way the Clintons handled the Justice Department during his presidency during the 1990s when Janet Reno was attorney general. This was the biggest complaint about Bill Clinton in those years that the Justice Department and federal lawyers were deployed on behalf of the Clinton's personal problems, such as the Whitewater scandal. We have been through this for years with the Clintons, and now it's back with the e-mail sever. And this is what Donald Trump should be talking about, not Miss Universe.
GIGOT: Do you think he'll take it up, Bill?
MCGURN: I don't know. It is part, as Dan says, of the overall corruption. Look, I think, again, Cheryl Mills, people understand this. She was a witness. This is like having Tom Hagen, the mob lawyer for Don Corleone --
GIGOT: Don Corleone.
MCGURN: -- serve. I mean because you use attorney-client privilege to hide information about who's getting whacked or something. It's just unprecedented for the Department of Justice to allow that when they're so vigilant about conflicts of interest in other prosecutions.
GIGOT: Collin, very briefly, should he have impaneled a grand jury to do this and go at it that way?
LEVY: Yeah, I think that would have been a lot more illuminating. I mean, quite frankly, what you see here is that the Clinton campaign just wasn't going to cooperate. That's why they got immunity deals because they weren't cooperating. It's just about as simple as that.
GIGOT: OK, thanks a lot, Collin.
Still ahead, it's a top concern for many voters, so just how do Donald Trump and Hillary Clinton plan to create jobs and jump-start a sluggish economy? We'll take a closer look at their economic proposals when we come back.
(BEGIN VIDEO CLIP)
CLINTON: We have to build an economy that works for everyone, not just those at the top. That means we need new jobs, good jobs, with rising incomes. We also have to make the economy fairer. That starts with raising the national minimum wage, and also guaranteed, finally, equal pay for women's work.
Let's have paid family leave, earned sick days. Let's be sure we have affordable child care and debt-free college. How are we going to do it? We're going to do it by having the wealthy pay their fair share and close the corporate loopholes.
(END VIDEO CLIP)
GIGOT: That was Hillary Clinton laying out her economic agenda in Monday night's debate. The Democratic nominee is promising to create new jobs while making the economy fairer. Her plan includes a higher minimum wage, paid family leave and debt-free college. So can she pay it for it all by raising taxes on the wealthy and closing corporate loopholes?
Let's ask Austan Goolsbee. He's the professor of economics at the University of Chicago and former chair of President Obama's Council of Economic Advisors.
So, Austan, good to see you. Thanks for coming in.
AUSTAN GOOLSBEE, PROFESSOR OF ECONOMICS, UNIVERSITY OF CHICAGO & FORMER CHAIR, PRESIDENT OBAMA'S COUNCIL OF ECONOMIC ADVISORS: Yeah, thanks for having me back.
GIGOT: OK, so what is the difference between President Obama -- between Hillary Clinton's economic agenda and President Obama's?
GOOLSBEE: Well, I'd say there's several specific policy differences. I'd say, in spirit, the idea that we want to have the economy grow in a way that's broad based so that it includes a lot of people and get middle class incomes. That part I think the direction is the same. Some of the major policy differences are Hillary Clinton's proposed a quite significant investment in infrastructure, highways and bridges, ports and that sort of thing. She's got this debt-free college idea and a series of things that around women in the workforce, family leave, child care, early education, all three categories the president hasn't proposed, so those are a little different.
GIGOT: OK. So as I see the infrastructure plan -- and she has proposed a big one -- that sounds like to me like what happened in 2009 with the stimulus plan. It's basically a plan --
GIGOT: -- the government does the investing and that's how you get economic growth. Is that not --
GOOLSBEE: I don't think that's fair.
GIGOT: OK. How is it different?
GOOLSBEE: I think it's a little different on both sides. So you see Hillary Clinton proposing not just that the government spend the money, she's proposed an infrastructure bank that's trying to leverage private- sector money so that you can get more infrastructure and higher bang for the buck and some things like that. And in the stimulus, in 2009, the intention at that time, as you know, because you were critical about it --
GOOLSBEE: -- but the intention was to try to get things that could be immediate that we could just get out on to the plate, as it were, in the midst of this down turn in a fast way. The Clinton effort is about a longer-term investing in infrastructure. It's not intended to be short-run stimulus infrastructure. It's intended to rebuild the backbone of the country.
GIGOT: Now here's the -- she's going to pay for it, she says, she's going to increase taxes on investment and high earners, raising, for example, the capital gains tax, among other things. One of the features of this economic recovery that I've notice, most economists have noticed, is capital investment, business investment has been disappointing. It's been there, but it's been lower than in a lot of other recoveries. How does raising taxes on investment increase investment?
GOOLSBEE: Well, the first thing I'd say about that, I think you're characterization is somewhat accurate that business investment capital expenditure has been relatively disappointing in this recovery. That has been true over the last two recoveries that we're trying to wrap our heads around in the economic sense. Is there some fundamental shift going on that businesses are -- maybe they're buying more computers, more software or a service or something and they're buying less machinery. I don't think that the capital gains rates on individuals and their stock investments has very much direct impact on companies deciding whether to build factories and do capital investments. As you know, the tax costs of capital for business investment is about the lowest it's ever been on both the tax side and the interest rate side, all of those things, we're as pedaled to the medal as you can get. That's not what the problem has been. The problem has been a lack of demand around the world and in the United States, and we need to get growing again before businesses are going to overcome their reluctance to build over capacity the way they did before --
GIGOT: I guess I would argue that it's also related, the reluctance in businesses to investment, is uncertainty cause by regulation. But let's take one more --
GOOLSBEE: I know you would, and you've said that before, but I would just highlight the fact that you observe that phenomenon happening in all the advanced economies of the world, including ones where they didn't pass Obamacare and they didn't make regulatory changes, I think strongly suggests it's about global aggregate demand and not about regulation in any way.
GIGOT: This is where we have a fundamental disagreement about supply.
But let me ask you one other tax element where you might be able to get an agreement between President Clinton and Congress, and that is cut the corporate tax rate in a way that gets the $2 trillion of corporate income that's stuffed overseas, bring it back. Why hasn't she proposed that kind of a tax cut, because even President Obama and Jack Lew say that would be helpful?
GOOLSBEE: Well, wait a minute. The president and Jack Lew and the Republicans in Congress, when we were engaged in negotiation over corporate taxes, I agree we could find a way to broaden the base and lower the rate, and that would be an attractive reform of corporate taxes. Neither of those parties that you're describing proposed any kind of repatriation holiday of that foreign money. And I think we should be open to all ideas and let's examine them. For the people who think there's a huge cash of free money, I would just highlight two things. One, half the money sitting on corporate balance sheets now is already domestic. It's not being used and it's already sitting here. So I think it's far more likely that you would give this huge tax giveaway to get them to bring the money back to the U.S., and then we would be talking about, well, why is the money sitting here being unused in the U.S. And the second is companies do repatriate money now. The Congressional Budget Office has estimated this idea not as a windfall gain. They actually say that costs money over 10 years to do that.
GIGOT: All right.
GOOLSBEE: So we can't use it for something. We've got to find a way to pay for it.
GIGOT: Well, we've got to also find a way to grow the economy.
Thanks, Austan Goolsbee. I appreciate your coming in.
GOOLSBEE: Yeah, it's always great to see you.
GIGOT: All right, still ahead, the other side weighs in. Trump economic advisor, Steve Moore, on the Republican's plans to cut taxes and create jobs, when we come back.
(BEGIN VIDEO CLIP)
TRUMP: Under my plan, I'll be reducing taxes tremendously, from 35 percent to 15 percent for companies, small and big businesses. That's going to be a job creator like we haven't seen since Ronald Reagan. It's going to be a beautiful thing to watch. Companies will come, they will build, they will expand, new companies will start. And I look very much forward to doing it. We have to renegotiate our trade deals and we have to stop these countries from stealing our companies and our jobs.
(END VIDEO CLIP)
GIGOT: Donald Trump touting his plan to cut corporate tax rates at this week's debate while promising to renegotiate U.S. trade deals with countries he claims are stealing American jobs.
Steve Moore is a Trump senior economic advisor and a former "Wall Street Journal" editorial board member.
So, Steve, you heard --
STEVE MOORE, SENIOR ECONOMIC ADVISOR, DONALD TRUMP PRESIDENTIAL CAMPAIGN:
You heard Austan Goolsbee.
MOORE: I did.
GIGOT: How do you respond to his points that this is all just a demand problem and if you just gin up government spending, that'll boost growth?
MOORE: A couple of things. First of all, I think you guys nailed it on the editorial page three or four weeks ago when you put a headline in your editorial about Hillary's plan that said, "Hope with no change. When you listen to what Austan just said, and what Hillary said on Monday night, it was basically we're going to do what we've done for the last eight years and hope this time it works. A couple of things. First of all, is there really anybody who thinks that a big tax increase of $1.5 trillion is what an economy that's been growing 1 percent to 1.5 percent needs now? You can quibble with some of the things that Trump wants to do, but I don't see the logic of a major tax increase.
One of the things Austan said that I thought was incorrect when he was talking to you was when he said the tax cost of capital is the lowest it's ever been. That's absolutely not true. Remember, Paul, when Obama came into office, the capital gains tax rate was 15 percent. Obama raised it from 15 to 20 and then 24 percent with Obamacare. That's a 60 percent increase in the tax on investing and capitol. Also the --
MOORE: - individual tax rates went up and those are taxes paid directly by business. So you summarized the very problem in the economy very well, businesses are not investing. They are profitable, Paul. They're just not reinvesting that money in the economy.
MOORE: I think it's partially because of taxes and partially because of regulation.
GIGOT: Let me take something up with you on Trump, and that is, when he started on the economy, he spent most of his time in that answer on the economy talking about trade.
MOORE: Right, right.
GIGOT: He did mention taxes. He mentioned regulation very briefly. But mostly, he focused on trade. Is this telling the American people that Donald Trump really thinks that renegotiating trade deals, renegotiating NAFTA is the number-one economic priority we have?
MOORE: Well, look, you know me, Paul. I'm a free trade person. And I've told Donald Trump that from the start, so I don't entirely agree with him on trade issues --
GIGOT: No, but I'm talking about, you talk to Trump --
MOORE: Yeah, yeah.
GIGOT: -- is this his priority or not? What is his priority?
GIGOT: Is it taxes or regulation or trade?
MOORE: I believe, and I think he does -- and he said this in the debate -- one of the big problems with our trade imbalance and the fact that we're importing so much more than we're exporting, is the tax code. In other words, what I told him -- and I think he wants to go in this direction -- if we fix the tax plan and we're taxing things that come into the United States rather than what we produce and export, as other countries are doing, you can level the playing field, and he said that in the debate.
The other thing is, if you get the regulatory structure fixed -- I'll give you one statistic. The National Association of Manufacturing said that every manufacturing job comes with $18,000 of regulations, Paul. That puts America at a severe disadvantage. So I believe you bring these businesses back through tax and regulatory reform. But, look, he has made it clear he does want to renegotiate some of these trade deals.
GIGOT: OK, all right. And I think that's going to harm growth, not enhance it.
But let's talk about the tax plan.
MOORE: All right.
GIGOT: I want to clarify a point here. Donald Trump is proposing to cut the rate from 35 percent to 15 percent. I think, you think that would help growth.
GIGOT: But there's an ambiguity about how that rate would apply to small businesses, OK, who now currently pay taxes, under the individual tax code. So would that 15 percent rate apply not just to General Electric but also to the hardware store owner?
MOORE: Why it's so important, just a quick point about this -- I learned this from reading your editorials -- we have the highest corporate tax rate in the world --
MOORE: -- and it is leading to companies leaving the United States. If you cut that rate to 15 percent, you'll get a lot of those businesses come back to the United States. It's the heart of our plan.
Now, what Donald Trump told Larry Kudlow and I and others, when we put this plan together, is I want to make sure small businesses benefit as well. So we have a 15 percent rate for small businesses and Subchapter S's and so on, but the stipulation is you have to reinvest the money back in the company. If you have profits and you put that money back in the company, hiring more workers or building a new plant or investing in machinery or trucks or something like that, you're going to get a 15 percent rate. If you take it out in the form of a dividend or you take it out in the form of some kind of wage and salary, it will be taxed at the individual rate. And by the way, we cut those as well. So it's a big bargain for businesses and we think it's going to be a huge job generator.
GIGOT: OK, but it only goes down to 33 percent if you take it out of the business?
MOORE: That's right.
MOORE: Well, if you're a sole proprietor.
GIGOT: OK. Steve, thanks. We've got to go, but I appreciate your coming on. Thanks a lot.
MOORE: OK. Thanks, Paul.
GIGOT: All right, still ahead, with murders up more than 10 percent in 2015, issues of law and order are taking center stage in the presidential campaign. So who was right about Stop-and-Frisk in this week's debate?
(BEGIN VIDEO CLIP)
CLINTON: Stop-and-Frisk was found to be unconstitutional and, in part, because it was ineffective. It did not do what it needed to do.
(END VIDEO CLIP)
GIGOT: Issues of law and order making a return to the campaign trail as the FBI reports a 10.8 percent increase in murders across the U.S. in 2015, and in Monday night's debate, the controversial practice of Stop-and-Frisk was a hot topic, with Moderator Lester Holt and Donald Trump squaring off on its constitutionality.
(BEGIN VIDEO CLIP)
LESTER HOLT, DEBATE MODERATOR: Stop-and-Frisk was ruled unconstitutional in New York because it largely singled out black and Hispanic young men --
TRUMP: No, you're wrong. It went before a judge, who was a very "against the police" judge. It was taken away from her. And our mayor, our new mayor refused to go forward with the case. They would have won on appeal. If you look at it throughout the country, there are many places --
HOLT: The argument is that it's a form of racial profiling.
TRUMP: No the argument is that we have to take the guns away from these people that have them and that are people who shouldn't have them.
(END VIDEO CLIP)
GIGOT: We're back with Dan Henninger, Dorothy Rabinowitz and Bill McGurn.
So let's take the legal merits here. Is Trump or Holt is right?
HENNINGER: Trump is right. Certainly, Hillary Clinton, who graduated from Yale Law School, should have known better. Stop-and-Frisk was an idea that was established in the 1968 Supreme Court case called Terry, in which the Supreme Court ruled 8-1 that those kinds of stops by police are constitutional. They were called Terry stops or sometimes Stop-and-Frisk. What is at issue here is whether Stop-and-Frisk, as applied by the New York Police Department, was constitutional or not. Judge Sheindlin ruled, that as applied, they were doing too much of it, it was unconstitutional.
GIGOT: As applied in that case?
HENNINGER: As applied in that case. The city was going to appeal that. There was every expectation that her ruling will be overturned on appeal. That was legality of --
GIGOT: Not least because the Second Circuit Court of Appeals took the case away from Sheindlin for what they said was anti-police bias.
MCGURN: For the appearance of bias.
GIGOT: The appearance of bias.
MCGURN: What she did -- this is no ordinary judge. This is a woman who invited the lawsuit from the litigants, told them how to file, then collected the cases under her jurisdiction, and then she ran this kangaroo court indicting the police to have findings of facts that would then lead to her ruling. It was so egregious that the second circuit slapped her down.
As Dan said, this is a tactic. It goes back a long time. It's just one part of policing.
And Donald Trump basically got it right. This is a tactic by which you take illegal guns from bad guys. Liberals don't like it for that reason. They want to take guns from good guys.
And in this case, if you're going out there and you're a troublemaker, you know, I'm going to leave my gun at home because I might get stopped for jumping a subway or whatever else you do.
GIGOT: So you've lived in New York a long time, Dorothy. You remember the bad old days in New York --
RABINOWITZ: Oh, absolutely.
GIGOT: -- before Stop-and-Frisk. Even if Stop-and-Frisk was practiced to an excess for a time, it did work.
RABINOWITZ: It did work. I've been a long time in New York, enough to remember Justice Sheindlin, who was absolutely notoriously anti-police. This is one of the best-known stories about judges that the city had ever seen. However, the real problem was that you go into crime-filled neighborhoods, you are going to pick necessarily people to stop who are proportionately very high minority groups. This is the killer trap.
And the other thing that happened in this case, which is unforgettable, is the media assault. I know it's the season to blame the media but, believe me, they were worth it in the attack on policing and this.
MCGURN: And further to Dorothy's point, the man who was most popular in New York City was Commissioner Ray Kelly, who used Stop-and-Frisk the most. Even Bill Bratton, who succeeded him, and criticized the overuse, still, in his departing day last week said it's a vital tool and the people who want to take it away are nuts.
GIGOT: Briefly, Dan, this increase in crime rates, murder rates, is troubling. We really need to stop it before it gets out of control.
HENNINGER: Yeah. And it's mostly in cities like Chicago, as we know, Baltimore, St. Louis. But still, it's down in cities like New York where police have the resources to stay on top of crime and to stop murders before they take place.
GIGOT: All right, thank you all.
We have to take one more break. When we come back, "Hits and Misses" of the week.
GIGOT: Time now for our "Hits and Misses" of the week.
Collin, start us off.
LEVY: Paul, in August, University of Chicago President Robert Zimmer took a really strong stand where he basically said that his school was going to be a forum for debate and he wasn't going to let safe spaces break down free speech on campus. Now his counterpart at Northwestern University, Morton Shapiro, ranted recently that anyone who denies micro aggressions or the existence of safe spaces was a lunatic or an idiot. I'm not sure if that qualifies as a micro aggression, but I know it's not good for Northwestern University. So a miss to him for diminishing the academic traditions at his school.
MCGURN: A hit to Nevada State Supreme Court in a landmark decision. It upheld the broadest school choice program in the nation and, even better, threw out the Blaine Amendment objections to it. The Blaine Amendments are the 19th century anti-Catholic relics but some states constitutions still have them.
GIGOT: Still have them.
MCGURN: And the teachers' unions are hiding behind them to take away choice from kids. So good for the court for throwing this into the trash can.
GIGOT: Hear, hear, Bill.
RABINOWITZ: Paul, call me a sentimentalist, but here is a hit to that wonderful picture of Michelle Obama and George W. Bush at the African- American Museum of History last week. And it reminded me of those moments, way back, when people of opposite sides, both in Congress and elsewhere, could have a drink, work together, have some spontaneous relationships. It's a kind of, in the dark hours of this election and all the misery of the age, this is a soothing balm and we could use it.
GIGOT: All right, Dorothy.
HENNINGER: Paul, my miss runs from the White House all the way to Capitol Hill for letting the Justice against Sponsors of Terrorism Act become law after both houses had overridden President Obama's veto. This is the law that's supposed to let victims of 9/11 sue Saudi Arabia for alleged culpability in 9/11. In fact, it means the plaintiffs' lawyers are now going to have a new target. Every government in the world, and most likely, will get retaliatory lawsuits by those governments against our people. Mr. Obama checked out. Did zero to stop it.
GIGOT: All right, Dan, thank you.
And remember, if you have your own hit other miss, be sure to tweet it to us at JER on FNC.
That's it for this week's show. Thanks for watching. I'm Paul Gigot. We'll see you right here next week.
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