This is a rush transcript from "Journal Editorial Report," December 10, 2016. This copy may not be in its final form and may be updated.
PAUL GIGOT, HOST: Welcome to the "Journal Editorial Report." I'm Paul Gigot.
President-elect Donald Trump continued with his rollout of domestic policy nominees this week, selecting Oklahoma Attorney General Scott Pruitt to run the Environmental Protection Agency and fast-food executive, Andy Puzder for Labor Secretary.
And we begin with Pruitt who was a tough critic of the EPA under President Obama, suing the agency several times as attorney general in a bid to rein in its regulatory overreach. The left's reaction to Pruitt's election was swift, with Vermont Senator Bernie Sanders calling him "a climate change denier" and his selection to lead the EPA "sad and dangerous."
Joining the panel this week, Wall Street Journal columnist and deputy editor, Dan Henninger; editorial board member, Mary Kissel; and columnist, Bill McGurn; and Kim Strassel.
Kim, you wrote about the Scott Pruitt selection this weekend. You like it. Why do you like it?
KIM STRASSEL, WASHINGTON COLUMNIST: Yeah, I love it. This is exactly what the EPA needs. This is a guy who has sued the agency and is highly skeptical of a lot of the regulatory actions that was taken, that President Obama put in place extra-legal actions, which the courts have proven. So, we don't need another environmentalist there. There's plenty of rules already. We need a lawyer, like Mr. Pruitt, who is going to try to restore the balance between the agency and the states as partners and put it back in its proper role.
GIGOT: And you like the fact that he is from a state, now it's an oil and gas state, and that has a lot of people, a lot of Democrats gripping. But you like the fact that what the Obama administration tried to do was to impose from Washington mandates essentially on the states. And the states fought back, with Pruitt in the lead. So, we'll get a rebalancing here between the state and the federal government.
STRASSEL: This is how the laws are supposed to work. There's supposed to be a partnership. The federal government sets the minimum standards, offers technical support, maybe enforcement if states aren't doing what they're supposed to be doing. But the states are supposed to be free to innovate. And that is definitely the vision Mr. Pruitt will put back on the EPA.
Also, by the way, nowhere in the EPA mandate does it ever say that the EPA has to be opposed to energy and development and economic growth.
(LAUGHTER)
GIGOT: The climate change debate --
DAN HENNINGER, COLUMNIST & DEPUTY EDITOR: Yeah, exactly.
GIGOT: -- they are going to call him a denier and say that he thinks it's not happening. But he's never said that. He said maybe the scientists have settled, but that is different than saying there may not be a human role -- there may or not --
(CROSSTALK)
GIGOT: We don't know how big the human role is.
HENNINGER: Paul, this explains a lot why the Democratic Party has gone off the rails, why they're losing at so many levels of government. They have made climate change into a secular religion, literally. And it has led to a lot of ugliness, such as calling people deniers who disagree with them, as though their heretics.
(CROSSTALK)
GIGOT: The echoes of Holocaust.
HENNINGER: Ostracizing scientists. It became anti-political. And Barack Obama tried pass a ceiling on carbon emissions in his first term. A lot of centrist Democrats in carbon-producing states voted against him. So, they gave up on the legislative process and went to these executive orders, which is basically imposing them. And in that sense, Democrats just pulled away from politics, and now they're paying the price for it.
GIGOT: Mary, can they beat Scott Pruitt's confirmation?
MARY KISSIL, EDITORIAL BOARD MEMBER. Well, I don't know. We're going to find out.
But another point that I would make is that setting climate aside, the EPA doesn't perform its core functions. This is an agency that missed the Flint water crisis. This is an agency that poisoned the Animus River in Colorado. There were no repercussions for that. This is an agency that that missed a con man in John Beale (ph), pretending he was a CIA agent for years, and pulled down a lot of money --
(CROSSTALK)
GIGOT: Are you sure Scott Pruitt wants to run that?
HENNINGER: Yeah.
(LAUGHTER)
GIGOT: But he can provide some management and -- out let's turn to Andy Puzder as the Labor Secretary. He's truth in advertising. He's written op-eds for us, quite a few.
(LAUGHTER)
He's the head of fast-food restaurants, Hardees, Karl Jr's. And he is opposed, in our pages, to increases in the minimum wage.
BILL MCGURN, COLUMNIST: Right.
GIGOT: He said that the Affordable Care Act had a destructive role in the labor market.
What about this and Donald Trump's promise to be for the working man. The unions are going to go after him and say, you're not for the workingman, Mr. Puzder.
MCGURN: Right. Listen, we have a secretary now who is going to understand labor markets, because he was involved in them and how people hire.
The larger part of all these things, HUD, EPA and Labor, is this the part that is really dysfunctional. The left always thinks -- the thing NSA spying on foreigners, I worry about EPA and HUD and IRS and Labor, because they make these rules -- they usurp Congresses role. They make these rules, and they make peoples' lives miserable. I mean, going after the energy companies. Like Dan and Mary said, it's after a lot of jobs of people that work in coal mines and stuff. And a lot of people at the bottom suffer.
GIGOT: And --
MCGURN: So it's good to see someone reversing this.
GIGOT: And, Kim, there is a distinction between the unions and workers, and Obama Labor Department favored unions instead of rules that favored unions (sic). And there's only 6.7 percent of the American private workforce that belongs to unions.
STRASSEL: Yeah. This was a special-interest mania, when you had an entire department that was geared towards helping out a tiny fraction of the American workforce at the expense of everyone else in the American workforce. The Labor Department has been on the forefront of that, with its new overtime regulations, it's persuader rule that knocks down attorney/client privileges for employers, all of it, and executive about project labor agreements, all designed to help out this constituency that offers a lot of money and support to Democrats during the election.
GIGOT: The ultimate test, Dan, I guess, of the success of the Trump agenda with workers will be are wages going to go up.
HENNINGER: Absolutely.
GIGOT: That means you have to have faster growth, and to Bill's point, you have flexible markets to help that because it gives more opportunities to fire but, more importantly, to hire.
HENNINGER: Exactly. And that was the political basis for Trump's victory in this election. And if he does not deliver in four years, I think those people will step away from Donald Trump. He's got a big stake in getting those wages up.
GIGOT: All right, thank you all.
Trump Taiwan play as the fallout continues after last week's controversial phone call. A look at what it signals about the president-elect's approach to China.
(COMMERCIAL BREAK)
GIGOT: The fallout continues this week from President-elect Donald Trump's phone call with Taiwan's president, the first such communication since 1979. The Obama administration said Monday that it had sought to reassure Beijing of Washington commitment to the One-China policy and warned that the call threatened to undermine progress man in U.S./China relations.
John Bolton is a senior fellow at the American Enterprise Institute and former ambassador to the United Nations.
Ambassador, welcome.
JOHN BOLTON, SENIOR FELLOW, AMERICAN INTERPRISE INSTITUTE & FORMER U.S. AMBASSADOR TO THE UNITED NATIONS: Glad to be with you.
GIGOT: You wrote for us, in January, that the United States could play what you called the Taiwan card. Is that what is happening now?
BOLTON: Well, certainly, this is a possible opening to do that. I think the call was the right thing to do. Taiwan is a democratic ally of the United States, and it was a signal of respect that we haven't shown in a long time. But I don't it inevitably foreshadows a major shift in U.S./China policy or Taiwan policy. It certainly could, and I think from that perspective, putting Beijing on notice was a good thing to do.
GIGOT: Elaborate a little on what you mean by the Taiwan card. What would that mean going forward? Certainly, I doubt you're saying Taiwan should declare its independence.
BOLTON: Well, not now, that's for sure. But I think this is a neuralgic subject for Beijing, as it is, which makes it all the more important for the United States to have it on the table when we deal with China on issues that are neuralgic for us, like the effort in the South China Sea by Beijing, to declare that a Chinese promise.
GIGOT: So you signaling -- Trump is signaling, saying you're not going to help us on other things, we can show that we can get closer to Taiwan?
BOLTON: And it would be the right thing to do in many respects. I think the North Korean nuclear weapons program is another issue. China has not cooperated with us over the past 15 years, despite what people have said, and I think it's something we should be emphasizing more there as well. So, what I'm trying to do is broaden the array of subjects to raise with China.
GIGOT: Is there a risk, though, that you could you encourage Taiwan to think, you know what, we could declare independence? Because I know, from my experience with China, that's a red line where they feel perhaps they needed to do something militarily.
BOLTON: I think the President Tsai Ing-wen is a very cautious person. I fear it less that possibility. And I don't think we should be shy in saying Taiwanese privately don't think about that. This is a bigger game, a longer game that we're playing here.
GIGOT: What do you think of the president-elect's announcement that Terry Branstad, the governor of Iowa, a personal friend of President Xi Jinping, from going way back, from the time when Xi spent time in Iowa as ambassador to Beijing?
BOLTON: It is out of the normal order of things, let's put it that way. Normally, you have the secretary of state and then do the ambassadors, but this transition has followed its own pattern.
I think, ultimately, policy is controlled from Washington. And I think, ultimately, it's control from the Oval Office. So, the envoy is less important than what direction the president-elect actually takes when he gets in. Certainly, in the past week, in his speeches, he's signaling a pretty hard line on China's economic practice.
GIGOT: I want to talk about the broad possibility of a re-setting of the U.S./China relations. Number one, do you think that's possible? And what form would it take if you were trying to advance U.S. interest?
BOLTON: Well, I think China is resetting U.S./China relations with its assertive near-belligerent territorial claims in the South China Sea, what's it's tried to do in the East China Sea, it's massive military and security build up, including a blue-water Navy for the first time in 600 years, as to which the Obama administration's response has been pathetic and inadequate.
GIGOT: So you think China is looking to become a regional dominant power and push the U.S. out?
BOLTON: Or perhaps go beyond that. Just a few months ago, Russia and China held their first ever joint naval maneuvers in the Mediterranean. The South China Sea, too, but the eastern Mediterranean. So, I think China understands that it has taken advantage of the Obama administration for eight years. And I think it's time to signal that we have a new administration and it takes a very different view, including on these economic issues.
GIGOT: What does that mean in practical terms? OK, I mean, the Obama administration say, sure, we believe in freedom of navigation. We sent U.S. vessels through there to show that we are not going to be stopped doing that. What would a reset look like? What do you mean? Is it taking on China economically and saying you access to our market unless you help us on a security point of view?
BOLTON: I think it has to be across the board, I really do, economically, politically and militarily. And I think economically, the evidence of Chinese discrimination, not just against American investment and trade with China, but the European Union as well, the theft of intellectual property, disparate treatment Chinese courts, more favorable capital allocation decisions.
GIGOT: Right.
BOLTON: The Chambers of Commerce of the U.S. and the E.U. and Hong Kong and Beijing have been saying this for years. So, I think taking them on to make China live up to its commitments in the WTO and elsewhere that they have not lived up to is a pretty big task, in and of itself. When we come to the South China Sea, honestly, the Obama administration's response has been pro forma. I think China reads it that. It's got to be very different. It would build up the Navy again to an adequate size more longer term. But the political shift can be signaled very early, and that's what the call to Taiwan's president may indicate.
GIGOT: Let me ask you about the Trans-Pacific trade deal. Trump has announced he's going to drop out of that on day one. There's a lot of people in Asia that I talked to, our allies, who say that's a mistake because it signals U.S. is disengaged from the Asia-Pacific on economic and soft-power terms and cedes that field to China. What do you think of that?
BOLTON: I don't know what the president-elect has in mind after TPP, but I think anybody that thinks it can be revived is mistaken. I think he's made that very clear. I agree with that.
(CROSSTALK)
BOLTON: I think the mistake that was made, beginning in the Bush administration and certainly continuing under Obama, was to say that this is a strategic issue, kind of masquerading as a trade agreement. And the result is very few people in the United States, at least, understood the strategic significance.
GIGOT: But is it a setback for us, strategically but pulling out? Even if all of that is right?
BOLTON: Short-term, perhaps, it is. But now it requires us to think more coherently what we mean by a strategic initiative to box China out of asserting its agenda. If you are going to do a trade agreement that encourages free trade between the United States and its potential partners in Asia, do that. If you want to have a strategic initiative, do something else. And I think it should be more in the security field.
GIGOT: All right. Thank you, Ambassador. Appreciate your being here.
BOLTON: Thank you.
GIGOT: Still ahead, President Obama defending his counterterrorism strategy in a final national security speech. We'll look at his legacy and his advice for the Trump administration when we come back.
(COMMERCIAL BREAK)
GIGOT: During his last official visit to CENTCOM headquarters in Tampa, Florida, this week, President Obama defended his anti-terror legacy, telling troops at McGill Air Force Base that real progress had been made during his eight years in office, and offering what he called a "sustainable strategy" for future administrations.
(BEGIN VIDEO CLIP)
PRESIDENT BARACK OBAMA: Rather than offer false promises that we can eliminate terrorism by dropping more bombs or deploying more and more troops or fencing ourselves off from the rest of the world, we have to take a long view of the terrorist threat. And we have to pursue a smart strategy that can be sustained. We need the wisdom to see that upholding our values and adhering to the rule of law is not a weakness in the long term, it is our greatest strength.
(END VIDEO CLIP)
GIGOT: We're back with Dan Henninger, Mary Kissel, Bill McGurn and Kim Strassel.
Mary, smart, long-term, what do you make of that defense by the president?
KISSEL: He's taking the long-term view and accepting the terrorists threat and letting it grow on his watch. President Obama is leaving President- elect Trump with an extremely dangerous world, a far more dangerous world than he inherited from President Bush.
GIGOT: He would push back to say, well, I got bin Laden, al Qaeda has been diminished, and not just in Afghanistan but elsewhere, and nobody has attacked the homeland from afar. Granted, there have been some home-grown terrorist attacks. He would say, I'm giving him -- what he would say. Your response?
KISSEL: First of all, ISIS covers a far wider geographic territory than al Qaeda did. They are in North Africa, East Africa, they are across the Middle East, in Pakistan. They are moving into parts of Asia. So, that simply --
(CROSSTALK)
GIGOT: -- on his watch.
KISSEL: That developed on his watch. But you also have Putin emboldened, going into eastern Ukraine, threatening the Baltics. You have Xi Jinping making noises in the South China Sea, pushing his naval ships around Japan and making overflights. You have North Korea testing nuclear weapons.
When I say this is a far more dangerous world, it is, not just in comparison to Bush, but I would argue it's the most dangerous world we have seen since the end of World War II.
HENNINGER: We'll give him credit for the drone strikes that have taken out a lot of terrorist leaders --
(CROSSTALK)
HENINGER: -- Afghanistan, Pakistan and in the Middle East. They have done that. But --
(CROSSTALK)
GIGOT: He's taken criticism from the left for that.
HENNINGER: He has, indeed, killing from afar. But he talks about the long view, he's right, because he has set up a world which is going to be, in a sense, a stalemate, endless conflict, just standoffs, in the Middle East, in Afghanistan, where both sides -- it's not as though nothing is going. This is a tremendously huge battle taking place, like in Syria, and he did nothing to push it forward. It is just a stalemate. He seems willing to settle for a world which is an endless conflict.
GIGOT: If you listen to that speech, Bill, he really did a line over the Syrian Chernobyl, as David Petraeus once called it.
MCBURN: This is actually Obama making good on his promises. If you go back to his inaugural address, where he talks about leaving Afghanistan and Iraq, this man has been sounding the retreat since he became president. In his speech announcing the 30,000 surge in Afghanistan, the very next sentence he announced was when we would start to get out. So, he's kind of frozen in time, too. He's focused a lot on his speech. He's ah lawyer. He parsed his words, "poor al Qaeda," meaning just al Qaeda. He also talked about -- I think his words were, "no foreign terrorist organization has successfully planned" -- well, San Bernardino. Now the threat is different.
GIGOT: They are inspired by --
(CROSSTALK)
MCGURN: They are inspired by, radicalized. So, it's all in serious terms. Look, if we want to get a read of his legacy, we should go around and ask people in Jerusalem, in Riyadh, even in Tehran. They would have a much different picture of what he's bequeathing the world.
GIGOT: Kim, how is Donald Trump going to be different in going after terrorism, in particular, than Barack Obama?
STRASSEL: Well, you know, he has been somewhat vague on this. We know his broad promises, which is that he says he's going to hit ISIS very hard, destroy terrorists harder than anything has happened before. But we'll also doubling down on his promise to not commit troops to places and not have a bigger footprint in the world.
GIGOT: Which may be a contradiction.
STRASSEL: I think it's a contradiction. And we don't know yet.
Look, he's picked some very aggressive people to serve at the Department of Defense and other places. We'll see what they come up with as a strategy for doing this. But at the moment, he hasn't said too much that would be a big change in what we're doing now.
GIGOT: And, Mary, one thing I think there will be a difference, he's not going to close Guantanamo.
(LAUGHTER)
KISSEL: No.
GIGOT: In fact, he may even send some enemy combatants to Gitmo if they're captured in theaters where they are not going to be normal prisoners of war.
KISSEL: Let's hope so. Also, Obama's legacy is not just a legacy of American retreat. Obama went out and made deals with countries that don't share our interest or values, with Iran, with Cuba, for instance, and Donald Trump may take a very different view of those arrangements.
Donald Trump also may not view American casualties in the same way that President Obama did. Recall that Obama told Jeffrey Goldberg, at the "Atlantic," that he saw the problems in the Middle East as a problem within Islam, and Americans are sometimes collateral damage in that fight. I don't think Donald Trump will see it the same way.
HENNINGER: One quick phrase. Obama's speech was a defense of the idea of leading from behind, and that's what he has done for eight years. The question is, will Donald Trump lead from the front and reassert world leadership in the United States.
GIGOT: That's a good question. I'm not sure I know the answer to that, Dan. I think he has, in many ways, in the campaign, mimicked President Obama's rhetoric about not intervening abroad. And I think that resonated with a lot of Americans. And I'm not so sure, other than bombing from afar, he's going to do much different.
HENNINGER: There were echoes of Obama's speech of exactly what Trump said, about not getting involved in nation building, not having troops overseas.
GIGOT: All right, thank you, all.
Still ahead, Donald Trump's battle with big business continues as he warns another American company against moving jobs to Mexico.
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
PRESIDENT-ELECT DONALD TRUMP: We love our companies, and we love it when they're employing thousands of people. But we don't love our companies when they leave and go to another country, and think they can make their product and sell it back into our country like we're a bunch of fools, like they've been getting away with for the last 35 years. Not going to do it.
(CHEERING)
(END VIDEO CLIP)
GIGOT: President-elect Donald Trump in Des Moines, Iowa, Thursday night, with a warning for companies looking to shift production abroad. Following last week's deal to keep the Carrier corporation from sending almost 1,000 jobs to Mexico, Trump is setting his sights on other American businesses planning similar moves, including the Indiana-based manufacturing plant of Rexnord.
Bill, what kind of message is the president-elect sending here to American business? And is the right message?
BILL MCGURN, COLUNMNIST: Well, it's brilliant politics for the president- elect, and very bad economics for a president. I mean, he's getting --
GIGOT: How --
(CROSSTAKL)
MCGURN: He's showing that he cares about workers, which is not usually associated with the Republican Party. But if he carries this through, individual deals aren't the way to go. The way to go is to make the United States, by lowering taxes, like new regulation, a more attractive place for investment and for workers. We have to remember the best place for workers is an economy where they can tell their boss, "Take this job and shove it," and go across the street and get another job.
(LAUGHTER)
That can't happen in an economy growing --
GIGOT: Now you said that to me.
(LAUGHGTER)
MCGURN: But in the economy growing under 2 percent, that just can't happen. And workers have an interest in growth, probably more of an interest than anything else, because that's the only thing that gives them choice and opportunity. And they haven't had that for a long time.
GIGOT: So what does that tell you, though, Mary, when Mike Pence says, the president-elect says, that, in fact, company by company is exactly the kind of policy that Donald Trump is going to pursue? We're going to do this case by case, day by day?
MARY KISSEL, EDITORIAL BOARD MEMBER: Well, Mike Pence was a governor, and governors loves to do this. Even good, solid Republicans/conservatives, like Rick Perry, for instance. When he came in to see us a couple years ago, he talked about how great it was to give away his taxpayer money to certain kinds of companies.
Look, it's a terrible policy. And unfortunately, it also has echoes of President Obama, who likes to pick winners as well, and likes to punish businesses he didn't like. Except, for Obama, those companies were the coal companies and the big payday lenders. Whereas, for Trump, the targets seem to be companies that is are outsourcing.
I tell you what, if I were a CEO, I hope my name is not on breitbart.com, because that is the target list for Trump.
GIGOT: That is the website that Steve Bannon ran before he joined the Trump campaign.
Dan, what about the Boeing episode? The vice president-elect said, look, it seems to be more $4 billion worth of cost overruns. Now he's saying -- for the redesigning and creating a new Air Force One. He said, cancel the contract. And I've looked, I haven't seen evidence so far of $4 billion worth of overruns, because I haven't even -- I don't think the final contract has been struck.
DAN HENINGER, COLUMNIST & DEPUTY EDITOR: I suspect he may be pulling back from that one, because I have not seen there's any $4 billion contract yet at all.
I mean, the danger here in going case by case is that one of Donald Trump's most famous phrases, "he's going to drain the swamp," this sort of thing fills the swamp. This fills the swamp with lobbyists. This is what we used to call country club capitalism, where the guys on the golf course do deals with the governor and so forth.
The better way is to get done with the tax reform bill he wants, reform Dodd-Frank, reduce costs, so this sort of thing isn't necessary, so companies like Carrier don't have to think about leaving the country. Maybe we'll get to that point.
GIGOT: Kim, I can just hear some of the viewers say, oh, you guys at the "Wall Street Journal," you believe in ideology, you believe in Adam Smith, you believe in David Ricardo, get over it. That doesn't work anymore.
(LAUGHTER)
Republicans, those ideas don't matter. It's the working -- Donald Trump won with that message. That is what he's going to implement, so shut up and sit down and get used to it.
KIM STRASSEL, WASHINGTON COLUMNIST: Look, I care about the working man, too. We should all care about the working man. In fact, that is why this is bad policy in the long run.
Look, why are companies moving to Mexico? It's not because they are anti- American or hate U.S. workers. It's because they are not making it here because our costs are too high. We're not competitive. So, you can do a temporary Band-Aid and give a group like Carrier some subsidies from the state, et cetera, but if you're not focused as a president on the long-term goal of what Dan just said, tax reform, et cetera, these companies are still not going to make it. And those workers are going to lose their jobs, ultimately, in the end. This is not a fix, brow-beating companies to stay. The fix is in better policy to make America competitive.
GIGOT: Bill?
MCGURN: Yes, I agree we that. Also, I think that one of the unintended consequences of this is you're going to have a lot more people say they're going to Mexico if they think there's a subsidy or better treatment on the other end. Look --
(CROSSTALK)
GIGOT: Even if Trump is going to slap a 35 percent --
(CROSSTALK)
GIGOT: They'll say it. They'll say it if they can carve out a better deal.
GIGOT: It depends on the marketplace for their product. If it's overseas, if they sell most products in Europe or Asia, they may not care about the U.S. market.
MCGURN: It is not just overseas. This has been going on in the U.S. between governors, as Mary said. The governors are trying to prevent people not only from moving to Mexico, but the next state. Remember the Patriots owner? He got Connecticut to agree to a new stadium and all this stuff. And what he was doing was shaking down Massachusetts for $70 million. This is an old game. And they will play it pretty well.
HENNINGER: Political point, Carrier's workers win, but a lot of companies' workers here are going to lose, because they're not getting the same deal. And they could become angry about that and go into opposition.
GIGOT: All right, Dan, thank you.
Still ahead, as Republicans grapple with what to do about Obamacare, we'll take a closer look at Donald Trump's pick for Health and Human Services, and his plan to replace the controversial health care law.
(COMMERCIAL BREAK)
GIGOT: As Republicans in Congress grapple with just how and when to replace and repeal Obamacare, the incoming Trump administration is making its own plans, appointing Representative Tom Price as secretary of Health and Human Services. Price, an orthopedic surgeon and six-term Georgia congressman, is a vocal critic of the Affordable Care Act and has been studying how to replace the law for more than six years.
Tevi Troy is president of the American Health Policy Institute and a former deputy secretary of Health and Human Services. He's author of the book, "Shall We Wake the President? Two Centuries of Disaster Management from the Oval Office"
Welcome, Tevi. Good to see you again.
TEVI TROY, PRESIDENT, HEALTH POLICY INSTITUTE & FORMER DEPUTY SECRETARY, HEALTH AND HUMAN SERVICES & AUTHOR: Paul, thank you for having me.
GIGOT: Do you agree with me, just stepping back a bit from the big picture, that this is a moment for Republicans to put up or shut up on health care policy? They have to deliver now a replacement Obamacare?
TROY: Look, Paul, I usually agree with you, and I agree with you this time as well. This is the time. And Republicans have said for years we have to get a chance to have a Republican House, Republican Senate, Republican president. We have those things. Now there's an opportunity to get rid of the ACA and to replace it with something different. So now is the time to see if those ideas work.
GIGOT: With that in mind, the Tom Price pick, a doctor himself, what do you make of his selection to lead HHS?
TROY: I think it's a great pick. I know Dr. Price. He's a smart guy. He's a thoughtful guy. He's also a determined guy. This is a guy who keeps introducing plans to repeal and replace the Affordable Care Act and has done it since the ACA has been in effect. I think it's smart to bring a legislator, a legislator who knows how to work the legislative process.
If you recall, Paul, the Democrats wanted to bring in Tom Daschle to be Obama's secretary at HHS.
GIGOT: Right. I remember that.
TROY: And I actually think it would have been a good move from their perspective. It did not work out, as you know, and the nomination blew up. Then we had a situation where they had to find a backup. And in doing so, they found someone who was not a legislator, and they were kind of behind the eight ball the entire time. So, Secretary Sebelius didn't understand the legislative process. Tom Price does.
GIGOT: I want to talk about the legislation in Congress. But let's talk first about legislation. It does seem to me that -- people say, you can fix part of Obamacare through regulation right away, including maybe reducing some of the mandates. How much of the law can be repealed or minimized through regulation?
TROY: Through regulation alone, you're somewhat limited. The legislation is this famous 2700 pages. There are many, many more thousands of pages of regulation after that. But those implement the actual legislation. You really need to get at the legislation.
What they can do administratively are some kind of waivers. There are both state waivers for Medicaid and state waivers in general for the ACA that give the governors a little more flexibility in how they cover people. But to really get rid of the ACA, you have to do it legislatively.
GIGOT: Republicans are talking on Capitol Hill -- I know you've heard it - - to say, first we going to repeal it or as much as we can. And then we'll set a date down the road, maybe later this year or maybe even two, three years down the road, to replace it. What do you think of that strategy?
TROY: Well, President-elect Donald Trump said he doesn't like that strategy on "60 Minutes." And he talked about doing the two things together.
GIGOT: Right.
TROY: I don't know if that's possible. There is a window for getting rid of the ACA, via reconciliation, which you can do as part of the budget resolution. So, it's a time-limited thing without 60 votes. So, that makes some sense to me to get it out there, that this is what you're trying to do. But once you do that, you own the thing. I've heard Democrats on Capitol Hill saying that health care is a form of inedible sandwich that I won't say the name on TV.
(LAUGHTER)
GIGOT: Right.
TROY: And they want somebody else to have the sandwich. So, Republicans have to be careful of that.
GIGOT: Chuck Schumer said, flat-out -- the incoming Senate Democratic leader -- that if Republicans change this one iota, they own it, and we're not going to help them one bit. That's my concern about this repeal first and then replace strategy, that what happens is, you make yourself hostage down the road to the irreconcilables. On the left, you have the Democrats who say, we're not going to help you one bit and don't change a thing. On the right, you have people who say, oh, this is not a perfect replacement bill, I'm not going to vote for it. And then, down the road, we're not going to vote for subsidies, for example, for anybody. You have some of those people on the right who will say that. Ted Cruz may throw a wrench in the works.
So, isn't that a risk that you might repeal it and then have nothing down the road to replace it with?
TROY: It absolutely is a huge risk, but another risk that they have to take into account is they made such a big deal -- as your first question suggested -- about getting rid of the ACA, and not taking care of the opportunity or not taking advantage of the opportunity would really hurt them politically as well.
GIGOT: So they have to do something.
Now what about this issue of the subsidies? There are tax credits in the bill, as you know, that go to people below a certain income level. Do you think that that has -- those subsidies, in some form, have to be part of a Republican fix so people aren't thrown off their insurance?
TROY: So I think the key thing to remember is that Republicans are never going to outbid Democrats on the amount of subsidies and the number of subsidies they provide. What Republicans want to do is bring down the overall cost of health care, thereby, incentivize people to purchase health care on their own. You don't want the Obamacare essential health things that skyrocket the cost of health care, as we have seen the last few years. So, there should be some kind of a -- I call it a tax goodie -- of some sort to help some people, not everybody, help some people purchase health care. But you don't want to do what Obamacare did, which is raise the cost of health care and then provide a high-cost subsidy to some low-income individuals.
GIGOT: You and I know, we're employed by a company, we have a tax subsidy through health insurance through our company, OK? Already. So, if you work for a company and you get health insurance, you have the tax incentive. Then if you lose your job and go into the individual marketplace, you don't have that subsidy. So, I've heard a lot of Republicans talk over the years, we need to equalize tax treatment between the tax treatment of individuals and employers of big companies, in particular. Should that be part of the reform?
TROY: This is one of the reasons I'm encouraged by the pick of Dr. Price in that he's someone who believes strongly in the employment-based system. There's 177 million people that get health care through their employers. And I think it is important to maintain that part of the system for the stability of the system. They are much more important numerically rather than the 20-odd-million people who get their health care via some form of the ACA. So, it is important to maintain that system and not lose the stability of that system. And that's how I --
GIGOT: But if you're a Republican, you don't want the headline that people are losing their insurance in the private markets.
TROY: No, absolutely not. You need to use building blocks. So, the biggest building block is the employment-based system. You have Medicare, Medicaid. Those building block together cover the vast majority of people in this country. Then figure out how to help the people in the gaps. If you want to do it via the tax code or finding other ways for people to band together by health care, Dr. Price calls for association health care plans, that's the way to go about it.
GIGOT: Thank you, Tevi Troy. Appreciate you being here.
Still ahead, Ben Carson, no doubt, an unconventional pick to head up the Department of Housing and Urban Development. A look at what the retired neurosurgeon could bring to the job, when we come back.
(COMMERCIAL BREAK)
GIGOT: Donald Trump's choice Ben Carson to head up the Department of Housing and Urban Development is raising eyebrows as Democrats and even some Republicans question just what the retired neurosurgeon brings to the task of overseeing a sprawling bureaucracy with a budget of more than $45 billion.
The unconventional choice was officially announced Monday, with the president-elect saying he has talked at length with Carson about his urban renewal agenda and message of economic revival.
We're back with Dan Henninger, Mary Kissel, Bill McGurn and Kim Strassel.
Kim, you've been doing some reporting on HUD for your sins.
STRASSEL: Lucky me.
GIGOT: And what have you found out? What do you think about the Ben Carson pick?
STRASSEL: I think this is a very inspired pick. And here's why, because here's a fundamental problem with HUD, it is the welfare agency that Washington forgot. We've done all of these other reforms, but HUD has just been allowed to grow on autopilot. These days, 80 percent of that $45 billion budget goes to federally owned and operated public housing and vouchers for public aid housing out there, which is for low-income Americans, OK?
GIGOT: Right.
STRASSEL: There's no work requirements. There's no means testing. We basically relegate these people to ghettos and projects with no means of getting out.
So, Ben Carson, given that much of his own presidential campaign was geared towards trying to get people out after a culture of dependency on government, I think he's will have a vision of how you do that at HUD.
GIGOT: Mary, you covered HUD and you know it's a tough place to run, particularly if you're not steeped in the traps that you can fall into. What do you think of the Carson thing?
KISSEL: I'll say one thing for Carson, Carson seems to understand HUD doesn't just provide public housing. It's trying to socially engineer the racial makeups of neighborhoods across America.
GIGOT: How is it doing that?
KISSSEL: Well, HUD has something called the Affirmatively Furthering the Fair Housing Rule. It's kind of a mouthful but it's very important. What HUD did under Obama is it forced communities that take federal monies, which is basically every community in the country, and said give us all this racial and income data and then we're going to tell you if you have enough Hispanics or blacks or other minorities living in white neighborhoods, for instance, and if you don't have the right mix, we're force you to build housing in those neighborhoods.
GIGOT: And its signature was Westchester, New York.
KISSEL: That's right.
GIGOT: But presumably, he can reverse that.
KISSEL: He could reverse that. But, look, it's not just about public housing. HUD also has something called the Federal Housing Administration, which has become the new Fannie Mae and Freddie Mac. FHA, as it's called, is an insurer. It insures mortgages. And it took over the subprime mortgage business after the housing crash. So, there's a ton of risk there, and Carson, coming in, has to address that risk. He doesn't have the housing background for it. I have no doubt he can learn about it but that is a huge task and it's an urgent task, aside from the public housing.
GIGOT: So you think a lack of experience could be problematic for Carson?
KISSEL: I do. It's a huge sprawling bureaucracy. It's got, I think, more than 8,000 employees. It also has a web of public housing advocates, so- called fair housing advocates. It has banks involved. There are a lot of lobby groups whose interests are involved in keeping HUD just the way it is, not just in public housing but also for FHA.
GIGOT: You think the big opportunity here, Kim, is the anti-poverty agenda, trying to make housing, instead of a permanent -- people putting them in public housing permanently, making sure this is a stepping stone to self -- to independence.
STRASSEL: Yeah. This has been a new initiative of Congress, Speaker Paul Ryan, obviously, his anti-poverty initiative. And you're beginning to see some good ideas coming out of Congress that Ben Carson can build on.
Look, it is an issue he needs to know that that bureaucracy and those interest groups are going to be out to get him. It also would be wise of the Trump administration to put some people around Ben Carson that are housing experts and understand how you can deal with this pushback, too.
GIGOT: Good advice, Kim.
All right, we have to take one more break. When we come back, "Hits and Misses" of the week.
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GIGOT: Time now for our "Hits and Misses" of the week.
Kim, start us off.
STRASSEL: So, Paul, the media absolutely embarrassed itself during this election with its support of Democrats and, whoops, they're doing it again. This is amiss to all of those publications pedaling the story that Obama is handing Donald Trump a booming economy. OK? Part of this is the White House working with media allies to invent an Obama legacy that doesn't exist. Part of it is potentially setting up Mr. Trump. Look, we may be overdue for a recession already. This is a way to suggest that if it happens, it might be due to Trump policies. The country kicked out this administration because they know the real truth about the economy, and they're not going to buy it.
GIGOT: William?
MCGURN: A miss to the Fight for $15 movement. And this one was delivered by a former CEO of McDonald's. Back when the movement of this mandated $15-an-hour minimum wage started, he warned it's going to cost jobs and it's going to cost the people at the bottom. McDonald's recently announced it will replace workers with these self-service kiosks. And that's exactly what he says. The key of courses there and that's what he said. Look, the point is a lot of workers at the bottom are struggling from technological changes that have been disruptive. It's foolish to make them more expensive to hire and just hurts the people at the bottom.
GIGOT: All right, Bill.
Dan?
HENNINGER: The media is full of concern that Trump is appointing too many generals. Trump's junta.
(LAUGHTER)
HENNINGER: Given Mattis as defense, Mike Flynn as national security adviser, and John Kelly for Homeland Security, Paul, the last thing I'm worried about in this country is a military coupe.
(LAUGHTER)
A hit for Donald Trump for getting the best he can find, and that includes the military.
GIGOT: All right.
Mary?
KISSEL: I want to give a hit for American hero, John Glenn, who passed away at the age of 95. He was many things, he was a husband, a father. He was a Marine, fighter pilot who fought in World War II and Korea. He was a test pilot and the first American to orbit the earth. He was a four-term Senator and a true American hero. And now he's slipped the bonds of earth one last time. We wish him god speed.
GIGOT: Thank you all very much.
And, remember, 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. Thanks to all of you for watching. I'm Paul Gigot. Hope to see you right here next week.
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