JOURNAL EDITORIAL REPORT

How Trump can push his ambitious agenda through Congress; Rep. Thornberry: WH defense spending increase is not enough

Former Bush adviser and Fox News contributor Karl Rove explains on 'Journal Editorial Report'

 

This is a rush transcript from "Journal Editorial Report," March 4, 2017. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

PRESIDENT DONALD TRUMP: Everything that is broken in our country can be fixed. Every problem can be solved. And every hurting family can find healing and hope. Our citizens deserve this and so much more. So why not join forces and finally get the job done and get it done right.

(APPLAUSE)

(END VIDEO CLIP)

PAUL GIGOT, HOST: Welcome to the "Journal Editorial Report." I'm Paul Gigot.

That was President Trump on Tuesday in his address to a joint session of Congress, calling on lawmakers to unite behind an ambitious agenda, including appealing and replacing the Affordable Care Act, overhauling the U.S. tax code, and rebuilding a depleted military. Now comes the hard part, pushing that agenda through Congress.

Here with a look at how he can do that is Wall Street Journal columnist and Fox News contributor, Karl Rove. He served as a senior advisor to George W. Bush.

Karl, welcome. Good to see you.

KARL ROVE, COLUMNIST & FOX NEWS CONTRIBUTOR & FORMER SENIOR ADVISOR TO PRESIDENT GEORGE W. BUSH: Thanks for having me.

GIGOT: Do you see, do you believe that Donald Trump's presidency, at least on the domestic side, will be determined here in the first year on what he can get through Congress?

ROVE: I do. The question is not how much can he get done, but does he get right things done? Absolutely critical to his long-term success is the passage of a comprehensive tax reform measure and the repeal and replacement of ObamaCare. If he fails to achieve these two things this year or next year, his presidency will be in difficulty. He was elected because people wanted a change, and principally, we're concerned with change in the economy. And these are going to be two of the bigger drivers in making sure that the economy gears up more and prosperity spreads farther and bigger.

GIGOT: Karl, I'm not so sure he has much time of going into next year. If he's going to do this, the first year is always so much easier.

ROVE: That's true.

GIGOT: And the second year, people begin to say, all right, I'm looking at my own re-election.

ROVE: Absolutely, I agree. It's possible to get it done this year. I don't think the Secretary of the Treasury Mnuchin is helping by saying we are going to get it done by August. That's a very heavy lift to get tax reform done. And the Affordable Care Act's replacement, while they will move it through the House with some dispatch, it will be a heavy lift in the Senate. That's the one I think might pass the House, pass the Senate, but have significant enough differences that it takes it late in the year.

GIGOT: Some people think they are making a mistake going first with ObamaCare, repeal and replace. What they should do first is tax reform or some of kind of tax cut, because if you look at history, health care has bent graveyard of more than one administration as they tried to press that.  Even when President Obama passed it, it turned out to be a disaster for them politically. Do you think they are making a mistake with health care first?

ROVE: Well, that's a close call. The one that's more complicated and more likely to have bigger divisions between the House and Senate is the Affordable Care Act. They may be moving quicker on the repeal and replacement of the Affordable Care Act in the House, but I would bet they are more likely to find they will themselves in the not too distant future with the tax cut further along in its road to passage than the repeal and replacement of ObamaCare.

GIGOT: On health care, on any legislative initiative, there are different ways you can do it. The president can submit his own plan or he can toss it to Congress and say, you write the plan. In this case, the president is going down the middle. He's saying -- he laid out on his speech this week some principles on health care reform and said within those parameters go ahead and operate and work out the details. Is that that right strategy in your view for this matter?

ROVE: Absolutely. I don't think those principles came from the domestic policy shop inside the White House. I think they came from conversations with Speaker Ryan and Leader McConnell, who said, Mr. President, it would be useful for you to say these things.

GIGOT: Right.

ROVE: I thought it was very, very good. The White House is going to play a lesser role in this in writing Paragraph 354 in Section 218-C. That's not going to be written in the West Wing of the White House. There will be more at HHS and a heck of a lot more up on the Hill. But the president needs to give air cover. On the critical things where the Republicans are having disagreements, he needs to put the emphasis on one side other or the other of those disagreements. And he needs to make clear -- we have a growing element within the Republican House caucus, whose ideas -- when we said repeal and replace, we didn't mean the replace part. He needs to be the person who says we meant it when we said it, you said, now we need to get it done.

GIGOT: And I think he did say that in his principles this week.

Now, one thing you were able to do in 2001, the first year, was you were able to get some Democratic help on your tax bill and education bill. I don't see that happening with President Trump. It looks like most of the Democrats, most of them, are pretty much going to be total resistance. Do the Republicans have to be prepared to pass all these things on their own?

ROVE: That was the point of my column Thursday in The Journal was to say this will be a heavy lift because Democrats are not going to be supportive of these measures. The ground work that should have been done in November, December, January to bring some of them, to make them more pliable, was not done. So they will have to depend upon passing these with virtually Republican votes only. Which means they can't have many defections in the Senate when you have a 52/48 margin. And in the House, you have to make certain this group that says we didn't mean that or we want to have it perfect, and if it's not perfect, we are voting with Democrats. You have to find ways to deal with it.

GIGOT: Let me shift to Jeff Sessions. Every administration has an issue like this, problems, many scandals. The Scandal you had one with the Valerie Plame episode. What's your advice to the Trump administration on how to handle that?

ROVE: First of all, full disclosure, Jeff Sessions has been a friend of mine since literally we were in college. We didn't go to the same school but we were active in college Republicans. I have great confidence in his integrity.

I don't believe he knowingly, deliberately misled the Congress when Al Franken asked him about campaign involvement and contacts with the Russians. But I also believe Jeff Sessions, from the beginning, would have no other avenue except to recuse himself. He was active in the campaign.  He was a U.S. attorney, a state attorney general. He's a Judiciary Committee member. He knows how these things work. And he was going to recuse himself. But it was artfully answered. It was a minor thing. If he -

(CROSSTALK)

ROVE: Oh, yeah. Look, I think there will be a lot more stories that could potentially come out between contact between campaign operatives and the Russians. But to compare this to if the Valerie Plame thing, which involved the special prosecutor and went on for years, I think Jeff Sessions role in this this will be minor. And he did the right thing yesterday by saying, I will recuse myself from any investigation that involves the campaign.

GIGOT: All right, thank you, Karl Rove. Thanks for being here.

ROVE: Thank you.

GIGOT: When we come back, the president calls on lawmakers to come together and pass health care reform. But can the Republican Party unite around a plan to repeal and replace ObamaCare?

(COMMERCIAL BREASK)

(BEGIN VIDEO CLIP)

TRUMP: ObamaCare is collapsing and we must act decisively to protect all Americans.

Action is not a choice. It's a necessity. So I'm calling on all Democrats and Republicans in Congress to work with us to save Americans from this imploding ObamaCare disaster.

(END VIDEO CLIP)

GIGOT: That was President Trump urging Congress to act on one of his top priorities, repealing and replacing ObamaCare. The president outlined a set of principles Tuesday that he says should guide health care reform, but Republicans are still split on key aspects of the emerging plan.

Joining the panel this week, Wall Street Journal columnist and deputy editor, Dan Henninger; Washington columnist, Kim Strassel; and editorial board member, Joe Rago.

Joe, the assumption is, as Karl Rove suggested, that the president has endorsed the principles that have emerging in the House reform. Do you agree?

JOE RAGO, EDITORIAL BOARD MEMBER: I think that's right. His principles, more choice, more competition, greater access to health care, broadly meets the outline of the bill currently under preparation in the House. I think it was shrewd for President Trump to give Congress some direction and I think he really advanced the momentum of this debate.

GIGOT: Crucially, it wasn't just repeal that he endorsed. He said you must also replace. And that's the emerging fault line, or one of them, in the Republican debate

RAGO: Right. And he specifically said he favors tax credits for people on the exchange. That's the big fault line you are looking at with some Republicans, well, saying this is a new Republican entitlement, we are not going to support it.

GIGOT: Because they are tax credits?

RAGO: Well --

GIGOT: There already are tax credits

RAGO: But these are smaller than the baseline of ObamaCare. But it would be a significant federal outlay.

GIGOT: If you don't do that, what if you just repeal it alone? What happens?

RAGO: You have a collapse in the insurance market. All the problems we are seeing with ObamaCare, rising premiums, insurers fleeing the exchanges, all that accelerates and it just collapses. So --

(CROSSTALK)

GIGOT: That would be a huge risk. And who would own that politically?

RAGO: Of course, the Republicans would own it.

GIGOT: Because they would have repealed the law.

RAGO: Right. If you go to the 2015 repeal bill, you also got rid of the Medicaid expansion. That would be 15 million Americans that would be expelled from this program. You anger the Republican governors and you create a big political mess. Trump is saying we want a stable transition from that's not working to a better way.

GIGOT: You support that?

RAGO: I would, definitely.

GIGOT: Kim, what about the political risks here for the Republicans, particularly in the strategy, because the Democrats aren't going to help them much at all. They will do this through something called reconciliation, which means you only need 50 votes. But they don't have a lot to spare in the House or Senate, the Senate in particular. Could this thing fail?

KIM STRASSEL, WASHINGTON COLUMNIST: That was the importance of what Trump said today, telling everyone, you have got to get on board to not just repeal, but to come up with a replace plan. And also, to put some political capital into it and make sure it works. Because this was something we campaigned on, people, and everyone in America is waiting for us to do something. This was important.

I think in some ways that Trump message maybe has put aside the question of whether you move ahead with replace. Now the discussion you are having is about the details that joe mentioned over the fight between refundable tax credits or straightforward tax deductions.

GIGOT: That's fine. We've had the debate for a long time.

STRASSEL: Right.

GIGOT: And you can debate the merits of that.

But there are a lot of people in the House, Kim, I keep hearing, Kim, that say, look, just repeal it. A lot of these people, like Mr. Meadows, they are -- they're in save seats. The only challenge they are likely to get is from the right. They can sit back and oppose this, but could they be willing to kill the repeal?

STRASSEL: Well, people are beginning to put pressure on them for that reason, saying I appreciate you are in a safe seat, but the rest of the party will end up carrying your water.

One other important thing happened this week. Paul Ryan, the speaker of the House, and Tom Price, who is finally installed at HHS, began meeting one-on-one with the skeptics out there, moving ahead, and are making progress. Remember, Paul Ryan runs this caucus different than John Boehner did.

(CROSSTALK)

STRASSEL: Yeah.

GIGOT: Yeah.

STRASSEL: You've already heard some very important people start to come around to the idea that there needs to be movement.

GIGOT: This is a real test of McConnell and Ryan, is it not, Dan?

DAN HENNINGER, COLUMNIST & DEPUTY EDITOR: I think it is. But the opposition, such as it is, Rand Paul and Ted Cruz, Congressman Meadows, the head of the House Freedom Caucus, they are talking as if Obama were still president. Donald Trump won the election.

GIGOT: Right.

HENNINGER: And Trump -- I think this is an opportunity for Trump to show leadership. We finally have one of these big legislative battles. He's going to have to drive the debate and show pork, as he did in his speech the other night, for what the House is trying to do. He will have to tell the back-benchers, either you are with me or standing out there against me, and which side are you going to be on? I'm the one who ran for president.

GIGOT: Joe, do you agree with the strategy of just pushing this ahead, which I think the Ways and Means Committee, will start to do next week, and just pushing this ahead. You will have a debate on it, but basically daring some of these people, if you want to keep ObamaCare in place, go ahead and oppose the bill.

RAGO: I think specificity will be important here, not only among the Republican skeptics, but the liberals who are saying you are going to leave millions of people dying in the streets.

The other smart thing they're doing is they are working off a bill Tom Price drafted called the Empowering Patients First Act. It has a lot of co-sponsors in the House, including some of these skeptics.

GIGOT: All right, thank you, Joe.

When we come back, another top priority for Republicans could be gaining steam, as President Trump reportedly warms to a controversial proposal backed by Republican leaders. So is a border adjustment tax a good idea?  We'll have a debate next.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

TRUMP: My economic team is developing historic tax reform that will reduce the tax rate on our companies so they can compete and thrive anywhere and with anyone.

At the same time, we'll provide massive tax relief for the middle class.  We must create a level playing field for American companies and our workers.

(END VIDEO CLIP)

GIGOT: President Trump addressing another top priority Tuesday night, tax reform. The White House says it hopes to see an overhaul of the tax code passed before Congress's August recess. And the president is reportedly warming up to a controversial plan by House Republicans to implement a border adjustment tax, which would levy a 20 percent tax on goods and services imported into the U.S., while exempting U.S. exports.

We're back with James Freeman, and Wall Street Journal columnist, Mary Anastasia O'Grady.

I want to stipulate both of you favor tax reform. Right?

(CROSSTALK)

GIGOT: You think it would help growth. So, what we are fighting about here, or debating, is how to do it. Let's talk about the border tax.

Mary, you don't like it. Why?

MARY ANASTASIA O'GRADY, COLUMNIST: The main reason is because it explicitly favors exports over imports. That means imports are taxed and exports are subsidized. The overall objective is to grow the economy.

GIGOT: Right.

O'GRADY: If we want to grow the economy, we should not favor exports over imports because the U.S. is an open economy that thrives off of that openness, because it taps into low-prices, high-quality goods in other parts of the world that have -- where those countries have comparative advantages. And it uses the innovation and expertise and technology that we have to -- in order to allow us to be very productive.

GIGOT: Just to elaborate on that, James, you would not be able, if you used products that were imported, to write those off as expenses?

JAMES FREEMAN, ASSISTANT EDITORIAL PAGE EDITOR: Right.

GIGOT: Now, isn't that industrial policy from Congress?

FREEMAN: No. It seems like it favors exports and disadvantages imports.  I think a lot of people thought that was a good way to sell it to Donald Trump. But it actually doesn't do that. There is a problem here they need to market it better. But --

GIGOT: Why would they want to do that?

FREEMAN: Because what you are really doing is just saying is this is -- I think all economists we admire would say you want to tax consumption as opposed to people's work, savings, investment. So you are saying we are going to tax stuff that is consumed in the United States, whether it's imported or made here, same tax. What we don't want to tax is production.  So stuff that goes overseas and gets taxed over there, we are not also going to tax here. As you said, this is a little bit of a debate between tastes great and less filling.

(LAUGHTER)

Because we are talking about much lower rates, a smaller money grab from Washington. And the question is, how do you do that?

(CROSSTALK)

FREEMAN: -- all the way down to 15 percent --

GIGOT: There is no question, Mary, that everybody agrees, if this happens, you are likely to see an increase in the value of the dollar that would adjust over time, and you would have a big transition period. Tell us about that.

O'GRADY: James just helped make my point that it's a gimmick.

FREEMAN: What?

O'GRADY: Because it's a gimmick, that's one of the big problems with it.  The idea that companies buying imports from overseas and making things are consumers. They are producer. This is making them more efficient.

Secondly, as far as the currency, it might push up the value of the currency because you would have more demand for dollars --

GIGOT: Right.

O'GRADY: -- under this circumstance. However, total imports and exports are about -- less than 1 percent of total dollars traded. The idea that this is somehow going to be compensated by a rise in the dollar is preposterous. On top of that, if you do have that rise in the dollar, the assets that Americans hold overseas will be greatly harmed.

GIGOT: That's a big deal. Even Marty Feldstein (ph), who supports it, says three percent of U.S. assets. That's $2.7 trillion.

FREEMAN: Look, we actually don't have to wonder what will happen because this -- in some form, this type of tax has been employed different places in the world for over 100 years. The answer is it doesn't fundamentally change trade relationships because the currencies adjust. Currencies fluctuate a lot all the time, as Mary knows, because, unfortunately, we don't have gold-based currencies. We have fiat-based currencies. This is going to be within that normal rate of change. But the end result is, remember, this horrible system we have got now, highest industrialized tax rate in the world, taxing stuff overseas, even it's been taxed by foreign governments, this is a way to say we are going to tax what's consumed here and not --

(CROSSTALK)

GIGOT: Mary, last word?

O'GRADY: James' position is, don't worry about any of this because it's not going to affect our trading relationship at all because the dollar will do you give up and everything will be the same as when we started. Why do it in the first place? Why not just give us a flat tax and get out of our face in terms of whether we are buying or selling from abroad.

GIGOT: OK. All right. We're going to continue this very nice debate.

Thank you very much.

Still ahead, Attorney General Jeff Sessions under fire for his meetings with a Russian diplomat. Will the controversy cloud the administration's efforts to push its agenda forward?

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

JEFF SESSIONS, ATTORNEY GENERAL: Let me be clear, I never had meetings with Russian operatives or Russian intermediaries about the Trump campaign. And the idea that I was part of a, quote, "continuing exchange of information" during the campaign between Trump surrogates and intermediaries for the Russian government is totally false.

(END VIDEO CLIP)

GIGOT: Attorney General Jeff Sessions recused himself Thursday from any current or future investigation into Russia and the 2016 election after it was revealed that he twice had contact with a top Russian diplomat during last year's presidential campaign. Then-Senator Sessions met with the Russian ambassador to the United States at Republican National Convention in Cleveland in July and again in September in his Senate office, something he did not disclose during his Senate confirmation hearing in January.

We're back with Dan Henninger, Kim Strassel and James Freeman.

Kim, how much trouble politically do you think the attorney general is in?

KIM STRASSEL, WASHINGTON COLUMNIST: Now having recused himself, I doubt he's in much trouble at all.

Look, there is no evidence whatsoever of any wrongdoing. In this capacity as a Senator, he had some meetings with ambassadors. It's a routine thing that happens in the Senate all the time. He has said he did not have any discussions about campaign-related things. And there is nothing to make us believe otherwise.

The problem that the Trump administration has is there are clearly people, holdovers from the Obama administration that are leaking this stuff out, and the Trump team of is making it easier for them to do so by not being clear about what has happened up to now.

GIGOT: OK, on that point, Dan, inexplicable to me. So if there is nothing wrong, why didn't Jeff Sessions just say, sure, I met with the ambassador.  Why not. Everybody does at some point or other. It's a good idea. Why this -- why the oversight?

DAN HENNINGER, COLUMNIST & DEPUTY EDITOR: Well, I cannot explain the oversight. But he did it. To have accusations of Russian intervention in the campaign while he was meeting with these, it was no big deal. And would you think a Senator that's been in office as long as Jeff Sessions would have known that.

GIGOT: If you're trying to hide something, you don't have a meeting in your Senate office.

HENNINGER: No.

GIGOT: I mean, that's like Grand Central Station. It's about as secret.

HENNINGER: And he had several staff members there as well, along with him.  But, once again, we are getting a mountain made out of a molehill. As Kim suggested, this is part of a larger flow of information out of the intelligence community.

We should point out, not a very well-known fact, The New York Times reported it last week, that day before the inauguration, Barack Obama issued an executive order permitting the National Security Agency to share what it had on this Russian intelligence thing with 16 different other intelligence agencies.

GIGOT: That was earlier in January, not the day before. But it was in January. Why is that important?

HENNINGER: That's important because they also shared it with the Congressional Intelligence Committees. This raw data is flowing all over the government. I mean it's a cornucopia for reporters who want to sight anonymous sources and leaks.

But bear in mind, there will be is no real proof that anything happened.

(CROSSTALK)

HENNINGER: That's the rawest data imaginable --

(CROSSTALK)

GIGOT: I want to step back a little bit, James, and just ask the question.  Let's look at the whole big picture of the Russia relationship with the Trump campaign. What do we know? What are the facts?

JAMES FREEMAN, ASSISTANT EDITORIAL PAGE EDITOR: We don't know much. We know lots of other politicians, like pretty much every other member of the U.S. Senate, Jeff Sessions and others in the Trump campaign, had communications --

(CROSSTALK)

FREEMAN: -- Russians.

GIGOT: The fact we know there was hacking of the Democratic National Committee --

FREEMAN: Right.

GIGOT: -- and the Clinton chairman, John Podesta. We don't know, do we, are there facts that's suggest collusion at all? Any facts?

FREEMAN: None. Zero. And this is really a potential huge abuse power, where you have the Obama administration investigating the party out of power. And I think the excuse here is, oh, well, we are looking at a foreign government as this legitimate intelligence. But if you can pull in anyone who contacts that foreign government, who is an American

(CROSSTALK)

FREEMAN: What is the case against Jeff Sessions?

GIGOT: But let's step back from Sessions for a minute. We discussed that.  But what about the larger story of the Russians -- I assume you are troubled by the hack.

FREEMAN: Well, the hacking. And what's been clear, the media keeps talking about hacking the election. We are not talk about voting machines.  We are talking about Russian hacking of e-mails that they think will embarrass U.S. politicians. For most of my lifetime, for most of the last century, the Russian government, sadly, has had efforts to embarrass our politicians and undermine our process. The Democrats are suddenly concerned about this, that's good. I think it's good the House and the Senate are looking into it. Where is the evidence that Americans have done something wrong?

GIGOT: Kim, what do you think the administration should do here? Because if you look at what happened with Hillary Clinton, it was the tendency to be secret, the tendency to obfuscate, the tendency to trim the facts that got her into trouble over time. Shouldn't the Trump administration just say, let's let it all hang out, let's find out what happened here.

STRASSEL: Bring in an excellent crisis manager, round up your staff, make clear that you get down on paper who talked to the Russians whenever, whatever, put it all out there, get ahead of it. And, yes, call for the investigations in the Senate and the House to be expedited and put everything out.

GIGOT: Special prosecutor?

HENNINGER: Absolutely not, because that's just kind of job there. I would go so far as to say maybe another Rob Silverman Commission that looked into the weapons of mass destruction issue during the Bush administration.  Because we've got the crisis of confidence in the intelligence community again.

GIGOT: All right.

Still ahead, President Trump unveiled his plans to rebuild the American military. But is a $54 billion hike in defense spending enough? We'll ask House Armed Service Committee Chair Mac Thornberry, next.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

TRUMP: I asked Congress to eliminate the defense sequester and support my request for a great rebuilding of the United States military and the United States Navy.

(CHEERING)

TRUMP: After years of endless budget cuts that have impaired our defenses, I am calling for one of the largest defense spending increases in history.

(END VIDEO CLIP)

GIGOT: President Trump Thursday on the USS Gerald R. Ford in Newport News, Virginia, touting his plans to rebuild the American military. The White House announcing this week that the president's budget will call for a $54 billion increase in defense spending, a move the administration plans to pay for with cuts to the State Department and other federal agencies.

But the chair of the House Armed Services Committee said this week that the spending hike is not enough.

I spoke with Texas Congressman Mac Thornberry earlier and asked him why.

(END VIDEOTAPE)

REP. MAC THORNBERRY, R-TEXAS, CHAIRMAN, HOUSE ARMED SERVICES COMMITTEE:  Well, I think the president, as he says, inherited a mess, and is absolutely committed to rebuilding the military. But I think all of us have underestimated how much damage has been done to our military through the sequester and all of the things that happened over the past few years.

GIGOT: You are happy he's going to lift the sequester that cuts defense with discretionary spending?

THORNBERRY: Yeah. I think -- remember, the sequester was designed to force changes in mandatory spending, and it failed, because there have been no changes in mandatory spending. What's happened is a that defense has been disproportionately cut. A lot of people don't realize half the cuts under sequestration have come from defense. The defense is 14.7 percent of the federal budget. That's obviously not fair, but it's also not smart.

GIGOT: How big of an increase are you really talking about? We are now, as a share of the economy, heading to about 3 percent of GDP on defense spending. We were up to 4.7 percent in 2010. Do you think we have to go back to those levels?

THORNBERRY: Well, the goal has always been -- 4 percent is something that's reasonable. But we just looked at dollars and cents for the next fiscal year. If you want to fix the planes, get the ships back in the water, add to the end-strength of the Army, like the president proposed, it would take about $640 billion for fiscal year '18. That is obviously, about $40 billion more than the White House has floated. If you don't want to do all those things, you need to be clear about what you are not getting fixed. So that's why I think we need to not just talk numbers, but what those numbers buy you.

GIGOT: We are now, other than operations and maintenance, which you mentioned, where are the biggest deficiencies? Are they in the readiness of the Army, for example, or the maintenance of the aircraft, or do we need to build more ships right away?

THORNBERRY: I think maintenance is the most pressing immediate issues. We had testimony a couple of weeks ago that half of the planes the Navy has cannot fly today.

GIGOT: OK.

THORNBERRY: More than half of the planes, actually, they said, the Navy cannot fly. Out of 58 brigade combat teams in the Army, only three of that number are at the highest level of readiness. The Air Force is short 1,500 pilots and about 3,000 to 4,000 maintainers.

GIGOT: What you are talking about doesn't even get you into the new shipbuilding regime to get to a 325 or, much less, a 350-ship Navy. You are talking about making sure our combat forces are ready to be deployed if we face an imminent threat.

THORNBERRY: You're right. Actually, I'm talking about something more basic than that. Many of our combat forces cannot deploy today. And what we have also seen is, in my view, a disturbing increase in accident rates even during training. Some of our pilots are getting less training hours in the cockpit than the adversaries they would be flying against. So repair of what we have got is an urgent necessity.

GIGOT: Even $40 billion in a year is a lot of money, relatively. Where's it going to come from, right? The president is saying he will make it up with comparable cuts. But one of those cuts they are talking about is to the State Department, diplomats and to foreign aid. Jim Mattis, the defense secretary, and others, say that could hurt our security because we need to pay for that overseas. Are you willing to make that kind of trade- off?

THORNBERRY: I agree cuts to the State Department increase our security problems, not lessen them. One of the reasons we have had to count on the military to do so many things over the past few years is because the State Department and other agencies are not capable of doing them. So I think we have to be smart about it.

But, again, just back to basics, two-thirds of this federal budget is in mandatory spending. Defense is 14.7 percent of the budget. Surely, we can figure out a way to fulfill the first responsibility of the government, which is to defend the country.

GIGOT: OK. But what are you willing to see cut? You say you want to going to mandatory spending. The president said I'm noting touching Medicare and Social Security. You want a trillion-dollar infrastructure program, to have a big tax cut. Something has got to give here. Will it be the budget deficit? And are you willing to see more larger budget deficits to spend more on defense?

THORNBERRY: I am. Here is the deal. We cannot wait to have safe airplanes for our pilots to fly in until we get our budget house in order.  That's not fair to them and it's not fulfilling that first responsibility of the federal government.

Now, there's a lot of domestic programs I personally would be happy to cut.  As I talked about, EPA and all of things. I'm fine with that. The real money is in mandatory spending. This has got to be a back-and-forth between the administration and Congress to figure out how to do it.

Our job on the Armed Services Committee is to be clear about what it takes to fulfill the president's promises to repair and rebuild our military.  And 603 doesn't get it done.

GIGOT: But if push comes to show, would you be willing to see an increase in the budget deficit to do this spending that you say we require on the military?

THORNBERRY: Yeah. No, I think I've been clear, absolutely, because the first job of the federal government to defend the country. And we can't -- I mean, I don't want to overhype, but this is literally about the life and wellbeing of the men and women who serve our nation in our military. We owe it to them to make sure they have the training and equipment they need every time we send them on a mission. We can't wait until we have a balanced budget to do that.

GIGOT: All right, thank you, Chairman Thornberry. Appreciate it.

THORNBERRY: You bet.

(END VIDEOTAPE)

GIGOT: When we come back, as the president calls on the FDA to speed up its drug approval process, the World Health Organization warns that new antibiotics are urgently needed to combat the growing risks from superbugs.

(COMMERCIAL BREAK)

GIGOT: President Trump on Tuesday called on the Food and Drug Administration to speed up the drug approval process in the hope of helping more patients, like Megyn Crowley, a rare-disease suffer, who was one of the president's guests at his address to Congress. The president's call comes as the World Health Organization releases an alarming new report on 12-drug resistant superbugs in a bid to urge businesses and government to get serious about developing and approving new antibiotics.

We are back with Dan Henninger and Joe Rago. And Wall Street Journal editorial page writer, Kate Bachelder Odell also joins the panel.

All of you have written extensively about the EPA over the years.

Kate, what does the president need to do to drive this faster cures?

KATE BACHELDER ODELL, EDITORIAL PAGE WRITER: His first priority, appointing a good FDA commissioner. He hasn't named one yet. But Congress has twice, in 2012 and last fall, directed FDA to pick up the pace on cures and innovations, especially for rare diseases and orphan (ph) drugs when there is no treatment. The thing is, FDA isn't taking full advantage of this legal authority. So what you need is an appointee who changes the culture at FDA.

GIGOT: What else the problem at FDA, Joe?

JOE RAGO, EDITORIAL BOARD MEMBER: I think Kate put her finger on it. It's the culture. The FDA, its identity is grounded in power and control, whether over drug makers, especially drug makers, pharmaceuticals, but it extends to a quarter out of every dollar spent in the U.S. economy, and they are not going to give up that control easily.

GIGOT: You think the FDA commissioner can make a difference?

BACHELDER ODELL: I do. One example would be Scott Gottlieb, who knows the agency, worked in it in George W. Bush's administration. And he's written extensively on our pages about why generic drugs are slow to come to market and more, and understands the dysfunction.

GIGOT: All right.

HENNINGER: One of the things at the center of these things, you have got to do the clinical trial to the get a drug approved. They are huge clinical trials, which is hard in the case of antibiotics, because the population is so small with these superbugs. And if you read the "New England Journal of Medicine," there are endless articles about redesigning these clinical trials in a way that makes them more effective.

GIGOT: Some people get a placebo.

HENNINGER: Some people get a placebo. There's endless issues.

But the 21st Century Cures Act that Congress passed in the last session speeds up that process. And there is a lot of institutional pushback against doing that. They say it will slower standards. But you have got to do something like that if you are going to get the new therapies.

GIGOT: You're an optimist on that, Faster Cures Act will make a difference?

RAGO: I think it makes important progress at the margins, on the superbug problem, for instance. I think it's a step forward. The FDA will need radical change if we are going to tap the potential of modern medicine.

GIGOT: And so much of modern medicine, Kate, is geared towards more individualized treatment, as we -- biologic treatment. You've been writing about muscular dystrophy boys who did get the drug approved but over much, much opposition from the FDA bureaucracy. Are they rethinking these kinds of trials?

BACHELDER ODELL: Yes. There is basically a question, like Dan said, do you need a placebo-control trial when there is no other choice? Trump mentioned this as well, saying he doesn't understand why the FDA denies terminal patients drugs because it might harm them when they only have weeks or months to live.

GIGOT: The placebo means you get a --

(CROSSTALK)

RAGO: Sugar.

GIGOT: Sugar, exactly. So if you are dying, and they give you a placebo for the benefit of future patients, they say, it doesn't help you.

BACHELDER ODELL: Remember, the drug you just mentioned was for children.  So --

(CROSSTALK)

GIGOT: With muscular dystrophy.

BACHELDEDR ODELL: -- problem.

GIGOT: Right. That sort of thing.

You know, we have been pushing -- Dan, you and I have been pushing this stone up the Hill for decades, frankly.

HENNINGER:  Yeah.

GIGOT: And we make progress on an AIDs, for example, or we make progress on an Alzheimer's treatment or a cancer drug that Joe has written about, and, yet, it's always -- you have to fight every single time.

HENNINGER: Some of the people at FDA have been there opposing it as long as you have and I have been fighting for it, for the cure.

(LAUGHTER)

But where the rubber hits the road, it's become so expensive to develop these drugs. And as a result, the drugs themselves are very expensive.  You have got a tension here between what the FDA is going to do and the fact that drugs are becoming impossibly expensive. Something's got to give.

GIGOT: Then you get some drug that they approve that turns out to damage patients down the road, and then the culture clamps up again and slows everything down.

All right, well, thank you all.

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

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GIGOT: Time now for our "Hits & Misses" of the week.

Kim, first to you.

STRASSEL: Paul, a big hit to President Trump and new EPA administrator, Scott Pruitt, for taking steps this week to immediately begin revoking a pernicious rule called the Waters of the United States Rule. This was a huge power grab in an administration that loves power grabs. It would have essentially given the federal government a very expansive reading of the Clean Water Act, the ability to regulate every river, stream and mudpuddle in America. This is a big advantage back for developers, farmers, anyone, private-property owners, and also a good mark for the rule of law.

GIGOT: All right, thanks, Kim.

Kate?

BACHELDER ODELL: This is a hit for interior secretary, Ryan Zinke, who was confirmed this week. He showed up on the job on his first day riding a horse. The horse's name was Tonto, which seemed appropriate, if not all that original. But he immediately got to work then rescinding Obama-era rules on lead ammunition bans and more. And my question is, will Rick Perry let this stand?

GIGOT: No, he's -- he will ride a better horse.

All right.

(LAUGHTER)

O'GRADY: Paul, this is a miss for new U.S. Bank Stadium in Minneapolis, Minnesota. That's where the Minnesota Vikings -- that's a football team -- play and where scores of birds were killed in the migratory season in 2016 because they flew into the reflective glass. The problem is the stadium is on the Mississippi flyway, which is a big migratory path for birds going to the Gulf of Mexico and Central and South America. I always knew football was a dangerous game.

GIGOT: Be hard picking on the Vikings from Wisconsin.

All right, here you go.

FREEMAN: Football is a rough game. The birds ought to know that going in.

(LAUGHTER)

But, Paul, I think this is hit. The U.S. Golf Association and the Royal and Ancient Golf Club are coming out with new rules for golf to move things along a little bit. We don't know whether or not they have a plan to make golf interesting. But one thing that's good news in here is you can keep playing with a damaged club, even if you broke it in anger.

(LAUGHTER)

GIGOT: As some of us have.

FREEMAN: Yeah.

GIGOT: That's it for this week's show. Thanks to my panel and to all of you for watching. I'm Paul Gigot. Hope to see you right here next week.

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