This is a rush transcript from "Journal Editorial Report," May 6, 2017. This copy may not be in its final form and may be updated.
(BEGIN VIDEO CLIP)
REP. PAUL RYAN, R-WIS., SPEAKER OF THE HOUSE: Today was a big day, but it's just one step in this process, an important step. We still have a lot of work to do to get this signed into law. And I know that our friends over in the Senate are eager to get to work.
(END VIDEO CLIP)
PAUL GIGOT, HOST: Welcome to the "Journal Editorial Report." I'm Paul Gigot.
A long-awaited victory for Speaker Paul Ryan and President Donald Trump Thursday as the House narrowly passed a bill to repeal and replace Obamacare. And while the plan, as it stands, faces long odds in the Senate. President Trump says the process has served to unify the party.
(BEGIN VIDEO CLIP)
PRESIDENT DONALD TRUMP: This has brought the Republican Party together. As much as we have come up with a really incredible health care plan, this has brought the Republican Party together.
(END VIDEO CLIP)
GIGOT: 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, how did they pull this off? It was dead in the water for a while.
JOE RAGO, EDITORIAL BOARD MEMBER: I think there was a sense of political urgency. This was really a big win for the House to overcome the defeat in March of the original bill. And they made some policy compromises. If you look at the people who voted for this bill, spanning the conference from moderates to really hardline conservatives, they came together on a great bill.
GIGOT: Well, it's not perfect. We have written critically of some parts of it. But you think it's a substantial down payment on the pledge to repeal and replace Obamacare?
RAGO: Yeah, this is directional progress. It's moving away from the central planning and government control of Obamacare to a more free market system. Look, we have seen that getting an ideal bill would be really hard with this fractious Congress.
GIGOT: With the -- 60-vote barrier in the Senate. You couldn't do it.
RAGO: Sure, how about a 50-vote barrier in the Senate which is what they are working with now. But it's moving in the right direction and that's really what matters. You have to think about this as a multi-year, maybe even multi0decade process to start the fix the health care.
GIGOT: They had to demonstrate, Dan -- you have written about this. You wrote a column this week saying, what are Republicans for? If they couldn't do this, the voters could, I think, and even Republican voters say what can they do?
DAN HENNINGER, COLUMNIST & DEPUTY EDITOR: Yeah, they handed the control of the Congress to them, plus the presidency, you're supposed to do something when you have that sort of full government control, and it looked like they were on the brink of not being able to do that.
I have to agree with the point that President Trump just made. It's about -- I think it's a down payment hopefully on party unity as opposed to the basically fracturing and chaos that we have experienced over at least -- at least since about 2010. And you have to understand, a lot of the new members of Congress haven't been there for that long. They have spent their entire careers in opposition --
HENNINGER: -- fighting Obama. Have raised money, given hundreds of speeches, all about opposition. And I think this experience finally made clear to them that if they only do that, they will fail. You could see them coming around during this compromise over the House bill to the point where they said, if we don't figure out a way to work together, we will be seen as failures.
GIGOT: Kim, what role did Donald Trump play in making this happen?
KIM STRASSEL, WASHINGTON COLUMNIST: He played a very smart role. Go all the way back, he laid out some principals about what they we wanted to see in a health care bill and then he let the House get on with it, but stepped in whenever was necessary to host a meeting, lobby the right people. In the last few days he was on the phone with individual Congressmen, exerting pressure and in general making clear that he was still open to yet more deals, final compromises. Remember, at the very end what got the final votes was an agreement with Michigan Congressman Fred Upton for another $8 billion to help people with preexisting conditions. And so he was very much about making deals.
GIGOT: Kim, I want to - OK, you're talking about an inside game, right? You're talking to members, working one-on-one, getting them in for small groups. That's something that President Obama rarely did. President Obama hated that kind of personal-engagement politics. This is what Trump is really good at. On the other hand, Obama was quite good at giving speeches and selling ideas to the country, whereas President Obama -- President Trump not so good at that, and really hasn't done very much other than the occasional tweet to sell the details of this plan. And that's one of the reasons, I think, the plan right now isn't -- isn't all that popular in the polls.
STRASSEL: It's actually health care is not his forte. Going back to primary debates, he was ridiculed sometimes at not having a strong grasp of it. And so you have seen Mike Pence give some very good speeches on the policy questions and what they want to have done. Tom Price, who is running the Health and Human Services Department, knows this inside and out. But the chief spokesman, you're right, has not been much of a force for this. That has not provided a lot of direction for the party.
GIGOT: All right, we move to the Senate.
Joe, the same media folks that said this could never pass the House now say can never pass the Senate. What are the prospects?
RAGO: I actually think there are a lot better than the media coverage has, I think, led readers to believe. I think a lot of media people are invested in failure. The Senate is going to adopt the basic architecture of this bill, they are going to probably increase the tax credits for less- affluent people, they're maybe going to delay transition to Medicaid block grants to make it less about harsh fiscal policy, but they're going to put a better public face on this, try to resell it to the public, but I think the votes are there.
GIGOT: Things like the core devolution of Medicaid to the states, that's going to happen?
RAGO: That's definitely going to happen.
GIGOT: Tax cuts are going to be repealed; is that correct?
RAGO: Yes. I think they are going to keep the same basic architecture of this bill, make enough policy compromises to get to 50.
GIGOT: Dan, briefly. This is again a binary choice for Republicans in the Senate and in the whole Congress, you either stick with the status quo if you don't pass the bill --
HENNINGER: Which is Obamacare.
GIGOT: -- which is Obamacare, which is deteriorating, or you pass this in some form?
HENNINGER: That's exactly right. The Obamacare status quo isn't working. I mean, everybody knows that these exchanges are falling apart in states like Iowa, Kansas, New Hampshire.
GIGOT: Even Virginia. Aetna pulling out of Virginia this week.
HENNINGER: Big insurers pulling out of exchanges. The goal is to take a very complicated law, a very complicated subject and make it so that the subsidies allow it to work, and policies are cheap enough that young people will join and make the premiums come down, make it affordable.
GIGOT: All right, Dan.
HENNINGER: They'll get to that goal.
GIGOT: All right, Dan, thank you.
Up next, both sides are claiming victory as Republicans as Democrats strike a deal to keep the government running through September. So who came out on top in the shutdown showdown?
(BEGIN VIDEO CLIP)
MICK MULVANEY, WHITE HOUSE BUDGET DIRECTOR: They wanted a shutdown. We know that. They were desperate to make this administration look like we couldn't function, like we couldn't govern. And we know that a large part of their base, especially their left-wing base, wanted a shutdown and certainly didn't want them to cut a deal with us. That's why I think you are seeing them crowing about their success, is to cover up the fact that they actually cut a deal with President Trump.
(END VIDEO CLIP)
GIGOT: White House budget director, Mick Mulvaney, blasting Democrats and claiming victory for the administration following a deal this week to avoid a government shutdown at least for now. The $1.1 trillion spending bill funds the government through September. But the threat of a future stand- off still very real, with President Trump tweeting Tuesday that the country needs "a good shutdown to force a confrontation over the budget."
We are back with Dan Henninger, Kim Strassel and Joe Rago. And Wall Street Journal columnist, Bill McGurn, also joins the panel.
So, Kim, is Mulvaney right that the Democrats wanted a shutdown and Republicans were smart not to give them one?
STRASSEL: I don't know if Democrats really wanted a shutdown either. They remember what happened to Republicans when Republicans shut down the government a couple of years ago. The people that provoke, it tends to get the blame for it, and so they were willing to give something in the end to keep it open. I do think it's the case, though, that Republicans got a little bit more than the press gave them credit for. These budget fights are always a mess, especially when they are done in an omnibus fashion. It's always the case that if you wanted those Democratic votes to get it through, that this was going to be messy, no one got a clear victory here.
GIGOT: So anybody disagree with Kim here, Bill, about who got the most out of this?
BILL MCGURN, COLUMNIST: No, I think she's about right that the Republicans did get something. I mean, what worries me is Chuck Schumer said this is the way Washington should work.
GIGOT: One bill, $1.1 trillion.
MCGURN: Right. I think Paul Ryan called it a game-changer because we got increases in defense spending without corresponding increases elsewhere. It's a kick-the-can kind of thing. And you know, that tweet that you mentioned by President Trump, the shutdown, he was right in the first part. He said the reason we have this is the 60 votes in the Senate
MCGURN: If we get more Republicans in the Senate or we take another look at this.
GIGOT: They did get, to Bill's point, the Republicans did break the Obama pattern of saying, if you want increase of $1 in defense, you have to have increase of $1 in other domestic spending. Instead, you got a bigger increase in defense and a bigger increase in Homeland Security and smaller increases in domestic spending. Here is the issue. This isn't draining the swamp. This isn't big change in Washington. This is basically status quo government.
HENNINGER: Well, it's -- on the defense side, it's the old guns-and-butter debate that you always have, and currently have between Republicans and Democrats. The Democrats do not want to spend money on the military. And that one-for-one deal made it clear that they want money spent on the domestic accounts. Donald Trump has said that the defense spending has been starved for years, there are national security concerns all over the world now, we need a military restored that can deal with that, and he was absolutely intent on breaking that formula, and he has done that. And I think that's a basis to build on for the next budget.
GIGOT: Joe, it's not a lot of money for defense. I think it's $15 billion or something like that.
RAGO: You have to remember this is only a five-month bill.
RAGO: So I think the problem here is that Republicans cannot pass a budget in the House using only Republican votes.
GIGOT: Why not?
RAGO: There are some Republican who is will never vote for a spending bill under any --
GIGOT: Any spending bill?
RAGO: They vote for balanced budget or whatever but that's not realistic in my view. If they can't show the same kind of unity that they showed on health care, they have to go for Democrats to votes, and that empowers Nancy Pelosi.
GIGOT: Hey, that's not 60 votes, Bill. That's Republican dysfunction.
MCGURN: Right. That's the problem.
It also comes in the thick of a health care vote. To me it's kick the can. I don't think it's necessarily an awful deal. If I had to trade off to get the health care vote --
HENNINGER: There's one big $15 billion gorilla in the room, and that's Donald Trump's wall. The Democrats said they pulled the wall out, he got $1.5 billion for it. But in the next budget, Trump is going to want $15 billion for that wall, and that's a lot of money. There are some Republican who will oppose it and there are Democrats that say that it will never happen and it'll the tail-wagging the dog of the budget.
GIGOT: And Trump is going to want it because it's so symbolic to him.
GIGOT: But there are a lot of Republicans who don't like it either. And my personal views is that it's a waste of resources as well.
But Kim, the president said, look, I think maybe we need a shutdown. As to your earlier point in the segment, is it a good idea to advertise that you want a shutdown or you may want to shut down?
STRASSEL: Not necessarily. And if Republicans are smart, what they do here is try to get back to regular budget order. You pass 12 different spending bills and then the stakes are simply not that high. You can't get one through, maybe a portion of government shutdown instead of the whole entire thing.
GIGOT: All right, thank you, Kim.
When we come back, President Trump signs an executive order on religious freedom, but did it fall short of what some Christian conservatives had hoped for? We will ask Ralph Reed, next
(BEGIN VIDEO CLIP)
TRUMP: Under my administration, free speech does not end at the steps of a cathedral or a synagogue or any other house of worship. We are giving our churches their voices back. We are giving them back in the highest form. With this executive order, we also make clear that the federal government will never ever penalize any person for their protected religious beliefs.
(END VIDEO CLIP)
GIGOT: That was President Trump Thursday signing executive order on religious liberty that directs the IRS relax a provision in the tax code known as Johnson Amendment that bans churches and other tax-exempt organizations from engaging in political speech and campaign activities. The order also provides regulatory relief for organizations that object on religious ground to an Obamacare provision to requiring employer to provide certain health services, including coverage for contraception.
Ralph Reed is the founder and chairman of the Faith and Freedom Coalition. He joins me from Atlanta.
Good to see you, Ralph. Thanks for coming in.
RALPH REED, FOUNDER & CHAIRMAN, FAITH & FREEDOM COALITION: You bet, Paul. Good to be with you.
GIGOT: You said this order is a good first step. How so?
REED: It's a very important first step because there are ministries and churches, Paul, that over decades that have been subjected to harassments, audits that have gone on for years and remain open-ended, administrative persecution, such that they had to spend tens of millions of dollars to try to keep from losing tax-exempt status simply because the head of that church or ministry made one statement in their capacity as a private citizen in support of a candidate of their choice. That's wrong and violates the First Amendment. This -- this is something that has had a chilling effect on the political speech, First Amendment rights of people of faith, and Donald Trump put on end to that. We are thrilled. It's just a first step. I want to be clear --
GIGOT: Yeah, I want to --
REED: -- we still support full statutory repeal of the Johnson Amendment. And that should be done legislatively.
GIGOT: I want to talk about the Johnson Amendment enforcement. The argument that you hear from a lot of folks, you know what, the IRS doesn't enforce this very much at all right now, so this amendment doesn't do very much more than just say to the IRS, enforce it even less. What's your response to that?
REED: My response to that is the so-called experts that are pointing out that there's only been one case where a church lost their tax-exempt status under provision, and that is correct, obviously, haven't been running a major church ministry or Christian or other faith-based college or university in the last 30 years.
GIGOT: So they have to pay a lot of money to defend themselves against investigations, is that the problem?
REED: Paul, millions. I mean, this has been a full employment act for tax attorneys to fight the IRS at the cost of tens of millions of dollars that could have been used to feed the poor, to spread the gospel, to heal families and marriages, to get people off drugs and alcohol, and that money has gone to keep the right of people of faith to defend their First Amendment rights. And there's no reason for that kind of harassment. Look, if there's a problem in American politics today, if there's a problem with our civic discourse, it's not being caused because people of faith are raising their voices, whether it was the civil rights movement in the '60s or the pro-life and profamily movement in more recent times. This is a bright thread in the fabric of political discourse that we should be encouraging and not discouraging.
GIGOT: Let me ask you another -- one objection that folks on the right have raise it doesn't go far enough to protect people of religious conscious, say, a photographer, a cake-maker, who says, my religion says I can't serve at a gay wedding, for example, that there's no protections in this order for them. And there was, at least some people thought, in the earlier draft that was leaked. Now, it's out. What's your response to that?
REED: Well, my response to that is if you actually read the text of the executive order -- and I have read it -- what it does is it directs the secretary of Health and Human Services to write new regulations that protect religious liberty with respect to what remains of Obamacare as we dismantle it. That's the Little Sisters of the Poor case. The other thing it does is it directs attorney general to provide further guidance to protect First Amendment rights, free speech rights, and religious liberty across all departments of government. So this is going to be incremental process.
But, Paul, do I want to be clear about something. I helped pass the Federal Religious Freedom Act in the early '90s, and there are now state religious freedom statutes on the books in over 30 states. Paul, there has never been a case, never been a case in 25 years of litigation, under any state religious freedom statute or under the federal statute, that gives the right of a business run by a person of faith to deny services to someone because they are a gay or lesbian. That has been litigated and never won. And I don't think you can solve that by executive order. I think the critics are asking for something that can't be accomplished under executive order.
GIGOT: Would you agree with me that the most significant act that this president has made so far was putting Neil Gorsuch on the Supreme Court?
REED: No question about it. One of the things that I was concerned about -- and I'm not an attorney and I'm hoping the case can proceed -- but the Little Sisters of the Poor case is still technically pending before the Supreme Court.
REED: They were deadlocked 4-4 before Gorsuch was confirmed. I believe now we have a 5-4 pro-religious freedom majority back on the court. That case was remanded back to the appellate court. I hope it can still proceed. Because even though President Trump solved a good chunk of the problem with his executive order, a future president could recreate the problem. So I hope the Supreme Court will still take the case and dispense with this mistreatment of faith-based ministries and their right to express their religious freedom.
GIGOT: Ralph Reed, thanks for coming in.
REED: You bet.
GIGOT: Still ahead, as Hillary Clinton points a finger at the FBI for her election loss, Director James Comey says he'd do it all over again.
(BEGIN VIDEO CLIP)
HILLARY CLINTON, D-FORMER SECRETARY OF STATE & FORMER PRESIDENTIAL CANDIDATE: It wasn't a perfect campaign. There is no such thing. But I was on the way to winning until the combination of Jim Comey's letter on October 28th and Russia WikiLeaks raised doubts in the minds of people who were inclined to vote for me but got scared off.
(END VIDEO CLIP)
GIGOT: That was 2016 Democratic nominee, Hillary Clinton, this week in a rare public appearance acknowledging problems with her presidential campaign, but telling a New York audience that she was on her way to victory before WikiLeaks and FBI Director James Comey got in the way.
Comey, though, is defending his decision to inform Congress in late October that he had reopened an FBI investigation into Clinton's use of a private e-mail server, telling the Senate Judiciary Committee Wednesday that going public 11 days before the election was one of the world's most painful experiences but that he would do it again.
(BEGIN VIDEO CLIP)
JAMES COMEY, FBI DIRECTOR: This is terrible. It makes my mildly nauseous to think that we may have had impact on election but, honestly, it wouldn't change the decision. Everybody who disagrees with me has to come back October 28th with me and stare at this and tell me what you would do. Would you speak or would you conceal?
GIGOT: We are back with Dan Henninger, Kim Strassel, William McGurn and Mary Anastasia O'Grady.
Kim, Jim Comey nauseous about all of this. He did mention that he intervened in July, first, to exonerate Hillary Clinton from a crime for passing along confidential classified information but what else did we learn from Comey this week that we didn't know?
STRASSEL: He has handled this so badly all along. You saw him in that hearing, again, he actually tried to throw Bill Clinton under the bus and his former boss, Attorney General Loretta Lynch, saying that it was because of their meeting on the tarmac that he was force today act.
But we did hear a couple of other interesting things come out of this hearing. The top one being the information that Huma Abedin, Hillary Clinton's aide, had routinely, according to him, sent classified e-mails to the laptop of her husband, Anthony Weiner, to print out, and he didn't have any classified access to any of these. So there was a lot of questions for Republicans about whether or not Mrs. Abedin ought to be held to some sort of account for mishandling classified information.
GIGOT: Comey used the same explanation that he had given for Hillary Clinton, we couldn't prove intent, which is --
STRASEL: Yeah, it's an entirely new standard. That is not what the statute said. That's also how he got Hillary Clinton off. And he said, well, we couldn't prove that she intended to mishandle classified information. There are people sitting in jail, Paul, who never had an intent to mishandle information, but that was not what was applied to them.
GIGOT: Bill, here's the other issue with Loretta Lynch. She never formally rescued herself. She met him on the tarmac, but she never, as attorney general, formerly rescued herself. Comey took it upon himself to say, I am the authority who is supposed to intervene here. That's -- there's no authority for him under --
GIGOT: -- Justice Department process.
MCGURN: It goes with what you said earlier. We had in this hearing is all about Jim felt, what Jim feels about the election, what Jim feels Vladimir Putin feels about this, with no real information. He said there was no evidence on the Trump charges.
But your main point at the beginning is the most important one. It didn't start on October 28th, that's the Hillary Clinton narrative. It started in July when he made this foray into public realm. And now we see that he thinks part of the reason he didn't trust DOJ. I think -- he asked what you would do, I think a principled man, if the Department of Justice is making a compromising investigation, is to resign and say why.
MCGURN: Rather than usurp powers that you -- he created this entire mess for himself back in July, commenting on an investigation that wasn't resulting in charge, which almost never happened.
GIGOT: Mary, let's turn to the First Lady Hillary Clinton and her explanation it was Comey and WikiLeaks.
MARY ANASTASIA O'GRADY, COLUMNIST: Yeah, keep telling yourself that, Hillary.
If you, Paul, presided over the debacle that she did in November, you would be looking for scapegoats also. And it's interesting how she always starts out saying, I take full responsibility, and then goes onto blame everyone else.
I thought one of the most interesting comments came from David Axelrod, who was an adviser to President Obama. And he said that it takes a lot of work to lose to Donald Trump.
O'GRADY: And, you know, if you look at the campaign, not going to Wisconsin, not going to Michigan, not reaching out to those voters, that's why she lost. It had nothing to do with Jim Comey.
GIGOT: She did go to Michigan at the end, though she never made it to Milwaukee. She lost narrowly in Wisconsin.
Dan, WikiLeaks, the Russian hacking stuff really didn't add that much to the campaign. Basically, all we found out is that some Democratic operatives didn't like Bernie Sanders. We knew that. And some of the Clinton operatives didn't like traditional Catholics. There wasn't much else that really influenced the campaign.
HENNINGER: Yeah, once again, one may dispute her assertion that her problems began on October 28th. I think it's generally seen -- and this is across political spectrum. Her problems began with the revelation of the private e-mail server. And the second problem she then held a press conference and gave no adequate answer or defense for why she had that server, kept the story alive throughout the entire campaign. That was when Hillary Clinton's credibility was significantly damaged. She never recovered from that.
GIGOT: Mary, that was in 2015, the spring of 2015 when that first story came out.
O'GRADY: I think there's something much broader here, that the Democratic wing, the wing that Hillary Clinton represents, is not recognizing, which this was a rejection of eight years of Barack Obama, it was a vote for the Supreme Court, and it was a cry for help from people who felt like they've been ignored by the Democratic Party.
GIGOT: All right. Still ahead Trump and Vladimir Putin to Kim Jong-Un. Is there something behind the president's praise of the world's strong men?
GIGOT: President Donald Trump raising some eyebrows recently with his seeming embrace of the world's strong men. Last weekend's invitation to Philippines leader, Rodrigo Duterte, alarmed human rights advocates and took even his own advisers by surprise. And on Monday, he told Bloomberg he would be honored to meet North Korea's Kim Jong-Un under the right circumstances. A day later, President Trump and Russian President Vladimir Putin had their third phone call, discussing the civil war in Syria and the possibility of a meeting this summer.
We are back with Dan Henninger, Mary Anastasia O'Grady and Bill McGurn.
Dan, is there any foreign policy strategy behind this praise for strong men?
HENNINGER: I believe there is. Rex Tillerson articulated it at the State Department this past week. He said that human rights are important but we are not going the let them stand in front of the U.S. national interests and achieving our national interests in places like Asia and with things like North Korea.
In principal, Paul, it doesn't bother me so much that the president says he wants to meet with President Duterte of the Philippines or Kim Jong-Un.
HENNINGER: The problem is his modus operandi is to put the cart before the horse. He makes these game-changing statements before his foreign policy team has a chance to put a strategy in place to support it. That makes it very difficult for them because, when you are dealing with sovereign powers like this, it's very complicated. And Trump could be setting himself up in this way for abject failure unless he has a plan going in.
GIGOT: Yeah, an honor to meet, Mary? Kim Jong-Un, an honor? The guy is one of the world's great murderers. He just had his brother assassinated with a poison in a Malaysian airport. I mean, don't you have to have -- maybe at the end of the process, you could do this, but if Bill Clinton or if Barack Obama had said this, a lot of conservatives would be pillaring him.
O'GRADY: I think people are unhappy with that. As we know, Donald Trump is not good speaking off the cuff or tweeting off the cuff. And he often says things that he would end up regretting.
What's important here is that he -- I think Dan is right. He's putting national security ahead of human rights. But for the Democrats to be wringing their hands and crying about how our president doesn't care about human rights, Barack Obama called the dictator of Ethiopia the winner of a Democratic election. He was friends with Hugo Chavez until the end. But in the beginning, he --
O'GRADY: -- reached out to him. And Cuba. He made a great concession to the Cuban dictatorship. You know, so it went on and on. Iran, when Iran had stolen election in 2009, he praised it. You know, he did nothing to defend human rights over the course of eight years.
GIGOT: Reagan engaged with dictators. He had to. But one thing I never heard him say was praise for those dictators before they actually made concessions or released political prisoners or did something significant.
MCGURN: Yeah, he had a lot of nice words for Gorbachev.
GIGOT: At the end.
MCGURN: Yeah, at the end. But he was still presiding over the Soviet Union and so forth.
Look, I think, as Dan said, it's not as simple meet or don't meet with dictators. All presidents have to be involved with them. The president of the United States should realize that, as a democratically elected president, he has a lot of prestige in these meetings. These foreigners crave that. They crave the respectability of being in the Rose Garden or the Oval Office. It's a big thing for them because they know they don't have that credibility. So it's leverage for a president to use rather than just give away.
As to the point about human rights and American policies, sometimes you have to be silent for a greater cause. But the general principle is that a strong America acting decisively is good for human rights, and when people think America is weak, it's bad for human rights.
O'GRADY: I think the difference, though, is that when Barack Obama did nothing about human rights it's because he thought, well, the United States really doesn't have moral authority, we're not such a good country. He was sort of apologizing all of the time. And I think what Trump is doing is putting national security ahead of human rights only because, as Bill says, he has to engage with these dictators on some level if he's going make any progress.
GIGOT: The potential meeting, Dan, with Putin, a lot of -- six months ago, he said, OK, if Trump really wants this. But there's been a lot of problems here in the interim, namely the accusations of collusion between the Trump campaign and the Kremlin and some real problems in Syria. What do you make of offering -- holding out this idea of a meeting?
HENNINGER: Well, this is a perfect example of what I mean by putting the cart before the horse. Secretary Mattis and Rex Tillerson, both understand that Putin, post-Crimea, post-Ukraine, is not a friend of the West at this point. The idea is that we perhaps need to resolve this mess in Syria and the refugees. So you're going to need a strategy going in, just as Ronald Reagan had one going into talk to Gorbachev over ballistic missiles. That's what they're going to have to do before you sit down for a meeting with someone.
GIGOT: All right, thank you all.
When we come back, President Trump says he is looking at breaking up the big banks, but is it a plan Republicans in Congress could get behind? We will ask House Financial Services Committee Chair Jeb Hensarling, next.
GIGOT: A big step forward this week in the Republican effort to rollback Obama-era Wall Street regulations with the House Financial Services Committee voting Thursday to send the Financial Choice Act to the House floor. Democrats are promising a bitter fight against the bill, which would repeal major portions of 2010 legislation Dodd-Frank.
Texas Congressman Jeb Hensarling is the chair of the House Financial Services Committee and author of the new bill.
Mr. Chair, welcome.
REP. JEB HENSARLING, R-TEXAS, CHAIRMAN, HOUSE FINANCIAL SERVICES COMMITTEE: Thank you, Paul. Thanks for having me.
GIGOT: So the president and Gary Cohn, one of his chief economic advisors, have floated the idea of breaking up the big banks by reinstating the separation between investment and commercial banking that existed under Glass-Steagall. What do you think of that?
HENSARLING: Well, number one, as you probably know, many provisions of Glass-Steagall still survive. Number two, I'm not exactly certain what the president has in mind here. But I think the goal is to make sure that we have robust economic growth and we minimize the ability to have the kind of financial panic we had in 2008.
What I would argue to our president and Mr. Cohn is, in the Financial Choice Act, which both of them have at least given some laudatory comments to, we help achieve that goal. At the end of the day, I don't think this is about downsizing banks or supersizing banks. It's about right-sizing them with market discipline as opposed to regulatory fiat, which has hurt us so badly leading into the 2008 panic, when we had federal policy that essentially incented financial institutions to put people into homes that they couldn't ultimately afford to keep.
GIGOT: So you would not agree with the idea, that some have offered, including Democrats, the repeal of Glass-Steagall or much of it played a role in the financial crisis of 2008?
HENSARLING: No, not in the least. I don't see any intellectual case that can be made of the fact that those provisions, Gramm-Leach-Bliley, that impacted Glass-Steagall, played any role whatsoever. It was a total meltdown of our real estate lending market, basically, brought upon by the affordable housing goals of Fannie and Freddie, which is the next project we need to take on, Paul, in the House Financial Services Committee.
GIGOT: OK, you're saying with the Financial Choice Act you're going to eliminate too-big-to-fail banks, that policy. I thought Dodd-Frank took care of that in 2010.
Are you're saying it didn't? And how would your bill do it differently?
HENSARLING: What's kind of interesting, Paul, is, since Dodd-Frank was enacted, the big banks are bigger and the small banks are fewer and economic growth still lags. So, no, it didn't take care of too-big-to- fail. This is the huge difference between the two parties and the two pieces of legislation. Under Dodd-Frank, they actually codified too-big- to-fail into law. The federal government, as you well know, has the ability to designate too-big-to-fail firms --
HENSARLING: -- known as SIFI, Systemically Important Financial Institutions, and then back that up with a taxpayer bail-out system. Under the Financial Choice Act, we replace taxpayer bail-out with a new subchapter of the bankruptcy code for large complex financial institutions, and we prohibit any ability for the taxpayer to bail out these funds. And so we are counting upon market discipline and, frankly, high levels of private capital to replace involuntary high levels of taxpayer capital. The amount of capital that's required under the Financial Choice Act, loss- absorbing capital, far greater than Dodd-Frank, far greater the Basel Accords.
GIGOT: All right. That capital, I think, is something that a lot of people across the spectrum could agree with.
But here is something -- you know there's something called Orderly Liquidation Authority under Dodd-Frank, and you would eliminate that and replace it with that bankruptcy provision. Ben Bernanke, the former chair of the Federal Reserve, said it would be an irresponsible provision because the bankruptcy point would not allow the federal government to act with enough rapidity to be able to stop a real meltdown if you had a big bank fail and threaten the whole financial system. What's your response to Bernanke?
HENSARLING: Number one, he ought to listen to his predecessor, Alan Greenspan, who has the complete opposite of the opinion. Chairman Greenspan, as does Federal Reserve Governor Robert Heller, believe that what we need to do is replace private capital with these bailout mechanisms. The second point I make, Paul, is that an ounce of provision is worth a pound of cure. If we use market discipline, market discipline, which I would define as having both the appearance and reality of having your own money at risk, will ensure that we right-size our financial institutions, that we right-size the amount of risk, and also, Paul, that we don't impose one global view of risk on the economy, which is what happened in 2008 when our regulators said that, for all intents and purposes, you don't have to reserve capital against mortgage-backed securities and sovereign debt, Greek bonds, Fannie and Freddie, and the rest is history. So we want to try to prevent these meltdowns in the first place. You do that through market discipline.
GIGOT: Very quickly, Mr. Chairman, should the president fire Richard Cordray, the head of the Consumer Financial Protection Bureau?
HENSARLING: The short answer is yes. I wish he would have done it yesterday, but I'll settle for today or tomorrow.
GIGOT: All right. Thank you very much for being here.
HENSARLING: Thank you.
GIGOT: We have to take one more break. When we come back, "Hits & Misses" of the week.
GIGOT: Time for our "Hits & Misses" of the week.
Kim, start us off.
STRASSEL: Paul, this is a hit for the board of the Heritage Foundation, which recognized a mistake and took action. That mistake was Senator Jim DeMint, who was brought in, in 2013, to be president and CEO of the group and managed in a few short years to throw over decades of good reputation Heritage had as a policy shop in favor of turning the outfit into a political enforcer, pressuring Republicans to get on board with his own agenda. The board this week asked for his resignation. Let's get back to what it does best, which is churning out really great innovative ideas for the conservative.
GIGOT: All right, thanks, Kim.
RAGO: Paul, you remember the epic Delta meltdown from a couple of weeks ago with four thousand canceled flights and tens of thousands of stranded passengers? It turns out it was caused by busy signals on landline phones as pilots and crew tried to call into H.Q. to get a reassignment.
GIGOT: It's really hard to believe.
RAGO: Travelers don't expect miracles from the airlines, and they're idiots if they do.
GIGOT: Right, that's for sure.
RAGO: But this is a miss to Delta for not using the most-advanced technology the 1990s had to offer, like e-mails and text messages.
GIGOT: All right, thanks, Joe.
O'GRADY: Paul, a miss this week goes to the rock band formerly known as the Eagles. It has sued the Hotel California, in Baja, Mexico, because it believes that the 11-room in is leading people to think that it has something to do with the song, "Hotel California." It even plays the song through its sound system. Now, full disclosure, I've stayed at the Hotel California --
O'GRADY: -- and I can attest it's not the same one, because I did check out. Besides that, artists usually have to pay for this kind of promotion. I don't want to sound like a "Witchy Women," but they should "Take It Easy" --
-- and understand this is "Life in the Fast Lane."
GIGOT: All right, Mary.
MCGURN: Paul, a hit to an unnamed customer at Zona Caliente (ph) Restaurant in Arlington, Texas, on Wednesday night. While he was there, a gunman entered the restaurant and shot a bar manager. The man, who had a concealed-carry permit, told his wife, honey, get down, and he fatally shot the killer. They discovered another loaded gun on the killer. It's a reminder that when you have places where people can legally carry guns, someone might shoot back.
GIGOT: All right, Bill.
That's it for this week's show. Thanks to my panel. Thanks to you for watching. I'm Paul Gigot. Hope to see you right here next week.
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