This is a rush transcript from "Journal Editorial Report," January 13, 2018. 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.
The Trump administration keeping the Iran nuclear deal intact for now. The White House announced Friday that the president will again waive nuclear- related sanctions on Iran but will add economic sanctions on Iranian leaders and businesses for their support of terrorist groups across the Middle East, making clear that this will be the last waiver he'll issue, giving Congress and our European allies until May to modify the agreement.
John Bolton is the former U.S. ambassador to the United Nations and a Fox News contributor.
JOHN BOLTON, FORMER U.S. AMBASSADOR TO THE U.S. & FOX NEWS CONTRIBUTOR: Glad to be here.
GIGOT: So the president said, I think his words today, this is the last chance. And nobody should doubt my word. That sounds like a red line to me.
BOLTON: Sounds like a red line to me, too.
You know, in a way this is not unusual. This deal is not a treaty, but in treaties often there's a provision for a 90-day or 180-day notice of withdrawal. That, in effect, is what he served today. Because the idea that Congress and Europe can somehow change the teal in a way that satisfies the president's concerns is simply not going to happen. There's a small complication here. Iran is part of the deal, and they have to agree to it. Believe me, they're not going to do it.
GIGOT: No. They've already said they're not going to have anything to do with the renegotiation. They'll be backed up by Russia and China, so the pressure will be on Europe to try to come to some accommodation with us. But I don't see them really being eager to do that, because they're doing a lot of business with -- their companies are doing a lot of business in Iran now.
BOLTON: Well, precisely, and that was what the ayatollahs and the Obama administration understood when they were crafting this deal, that if they could entice Europe in particular into more trade and investment with Iran, it would make it much more difficult to terminate the deal. But from the American perspective, I think the president has to say that this deal remains a strategic mistake for the United States, it was a bad deal when we entered into it, it's a bad deal today, we should get out of it. I think there's been far too much debate over whether Iran is in violation of the deal. Technically, I'd be happy to argue that point. But when George W. Bush withdrew from the 1972 treaty prohibiting national missile defense, he didn't do it because the Russians were violating that treaty. He did it because it was in our strategic interest to do it. I think that's the point. Trump has to emphasize that and explain it more.
GIGOT: Well, but if the Europeans do not come to some agreement with us, what happens then? What does the president do? I would argue he's now committed. He's got to pull the trigger on this, or his credibility will be shattered. He has to reimpose the sanctions or his credibility will be shattered over the next three years.
BOLTON: Yes. Well, I think one reason the Europeans are so upset by the prospect of American sanctions coming back into force is that a lot of the technology and products they want to sell to Iran is American. And their European companies have it on license from American firms. So if our sanctions remove that technology from trade with Iran, they're not going to sell any Airbuses among other things because there's too much American technology in there.
GIGOT: So you think that might drive them enough to the table to cut a deal with us. OK, let's say they cut a deal with us, then Iran says, no, all right? And they go about -- what do they do? I mean, I think Iran probably stays in the agreement rather than rush to a nuclear deal. What would you -- what do you think?
BOLTON: Sure. Why should they change the agreement? They're getting everything they want and more, and they'll wait to see what we do. But that's what really is foolish about the whole notion that somehow Congress is going to fix the deal. Congress can amend the Corker-Cardin legislation, which was a mistake to begin with, but we're negotiating with Congress. It'd actually be easier to negotiate with Iran. The fact is that as long as Iran can hold out economic prospects to the Europeans or others -- particularly Russia and China -- they'll continue along. They'd be happy to pin us with withdrawing from the deal. I think that's a trivial propaganda point when you compare it against our strategic interests and Iran's continued progress toward deliverable nuclear weapons.
GIGOT: So the smart play would be to try to divide us from U.K., France and Germany, and say we're going to take your money, come on in, the water's fine, business investment, great. They need that investment in Iran, obviously, in the wake of the protests to satisfy their population. You think that's the way they'll go?
BOLTON: I think they'll try that, but I think the Europeans are going to be hard-pressed to do very much if the choice is do business with Iran or with the United States.
GIGOT: OK. So you think this is a smart play by Trump then?
BOLTON: It would have been a smarter thing to do on January 20, 2017, because they'll now have 16 months in total by May of sheltering under this deal. Now, a fair question, Boris Johnson, the foreign secretary of Great Britain, said, well, what's the alternative policy. And we now have an answer to that. The alternative policy is regime change in Iran. The people rose at the end of December. That protest is over. But they crossed a red line in Iran, too, by calling for the death of the Ayatollah Khamenei for the overthrow of the regime itself. Widespread across Iran. I think this regime is weak.
GIGOT: OK. I agree with you. But how do you reform a coalition if you're Trump to make that happen?
BOLTON: Right. Well, that is the one advantage I can see of this, in effect, 120-notice of withdrawal. You go to the Europeans, you go to others, our Arab friends in the Middle East, Israel, and say this is happening, you know it as well as we do there's no fix to this deal, now let's figure out how to try and get the band back together and move forward. I don't underestimate the problems, but he's got now 120 days to do it.
GIGOT: That's going to be a very difficult task diplomatically, given the way Donald Trump is viewed in the world right now. Don't you think?
BOLTON: Well, my take on the Arab countries of the region is they understand what is driving the United States. They don't want Iran to have nuclear weapons any more than we do --
BOLTON: -- or Israel does. And I think they understand that the North Korea is a major factor here. North Korea is very close to crossing the finish line to getting deliverable nuclear weapons. And whatever technology they have, Iran could have the next day. So this threat is becoming more imminent. And honestly, our European friends have to wake up to that, too.
GIGOT: Well, it's going to be a wild 120 days as we see this diplomacy going. Rex Tillerson and H.R. McMaster have their hands full.
Thank you, John Bolton.
BOLTON: Thank you, Paul.
GIGOT: When we come back, President Trump complicating efforts to reach a bipartisan agreement on immigration with an expletive-laced remark. So is a deal with Democrats still possible?
(BEGIN VIDEO CLIP)
SEN. DICK DURBIN, D-ILL.: I thought that we might get a bipartisan agreement approved by the White House. It died yesterday.
(END VIDEO CLIP)
GIGOT: President Trump complicating efforts to reach a deal on immigration late this week after he reportedly use an expletive to describe certain countries in a closed-door meeting with law makers. Thursday's outburst came just days after a bipartisan gathering where the president struck a decidedly different tone, calling for compromise on an issue that has divided the parties for more than a decade.
(BEGIN VIDEO CLIP)
PRESIDENT DONALD TRUMP: We've been talking about DACA for a long time. I've been hearing about it for years, long before I decided to go into this particular line of work. And maybe we can do something.
I feel having the Democrats in with us is absolutely vital, because this should be a bipartisan bill. This should be a bill of love, truly, it should be a bill of love. And we can do this.
So I'm appealing to everyone in the room to put the country before party and to sit down and negotiate and to compromise, and let's see if we can get something done.
(END VIDEO CLIP)
GIGOT: Let's bring in Wall Street Journal columnist and deputy editor, Dan Henninger, columnist, Kim Strassel, and editorial board member, Allysia Finley.
So, Dan, where are we here at the end of the week after the lovefest there earlier in the week, and then we've got this controversy over the president's words or on Haiti and other countries?
DAN HENNINGER, COLUMNIST & DEPUTY EDITOR: Yes. We've just been through another week of Donald Trump's magical mystery tours.
Tuesday, the clip you showed was the good Trump saying he's going to produce a bill of love. And later in the week, the meeting with the Senators, expletive deleted, that was the bad Trump. And throws the negotiations somewhat up in the air. But I think we can identify the terms of an agreement if there's going to be one. There has to be something done for the DREAMrs either with or to without legal path to citizenship.
GIGOT: That's about 800,000 --
GIGOT: -- give or take a couple hundred thousand.
HENNINGER: The president's insisting that a wall of some sort be built. That's what's known as border security. They want to do something about chain migration, the idea that people who come in here can bring their relatives in. They want a modification of that. And they want a modification of the visa lottery system, which allows people to be given visas from underrepresented countries, which was kind of at the center of what Trump was talking about when he expletive deleted which countries he wants included in --
GIGOT: All right, those are the outlines of the deal.
But let's get to this expletive. Because the president tweeted late in the week after the reports that he used it, he said, "The language used by me at the DACA meeting was tough, but this was not the language used. What was really tough was the outlandish proposal made, a big setback for DACA."
He's talking about the proposal made by the Senate Democrats, Allysia. Is this going to be, you think his comments are a passing storm, and they'll all get back to focusing on this compromise?
ALLYSIA FINLEY, EDITORIAL BOARD MEMBER: I think what we've found is over time that most of Trump's tweets eventually blow over. It just depends how quickly. And I think some on the left will be tempted to use this to try to block a deal. The people -- or the Democrats really don't want a deal, want to bludgeon Republicans through the election on this. They'll use this to -- as a cudgel.
GIGOT: And you think, where does the split among the Democrats between those you described and those who actually really do want to do something about these people? Because let's face it, if we don't get a deal on this, they're in legal limbo, notwithstanding a court order this week that temporarily said that it has to be in force to stay here. I think that's going to go away eventually, so these young adults will be in trouble.
FINLEY: Right. This is a humanitarian issue. These kids would end up -- or young adults would end up being sent back to a country which they may not even speak Spanish, they may not know anyone there.
GIGOT: Because they came when they were four or five.
FINLEY: When they were four or five, and they don't have any family. And this is really going to test the sincerity of Democrats, Chuck Schumer, Dick Durbin, and those in the House, Nancy Pelosi, and whether they'll come together to compromise. Over the years, what has eluded Democrats and Republicans has been compromise because both sides have wanted to use the issue and it has been resisted.
GIGOT: They want to use it as a political issue.
Kim, let's talk about the debate on the Republican side, because as soon as the president gave his comments about we need to do something about DACA, even with the terms and border security that he set, a lot of people on his right flank said, wait a minute, you know, sellout. Donald J. Trump, the J. stands for Jeb, as in Jeb Bush. This is betrayal. The betrayal caucus came out. How is this going to complicate things?
KIM STRASSEL, WASHINGTON COLUMNIST: Amnesty, amnesty.
Yes. Look, this is going to be one of the real tests of whether it gets done. There's a lot of talk about how the left would like to use this as an issue, but there is a determined flank on the right that, for them, any changes in the immigration system, anything whatsoever, and even the DREAMers amount to amnesty. And they're going to be putting -- a lot of those people, by the way, are Donald Trump's base. So they're going to be putting a lot of pressure on him not to go there.
The test again is can they get across the point that this is a much more targeted and smaller compromise that everyone is talking about that will end up, if it passes, with a lot of priorities that Donald Trump had promised that base. And there is something in this for everyone. But the right at the moment is determined to make sure, the far right, that this does not happen.
GIGOT: And Trump said I'll take the heat. Well, OK, then take the heat. Do the deal and take the heat.
HENNINGER: But he seems to be bending a little bit under pressure from the right. And I think Kim is right, there's a basis here for a deal. Most Americans want something done on immigration, and certainly something done on the DREAMers. And I think the big question here in the coming week is going to be which party snaps first, which party starts breaking down and fighting internally and saying, we won't go there. Because I think whether it's the Democrats or the Republicans, the party that causes this bill to fail is the one that's going to take the political blame.
GIGOT: And if Donald Trump gets a deal, Allysia, he can say, you know what, I solved a problem that George W. Bush and Barack Obama couldn't solve.
FINLEY: I think this is a big political winner for him. He can show he brought both a bipartisan deal, brought Republicans and Democrats together, and they won't be able to use it. Again, Democrats won't be able to use it against him in the next election.
GIGOT: All right, thank you all.
When we come back, fallout this week from Michael Wolff's explosive, if dubious, new book on the Trump White House. So is talk of removing the president through the 25th Amendment as common as Wolff claims? We'll tell you what the people around the president really say, next.
GIGOT: Steve Bannon stepped down this week as executive chairman of "Breitbart News" following a public fallout with the White House over critical comments he made about President Trump and members of his family in Michael Wolff's incendiary new book, "Fire and Fury."
That book also reopening the debate over the president's fitness for office, with Wolff claiming that talk of using the 25th Amendment, which would allow the president's cabinet to remove him from office, is a concept that is, quote, alive every day in the White House.
We're back with Dan Henninger, Kim Strassel and "Wall Street Journal" columnist, Bill McGurn.
Bill, let's step back after a week of reporting about this Wolff book. What do we think the fallout ultimately has been?
BILL MCGURN, COLUMNIST: I think actually, apart from his specific allegations in the book, it's a reflection of the reality of the first six months or so of the Trump administration. Just kind of no one in charge, a reporter wandering around --
-- talking to people off the record --
GIGOT: Hey, can I stop in.
MCGURN: In some ways, it's a real tribute to General Kelly, I think, you know, if you look. So much centers on Steve Bannon.
GIGOT: He's the new chief of staff who came after that six months.
MCGURN: And right when he came in, Steve Bannon challenged him by calling up a reporter, on the record, and trashing his colleagues. So in some ways, I think the more interesting story is what came after. But I think it's part and parcel of what we had in the first few months of no one really -- people sniping at each other. Again, I don't know if he's accurate in all of it, there's a lot of questions about --
GIGOT: I'm sure that a lot of it is not accurate.
MCGURN: Right, right. But it reflects a time in the Trump administration.
GIGOT: OK. This -- Dan, let's step back. We talked about this 25th Amendment. There are a lot of people who, for their own reasons or sincere views or politically motivated views, are saying Trump is unfit for office, despite the election, and we need to invoke this 25th Amendment. Isn't that, basically, a fantasy?
HENNINGER: It's a fantasy, it's ludicrous, it's absurd. It's pointless to talk about it. The 25th Amendment was enacted in 1965, led by Senator Birch Bayh, in light of the JFK assassination. They weren't clear whether LBJ was alive or not. He wanted to get the succession established if the president was physically incapacitated. Birch Bayh, his chief of staff at the time, Jay Berman, who helped write the 25th Amendment, said it has no application whatsoever to Donald Trump right now. That if you're going to do something with Trump, that would be impeachment.
GIGOT: That is in the Constitution.
HENNINGER: That is in the Constitution.
GIGOT: That is the political process for doing that.
MCGURN: Yes. I think it's a stalking horse for impeachment. I agree with Dan, the actual invocation of the 25th Amendment doesn't apply. It's ridiculous. But it shows the fever to get rid of Donald Trump. And in this election, this is something that he has to take seriously.
GIGOT: The 2018 election.
MCGURN: Yes, 2018. I just saw a pew poll, Quinnipiac, and it said the generic Democratic advantage was 17 points in Congress.
GIGOT: Wow. That's unheard of.
MCGURN: I think it's clear if there's a Democratic House, he will be impeached. So he has a vested interest in not seeing his party decimated at the polls.
HENNINGER: Impeachment requires a majority vote in the House.
HENNINGER: Done deal if they take it back.
GIGOT: A conviction of two-thirds in the Senate to oust him.
GIGOT: -- you only need a majority vote in the House of Representatives.
HENNINGER: In the House.
GIGOT: Kim, let's talk about this issue of fitness for office. And I ask this because it's clear the White House took some of this seriously in the sense that they then rolled out the president to meet with congressional leaders this week about immigration. And they have an on-air TV discussion for nearly an hour led by the president where instead of, you know, having a two-minute clip and then going behind closed doors, they were negotiating in public. And the president -- I think the White House wanted the president to do that to show, in fact, that, look, he can lead, he can negotiate, and he's very much in charge.
STRASSEL: Yes. It was a very smart call on their part because he did look as though he was confident, sitting there leading negotiations. The Democrats looked utterly confused by what was going on in this entire hour that they were sitting there.
But this is -- you talk to people within the White House, yes, if you've gone to work for Donald Trump, you have taken onboard that he is an unusual president who does not follow norms. But the idea that there is this active, aggressive conversation going on every day about how you get rid of him, it's -- that is also just pure fantasy. So they have a challenge right now in trying to change the perception that is out there, but it isn't as if there is some personal coup going on at the moment for everyone to get rid of Donald Trump.
GIGOT: The phrase that I often hear, Dan, and you wrote about this week, you said, "Trump proves he's sane." What I hear from the people who work for Trump, "He's a difficult client." That's a quote I've heard more than once. He's volatile, he's impulsive, he changes his mind. He doesn't have a lot of fixed north stars on principles, so he can be bounced around and moved by arguments or who he talked to last. That's a very difficult person to advise. But the madness of King Donald, what do you make of that?
HENNINGER: Well, as I -- I think Bill's right, it's a stalking horse for trying to just push Trump out of office.
But, look, we've been through a year with Donald Trump, and they've passed a major tax reform bill. They've passed a whole host of deregulatory moves across various industries, energy and so forth, appointed judges, appointed a Supreme Court judge. Look, you can agree or disagree with all of that. As a liberal, you could say, I would have resisted every one of those things, and I hate Donald Trump. That is not grounds for impeaching this president on the basis of his mental capacity. We should get back to real politics.
GIGOT: Yes. And if you want to get rid of Trump or check him or whatever you do, let's let the normal political process work, right? It's called elections.
MCGURN: Right. Well, so much of today is about not letting the normal -- whether it comes to congressional investigations or investigations of the president or impeachment, everyone wants to go around, you know, make an end run around the usual process.
GIGOT: All right, thank you.
Still ahead, Senator Dianne Feinstein releases the transcript of a congressional interview with a cofounder of the firm behind the anti-Trump dossier. So did we learn anything new about alleged Trump/Kremlin collusion, and will the Feinstein precedent lead to a full disclosure in the Russia probe?
GIGOT: President Trump slams "Sneaky Dianne Feinstein" this week after the California Democrat unilaterally released the transcript of the Senate Judiciary Committee's interview with Glenn Simpson, the co- founder of Fusion GPS, the firm behind the salacious and unsubstantiated anti-Trump dossier.
The transcript's release comes amid reports that Robert Mueller's team would seek to interview the president in the next several weeks, something Mr. Trump refused to commit to this week.
(BEGIN VIDEO CLIP)
TRUMP: We'll see what happens. I mean, certainly, I'll see what happens. But when they have no collusion, and nobody's found any collusion at any level, it seems unlikely that you'd even have an interview.
(END VIDEO CLIP)
GIGOT: We're back with Dan Henninger, Kim Strassel and Bill McGurn.
All right, Kim, so you have slogged through all 300 pages of that Glenn Simpson transcript. What did -- what's the biggest takeaway that you have?
STRASSEL: The biggest takeaway is that even Mr. Simpson is not able to corroborate anything in his dossier. And that came out very clearly as he was grilled by the Senate Judiciary Committee. Basically, this was his attempt to paint his motives for putting this together in a good light, to sort of buck up his credibility, and that of Christopher Steele, who was the actual author of the dossier. But we don't come out of this necessarily with any greater insight into Donald Trump's actions during the election year.
GIGOT: OK. In the transcript itself, did Glenn Simpson get the story straight about what triggered the FBI's interest in the Trump/Russian ties?
STRASSEL: No. And, look, by the way, he had to issue a correction. He came out, and he got everybody excited. The press was all over it saying when they turned in this dossier, they were simply back up information that the FBI already had from an internal source within the Trump camp.
GIGOT: That's what he said.
STRASSEL: If that were true, it would be huge.
GIGOT: That's what he said in the August transcript.
STRASSEL: Yes, in the August transcript.
STRASSEL: Then after that came out, the transcript came out, the media goes wild saying, look, someone within team Trump was telling the FBI the same thing. Then we get a Simpson correction saying, no, that's not really what I meant. I meant that Australian diplomat that had tipped off the FBI about that campaign aide, George Papadopoulos. So the point is, we do not have any evidence of an internal Trump person talking to the FBI.
Bill, meanwhile, the House Intelligence Committee had struck a deal finally late last week with the FBI Director Christopher Wray and with Deputy A.G. Rod Rosenstein to turn over documents that they'd been seeking for a long time and that those gentlemen had been resisting turning over. What are we likely -- this is important, right?
GIGOT: What are we going to learn from these documents?
MCGURN: Well, we're going to learn about this investigation. Isn't it interesting that we want this investigation into Donald Trump and Russia, but no one wants to see what the investigation's telling us? I mean, the only information we really have so far is the Steele dossier, which is sort of the Rosetta Stone for this. Now, I know a lot of people accuse Fusion, say, well, it's a piece of opposition research. I'm more interested to know is it true or is it false. I think Director Comey testified that it was salacious and unverified a few months ago. And I think Assistant Director McCabe, the reports are that he testified only to Carter Page's trip to Moscow --
GIGOT: That was the only thing that he publicly verified.
MCGURN: So the question is -- I mean, the question is -- and so many people don't seem to want to know the answer. Was this used in FISA warrants to spy on members of a presidential campaign team? And was it used knowing the information was unverified? How did the FBI present this? So I think we need to know these answers. Congress is the appropriate place to get these answers, you know, and get them out in public. So they have the documents now. They're going to interview only some of these FBI witnesses under oath, but the public is still largely in the dark.
GIGOT: Yes, Dan, I think this would be a very big deal if, in fact, a piece of disinformation -- if that's what this turns out to be -- ended up motivating a warrant for spying on members of a presidential campaign?
HENNINGER: Yes, I think you put your finger on it. It may, indeed, be misinformation. There's kind of a spy versus spy thing going on here between the Russian intelligence services, I think, and the American security service. And I think the American security service, especially the FBI, have gotten themselves to a point where they were humiliated by the way the Russians were using this disinformation, and that is what they don't want --
GIGOT: So you think they'd be embarrassed by --
HENNINGER: I think they'd be tremendously embarrassed if any of this came out.
HENNINGER: But the American people are sitting there wondering what's going on inside this hall of mirrors. It's gone beyond a simple question of institutional confidence.
MCGURN: And to Dan and Kim's point, Christopher Steele, I mean, he was briefing reporters, but he's so reluctant to talk to Congress. If this stuff is true in what he found, shouldn't he want to set the record straight and explain it? That's what's so troubling.
GIGOT: Kim, what about the likelihood that these documents that the House Intelligence Committee now has are going to become public at some stage? Do you think that's likely to happen?
STRASSEL: I think it's highly likely, because that's what everyone is now understanding, is that the spin out there has become monumental for those who support the dossier, speculations, outright claims that it's true when there's no evidence that it is. Republicans worried about the FBI motives. People are coming to understand that the only way you get answers to these questions is to just put it out there for the public to see. So, you know, it would be nice to think that the White House would step in here and declassify. It's probably not likely because they're worried about Mueller and his investigation. But watch to see if Congress doesn't exercise its authority to declassify.
GIGOT: All right, thank you all.
When we come back, Democratic governors in high-tax states are scrambling to preserve state and local deductions for their residents as the GOP tax overhaul kicks in. But will their strategies work?
GIGOT: Democratic governors in high-tax states are scrambling to blunt the impact of the Republican tax overhaul, which caps state and local deductions at $10,000. But will their strategies actually work?
Here's New York Governor Andrew Cuomo last week outlining his plan for the Empire State.
(BEGIN VIDEO CLIP)
GOV. ANDREW CUOMO, D-N.Y.: We are developing a plan to restructure our tax code to reduce reliance on our current income tax system and adopt a statewide payroll tax system.
We're also exploring creating additional charitable organizations so that contributions to those charitable organizations would be tax deductible.
(END VIDEO CLIP)
GIGOT: Scott Hodge is president of the Tax Foundation.
Welcome back, Scott. Good to see you.
SCOTT HODGE, PRESIDENT, TAX FOUNDATION: Thanks, Paul.
GIGOT: The -- let's talk -- basically, the states that are mainly affected are the states with really high-income tax rates: New York City, 12.7 percent, state and local combined, California, 13.3, some others. So let's think through the responses they're making. First of all, there's a threat of a lawsuit that they're going to say that this tax bill is illegal, unconstitutional because it discriminates against certain states. How do you see that playing out?
HODGE: Well, it's kind of ironic that they're complaining about this when there are already provisions in the tax code that limit the state and local tax deduction. One is the alternative minimum tax, which was created by Democrats. The other is the limitation which limits or actually scales back your itemized deductions for high-income people. That was also created by an Ohio Democrat. So there are already provisions there that do discriminate against high-tax states. But this is, obviously, directly hitting their highest income people, essentially, their donors, and I think that's why they're complaining the most.
GIGOT: But basically, the tax bill, the provisions of the tax bill treat all states alike. I mean, every state faces --
HODGE: It equalizes, yes.
HODGE: It really levels the playing field, which is great.
GIGOT: Right, at the federal level. The difference is state law. So there's no discrimination at the federal law. It's a state law which they can change.
HODGE: Right. Sure, and they're welcome to try these schemes, but they really are -- there's a great irony here. You have people who were once decrying the tax reform bill as tax cuts for the rich now coming up with these Rube Goldberg-type schemes to benefit the wealthiest people in their state by giving them back a deduction that was taken away from them in the tax bill.
GIGOT: Let's take those one by one. First, what they're talking about in California in particular --
GIGOT: -- which is the new charitable deduction. So that if you're a California resident, the state will give you a dollar-for-dollar deduction as a charitable contribution to defray any increased federal taxes. What to you make of that?
HODGE: It's probably illegal. The whole purpose of charity, or one of the principles of charity is that that charitable gift cannot materially benefit or financially benefit the giver. And this clearly would. It's really a scheme, a tax payment by any other way. And a lot of court decisions have actually upheld this principle that a charitable gift can't financially benefit the giver. This clearly does. I think it'd be thrown out by the courts.
GIGOT: And would the IRS approve it?
GIGOT: They'd have to make a judgment on an individual basis for it to go through.
HODGE: They've won decisions on this basis before, so I think they would challenge it, and they'd win.
GIGOT: All right. Now, let's take the other proposal that we've heard a lot about which is the payroll tax change. So Andrew Cuomo says we'll rely less on income tax rates, and we'll substitute it by imposing a new, higher payroll tax that the companies would pay in the state, employers would pay in the states to compensate for it. Does this make sense to you?
HODGE: Well, they -- states are certainly allowed to create a payroll tax. But unless they fully eliminate the state personal income tax, they would essentially have employers paying your income tax, which the IRS would see as income to you. If a third party pays your income taxes, that's really income on your behalf. And so it would actually increase the tax burden on working New Yorkers. So that probably wouldn't fly. And I doubt that most employers would want to pay higher payroll taxes on behalf of their employees. There are a lot of mechanical problems with this, too, in trying to create -- how do you create a progressive payroll tax? That's very, very challenging.
GIGOT: Well, and if you're an employer, and the payroll tax goes up on any individual employee, you're either going to have to absorb that higher cost --
GIGOT: -- or you're going to have to reduce the compensation to the employee. Now, I don't know a lot of employees who would sit well with a company saying to them, you know what, we're going to have to reduce your compensation by 5 percent, 7 percent, 10 percent because of this tax law change. That's going to be politically difficult as well.
HODGE: Yes. I think this is really thrashing about. And states are really facing the fact that the federal subsidy has been dramatically limited for their tax-and-spend policies. And they are going to have to get in line. They are going to have to control themselves. They can no longer shift a lot of their burden off to Washington. And they're going to have to compete equally to other states, especially the low-tax states like Texas and Florida and others that don't have an income tax.
GIGOT: So the simple solution here is cut your tax rates.
GIGOT: Cut the -- so that your citizens basically want to stay as opposed to moving at the first opportunity they have to a low-tax environment.
HODGE: It was very telling when Governor Cuomo actually expressed the worry that a lot of these high-income people would leave the states. That's extremely telling that he understands how tax competition works and that people can simply vote with their feet and leave and go to lower-tax jurisdictions.
GIGOT: OK. Scott Hodge, thanks for being here.
HODGE: You bet.
GIGOT: Still ahead, Oprah Winfrey's Golden Globe speech igniting speculation of a 2020 presidential run. So could the talk show host out- Trump the Donald? Our panel weighs in, next.
(BEGIN VIDEO CLIP)
TRUMP: I don't think she's going to run.
TRUMP: I know her very well.
(END VIDEO CLIP)
GIGOT: Oprah Winfrey's Golden Globes speech last weekend igniting speculation that the talk show host is eyeing a run for the White House in 2020, setting up a potential showdown between two celebrity candidates.
President Trump said this week that he welcomes the prospect, but doubts it'll happen.
(BEGIN VIDEO CLIP)
TRUMP: Oprah would be a lot of fun. I know her very well. You know, I did one of her last shows. She had Donald Trump. This was before politics. Her last week, and she had Donald Trump and my family. It was very nice. No, I like Oprah. I don't think she's going to run.
(END VIDEO CLIP)
GIGOT: We're back with Dan Henninger, Kim Strassel and Allysia Finley.
Allysia, I love the look on Dick Durbin's face there.
What do you make of Oprah as a plausible candidate?
FINLEY: Well, I don't think we should rule anything out after 2016 and Trump, because nobody would have thought we'd have President Trump at this point.
But, you know, I think she would, actually, unite the Democratic base.
FINLEY: I think she has brand name recognition on par with Donald Trump. She has her own tv network, a business that she started and has been very successful, Oprah magazine, "O" magazine on which she has appeared on the cover multiple times, 2.4 million subscribers. Extremely popular.
GIGOT: But would the Democratic base, Dan, tolerate her given that her persona is not very ideological, and that, basically, the Democratic Party has moved left. What do you to do on single-payer health care or climate change?
HENNINGER: Yes. That raises the largest question, the Democratic Party's identity. Democratic Party professionals understand that the new base, which is so far left, really wants Bernie Sanders as their candidate. Bernie happens to be a Socialist. He's not a Democrat.
GIGOT: And a proud one.
HENNINGER: And a proud one. But that's what they want. And so they are probably going to start attacking Oprah. And some of them have already done it from the left, saying that she's really like a pal of Harvey Weinstein, things like that. I think Oprah is probably going to pull back and let these professionals carve each other up.
GIGOT: But on the other hand, Kim, I mean, Allysia's point is good. She's likable, she's popular. She's, in many ways, the emotional opposite of Donald Trump. That is -- she's not divisive. She's somebody that says can't we all just get along? I've got a car for you, you know? There's a sort of good feeling about Oprah. And people like to like their presidents, believe it or not, or at least we did once.
STRASSEL: They did, but they also -- look, I think one of the biggest criticisms of Donald Trump is that he doesn't necessarily have a lot of policy chops on some of the subjects he talks about.
I think that you'd probably get an equal thing in Oprah Winfrey. And, in fact, you've already seen some of the potential people that might run on the Democratic side. Elizabeth Warren coming out to pooh-pooh the idea saying, you know, we don't need another celebrity president. So that would be one of the measures. She's also, by the way, got a few controversial things in her past, like her views on vaccines or some kind of quack health things --
STRASSEL: -- which could come out and dog her as well. She's not a risk- free candidate in that way.
GIGOT: And she'd be in a big field, Allysia. Who else, who else is going to run? Elizabeth Warren is putting the --
FINLEY: Right. Kamala Harris, the California Senator, Kirsten Gillibrand, New York Senator, Cory Booker from -- I mean, everyone wants to run because they think President Trump is eminently beatable.
GIGOT: So it's going to be -- it's going to be around the block and maybe around the city, the Democrats' line --
HENNINGER: And it's going to be vicious. The mayor of New York City, Bill de Blasio, is obviously thinking of running. I think we have a kind of survival of the fittest. Some of these marginal candidates are in because they think the major candidates are going to start knifing each other in the back, Kamala Harris, Oprah. Bernie Sanders' wife has got some legal problems. And one of them is going to be the last person standing for the nomination.
GIGOT: Well, and --
FINLEY: This is also what happened, by the way, in 2016, in the Republicans, because everyone assumed Donald Trump would fade away. So you had a lot of marginal candidates or a lot of people got in, nonetheless, Trump rose to the top. I wouldn't discount Oprah.
GIGOT: It may be that she has, Oprah would have a little shield from the ideological attacks because people would say, well, that's not her. That's not why we like her.
FINLEY: Again, I think they'd like her because she's almost another Obama. She could rise above all the animosity.
GIGOT: All right.
We have to take one more break. When we come back, "Hits & Misses" of the week.
GIGOT: Time now for our "Hits & Misses" of the week.
Kim, start us off.
STRASSEL: Paul, do you remember the Bridge to Nowhere or the Teapot Museum or the Indoor Rain Forest?
These were, of course, terrible earmark ideas. And my miss goes to President Trump for suggesting we bring earmarks back. I suppose this is inevitable. He's a dealmaker and, of course, pork and earmarks are ways to grease deal making. But they are also the gateway drug to more spending and the epitome of the swamp, which are both good reasons to never touch them again.
GIGOT: All right.
MCGURN: Paul, a hit to Costco. On January 1st, in Seattle, the new sweetened beverage taxes have gone into effect and it's dramatically raising the price of soda, Gatorade and so forth. At its Seattle stores, Costco is putting up a sign showing that why a case of Dr. Pepper that they would sell for $10 is now $17.50 because of this tax.
It may not succeed in getting the city council to reconsider, but I say kudos to the discount store for literally showing us the price in government.
GIGOT: Hear, hear.
All right, Allysia?
FINLEY: This is a hit to American innovation. At the Consumer Electronics Show this week, computer engineers and companies this week introduced new innovations, including a robotic laundry folder, just what every girl wants.
On the other hand, as a bit of a miss, they also introduced a robotic dog, which is not man's best friend.
HENNINGER: I'm going to give a hit to the tax reform bill of 2017. The payoffs just keep coming, Paul. This week's list includes Walmart, which will raise the minimum wage to $11, plus, give up to a $1000 bonus to all of its employees. In addition, two utilities, if you can believe this, utilities are going to cut rates to their customers. First, the Arizona Power Service in Arizona. And then a big utility in Elizabeth Warren's state, Ever Source, says it will cut its rates, as well. Keep this in mind, this is a bill for which no Democrats voted.
GIGOT: All right.
Remember, if you have your own hit or miss, be sure to tweet it to us, @JERonFNC.
That's it for this week's show. Thanks to my panel. And thanks to you for watching. I'm Paul Gigot. Hope to see you right here next week.
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