This is a rush transcript from "The Journal Editorial Report," February 10, 2007.
PAUL GIGOT, HOST: This week on the "Journal Editorial Report":
(BEGIN VIDEO CLIP)
RUDY GIULIANI, FORMER MAYOR OF NEW YORK: I'm in this to win.
(END VIDEO CLIP)
GIGOT: Rudy Giuliani comes one step closer to a presidential run. But how will the former New York City mayor's social views play with cultural conservatives in the South and West?
Plus, a looming fiscal showdown, the president vows to balance the budget without a tax increase. But Democrats say something's got to give.
Those topics and our weekly "Hits and Misses," but first, these headlines.
GIGOT: Welcome to the "Journal Editorial Report." I'm Paul Gigot.
Former New York City Mayor Rudy Giuliani moved closer this week to a run for the Republican presidential nomination, filing papers with the Federal Election Commission, and telling FOX News that he's in it to win.
(BEGIN VIDEO CLIP)
GIULIANI: I've no idea who's going to get the nomination. But you do this because you believe that you can win the nomination of your party. And then you believe that you are the strongest candidate to win the election for your party. GIGOT: Fred Siegel is a former Giuliani campaign advisor and author of "The Prince of the City: Giuliani in New York and the Genius of American Life."
Fred Siegel, welcome.
FRED SIEGEL, AUTHOR, "THE PRINCE OF THE CITY": Thanks for having me.
GIGOT: You watched Rudy Giuliani as mayor here. Now, we all know about his performance after 9/11. But what else did he accomplish in that office that recommends him for the White House?
SIEGEL: Well, it's little known, but when he came into office, one out of every seven New Yorkers, 1.1 million people, were on welfare. Now, this is significant not only because welfare itself was a problem. It's because when he came into office, New York was bankrupt. It was technically bankrupt.
And he pulled New York back from bankruptcy, partly through welfare reform, partly through cuts, partly through some privatizations. And the fiscal accomplishments in his first term were enormous, but not widely known.
GIGOT: Some people say in the second term, though, he let that get away, not on welfare, but on the fiscal side, where he started to spend a lot and left his successor, Mike Bloomberg, with a deficit.
SIEGEL: He did. I think he loosened the reins in the second term. He wasn't — he wasn't the fiscal manager then that he had been in the first term.
GIGOT: A lot of people say, Rudy Giuliani, some people says he's a conservative. Other people say he's a liberal? Is he a mix of the two? How would you describe his political philosophy?
SIEGEL: I describe him as an immoderate centrist.
GIGOT: What does that mean?
SIEGEL: What that means is, that when he takes on an issue near and dear to his heart, like crime or welfare, he goes all the way. And the way he goes all the way, it's not just because he has an operatic personality. He is very...
GIGOT: He does have an operatic personality?
SIEGEL: Oh, there's no question. No one can doubt that. He's very, very bright. He's wonkish, the way Clinton was wonkish. Concerned with the mechanisms of how things really work. And that served him very well. And if he was in the White House, it would probably serve him well there, too.
GIGOT: Let me ask you about another episode, when he was U.S. attorney. He was very rough in going after the mob. And that was successful.
But also white collar criminals, a couple of which he had very publicly thrown up against the wall at their offices, hauled out. And he lost some of those cases in court. What does that say about judgment or his going too far, this operatic personality? Is there a danger of excess?
SIEGEL: He can push things too hard. There's no question.
By and large, he avoided that in his first six years as mayor. When his personal troubles hit, when his health troubles hit, this, again, became a problem.
In a certain sense he paved the way for Elliott Spitzer with his prosecutorial excess.
GIGOT: Is that something you would worry about in a Giuliani presidency?
SIEGEL: I would. I would. Giuliani can hurt himself in this campaign about he shows that side.
Now, the question is, is he now so confident, so successful that he's put that behind him. He's not trying to make a name for himself any more. He is a name.
GIGOT: Let me ask you the question that really is, I think, at the heart of whether or not he can win this nomination, which is his liberal views on the culture. He is for gay marriage. He's for gun control. He's pro-choice on abortion.
Is the Republican nominating electorate going to nominate somebody with those views?
SIEGEL: Paul, I can't give you a definitive answer. But I can tell you, when I went around the country flogging my book, I talked before conservative audiences who loved him. And they knew what his positions were — terror trumps, national security trumps.
Now, for a certain percentage of primary voters, it doesn't matter how much they like him on these other issues, they will vote a bullet on abortion, say.
What is done, which is quite thoughtful, is the talk about judges, the kind of judges he would nominate.
He talks about his friendship with Scalia, and the way he wants strict construction on the Supreme Court. That will mitigate some it, but not all of it.
GIGOT: And do you have any doubt where he stands on the war on terror? Would he be a big supporter, a prominent supporter, of the Bush doctrine on foreign policy?
SIEGEL: You can describe him in the simple way. The very Saudi prince he refused money to is now funding the Carter Center. And I'm sure he will be pointing that out.
GIGOT: But he has supported the president's policies in Iraq. He has supported the president's policies against the axis of evil, by and large. That... SIEGEL: He has. But he hasn't set a great deal on this. McCain has gone much further in this direction than he has, because McCain is in the Senate.
Giuliani has the great advantage of not being on the spot in a daily basis when it comes to foreign policy.
GIGOT: Let me ask you about another aspect of New York politics. It was the Bernie Kerik episode and the fact that he was nominated to be secretary of Homeland Security and had to withdraw under pressure after some details came out about his private life and other things.
And there are people out there, and not just with the other campaign camps, who say are there any other Bernie Keriks out there, because Rudy Giuliani recommended him for the job.
SIEGEL: Let me say something that's going to sound odd in terms of Bernie Kerik. Had Bernie Kerik been secretary of Homeland Security, you wouldn't have had the Katrina disaster.
Bernie Kerik, in that position, wouldn't have been the lawyer Michael Chertoff was — was arguing with the Governor of Louisiana on posse comitatus law. The cavalry would have arrived immediately.
And that is what Giuliani liked about Kerik. Kerik, as prison director, did a fantastic job.
GIGOT: He was a can-do guy?
SIEGEL: He's a can-do guy. And that is what Giuliani liked about him. And I don't think I could be wrong. I don't know if Giuliani was fully aware of his nocturnal activities.
However, what will come out in the campaign is that, when he made Kerik police commissioner, he didn't fully investigate Kerik's background.
And that will lead to something else. How is it that when Giuliani was approved as a federal attorney, his father's own Mafia connections did not come up. So it could open up a can of worms.
GIGOT: You think there are some other land mines out there?
SIEGEL: No, I don't. I don't. But I think it will be access — It'll be a way of raising questions about Giuliani. Talking about Kerik will be a way of raising questions about Giuliani without going after him personally.
GIGOT: OK. All right, Fred Siegel, thanks for being here. We'll be watching.
More on Rudy's run when we come back.
Plus, President Bush's proclamation that the budget can be balanced without a tax hike leaves Democrats saying something's got to give. Our panel previews the looming budget brawl when the "Journal Editorial Report" continues.
(BEGIN VIDEO CLIP)
GIULIANI: The experiences that I've had as mayor of New York City, United States attorney, all of them very, very strongly — kind of in the executive area where you have to have leadership and organization and focus, and having dealt with a city that was really in bad shape when I took over, and that had to kind of turn around. I think it gives you the background to approach it, and to feel pretty comfortable that you can make a difference.
(END VIDEO CLIP)
GIGOT: Big city mayor, former federal prosecutor — will Rudy Giuliani's past experience help or hurt him in a presidential bid?
Joining the panel this week, "Wall Street Journal" Columnist and Deputy Editor Dan Henninger, as well as Jason Riley and Steve Moore, both "Wall Street Journal" editorial board members.
Dan, I have to say, I thought I would never see the day when a New York City mayor would be leading in the polls for the Republican presidential nomination.
We have a national poll up that shows him, I think, ahead of even John McCain. And then there's a New Hampshire as well that has him pretty close. Is this just name recognition? People know Rudy Giuliani. He's famous. Or is there something else going on here?
DAN HENNINGER, WSJ COLUMNIST AND DEPUTY EDITOR: A little bit more than that. Fred Siegel touched on it. I think in our media age, stereotypes matter, even good stereotypes.
And Rudy's symbol is 9/11. He will be forever attached in the broad public mind with the war on terror.
Now, Republican voters — polls suggest that for the Republican base, either the war on terror or Iraq are the foremost thing on their mind, combined, well over 50 percent as their primary interest.
And I think Giuliani is just like a tunnel vision antiwar-on-terror figure, whereas John McCain is a little more less-defined than Giuliani on that issue. So I think, at this point in time, it is helping Rudy a lot.
GIGOT: Well, the voters are looking for an executive who has a record of accomplishment as well, Steve. Can Rudy point to that in New York City?
STEVE MOORE, WSJ EDITORIAL BOARD MEMBER: Well, it certainly is an incredible record. And Fred talked about the way he turned around this city with something like 21 tax cuts. He talked about the reduction in crime and also the reduction in welfare. So it's a good story.
I agree with Dan that what the American people are looking for in a presidential candidate this year is somebody — it has two characteristics that Rudy has — toughness and confidence. And on those Rudy gets an A.
GIGOT: All right, Jason, where the rock?
JASON RILEY, WSJ EDITORIAL BOARD MEMBER: Well, the tax cuts that Steve alluded to. Again, this was first-term Rudy Giuliani. He served two terms.
And in the second term, he didn't do so well. The budget grew. Again, the quality of life improvements, indisputable. But his budgets did grow in the second term.
And he left his successor, Mike Bloomberg, with a $2.5 billion budget gap, which is larger than the budget gap he inherited from his predecessor, David Dinkins.
So it's something that — people care about these issues. Fiscal conservatives, who vote on these issues, might have a tough time overlooking that City Hall spending record.
GIGOT: Steve, you know the Republican Party. Are they really going to nominate somebody with his social views? For 25 years it has been a litmus test that, if you are pro-choice and pro-gay marriage and pro-gun control, you can't get the nomination.
MOORE: If you'd asked me a year ago, I would say Rudy has a zero percent chance of winning. Now, I think he is maybe even a frontrunner in this.
Two reasons. Number one, he basically said to social conservatives, I'm going to put conservatives on the Supreme Court. And that is the number one issue to them.
And second of all, social conservatives care a whole heck of a lot about the war on terrorism. And they look — they agree with Dan that this is an important family issue as well.
HENNINGER: And one more quick-note point to that. Rudy Giuliani is a politician. And he holds these views because he was running for mayor of New York City.
MOORE: That's true.
HENNINGER: You could not possibly have been elected mayor of this city unless you held those views. Does he believe them? Who knows? But I think it might be.
MOORE: And who else is there that the social conservatives — if there were a Ronald Reagan type in the field, I would say yes, he is going to obliterate Rudy. But there is no strong social conservative.
GIGOT: Is this judicial point that he is trying to make, saying, look, I will appoint a Scalia, I'll appoint a Thomas — conservative judges. Is that enough to get him past these?
RILEY: I don't know how that will play in South Carolina and Iowa. I really don't. I mean, and some of these primary voters have a visceral reaction to New York City people...
GIGOT: That is true.
RILEY: ... that Rudy will have to overcome. These people condescend to the rest of the country.
I think Rudy's got some...
MOORE: But when he goes to South Carolina, he has this sort of Beatles quality to him. He's a rock star.
He really is. He's the one who's getting the big crowds.
GIGOT: You've got to update your rock bands.
MOORE: Bon Jovi?
GIGOT: Keep coming.
GIGOT: All right, Steve.
Coming up, Democrats are seeing red over the new Bush budget, calling the president's plan to eliminate the federal budget deficit by 2012, unrealistic. Is it? Our panel weighs in when the "Journal Editorial Report" continues.
(BEGIN VIDEO CLIP)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I strongly believe Congress needs to listen to a budget which says no tax increase, and a budget, because of fiscal discipline, that can be balanced in five years.
(END VIDEO CLIP)
GIGOT: President Bush sent his proposed $2.9 trillion budget to Congress this week, calling on lawmakers to make permanent his first-term tax cuts, and setting the stage for a fiscal showdown with Democrats.
Steve, not to long ago, you were worried the president was going to raise taxes this year in the deal with Democrats. And now, he is saying I can balance the budget without one. Can he do it?
MOORE: This was his best budget yet, in my opinion. And it's Reaganite. It basically says we're going to spend more on the military. We're going to cut domestic programs. And we are not going raise taxes.
The big story of this budget, though, is how well the fiscal picture of this country has improved over the last two or three years. The budget deficit is down 70 percent. Tax revenues to the government are pouring into the treasury at a record pace. That is bringing the deficit down.
As long as the economy continues to do well — and Bush has made this point — we're going to see this deficit continue to decline without a penny of new taxes.
GIGOT: This revenue picture is amazing, Dan, 15 percent in 2005, 12 percent in 2006, 10 percent, so far, in the first four months of this year. The government is rolling in tax dollars.
HENNINGER: Yes. And, as a matter of fact, what it has meant is that it's brought the deficit down to close to one percent of gross domestic product.
That said, the Democrats have saddled themselves with the idea of eliminating the deficit as their Holy Grail. So they are pushing an idea that virtually no one understands, to do something that no one wants to do, raise taxes.
How did they get there?
GIGOT: Well, Jason, the alternative minimum tax rolling down here. It's going to hit 20 million Americans if Congress doesn't do anything. Democrats have a $40 billion bogie. Do you think they can do something about that?
RILEY: Yes, they do. The Democrats have a big problem. On the one hand, they want to use these Pay-Go budget rules in order to budget. And Pay-Go means that any tax cuts have to be offset by spending reductions.
GIGOT: Or tax increases.
RILEY: Or tax increases. On the other hand, they want to solve this Alternative Minimum Tax problem.
The Alternative Minimum Tax has been around for about 40 years. It was meant to target very wealthy individuals. But it was never indexed to inflation. So now, it is capturing more and more of the middle class.
In order to provide, particularly in blue states, which have high state and local taxes...
GIGOT: California, New York, Connecticut, New Jersey.
RILEY: California. So in order to provide AMT relief, it's going to be hard to do that within the confines of these Pay-Go rules that they want to budget by. Got a bit of a problem there.
GIGOT: So, Steve, are the Democrats going to walk into this trap on taxes?
Or are they going to say, no, sorry, we're not going to do it. We're gong to have to find the money somewhere else? How do you...
MOORE: I do think that their going to do what they have done for the last few years. It's just a one-year fix to the ATM pundit in the future.
The big bite this year is going to be about the military budget. Bush wants a 25 percent increase in the military budget to pay for the wars in Iraq and Afghanistan.
The Democrats are saying, hell no, we want — the big thing they will keep an eye on, will George Bush use his veto on some of these spending bills this year.
GIGOT: What about the idea that Nancy Pelosi, the speaker, floated, a couple of weeks, which was, well, maybe we'll look at raising taxes on people who make above a half million dollars or the wealthy?
MOORE: Well, I certainly hope George Bush has his veto ready for that because — you know, the tax cuts for the rich have actually led to a record amount of revenues paid — taxes paid by the very wealthy people that Nancy Pelosi wants to tax.
HENNINGER: And the Alternative Minimum Tax was supposed to be just a tax on the rich. It is now a tax on everyone.
Why should we trust them to pass a tax on the rich, thinking it can be somehow corralled off on the rest of the population?
GIGOT: All right, do we get out of this year without a tax increase, Dan, Steve?
MOORE: Yes, absolutely.
RILEY: I think so, yes.
HENNINGER: Maybe a tiny one.
GIGOT: I think we'll get by without it.
All right, we have to take one more break. When we come back, our "Hits and Misses" of the week.
GIGOT: Winners and losers, picks and pans, "Hits and Misses," it's our way of calling attention to the best and the worst of the week.
Item one, first Hillary, then John Edwards, now Barack Obama says he won't take public funds to run for president.
Dan, what's going on?
HENNINGER: Well, what is going on here is that campaign finance reform is being reduced to an absurdity. To run for president now, you need about $500 million.
The problem is that, if you accept public money, it puts a ceiling on how much money you can raise privately.
Now, there is a public campaign fund to run these campaigns. By the end of 2007, there will probably be $200 million in it. Not quite enough for, say, six presidential candidates.
So why is there not enough money in the fund? The fund source is the $3 check off on your tax return. And the fact is, most people are not doing it. There is simply not enough money in the fund.
I think the public is voting with its check book on campaign finance reform. They might be willing to finance campaign elections in machinery, but not going to give their money to the bozos running for president.
GIGOT: All right.
Next, Snickers really satisfies its critics by dropping its Super Bowl ad — Jason?
RILEY: Yes, this was a miss for the Mars Candy Company, which gave into gay activists who demanded that they pull their Super Bowl ad, which featured two men accidentally kissing, and then pulling out their chest hair to prove that they're still men.
I mean, it was perfectly innocent fun. And the reaction to it shows just how humorless these activists can be sometimes.
I mean, the real butt of the joke is macho men, not gays. And it's too bad that Mars was so easily intimidated. They should have acted like a real man.
GIGOT: All right, Jason, thanks.
Finally, Jacques Chirac warns the U.S., sign Kyoto or else.
MOORE: Yes, Jacques Chirac is up to his old antics. He is basically saying that, if the United States does not sign the Kyoto treaty, he is going to place a tax on American products.
Now, there are two problems with this.
Number one, if they impose a large tariff on American products, the people who are going to hurt by this are not the Americans, but the French because they are going to have to pay more for the products they buy from America. And, of course, France already has a 50 percent tax.
The second problem is that France itself is not in compliance with the Kyoto treaty.
So I think that when you look at their record, you have to say that people, who live in glass French villas, probably shouldn't throw stones.
GIGOT: But, Steve, don't you think that we are headed to a carbon tax eventually in the U.S., too, at least down the road?
MOORE: Well, we may be. But if we decide that, it should be Americans who decide it, not the French.
GIGOT: And maybe we can cut other taxes in return. That would be a gain we could think about.
MOORE: No capital gains tax?
GIGOT: All right.
Thanks to Dan Henninger, Jason Riley and Steve Moore.
I'm Paul Gigot. Thanks to all of you for watching. And we hope to see you right here next week.
Content and Programming Copyright 2007 FOX News Network, Inc. ALL RIGHTS RESERVED. Transcription Copyright 2007 Voxant, Inc. (www.voxant.com), which takes sole responsibility for the accuracy of the transcription. ALL RIGHTS RESERVED. No license is granted to the user of this material except for the user's personal or internal use and, in such case, only one copy may be printed, nor shall user use any material for commercial purposes or in any fashion that may infringe upon FOX News Network, Inc.'s and Voxant Inc.'s copyrights or other proprietary rights or interests in the material. This is not a legal transcript for purposes of litigation.