Does the post-9/11 status quo need to be re-examined?

This is a rush transcript from "Journal Editorial Report," December 16, 2017. 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.

House and Senate Republicans reached a final deal on tax reform, setting the stage for a historic vote in Congress next week. The agreement would slash the corporate tax rate to 21 percent beginning in January, down from 35 percent, while the top individual rate would drop to 37 percent from 39.6. In a last-minute tweet to bring Florida Senator Marco Rubio on board, the final deal expands access to the child tax credit for low and middle-income families.

President Trump made his final push for overhaul on Wednesday.


PRESIDENT DONALD TRUMP: As a candidate, I promised we would pass a massive tax cut for the everyday working American families who are the backbone and heartbeat of our country. Now we are just days away, I hope, I hope -- you know what that means, right -- from keeping that promise and delivering a truly amazing victory for American families. We want to give you, the American people, a giant tax cut for Christmas.


GIGOT: Wall Street Journal columnist and deputy editor, Dan Henninger joins the panel, also columnist, Kim Strassel, editorial writer, Kate Bachelder Odell, and assistant editorial Page editor, James Freeman.

Kate, you've followed the ins and outs, detail on detail. The final bill, good tax policy, good reform or not?

KATE BACHELDER ODELL, EDITORIAL WRITER: Paul, it's about what we expected in the sense it's a major improvement on the business side, a structural reform on how we tax corporations. We go down from 35 to 21 but also a territorial system where you tax income where it is earned instead of taxing it twice when it comes back to the us.

GIGOT: Hundred percent expensing for five years on new investment.

ODELL: Right. That will probably be extended by Congress when it comes close to expiring. But this is a marginal discrete improvement on the individual side, but not really a reform working within some of the same deductions and credits that have mucked up the code for a long time, but on the whole, it represents progress.

GIGOT: I think a significant pro-growth on the business corporate side, James. Individual side, most people will get a tax cut, maybe not some of us in New York or California, but most people get a tax cut, just not as much reform.

JAMES FREEMAN, ASSISTANT EDITORIAL PAGE EDITOR: I think given what we had every right to expect when Donald Trump was elected, this is fantastic. This is --

GIGOT: Wait a minute. What is that Trump line about?

FREEMAN: Well, my point being, as he said, we are moments away. In a few days, we will see. But this is a major step forward, not perfect, but the United States becoming competitive again with the rest of the world. We went through a long dreary period where companies didn't want to be here, found various ways to get out of the United States, jobs were not being created here. And this is a real change. The markets have been reflecting that, that optimism. And you are seeing economic growth pickup, investment pickup. Finally, the U.S. is competing again.

GIGOT: Kim, that is the wager, that this will be reform that improves the productivity, underlying productivity and growth potential of the American economy that will draw capital to the United States, will increase business investment, which during this expansion, has been historically low. If you do that, you can keep this economy moving, keep wages going up at a faster pace, even as the Federal Reserve raises interest rates. That's the best.

KIM STRASSEL, WASHINGTON COLUMNIST: It is such a better way of doing it. This is the right strategy. Remember, Donald Trump came into office and his initial strategy -- well, he always planned a tax reform -- was to the rate companies for leaving when you can't blame them for doing so. The better way is to create infrastructure that is pro-growth tax policy and encourage companies to stay or expand or to invest here from a new perspective. And it's also, just to point out, this is dovetailing with some other very important Trump initiatives like deregulation, like a boom in the energy sector, and that will help American competitiveness as well.

GIGOT: Dan, why is the individual side, individual reform disappointing?

DAN HENNINGER, COLUMNIT & DEPUTY EDITOR: It is disappointing because they never reduced rates that much. They have the child care credit in there, by Marco Rubio, to join them, so the top rate doesn't come down all that much.

GIGOT: Incentives to invest and work hard are not there.

HENNINGER: They're not there on the individual side. And part of the reason is they had to keep this within a cap, a 10-year budget. There was $1.5 trillion they were working with, that much of the tax-cut. One way or another, they had to stay inside that ceiling. The individual reform suffered as a result by pushing and hauling a lot of the pieces of that by the cap.

GIGOT: Kate, they also didn't want to make the tax code any less progressive. We have a very progressive tax code. People with higher incomes pay almost all the taxes, most of the taxes. They didn't want to change that so they had to finagle it in a way that didn't cut rates much.

ODELL: Sure. It is jerry-rigged in that sense. But I would give one word to Republicans for lowering the top rate from 39 to 37, and that is we will have modest growth. It will look nothing like when Reagan lowered the top rate from 50 to 28. No one expects that. But what it does do it is a symbol the top rate is not permanent. If Republicans declined to lower the top rate at all, remember that the Senate bill only lowered it to 38 and the House didn't touch it, and in some brackets, increased it. This represents some progress Republicans can fight another day on this question.

GIGOT: Kim, disappointments? You have a few? Any in the bill?

STRASSEL: I have would love to have seen a much cleaner bill. I understand why they did it, to get the support of those House Republicans from high tax states, but we have a $10,000 deduction on state and local taxes still. That's just distortionary. I wish Marco Rubio had not gotten his child care tax provision because, let's be honest, this is redistributionist policy. It's taking from some taxpayers and giving to others. This should not be good conservative policy. It's also not pro- growth policy. It adds nothing to growth, and can, in fact, be a discouragement from people working.

GIGOT: Big victory, James, on repealing the individual mandate on Obamacare though?

FREEMAN: I think the whole thing is a big victory.


What I was saying, more than we can expect. President Trump is a rookie at this and he has delivered, you have to call it, a huge win. On the corporate side, even the individual, this will exceed people's expectations when they see more simple filing and less withholding.

GIGOT: Freeman's enthusiasm is up.


GIGOT: When we come back, the man who appointed Robert Mueller faces a grilling on Capitol Hill as newly released texts further instill concerns of bias in the special counsel's Russia probe.



REP. TREY GOWDY, R-S.C.: This agent in the middle of almost everything related to Secretary Clinton and Donald Trump sent pro-Clinton texts, anti-Trump texts to his paramour.

This conflict of interest-free special agent of the FBI, this is who we were told we needed to have an objective, impartial, fair, conflict-of- interest-free investigation.


GIGOT: The man who appointed Special Counsel Robert Mueller faced a grilling on Capitol Hill this week. Deputy Attorney General Rod Rosenstein told the House Judiciary Committee on Wednesday he has seen no reason to fire Mueller, thus far, despite growing Republican concerns of bias in the Russia investigation.

The Justice Department this week released 90 pages of text messages exchanged last year between FBI Agent Peter Strzok, who was later assigned to Mueller's team, and FBI lawyer, Lisa Page. The anti-Trump texts describes the possibility of his election victory as, quote, "terrifying." But do they go beyond political antipathy?

Kim, let's try to put this into some context. Why should we care what we are discovering about members of the special counsel's team?

STRASSEL: Well, defenders of Mr. Mueller have quickly pointed out there's nothing wrong with an FBI agent having a political opinion, and that is true. The question is whether the hostility expressed in these texts go beyond that to a bias, and whether there is any evidence, more important, that the agents were willing to act on that hostility. One text message in particular talked about the importance of having an "insurance policy" in case Trump were to win the election. What does that mean? There's a lot of thoughts about it. Was that the dossiers that they were using, what it something else? Was the FBI actively trying to thwart Trump's presidency?

GIGOT: Let's put up that text. I want to go into that and read that. Let's show that. "I want to believe the path you threw out for consideration in Andy's office that there is no way he gets elected, but I am afraid we can't take that risk. It is like an insurance policy in the unlikely event you die before you are 40."

What does that mean, James? Insurance policy, how should we read that?

FREEMAN: It is deeply disturbing. On the face of it, a reasonable person would look at it and say it looks like this guy thinks his job in life is to protect all of us from the consequences of our political decisions. And just in case dumb voters choose Trump, the FBI needs to intervene. Maybe it doesn't mean what it seems to mean. Mr. Strzok, if he doesn't dodge it, should have the opportunity to come before the House Judiciary Committee, and perhaps other committees, and explain what he meant by this. On the face of it, deeply disturbing.

GIGOT: Here's another element of that. That "Andy" reference, that's Andrew McCabe, who is the deputy FBI director. The reference is there was a meeting in Andy's office and we were all talking about the election. And what were they talking about? And beyond opinion, the question is, did it go into -- did their line get crossed into some kind of active action or plotting or something like that? We don't know that, but these texts are disturbing.

HENNINGER: They are disturbing. And FBI Director Christopher Wray appeared before Congress this past week and basically answered no questions about any of this, nor did Rod Rosenstein.

Paul, I think the FBI and the Department of Justice are wadding into very deep water here. We are asking these questions, the American people have these questions, Robert Mueller has an investigation of Donald Trump going on, it is looking more and more as though perhaps there was some sort of internal conspiracy against Donald Trump.


HENNINGER: I know that. I know that. What I'm trying to say, Paul, is that eventually you are going to get to the point where the American public is going to start asking these questions themselves, and confidence in the FBI will break below a level that the FBI and Justice Department doesn't want to go. And the burden is on them to make sure that doesn't happen.

GIGOT: Kim, I think you and I agree, we don't think Donald Trump should fire the special counsel.


GIGOT: That would be needless provocation and a very bad idea politically. But on the other hand, the special counsel has an obligation to basically make sure that when he presents evidence and cases, they are credible, not only because, if it is a legal case, he has to convict somebody in a court of law beyond a reasonable doubt, but if he makes a recommendation to Congress, for example, you want people to think, OK, this was based on considered judgment by people who are fair-minded. If that confidence is undermined by these actions, we are in a pretty bad place.

STRASSEL: Yes. How can it not be? The Strzok news is not isolated. We've also had an entire raft of stories this week about other people on Mueller's team that would appear to be pro-Clinton, and we assume anti- Trump, and so this is really undermining confidence.

Also, bear in mind, I think this is important, too. These Strzok text messages have been known about by Rod Rosenstein and Robert Mueller since July and they know the amount of attention Congress is putting on this issue and, yet, they deliberately kept them from Congress for four months. That undermines their credibility as well. It looks like they have something to hide, which they apparently did.

GIGOT: What recourse, James, does Congress have?

FREEMAN: They need to start issuing subpoenas, more subpoenas, and enforce them. And this is where it is going to be difficult because when you have an FBI and a Justice Department that seems to not want to cooperate, not want to respect the oversight role of Congress over the executive branch -- Congress is going to have to jail somebody if they will not respond to a legally issued subpoena.

GIGOT: The president of the United States is the chief law enforcement officer of the United States. The Justice Department works for him. Can't he order them to turn over the documents?

HENNINGER: He most certainly, theoretically, could order them, but you can see the difficulty of Donald Trump doing that, politically. But again, Paul, I think we are getting to a crisis, an institutional crisis here, that if the FBI leadership and Justice Department leadership feels as important about that as they seem to say, they should step up and start telling the American people what happened during the election.

GIGOT: All right.

Still ahead, a major terror attack narrowly averted this week in the heart of New York City. Is Monday's failed pipe bombing a wake-up call? Does the post-9/11 status quo need to be re-examined? We'll ask a former top intelligence official at the NYPD, next.


GIGOT: A failed terror attack in the heart of New York City Monday has law enforcement officials across the country on high alert. Twenty-seven-year- old Akayed Ullah has been charged with federal terrorism offenses after he detonated a homemade pipe bomb in an underground subway passage during the morning rush hour. The Bangladeshi immigrate telling investigators that he, quote, "Did it for the Islamic State."

Nate Silver served as the director of intelligence analysis for the New York City Police Department.


I'm glad to have you here, because you predicted this would happen 15 years ago. I can give you credit for that. You were saying -- you did a paper called "The Radicalization, Homegrown Radicalization Here." And we've seen in the last 15 months, in New York alone, three cases like that. What is going on

NATE SILVER, FORMER DIRECTOR OF INTELLIGENCE ANALYSTS, NEW YORK CITY POLICE DEPARTMENT: Paul, it is unfortunate when you're a Cassandra and you are correct. We spent a lot of time looking at the trends in Europe in 2004- 2005, seeing how the threat was changing. And based on what we were learning in New York City from investigations, we realized the trends in New York are not that different, we're just a little further behind.

GIGOT: Really?

SILVER: And that was the purpose of the report at the time, to ring the bell and say, hey, wait a second, sure, Muslim immigrants to the United States integrate much better here than in Western Europe. That is part of the American dream, the American story. We are a melting pot. But that doesn't mean they are immune to radicalization and we should be concerned because that is the story of coming here.

GIGOT: If you look at the trends in New York, after 9/11, of course, that horrific attack, -- you guys, the NYPD and FBI, you've found a few -- you've stopped a couple of attacks. There's a long period where there weren't any. The one guy in Times Square who tried to explode a car bomb and failed. But there were not a lot of other attempts. Now in the last 15 months, we have had three.


GIGOT: So is this just a coincidence, do you think, or is this the kind of thing we are going to see more often?

SILVER: It is a question that is appropriate to begin to ask. When you think about from 9/11 to 2016, 2017, you went 16 years without a successful attack in New York City. And if you are a bad guy looking at New York City, New York City looks invulnerable, looks invincible. There is the shield around the city. On October 31st, unfortunately, that shield was pierced, and now it was demonstrated that an attack can be carried out in New York City. And now we have, less than six weeks later, a second attack, a first suicide bomber in New York City.


GIGOT: That is what he was attempting to do. It was just he was incompetent, and we got lucky.

SILVER: We got very lucky. It was only the fact that he wasn't an electrician and he couldn't make it work. Otherwise, there's nothing to stop him from exploding a few blocks from here.

GIGOT: Is the NYPD, as you observe it, doing something differently now than it did in the past?

SILVER: There is a political question that has to be asked. When Mayor Bill di Blasio ran for mayor, he ran, to some degree, against the NYPD. That is who he positioned himself against. And shortly after coming into office, a lot of media attention was garnered because they issued a press release when they shut down the unit called the Demographics Unit.

GIGOT: Right.

SILVER: I don't know how many times in the history of the NYPD that when the unit of half a dozen people was shut down, and justified a press release.

GIGOT: What did that Demographics Unit do and why was it important?

SILVER: It did a few different things, Paul. One of the things New York City learned from 1993, when former police commissioner, Ray Kelly, was the commissioner, you need to understand where people from other countries might come and lay low before they launch an attack. Before the 1993 World Trade Center attack, that they might be in places in Jersey City.

GIGOT: Where do they hang out? Where do they go to? Where do they stay? Where do they -- what mosques do they go to?

SILVER: Where are you likely to find people who are their co-countrymen, where they might stay to lay low? Think about it, when the attack happened at the Boston Marathon, two individuals of Chechen background. In New York City, we have to ask the question, where would these guys go if they came to New York City.

GIGOT: That increases the chances of getting a tip, getting some information, preempting something, as opposed to afterwards trying to put together what happened.

SILVER: Right. We would have been positioned well in Brooklyn to detect a car with Massachusetts license plates showing up to New York as we now know they haven't thought about doing.

GIGOT: The NYPD would respond to that, saying we are not doing anything different, the demographics didn't matter that much, we really -- we still get the surveillance we need. How do you respond to that?

SILVER: Look, I'm no longer at the NYPD.

GIGOT: Right.

SILVER: So I don't know operations, what they are doing. People who I trust and speak to say, look, we're working as hard as ever --

GIGOT: Sure.

SILVER: -- and if anything, the threat is more complicated because when you are dealing singletons as opposed to a group, there's not as much of a signature to detect.


GIGOT: That's a fair argument.

SILVER: I think it is, too. We are talking about people who radicalize online, and they are not meeting in a bookstore or mosque or someplace. But the demographics have important purposes. And if the question is, NYPD and FBI said, hey, this guy, Mr. Ullah was not on our radar. Why was he not on the radar? That's the question I think needs to be asked. Maybe everything was being done and he slipped through. But three people in 14 months, this begins to be a question that is worthwhile thinking about.

GIGOT: I agree.

Thank you, Nate Silver. Appreciate you're being here.

Still ahead, Alabama sends a message. What Republicans can learn from Roy Moore's Senate defeat when we come back.


PAUL GIGOT, FOX HOST: A stunning setback for Senate Republicans this week as embattled GOP Candidate Roy Moore was narrowly defeated by challenger, Doug Jones, in Alabama, sending Democrats their first Senate seat in that state in 25 years. What lessons can Republicans take from Roy Moore's loss? And what will a 51-49 Senate majority mean for the Republican agenda going forward?

We are back with Dan Henninger, Kim Strassel, Kate Bachelder Odell and James Freeman.

Dan, first is this going to hurt tax reform?

DAN HENNINGER, COLUMNIST & DEPUTY EDITOR: I don't think it will have a big effect on tax reform, unless it rolls into the next year. It puts pressure on them to get it done this year so that, Luther Strange, sitting Senator from Alabama, can vote for it.

GIGOT: What about the rest of the Republican agenda going forward?


GIGOT: Tax reform passes, but they seat Jones, what does that loss of one Senate seat mean?

HENNINGER: Look how difficult it was to get anything done with 52 Senate seats. Then you lose one. Then on budget issues they are going to need Democratic votes. Democrats have the wind at their back. Not going to will be much help to Senate Democrats, especially in the area of a judges. Say, a Supreme Court nomination is going to be very difficult, say, if Anthony Kennedy were to retire. It looks as though President Trump probably would not be able to nominate another justice in the Scalia mode, because you have Senators like Lisa Murkowski and Susan Collins who would probably push back against that.

GIGOT: I think it would make it much harder. If you only lose two votes, Kate on the judicial question, you are done. The nominee would be defeated. So the pressure will be on to nominate somebody who has a little more -- maybe like Justice John Roberts or Anthony Kennedy, than Scalia.

KATE BAHCELDER ODELL, EDITORAL WRITER: Right. It also has an impact on lower judges as well. As of this week, the Senate has confirmed 12 circuit court judges, which is the most in the first year of any presidency since circuit courts were created in 1891.

GIGOT: It's amazing.

ODELL: That's an amazing accomplishment, and they better keep the pace up, coming into the new year.

GIGOT: What about, James, the rest of the agenda, talking about welfare reform, entitlement reform, infrastructure spending? Most or all of those will take 60 Senate votes. Maybe they can do one more reconciliation bill to get 50, but even that, with 51, it will be tough.

JAMES FREEMAN, ASSISTANT EDITORIAL PAGE EDITOR: Yes. You turned a reliable yes vote for the Republican agenda into a no, or maybe not. We will see if Doug Jones has any interest in reelection. He may.

GIGOT: It is a no.

FREEMAN: Probably a no.


But at the margin, it probably hurts them this year in terms of their legislative agenda, but it helps Republicans long-term. The Democrats wanted to run against Roy Moore in 50 states near fall. They won't be able to do that now. So long-term, probably not a big negative for Republicans.

GIGOT: Kim, the striking figure I saw, one, in this race was Donald Trump's approval rating in Alabama, which is one of his best states, it was only at 48 percent in the exit poll for the Senate campaign. It was 62 percent when he won, when Trump won in 2016. If he is at 48 percent in Alabama, we know he is under 40 in all kinds of important states where Senate candidates and House candidates are going to run, what does this tell us, this race, about 2018?

KIM STRASSEL, WASHINGTON COLUMNIST: We know how much that hurts Republican candidates. Don't forget that the Alabama race comes on the heels of Virginia and the gubernatorial race there where Ed Gillespie, who was a rock-solid candidate, could not pull out a victory. He got crushed in that race by the Democrats. And no doubt, a huge amount was because of suburban voters, who were Republican leaning, but just very unhappy with the president. His approval rating is very low. It is worrisome to Republicans going ahead. More than Alabama, that is an anomaly, given the poor candidate quality down here. But if you get even an amazing candidate, like Gillespie, and they are dragged down by a President Trump, there is a likelihood that Republicans could lose the House and the Senate next year. And this is something the president needs to be worried about more than his Twitter feed.

HENNINGER: Yes. Paul, especially for 2018. Democrats are now feeling good about this because the standard political analysis suggests they may be building a wave towards 2018. The president's approval is below 50 percent.

GIGOT: Forty.

HENNINGER: Forty percent. The generic ballot, asking whether people whether they prefer Republicans or Democrats in the Congress, is going with the Democrats at the moment. Democratic donors are enthusiastic. They will start spending money to support some of these candidates. And 2018 will be about turnout. Democrats will be out there working, just as they did in Alabama, to turn their voters out. Then you have Republicans back on their heels. So at the margin where these elections are decided, Democrats are at the moment running uphill, against Democrats in 2018.

ODELL: Also, if you look at the map for Democrats, it should be a tough map. They have to hold 26 seats and they have to flip Arizona and Nevada if they want control of the Senate. But that looks possible because of changes we've seen in Nevada made it a more blue state over the past six years. And in Arizona, we have another Bannon-backed candidate, Kelli Ward, that could repeat the mistakes of Alabama.

GIGOT: You mentioned the word Bannon, Steve Bannon.


Silver lining department, James, Bannon backed Roy Moore.


GIGOT: He said it was a test of the Republican -- whether you support the establishment. But his credibility was not helped by backing such a flawed candidate.

FREEMAN: No. This is a useful wake-up call for Republicans. Look at this race and say, even if you like Roy Moore, he lost. You've got to win seats to affect policy.

GIGOT: In the reddest country in the country.

FREEMAN: Right. He also -- you hope there's some reconsideration of this idea that there needs to be a rebellion against Mitch McConnell, for example, Senate majority leader. Look at the history of the conservative movement, it was about taking over the Republican Party from liberals in Manhattan who had taken it over. Mitch McConnell is not a liberal. As we've mentioned, he just set a record on getting conservative judges on the circuit courts. He's about to get a tax cut through. So this is not the problem in Washington, not that he doesn't have his faults, but I hope there would be a reconsideration.

GIGOT: I think Steve Bannon is more interested in being a kingmaker --


GIGOT: -- than a conservative policy victory.

Still ahead, Donald Trump takes on Senator Kirsten Gillibrand after the New York Democrat called on him to resign over allegations of sexual misconduct. Is this week's skirmish a preview of battles to come in 2018 and 2020?


GIGOT: President Trump taking on Senator Kirsten Gillibrand this week in his usual understated style, attacking the New York Democrat after she called on him to resign over allegations of sexual misconduct. The president tweeting, quote, "Lightweight Senator Kirsten Gillibrand, a total flunky for Chuck Schumer, and someone who would come to my office begging for campaign contributions not so long ago, and would do anything for them, is now in the ring fighting against Donald Trump. Very disloyal to Bill and Crooked. USED."


We want to go back to 140 characters, James, not 280 on Twitter.



FREEMAN: So much fun. I don't know.

GIGOT: You can say this is a distraction, but there's a political strategy Democrats are developing. What is it?

FREEMAN: There's been a lot of talk about fake news this year. This is fake politics. The Kirsten Gillibrand argument that, suddenly, after being part of the Clinton machine, she is appalled by sexual abuse of women, this is now topic A for her, apparently, after ignoring it for years.

GIGOT: But isn't it good politics?


GIGOT: She just said Bill should have resigned in the 1990s. She's throwing the Clintons under the bus. She's hoping to run herself on this theme and she's saying, basically, I am going to run to mobilize women against Trump.

FREEMAN: Yes. She is saying is that, and she's saying that five minutes after her Clinton pals are no longer politically useful. We didn't hear a word about this for a decade or more.


GIGOT: The Clintons are gone, James.

FREEMAN: Right. Right.



FREEMAN: Right now, the game to make this -- the war on women them all about Trump and pretend that what he said was a sexist comment, even if you go back to his campaign launch in 2015, this was the premise of his candidacy, talking about politicians who will do anything for money and he used to buy them off, and that was the heart of his message. It had nothing to do with gender.

GIGOT: But Democrats are cleaning their own house. They threw Al Franken out. They got John Conyers out. I guarantee, anybody who pops up, any man accused of sexual harassment, Democrat, they are gone, because they think this is a good issue against Trump.

ODELL: It is a good issue against Trump, in some sense. But Gillibrand is making a political transformation from her old moderate persona as a blue dog Democrat in the House and is trying to lurch leftward, as a progressive. But I would note that Hillary, to the extent she could, would reduce a lot of issues to gender identity. She had a lot of other flaws but, to the extent she made everything about being her being a woman and her qualifications of having two X chromosomes, it didn't help her.

GIGOT: And you think that could be a mistake for Gillibrand or any Democratic nominee, particularly a woman who tries to run mainly on that?

ODELL: I do think that. It's a divisive form of politics that is not attractive.

HENNINGER: We will see. This is bloodless politics, Paul. In this game of politics, you try whatever works. Nothing personal, like the "Godfather."


GIGOT: Everybody who understands that is Donald Trump, I'll tell you that.


HENNINGER: Yes, exactly. And since Harvey Weinstein, this issue of sexual harassment of women has been elevated. There is a new story every day. And they are running it at Donald Trump. Again, it failed in the campaign, but they are going to run it towards 2018.

GIGOT: That's right. That is the key, I think, Kim, 2018. A large part of this is Democrats are looking at the Alabama suburbs where a lot of Republican women either didn't vote, came out for Roy Moore, or voted for a write in, or they voted for Doug Jones. And that is where the Democrats are aiming in 2018.

STRASSEL: Absolutely right. That's the number that has not gotten enough attention this week, which was nearly 60 percent of women in Alabama, who voted for Democrat Doug Jones, and somewhere close to 30 percent or more of white women who voted for Doug Jones, which is twice the number of white women voters who voted for Barack Obama in 2012. They believe this issue is a way to turbocharge them in the election because they had similar results in Virginia. And that is why they are throwing their own guys over, and let no good crisis go to waste. They will try to turn this into a campaign strategy.

GIGOT: All right.

When we come back, as the price of Bitcoin soars, we take a look at the crypto-currency. It is a promising investment opportunity or a risky bubble about to burst?


GIGOT: Bitcoin futures began trading on the Chicago Board Options Exchange this week, seen as a milestone for the digital currency. With its value surging by 2000 percent in the last year, investors are wondering if they could be the next Bitcoin billionaire.

But my next guest says the bubble is bound to burst. Lawrence Baxter is a law professor at Duke University where he also directs the Global Financial Markets Center.

Welcome. Great to have you here.

On Bitcoin --


GIGOT: On Bitcoin, how could so many people be so wrong?

BAXTER: We have seen it before in history. A lot of people would have read about tulip mania. We've had the Mississippi Company and so on, so there was a mania that gets into the market.

GIGOT: What is wrong in this case? What are people missing when they invest in Bitcoin that will cause heartburn down the road?

BAXTER: The actual speculators, the people who buy Bitcoin as opposed to traders and listing on exchanges, many of them think that it's something like a gold coin. In fact, Bitcoin uses that icon. People think it's a Krugerrands. Some of them are speculators who see the run and know there's more money to be made and hope they will get out before they end up being the last greater fool.

GIGOT: There's a kind of -- you use the phrase, and I like this phrase, "Libertarian ethos" that has developed around it, which is, OK, this Bitcoin is a store of value, some people see to think, that is an alternative to the currencies of untrustworthy, unreliable governments. You don't think it is the store of value. Why not?

BAXTER: I'm sure that is the well-intended origins, that the idea was this is currency that is transferred directly between individuals without the need for government involvement, and that would liberate the world's economy eventually from what is perceived by ideologues as the tyranny of governments and central banks. I don't think a lot of speculators think that far. They see an opportunity to make a buck, and they're willing to take the high risks involved, because the awards so far have been huge.

GIGOT: Some people think -- in fact, we had another op-ed after yours in our paper this week, saying, look, regulation of Bitcoin would be helpful. It would be reassuring to investors and look like it had some controlling legal authority. You think regulation is a great danger here, and once that takes place, it will hurt Bitcoin. Why?

BAXTER: Frist, because regulation is inevitable. People get hurt, will demand it. But once you get regulation in, it becomes more expensive currency. There's, all the compliance involved and so on. And if you do that, you take away the advantage of Bitcoin that it's a cheaper method of generating currency. There's a myth out there that the current systems of currency are expensive. They are not expensive. The margins are very low, and they could go lower still with competition. So Bitcoin has to make the case that in a regulated environment, it is still superior to what we already have.

GIGOT: The other thing that's interesting is the amount of energy Bitcoin uses.


GIGOT: You think of it as sort of a boutique investment. You report Bitcoin is actually taking up as much energy as the country Denmark uses.


GIGOT: I guess this is just because -- that's remarkable. Why is that?

BAXTER: In order to mine Bitcoins, one needs huge computing power. Basically, the computers solve the puzzles that are set for the miners and when the miner solves a puzzle, they get awarded Bitcoins. It is like the old analogy of gold mining. It is very lucrative if you strike gold. Those huge server farms, most of which are in China, are huge consumers of power. And a think tank in Australia -- I was reading this today -- has project it's conceivable they would ultimately use 60 percent of the world's energy.


BAXTER: And --

GIGOT: We know that is not going to happen.

BAXTER: And China is also using energy that is the most dirtiest of all, which is sulfur-coal-based energy.

GIGOT: Your point is, this can't last. Once it takes up that much energy, regulators will get in and governments will step in.

BAXTER: I am sure that will be the case. People who are concerned about the environment will also start clamoring for action. I have read the alternative argument, which is generation of currency his also high energy, but I suspect it is nothing like what Bitcoin is consuming.

GIGOT: All right, thank you, Lawrence Baxter. Appreciate you being here.

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


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

Kim, first to you.

STRASSEL: Paul, this is a hit for Texas Supreme Court Judge Don Willis, who the Senate confirmed to the Fifth Circuit Court of Appeals this week. He is not only a very talented jurist, but someone rare in the judicial world. He's very amusing. He is famous for having a Twitter account with 100,000 followers. It is funny. It is witty. Now, Democrats tried to use that against him and tried to discourage him from using it anymore. My plea to him is don't want to stop. We need more laughter in this political age.

GIGOT: He is not as funny, though, as Judge Freeman.

James, what's your --


FREEMAN: I don't know if I can pass that bar.

But it's not funny. I've very happy. I'm giving a hit to the U.S. consumer who is pulling the U.S. back toward normal U.S.-style growth. Big increase in consumer spending in November versus a year ago. So Atlanta Fed now saying another quarter over 3 percent growth. It's looking like a great economy.

GIGOT: Kate?

ODELL: This is a hit for FCC Chairman Ajit Pai, who this week, moved to repeal Net Neutrality. There's been a lot of hysteria about this. You need to understand we are just going back to the model of regulation of the Internet that brought us Google and Amazon and reigned for 20 years. And special point for Pai for doing this with a happy warrior mentality amid threats from the left about bonds and death threats and protests outside his out. But he has continued to press the case as a happy warrior who made us a video about why you'll still be able to post Instagram photos of our food.


HENNINGER: We need a miss so I'm going to give one to Vladimir Putin, who used a press conference this week to embrace Donald Trump, saying how much he wanted to work with him. I realize that Mr. Trump would like to work with Vladimir Putin as well, but bear in mind, this is a country the International Olympic Committee just kicked out of the Winter Olympics because there was so much cheating by their athletes at their Winter Olympics in Sochi. Paul, if you can't trust the cross-country skiing, you are not going to be able to trust them in Syria.

GIGOT: All right. That's it for this week's show. Thanks to my panel. Thanks to you for watching. I'm Paul Gigot. We hope to see you right here next week.

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