PAUL GIGOT, FOX HOST: This week on "The Journal Editorial Report," a federal judge slams the NSA surveillance program. And an Obama-appointed panel calls for major changes. How will the White House respond? And will America's safety suffer?
Plus, Pope Francis, Time magazine's "Man of the Year," making some waves for his economic views. Why some conservatives aren't happy.
An op-ed in our very own paper exposes a nasty rift in the Democratic Party. It turns out Republicans aren't the only ones divided.
Welcome to the JOURNAL, EDITORIAL REPORT. I'm Paul Gigot.
A federal judge ruled this week that the National Security Agency's bulk collection of phone records likely violates the Constitution, calling the program, quote, "almost Orwellian." The ruling came just days before a White House-appointed panel released its own critique of the NSA and its activities and made some potentially dangerous recommendations for reining it in.
Joining the panel this week, Wall Street Journal columnist and deputy editor, Dan Henninger; and editorial board members, Joe Rago and Matt Kaminski.
So, Joe, you, for your sins --
(LAUGHTER)
-- read this opinion and the NSA report. Tell us, first, about the opinion. How powerful is it, as a legal document, taking on the constitutionality of this program?
JOE RAGO, EDITORIAL BOARD MEMBER: Well, it's not very compelling, Paul.
Since a 1979 Supreme Court decision, called Smith versus Maryland, metadata, phone records, information about information has not been a search under the Fourth Amendment.
GIGOT: According to the Supreme Court.
RAGO: According to the Supreme Court ruling by Harry Blackman, who was no conservative, certainly. And if you entrust your data to a third party, like a phone company or a credit card company, you have no reasonable expectation of privacy.
GIGOT: But why did Leon then say that precedent -- because he's a lower- court judge. Why did he say that Supreme Court precedent doesn't apply right now?
RAGO: He said technology has changed so much that the case no longer pertains. But Smith versus Maryland wasn't about how or how much metadata the government collects, whether it's the local police or the NSA. It's simply the fact that your metadata is not yours. It belongs to the third party.
DAN HENNINGER, COLUMNIST & DEPUTY EDITOR: If that's the case, then I think someone should file a lawsuit against Amazon and American Express on exactly the same basis. Every day of the week, we all convey enormous amounts of privacy to these web retailers and nobody seems to complain about that. In fact, they're much more intrusive --
(CROSSTALK)
GIGOT: But I guess the argument would be made, well, that's not the government. They don't have police powers. Amazon and American Express don't have police powers.
HENNINGER: Well, the issue is it's not just the government doing it.
People are worried about what will be done with this information. I think your information is obviously, given the story of Target stores, is more at risk in the private sector than it is with the NSA.
MATT KAMINSKI, EDITORIAL BOARD MEMBER: But the NSA actually has no police powers. The NSA just gathering --
GIGOT: Excellent point.
KAMINSKI: -- reams of information for possible clues that they would pass on. Let's say, if someone is calling from Pakistan, a known terrorist, is calling a number in Utah, you know, 10 times in the span of two weeks, they would pass it on to the FBI, which then would look into it. We have to get a warrant --
(CROSSTALK)
GIGOT: You have to get a warrant to be able to do that.
KAMINSKI: Of course. It's like the police gathering tips.
GIGOT: What about this report, Matt, by the president's appointed panel, with basically came out and said do away with that bulk effort, for example, and did some other -- it puts really significant restraints, process restraints, bureaucratic restraints, on these programs?
KAMINSKI: It would really unilaterally disarm the surveillance state --
(CROSSTALK)
GIGOT: You think it's that serious?
KAMINSKI: I think it goes much further than the White House thought it would go. President Obama called these wise men, after Edward Snowden basically released the NSA's play book, so to speak, and they came back and said you have to curtail the metadata program, you have to change the way that a special court, a secret court, you know, allows the intelligence agencies to look into -- to follow up leads. And it curtails the president's powers to surveil overseas, basically, to spy overseas.
GIGOT: No other country has anything like that in terms of restraint, Joe, on foreign intelligence gathering, as I understand.
RAGO: It's very difficult to create rules for this kind of regime. The nature of anti-terror defenses is that you never know what you're going to need in advance. It's always we need this information immediately and we need to find it very fast. So the idea that we're going to create a set of constraints beforehand is really pernicious.
GIGOT: What about this argument, Dan, that the Libertarians, in particular, make? They make it on left and they make it on the right, that somehow, look, this is Big Brother, this is the intrusive state. It is, as Judge Leon wrote, "almost Orwellian" to think that they have this vast capacity to listen in on everything we do. Is this an irrational fear? Or is it just something we have to come to live with, with some restraints on the government?
HENNINGER: I guess I would put it this way, Paul. Those of us who live here in New York City, and did in 2001, what happened on 9/11 was rather Orwellian, I would say.
(LAUGHTER)
And, you know, if you are Al Qaeda, which still exists out there, and you are seeing that the United States is issuing a report like this, and it's going to -- what Matt just suggested, I think you've got to be pretty happy. Mike Rogers, out of the House Intelligence Committee, and Dianne Feinstein, out of the Senate Intelligence Committee, both said al Qaeda is getting much more sophisticated in the sort of weapons and techniques that it's developing. They have not gone to sleep. The question is, is the United States going to go to sleep?
GIGOT: Matt, the question is, where is the president on this? He accepted the report without comment. Said, we'll think about it, go at it. But it seems to me that he's been voting present on this entire debate. He just doesn't want to defend or seems reluctant to defend the very powers he's been using for five years.
KAMINSKI: Well, he stuck -- his base obviously wants him to, you know, curtail this back. So does the -- on the right. At the same time, he has been successful in preventing any terrorist attack on U.S. soil --
(CROSSTALK)
GIGOT: But why wouldn't he mention that? Just in passing, you know?
(LAUGHTER)
We haven't had another attack, other than the Tsarnaevs?
KAMINSKI: No, he has not been willing to speak out and defend these programs. I think the key phrase in the report from the White House is "potential risk to civil liberties." But there's a very real risk and a growing risk from al Qaeda, which is now spreading from Pakistan to North Africa, and that is something he has to explain to the American people.
GIGOT: All right, thank you all very much.
When we come back, Pope Francis, the economist? "Time" magazine's "Man of the Year" angers some conservatives with his recent writings on inequality.
Our panel joins the fray, next.
(COMMERCIAL BREAK)
GIGOT: Well, he's Time magazine's "Man of the Year." And there's little doubt Pope Francis has captured the imaginations of Catholics and non- Catholics alike. But his recent papal statement on inequality and his denunciation of so-called trickle-down economics isn't sitting well with many economic conservatives.
We're back with Dan Henninger. Wall Street Journal columnist, Mary Anastasia O'Grady; and assistant editorial page editor, James Freeman also joins the panel.
So, we've got the all-Catholic panel here.
(LAUGHTER)
So your theology's in order, gentlemen and Mary.
(LAUGHTER)
Dan, what do we think about the impact before we get into some of the specifics, but the larger impact and impression that Pope Francis has made?
HENNINGER: As Catholics, that means we all speak Latin and --
(LAUGHTER)
The title of this letter was (SPEAKING FOREIGN LANGUAGE), which means "the joy of the Gospel," not the joy of economics.
(LAUGHTER)
And pope's always been concerned really with the attention between the materialism and spiritual life and the idea that, in the modern world, there's excess materialism, and they've always tried to strike a balance between these two things. It isn't just Pope Francis. But his predecessors have always had a tendency to deeply criticize capitalism because they associate it with materialism.
GIGOT: Right.
HENNINGER: So they get into areas where they're maybe a little bit over their head. But you have to understand his concerns are with the moral life of people living in a capitalist world. I think this pope has a particular gift for handling the religious side of that equation. As he goes forward, I think that's probably what we'll see more of him doing.
GIGOT: Another thing that's made an impression, certainly on me, but I think on millions of others, is his humility and the degree to which he has shed some of the trappings of grandeur of the office and making calls to regular people and that sort of thing, and focusing less on the majesty of the church and more on its pastoral mission, to serve individuals and salvation. Has that made an impression on you?
MARY ANASTASIA O'GRADY, COLUMNIST: For sure. I think, from the first moment he was elected -- and he was attacked in Argentina by certain people on the left -- one of the things that elevated him was the fact that he had really walked the walk there. As a cardinal in Buenos Aires, he could have been in the social circle and so forth, and everybody, to a man, said that this is a guy who spends all his time in the slums with the poor really walking the walk. He lived in a humble way. And he really lived his mission.
GIGOT: Let me read you, though, a passage here. This gets into the economics from the pope's statement. "Some people continue to defend trickle-down theories, which is to assume that economic growth encouraged by a free market will inevitably succeed in bringing about greater justice and inclusiveness in the world. This opinion, which has never been confirmed by the facts, expresses a crude and naive trust in the goodness of those wielding economic power, and in the sacralized workings of the prevailing economic system."
Mary, how do you respond to that?
(LAUGHTER)
O'GRADY: Well, you know, there are two big problems with that. First, the idea that the market and market economics has not proven to lift people out of poverty is, I would say, completely wrong. But secondly, later on in the document, he also says, since we can't trust the market, we have to rely on the state to defend the common good. This is my real problem with his points on economics. It's fine to say, you know, that he needs to shepherd the flock away from materialism, but to say that we can somehow get closer to Christ by engaging in this coercion by the state, in forcing us to give and so forth, is completely contradictory to what I understand about Christianity.
GIGOT: Through the administrations of trickle-down government.
(LAUGHTER)
JAMES FREEMAN, ASSISTANT EDITORIAL PAGE EDITOR: Right. Right. I would say, based on his experience, doing his ministry in Argentina, a very big- government corporatist system, I can understand a certain degree of cynicism if you think that's how markets work, if you think that's what the market is. But I do think it's amusing watching much of the media, which spends a lot of time pushing religion out of the public square, saying that religious teachings have nothing to say about public policy --
(LAUGHTER)
(CROSSTALK)
FREEMAN: -- something bad about the market. Hey, this is an interesting guy.
(LAUGHTER)
We ought to bring him in the dialogue here.
(LAUGHTER)
But I think people who have that impulse might want to be careful because there are parts of this document that liberals will not really like. He criticizes spirituality without God, which is sort of student-body right for modern liberalism.
(LAUGHTER)
It attacks moral relativism, talks about those would want to redefine marriage as -- from mere emotional satisfaction and reconstructed and modified, it will. So there's a lot in here, I think, that liberals may be offended by, conservatives might want to cheer him.
GIGOT: Are you as disappointed in the economics --
(CROSSTALK)
HENNINGER: Economic --
(CROSSTALK)
GIGOT: Yeah.
HENNINGER: Yes, I was really quite disappointed. And I think part of what we're seeing here, Paul, if I may say this, is this is the first steps forward of a rookie pope, all right? Popes have always traditionally been very careful about the way they describe these sorts of things. Francis, as when he was a cardinal in Argentina, was very outspoken. He's finding that the media, modern media, will define his views for him if he isn't more explicit in making clear what he's saying.
(CROSSTALK)
HENNINGER: And he wasn't quite clear about a lot about these issues in this letter. I think that if he steps back, he'll say that a pope has to be a little bit more careful about choosing his words.
GIGOT: Well, I think the pope -- we don't listen to him so much for his views on tax rates, but we do listen to him as he's trying to save souls.
O'GRADY: The danger is that these sound bites are then taken by people who would defend the state.
GIGOT: OK, Mary, thank you.
When we come back, a Wall Street Journal op-ed exposes a nasty split among Democrats. Is economic populism a dead end for the party?
(COMMERCIAL BREAK)
GIGOT: Well, a battle is raging inside the Democratic Party over an op-ed we recently published in the Wall Street Journal. Two veteran Democratic operatives, now with the think tank Third Way, argue that economic populism is a dead end for their party, and the Elizabeth Warren/Bill de Blasio agenda won't play well outside of Massachusetts or New York. And now the campaign is on to purge these infidels from the liberal ranks.
(LAUGHTER)
So, James, Jon Cowan and Jim Kessler wrote in our paper -- these aren't conservatives by any stretch of the imagination.
FREEMAN: No.
GIGOT: They're liberal credentials --
FREEMAN: They liberals.
GIGOT: -- are very well in order.
FREEMAN: Right.
GIGOT: What hearsay did they commit?
FREEMAN: Well, it was, first of all, saying that voters across the country might not be as liberal as people in New York City and in Massachusetts --
GIGOT: You think?
FREEMAN: -- who think de Blasio and Warren -- yeah.
(LAUGHTER)
The greater sin may have been -- been saying in public that Social Security is actually paying more out than it's taking in. You're not allowed to say this.
(LAUGHTER)
But I also think, you know, maybe a bit of the anger is the forum they chose. They were not exactly keeping this within the family of Democratic discussion. So the fact it was in our pages probably rankled some people on the left.
(LAUGHTER)
GIGOT: Is economic populism, though, Mary -- and this was part of the reaction. This is de Blasio in New York, ran on taxing the rich. Barack Obama ran in 2012 on taxing the rich. Elizabeth Warren has made this really her main theme. Is this the dominant argument within Democratic circles these days that these guys are pushing back against?
O'GRADY: Well, certainly, that's, you know, the Obama style of democracy.
And for the Democratic Party, is certainly that model. But I think this is a really healthy conversation to have. Because basically, it shows that there's still some sane people inside the Democratic Party. I was amused by the fact that they decided they had to out the funders of the author of the -- the Third Way.
GIGOT: And even Elizabeth Warren, who's on the Senate Banking Committee, Senate Banking Committee, sent a letter to several big financial institutions saying, please disclose which think tanks you're giving money to, as if, somehow, by having banks finance these think tanks, you would corrupt what they have to say.
O'GRADY: Right. And then we find out, for example, that the Center for American Progress has an equally long list of corporate donors, so.
GIGOT: A liberal think tank.
(LAUGHTER)
O'GRADY: Exactly. So it's sort of -- reveals -- I think it's a very healthy discussion to have because we're going to get a lot on the table here about what's really behind this feel-good populism.
GIGOT: The arguments on Social Security, in particular, that the two gentlemen made in our newspaper really goes back to Bill Clinton.
HENNINGER: Yes.
GIGOT: That was the kind of argument Democrats were having in the 1990s.
Now basically, in the minds of some Democrats, it seems you can't raise those issues.
HENNINGER: Let's talk about that. You've got Bill Clinton Democrats, and now we've got Barack Obama Democrats. They are not the same thing. Ronald Reagan famously said he didn't leave the Democratic Party, the Democratic Party left him. All right? What we're now finding out is there are liberals that we always understood as traditional liberals, and now there are progressives, which is the left wing of the Democratic Party. And these people are not singing from the same hymnal.
I have to tell you, I've been talking more and more these days to traditional liberal Democrats who say I'm going Independent, this is not my party anymore and I just can't really sign up for it fully. So I think the Democrats are going to have a real internal debate going forward over just what that party stands for. A lot of people represent what those guys wrote and they're being pushed out.
GIGOT: But the liberals would say, the progressives would say, actually, we're winning elections. You know, we won the presidency twice on this agenda. Bill de Blasio won, Elizabeth Warren won, a lot of other populist Democrats are winning. So what's wrong with that?
FREEMAN: Well, OK, they won the -- the most recent ones they won in New York and Massachusetts. And as we said, Barack Obama -- is that a formula for anybody, or was there something special and historic about his campaign? I think a lot of people within the party -- you're not seeing it on MSNBC among the louder members of that party, but you notice, Third Way, as far as I can tell, the donors are not fleeing. You did not see a bunch of Senators condemning them and renouncing all ties to the group. There were some who backed up a little under pressure. But basically, Elizabeth Warren was not successful in getting Senate Democrats to embrace her view of basically an anti-business agenda.
GIGOT: Briefly, Mary, who's going to win that debate?
O'GRADY: I think the center left will win. I think the perpetual motion machine that Barack Obama sold people is starting to come unglued.
GIGOT: OK. All right, Mary, thank you.
We have to take one more break. When we come back, "Hits and Misses" of the week.
(COMMERCIAL BREAK)
GIGOT: Time now for our "Hits and Misses" of the week.
Dan, first to you.
HENNINGER: Well, Paul, I think we do have to give a miss to Barack Obama on the nuclear arms negotiations. It looks like they're getting bogged down --
(CROSSTALK)
GIGOT: With Iran?
HENNINGER: With Iran. I'm sorry. The United States and Iran can't even agree on the wording of the interim agreement. The French government criticized the negotiations again today. On Thursday, a bipartisan group of Senators introduced a bill to re-impose sanctions if, as they expect, the talks fail. And I'm afraid the talks are looking a lot like Mr. Obama's agreement with Vladimir Putin over the Syrian chemical weapons.
GIGOT: But the president threatened a veto of that Senate bill.
HENNINGER: He did.
GIGOT: Joe?
RAGO: Paul, a hit for more ObamaCare accountability in the states than Washington, D.C. This week, the director of the Minnesota health insurance exchange was forced out after taking a two-week vacation to Costa Rica while the state-based exchange floundered. Maryland's exchange director was also forced out after her own Caribbean vacation to the Cayman Islands. Is Health and Human Services Secretary Kathleen Sebelius due for time off? I think she should hit the road.
GIGOT: About a 12-month vacation.
All right, Matt?
KAMINSKI: Paul, in the spirit of the season, I want to give a hit to President Obama and for a foreign policy move. This week, he announced he would not be attending the opening ceremonies of the Sochi Winter Games in Russia. This is a snub to President Putin, who is really putting a lot on this coming-out party, but this is really an overdue corrective in America's all-too-indulgent policy toward Russia's.
GIGOT: Hear, hear.
Matt, thanks.
Remember, if you have your own Hit or Miss, please send it to us at jer@FOXnews.com. And be sure to follow us on Twitter, I know you are, @JERonFNC.
That's it for this week's show. Thanks to my panel and to all of you for watching. I'm Paul Gigot. Merry Christmas. Hope to see you right here next week.
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