Gingrich's Iowa Slump

This is a rush transcript from "Journal Editorial Report," December 26, 2011. This copy may not be in its final form and may be updated.

PAUL GIGOT, HOST: This week on "The Journal Editorial Report," Newt Gingrich's support sinks in Iowa as his opponents pile on. With just 10 days to go can he make a comeback?

And the payroll tax holiday fight is the latest in a series of showdowns between President Obama and House Republicans. One year into John Boehner's reign as speaker, who has the upper hand?

All that and our panel's picks for the biggest stories of 2011.

Welcome to "The Journal Editorial Report." I'm Paul Gigot. With just 10 days to go until the Iowa caucuses, former front runner Newt Gingrich has seen his support drop in the state amid a barrage of negative campaign ads. The latest Real Clear Politics poll average has him sinking third place behind rivals Mitt Romney and Ron Paul.

The former House speaker acknowledged this week that the race in Iowa is, quote, "a real mess."

So, can he come back? Let's ask The Wall Street Journal columnist and Deputy Editor Dan Henninger, Editorial Board member's Jason Riley and Dorothy Rabinowitz and Washington columnist Kim Strassel.

What's happened to newt Gingrich in Iowa?

KIMBERLY STRASSEL, THE WALL STREET JOURNAL: He's getting piled on, as you said. What you're going to see over the next week is a much more aggressive Newt Gingrich. You are going to see him going after his rivals the way they have him. He has promised to be a positive campaigner, but he's going to try to highlight some of their weaknesses. He went after Ron Paul this week on foreign policy. He's going to try to play to his strengths, in particular, on growth questions and tax reform policy, and he's going to try and bolster his ground organization there.

GIGOT: Dorothy, what do you think is working against Gingrich? I mean, why is-- what, what attacks specifically are making a dent?

DOROTHY RABINOWITZ, THE WALL STREET JOURNAL: Well, the Fannie, Freddie, and the flip-flopping. Everybody is accused of flip-flopping.

GIGOT: On cap and trade, for example.

RABINOWITZ: Cap and trade, and everything else.

GIGOT: And Nancy Pelosi?

RABINOWITZ: That's right.

And then there is this general vague sort of thing about his background, and his family life. You know it is insinuated. But you know, he has a very positive view for Newt and for everybody else and he believes that this race, I think, he believes, that this race is going to be clarified. And then all of those voters who went to Santorum and they're going to be his. They're not going to Romney.

GIGOT: Clarified how?

RABINOWITZ: Well, he's going to be the Southern conservative as opposed to the Massachusetts moderate and that's what he's going to be.

GIGOT: I see.

JASON RILEY, THE WALL STREET JOURNAL: Kim mentioned strategy going forward. The question is, is there enough time left to implement that strategy? Newt Gingrich spent Wednesday and Thursday of this week Virginia. Why? Because he needed enough signatures to get on the ballot there; he already missed the deadline in Missouri. Almost miss it in Ohio. Newt has an organizational problem here. He thought he could fly off the debates, flashy performances, but you still need a ground. It's largely organizational at this point.

GIGOT: You know the verities of politics. Presidential politics, money, which he doesn't have enough to respond to those ads. Negative advertising, which Mitt Romney and Ron Paul have been pounding him. Mitt Romney through the Super PAC that is not affiliated formally with Romney, but everybody knows is supporting him. If you don't have the money to respond to those ads, they work.


DON HENNINGER, THE WALL STREET JOURNAL: They not only work, Newt's done. He's toast, OK? He's finished. These ads are intimidating and driving away potential contributors, they're just going to leave Newt Gingrich out in the desert to die now.

Now, and I want to add this judge thing that was so controversial in the past.

GIGOT: This was Newt's proposals for judicial reform.


GIGOT: And taking on the judiciary and saying, the executive and the Congress, for example, Congress should subpoena judges.

HENNINGER: Right. Why did he do that? I think he did it to raise money on the Internet. You take these red meat subjects, you throw them out there. People start sending you small contributions. Most of his support has been from small contributors. But it was a two edge sword because he ran the risk of bringing the establishment down on him and that's what happened.

RABINOWITZ: But, Dan, I think it may be working a bit. Because there's a certain confidence in the Gingrich campaign that he's going to be, by the end of the month, having enough money to equal whatever John McCain had at this point in the race.

GIGOT: So he'll be able to fight back on the airwaves in Iowa, or so he says.

RABINOWITZ: That's right.

GIGOT: And Kim, what have we learned about Mitt Romney this week? Anything in particular about his campaign? He sat back and said, Newt, if you can't take the heat get out of the race because Obama is going to be much worse than anything you're getting now.

STRASSEL: He just keeps going and going. He's got an excellent strategy that way. As you say, all the money that he spent raising earlier in this race has now come very much in handy. It has allowed him to go after his rivals. He has also played Iowa carefully in that he didn't put too much emphasis on it. He made everyone know that New Hampshire was his big focus. And that way if he didn't do well in Iowa it wasn't necessarily a killer, like in 2008. And yet, behind the scenes been doing a lot of organization and keeping himself in Iowa and he could well do, pull out a victory.

GIGOT: Romney, obviously, wants to win Iowa, Jason, but the second best thing would be a Ron Paul victory in Iowa for him.


And he wants to knock out Gingrich. That is, Romney wants to knock out Gingrich, who he thinks is a more serious contender. And he believes that if Paul wins in Iowa it will be a flash in the pan because he can't possibly win the nomination.

RILEY: And they met with Romney, the editorial board of The Wall Street Journal, met with Romney earlier this week. And he was asked whether this 25 percent ceiling he seems to have is a problem. And he basically said he sees it as a floor. He says there's a lot of people still in the race and once the primary starts the field will narrow. And the fact that he's able to maintain a relatively high level of support, and albeit a limited one, is a good thing and he can only go up from there and expects to.

RABINOWITZ: Yes, well, Jason, you remember he did not look exactly happy when they issue was raised.



RABINOWITZ: And so, when we talk about, he has a very visible thin skin and it's quickly-it erupts. And-

HENNINGER: But we have been making this point. Organization usually trumps everything. The fourth primary is in Florida, he has a monster organization waiting down there. It's a big media market and I think he's probably going to throw it at his opponents down there, and crush them, and from there, take over into the other primaries.

GIGOT: Kim, briefly, could we see a surprise in Iowa, with say, a Michele Bachmann, Rick Perry, or Rick Santorum breaking through better than anybody thinks?

STRASSEL: There's been a lot of talk about it this recently. There has been some evangelical support coming to being Rick Santorum. People have wondered if there could be a late surge. I think if there's a surge it propels him simply up into third or maybe fourth place. The victory, rather than dead last, but I don't think you see someone coming all the way from behind to win it.

GIGOT: All right, Kim, when we come back, this week's payroll tax fight was just the latest showdown between President Obama and House Republicans. So, as 2011 comes to a close, who won the year?


GIGOT: Well, another week another standoff, it seems, between the White House and Republicans in Congress. And it's been a year since John Boehner took the speaker's gavel and this week's payroll tax fight was the latest in a series of very public battles between his caucus and President Obama. So as the year comes to a close, who has the upper hand?

Jason, what do think?

RILEY: This tax cut extension was going to pass, everyone knew that. The only question was who is going to get credit for it. And the president was able to out maneuver Republicans on this issue. He will be able to go before the public and I assume he will go before the public, particularly next month, at State of the Union and say, I stood between you Americans and Republicans who wanted to raise your taxes. The GOP should never have found themselves in the situation.

GIGOT: It seems to be a miscalculation, Dan, got on the wrong side of the issue early and didn't really have a strategy for how to make the case, either against it and defeat it, on policy grounds or vote for it and get something in return for it?

HENNINGER: Well, that's right, Paul. We editorialize this week that they don't have a strategy and it makes them look bad. I think, I have to say, I think the Republicans are in a tough situation in Congress. For one thing there is no, under our system, there is no single spokesman for the Republican Party. Not John Boehner, not Mitch McConnell. Paul Ryan occasionally gives tremendously strong speeches. He is not the spokesman. So who is? Nobody.

Secondly, they haven't had a budget for two years, and normally do the tax and spending issues inside the budget.

GIGOT: But the House passed it. The Senate deliberately refused to

do it, because the Democrats didn't want to declare themselves on any single issue. So you couldn't have a joining of that debate.

HENNINGER: That's exactly right. I think there is an issue of bad faith in the center of all of these negotiations. It is like the Republicans are trying to negotiate with Iran. We say, if you negotiating with Ahmadinejad, do you think you're negotiating with someone who has your interest-or has any interest in negotiating an outcome? The answer is no. And the Democrats have figured out if they simply take the position that there will be no result. They can blame the no result on the Republican Party.

GIGOT: Dorothy?

RABINOWITZ: Well, the relevance of all of this, of course, is the strength of it. It has to do with the coming election. I'd like to point out that it's a long, long way off. And the feverishness of today is going to be completely forgotten, or as close to that as possible.

GIGOT: Kim, one of the things striking this year in Congress is how rarely the Republicans in the House managed to pass things that put Senate Democrats on the spot. Now, Senate Democrats aren't control of the body, but still, you think that they'd be able to have some votes that Mitch McConnell could then bring to the floor of the Senate that could make the Democrats who are running for reelection in Missouri and Montana, and these relatively conservative states, put them on the spot politically.

STRASSEL: They haven't had time because they've been entirely playing on the president's term. The high point of Congress was when the House passed Paul Ryan's budget. They provided an incredibly nuclear contrast with the president. Saying here is how they would fix our federal spending problem, here is what this guy would do.

Ever since then the president has pulled them into these backdoor meetings, whispers of a big deal over the debt ceiling negotiations, and the Super Committee, and what that allowed the president to do is publicly keep saying over and over, I'm for cutting this, I'm for cutting this. Even while in these meetings he was saying, no, no, no. And then in the end come out and say, and blame it on the Republicans. So they have wasted the past six or seven months.

GIGOT: So, they've made a mistake, Kim argues, getting into these, the closed door meetings. And you know, taking the tax and spending debates off the table and letting the president define, as Dan says, the terms of the debate.

RILEY: You can call it a mistake, but you have to cut John Boehner slack here. He has a Tea Party caucus, these freshmen that are there. They're pulling him in one direction. They want him to take a tougher stance with the president. I think Boehner left to his own devices is a more pragmatic person, who would go forward. And he got out ahead of his caucus a couple of times on a few these debates and it cost him.

HENNINGER: I want to give him credit on one other thing. All of these negotiations have been over debt reduction and deficit reduction and spending cuts. But the president and the Democrats have always insisted that it include tax increases.

GIGOT: Right.

HENNINGER: First it was increases on people making over $250,000, and then it was millionaires. And the Republicans have held the line and pushed back against that, all year. The Republican Party is now very unified on tax policies and where tax policy should go in a way I've never seen before.

GIGOT: Wait a minute, they muddied the message with the payroll tax fight.

HENNINGER: They did. They did.

GIGOT: Because they got on the wrong side of a tax cut, and even though it's only a temporary tax cut. And they allowed that issue to-

RILEY: They got a little greedy.

GIGOT: To be taken over by the president.

HENNINGER: It was a big tactical error, but I do not think that completely undermines the unity on tax policy that they've created over the last 14 months.

RILEY: And you have to remember that the Democrats that are praising the extension of this tax cut are the same Democrats who all year said the government needs more revenue.


RILEY: I mean, this could come, if Republicans play this right. I mean, Dorothy says it will be forgotten. If I were the Republicans I wouldn't want the public to forget this.

GIGOT: By the way, 2013, this tax cut expires, and so many others do. There's a huge tax cliff that Obama wants us to fall off of, after he's reelected.

All right. When we come back our panel's picks for the stories of the year.


GIGOT: As we get set to say goodbye of 2011. Our panel picks the biggest stories of the year.

Dorothy, you're first.

RABINOWITZ: This is one story I'm ready to say goodbye to, it is Occupy Wall Street. And it grew from this little happening to this very large event, where by the end of about two weeks something called the 90 percent was now the excuse of every parent who couldn't get their child into an expensive school. I belong to the 90 percent. But it quickly induced a tremendous amount of loathing. After the first march attention hungry priests and ministers and everyone else, it settled into a war; people against this force.

GIGOT: But they changed. And push back a little bit on it, they changed the debate in this country and made the class issue, the one percent versus the 99 percent, one of the big defining themes. And now the president is on board, more or less with it. Haven't they succeeded, the Occupy Movement, in changing terms of political debate?



RABINOWITZ: No, seriously. The illusion that is dear to their hearts, that they have changed the debate is the one that really violates all sense of reality. The truth is that Obama has picked it up.

HENNINGER: Paul's (ph).


RABINOWITZ: That's true. Change the debate? They have convinced us, reporters went down the line to say, so what does the Fed, half the people holding "Kill the Fed" signs couldn't tell them what it is.

GIGOT: All right. Kim, how about your biggest story?

STRASSEL: OK, my story is the tracking down and the killing of Usama bin Laden. I would argue one of the more pleasant surprises of this Obama presidency is the degree to which it has maintained, in some respects, the Bush policies on national security. That included a commitment to finding bin Laden.

The intelligence involved in this was difficult. It was a risky operation. The president took that risk, to his credit. As a result we have brought to justice the man responsible for killing 3000 Americans on 9/11. Arguably, thousands more who went in to clear up Afghanistan. And we have also removed a man who if not in reality, also psychologically is big threat.


HENNINGER: Well, my big story is the Arab Spring, for better or worse. It began last January in Tunisia, then the two big stories were Egypt and Libya, Syria, you had the overthrow of the dictatorships of Mubarak, Qaddafi, maybe Assad in Syria.

Keep in mind, though, that these insurrections against economic and political misrule also happened in Algeria, Jordan, Kuwait, Morocco, Bahrain, Sudan, even in Saudi Arabia. It was enabled by social media and television. It allowed people to successfully prosecute old grievances. We don't know what the outcome is yet. Keep in mind these are countries which have not had economic, political pluralism in any of their lifetimes. I think it is going to take longer than a year to figure out whether it was a positive force or not.

GIGOT: But our colleague Bret Stephens would argue, I think, and he's on vacation. That this is turning out for the worse for U.S. strategic interests. Because we may be losing dictators, but they were our dictators, in a sense, the old cliche, and now there are Islamists and people who probably don't have America's foreign policy interests in mind.

HENNINGER: It's dangerous. But keep in mind, we did not overthrow Hosni Mubarak, the people in the streets did. There was nothing that we were going to be able to do to save Mubarak. This was a process that was completely out of our control. And probably we hurt ourselves by not being more engaged before all of this happened.

GIGOT: All right, Jason, your biggest story?

RILEY: I'm going with the death of Steve Jobs being one of the major stories, one of the most significant entrepreneurs of our time, created wealth for millions of people by giving us devices we didn't even know we wanted, and now we can't live without.

And I think he also provided a lesson that America's prosperity comes from the private sector, not government managers. And it's a lesson our current president would do well to learn, frankly.

GIGOT: We've had-it is one place in our economy, high-tech, where we're getting some IPOs. You know, new companies being created.

All right. So my biggest story of the year is Europe and the crisis of the entitlement state there. Where these countries can no longer finance themselves, the bond vigilantes are coming down very hard on them. And typically in the past they would have been able to devalue their currencies, debase middle class incomes. Now because they are part of the euro, they can't. So they have to reform and they're finding it very difficult, politically, to do so. The lesson for America? Don't get into that problem for the first place.

HENNINGER: Let me put you on the line. What do you predict is going to be the outcome of this? Because people's 401(k)s, via the stock market, are going up 381 points one day, down 250 points the next day, all based on whether the Europe is going to be solved or not.

GIGOT: They will kick the can, pardon the cliche, down the road, as far as they can, past Sarkozy's elections, past Obama's re-election campaign. They will try to use the European Central Bank bond buying to make this easier. In the end they'll still going to have a reckoning with their spending and with their slow growth rate. And that reckoning will hit sooner or later. And it will hit us, too, because I'm afraid we're on that same, same path.

HENNINGER: Where is Maggie Thatcher when we need her?

GIGOT: That's unfortunately only in the cinema.

And so, Kim, how vulnerable do you think President Obama really is on foreign policy? Do you think this is going to be a big issue? Because both you and Dan touched on this issue. Is that off the table, this year?

STRASSEL: Well, this is one of the mysteries of Barack Obama, because, if you looked at his poll ratings, it's where he does the best.

And I think of that is because a lot of people do have in mind things like the killing of bin Laden. If you look at his handling of Pakistan, his weakness on Iran, and all sorts of other areas, it has not been one of his suits. So I don't think it will be issue in the election, but it arguably ought to be.

RILEY: I didn't think it would. But this week what happened in Iraq? We have bombings. We have al-Maliki in trouble.

GIGOT: The prime minister.

RILEY: The power sharing arrangements being in jeopardy. Have we pulled out troops too soon? Republicans might make foreign policy an issue.

GIGOT: Will the American public blame Obama for that?

RILEY: Like Kim said, up until now, I don't think it was the place to go with Obama. I don't think he was vulnerable there. This opens the door a little bit.

GIGOT: We've got to go, thank you all. We have to take one more break. When we come back, "Hits & Misses" of the year.


GIGOT: Time now for the hits and misses of the year. Dorothy.

RABINOWITZ: Yes, well mine is to the Republican debate, that wonderful reality show that pulled in the all those viewers and that was full of humor, most of it inadvertent. And who can remember, you know, what? Rick Perry's freeze moment? It was a magnificent spectacle, I have to say and I mean that seriously.

GIGOT: I'm not sure it's helping the Republicans politically though, Kim?

STRASSEL: A hit to the royal family, because boy do those people know how to put on a show. The marriage of Prince William to Kate Middleton had everything. It had majesty, tradition, ceremony, cool dresses. It allowed Britain to put aside some of the scandals of the family of the past and briefly recover some grandeur. It also allowed the billion people who watched put aside their everyday cares and imagine a fairytale wedding.


HENNINGER: Well, my miss is to the once economy of the United States in 2011. First quarter growth 0.4 percent; second quarter growth 1.4 percent; third quarter 1.8 percent, this is a after recession. And this is in a $15 trillion economy. It's destructive. It's demoralizing. And the American people have from now until November to figure out what to do about it.

GIGOT: Let's hope we make the right choice as a nation.

All right, Jason.

RILEY: This is a hit for humanity, Paul. The welcomed its 7th billionth person.

GIGOT: You don't want to narrow that down, please?


RILEY: The population control crowd, of course, thought this was grim news. Their track record is pretty bad, however. The reality is there's not a single country in the world that was richer when it had half of its current population. Human beings are human capital. The time to worry is when the populations start declining.


My hit goes Cyrus Vance, Jr., the Manhattan district attorney who first indicted Dominique Strauss Khan, who was then the head of the International Monetary Fund, and likely the socialist candidate for president of France. Indicted him on sexual assault but then dropped the charges. And that was the really courageous thing to do after he decided that his main witness, the woman who was allegedly raped, had-just couldn't be credible.

Most prosecutors, we know, would not have dropped it that quickly, because they like to go to the bitter end and not admit a mistake. So, credit to Vance for admitting that misjudgment.

Do you agree with Dorothy, Dan, on Republican debates?

HENNINGER: Actually, I don't. I was told that when --


HENNINGER: When Ron Paul comes on, I tend to switch to ESPN. So, I have got pushback at the Republican debate.

GIGOT: Yeah, and how about you, Jason?

RILEY: They've been informative. I'm of the opinion you can't have too much information, but the debates might be questioning that.

HENNINGER: Well, when Mitt Romney came to see us, he spoke for five minutes about his plans for America. It was much more compelling than any 60 seconds he got in the debates.

GIGOT: I agree with Dan, that's this week's edition of "The Journal Editorial Report." Thanks to my panel and to all of you for watching.

I'm Paul Gigot. Merry Christmas. We hope to see you right here next time for our Iowa caucus preview.

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