This is a rush transcript from "Journal Editorial Report," May 17, 2014. This copy may not be in its final form and may be updated.

PAUL GIGOT, HOST: This week on the "Journal Editorial Report," Harry Reid's Senate blockade. He's launched an unprecedented crackdown on Republican amendments as gridlock in Washington grows. So can the GOP fight back?

Plus, former Treasury Secretary Tim Geithner out with a new book defending his role in the bank bailouts. But is his history accurate?

And New Jersey Governor Chris Christie saying a 2016 run is still very much on the table. But Bridgegate may be the least of his problems as the Garden State's finances take a turn for the worse.

Welcome to the "Journal Editorial Report." I'm Paul Gigot.

"Washington doesn't work" -- that was President Obama's message at a high-dollar fundraiser in Manhattan this week where he told attendees that, quote, "We have a party on the other side that has been captured by ideology that says 'no' to everything." But if the president wants to get to the true root of gridlock in Washington, he may also want to look at the Democratic-controlled Senate where Majority Leader Harry Reid has essentially shut down debate, refusing to allow a vote on all but nine -- that's right -- nine Republican amendments since last July and stopping several bipartisan bills cold.

For more, I'm joined by Wall Street Journal columnist and deputy editor, Dan Henninger; assistant editorial page editor, James Freeman; and Washington columnist, Kim Strassel.

So, Kim, why don't describe for us just what Harry Reid is doing.

KIM STRASSEL, WASHINGTON COLUMNIST: Look, here has been the long- standing deal in the Senate, Paul. The minority party would agree to move on to a bill, to gives the vote for cloture, to actually start debating a bill. The majority party, in return, would allow them to debate the bill and propose amendments. And everyone got something out of it. Harry Reid has turned that on his head. He does not want his members to have to vote for some of the amendments that Republicans are putting forward because they have bipartisan support and he and the White House don't like some of these provisions. So he's just stopped all amendments and stopped all debate. And the only way Republicans can fight back is to refuse, therefore, to move on the bill.

GIGOT: So you are saying that there are actual legislation moving through the Senate that has bipartisan majority support and would pass but Reid is saying, I don't know want to you vote on this amendment or that amendment and therefore, he's closing -- he's not letting the Senate work its will on these other pieces of legislation?

STRASSEL: That's right. You saw it this week. There was a bipartisan energy efficiency bill moving ahead. But Republicans were going to propose a number of amendments that have huge sweeping support on the Republican side and the Democratic side -- acceptance of the Keystone Pipeline, for instance, speeding natural gas exports. But the White House doesn't like those provisions. It was fearful those amendments would, in fact, pass, so Harry Reid simply didn't allow any of it to come up.

GIGOT: James, I covered the Senate for a long time. I think what -- and you were in Washington for many years, too. This is -- this is extraordinary. OK. This has not happened before. And I covered the Senate, whether it was Republicans in charge or Democrats in charge. The minority party was able to offer amendments. And part of their strategy to regain the majority was to offer amendments that put the majority in a tough spot, right? They take popular measures and they'd say we want to have a vote on this. And, hey, that's life. That's in a democracy. You've got to make tough votes.

JAMES FREEMAN, ASSISTANT EDITORIAL PAGE EDITOR: Yeah. He really changed the American legislature. You talked about how we used to work in Washington, observe it. In any standard textbook, it talks about how the House majority rules. But in the Senate, it is about deliberation and compromise and consensus.

GIGOT: Minority writes have been far more protected, I mean.

FREEMAN: That's right. And the idea is the Senate will be more deliberative and craft bills with input from all sides. He's really changed that. One, with getting rid of the filibuster last year, of course. And now we are talking about --


GIGOT: Nominees for -- presidential nominees.

FREEMAN: Presidential nominees. Now we are talking about limiting amendments. And it is a -- it is a different American legislature. It is a -- majority rules controlled by the dominant party. And I think that what is interesting now is it is basically about playing defense. Last year, it was about offense to get nominees to the executive branch approved or to the judicial branch. Now it is basically stopping popular items from getting a vote.





And please, our viewers, please, send mail to Henninger.




Now, as a result of my colleagues, the viewers of the "Journal Editorial Report" understand why gridlock exists in Washington.

GIGOT: But you love gridlock.

HENNINGER: Well, to some excellent, we love gridlock. We described three pieces of legislation, good for the country even. They are not going to happen.


Why aren't they going to happen? It's because the Democratic midterm strategy is, once again, to paint the Republicans as the party as "do nothing" and opposition. We just quoted the president of the United States giving that speech.

GIGOT: Right.

HENNINGER: Harry does this. The president goes out and tells the country. There is no bigger frustration out in the country than the fact that Washington isn't doing anything. And I think that the point of all of this is to discourage Republicans, to suppress the Republican vote, because they don't understand this Senate proceduralism and they are angry at the Senate leadership for not doing anything. So I think, given the hand they have been dealt, the Democrats are running a fairly good strategy.

GIGOT: Kim, do you, A, agree with that? And, B, what would you -- why haven't Republicans, if that's right if Dan is right, why haven't Republicans in the Senate fought back more to try to get Harry Reid to change that strategy?

STRASSEL: I think you are seeing them now starting to do it this week. They blocked two, again, very popular pieces of legislation. This is likely to get a lot of attention. The other one they blocked was a tax extender bill that has a lot you of support among the business community.

GIGOT: These are tax credits for businesses.

STRASSEL: Exactly. That the business community loves. They're routinely approved every year. So the fact they blocked it is going to get a lot of attention.

Dan is right. The procedural argument is harder for Republicans to make. But what you do see is more and more Republicans trying to paint Harry Reid as himself the face of the obstruction and making the very straightforward point if you want any of this bipartisan legislation to pass, you are going the have to elect a Republican Senate in the fall. And that's increasingly their campaign strategy and it has a better chance.

GIGOT: If you put -- if nothing happens, if even important legislation doesn't pass, that will raise the pressure on Reid to do something, won't it?

FREEMAN: The Democrats have to be careful here because they have a lot of incumbent, like Mary Landrieu of Louisiana. Kim has written about, she will have a problem because her basic argument to constituents is, look how influential I am in the Senate --


GIGOT: Because I'm the chairman of the Energy Committee.

FREEMAN: I'm the chairman of the Energy Committee and I'm pushing all of the issues you care about, like allowing energy production. If Reid keeps stopping that from happening, I don't know what her argument is.

GIGOT: All right. Thank you, all.

When we come back, former Treasury Secretary Tim Geithner out with a new book on the financial crisis and the role he played in the bank bailouts. But is his history accurate?


GIGOT: Tim Geithner is out this week with a new book, his account of the financial crisis and the decision to bailout some of the country's largest banks. But is "Stress Test" a fair telling of his role in the rescue? And five years later, are we any closer to solving the problem of Too Big to Fail?

We're back with Dan Henninger and James Freeman. And "Wall Street Journal" columnist, Mary Anastasia O'Grady also joins us.

So, James, you reviewed the Geithner book porous this week. What's the most important takeaway for viewers?

FREEMAN: I think for readers, they may be surprised to learn really how little this man who was at the center of the financial rescues knew about the banking and finance, had never been in banking. Although, a lot of people believe he was Goldman Sachs alum. That's kind of a persistent myth. Also, he had never been a bank regulator. His first job regulating banks was president of the Federal Reserve Bank of New York.

GIGOT: Is the memoir itself, in your view, an accurate portrayal of what happened?

FREEMAN: He admits to some of his failings in terms of not seeing the housing crisis coming, not understanding the banks he was regulating, not seeing the problems that Citigroup had hid outside the balance sheet. But one thing he doesn't -- he glosses over is that the bailouts begin, starting with Bear Stearns in March of 2008, he says now that -- that it was a problem because lots of other banks might have had the same problem. But we know from minutes of the Federal Reserve meetings that he actually was saying the opposite at the time, that the banks were not undercapitalize.

GIGOT: Any Geithner defense here on the panel? Mary?




I got nothing. But, you know, one thing I would add to what James is saying is that is that his narrative of what happened goes something like, well, it was a really optimistic time in America, so no one could ever have known that this was going to come about, and when it did, myself and some other very brave people, stepped in to save the world.

He doesn't have any -- he doesn't seem to have learned any lessons from the problem -- how we got into the problem and also how dangerous it is for, you know, five people to get in the room and have that much discretion. So that's why, going forward, he says that he likes the Consumer Protection Bureau that Elizabeth Warren, the Senator from Massachusetts, has crafted because he says that's just more of us putting ourselves into the system. That' how we are going to -- that's how we are going to make sure it doesn't happen again.

GIGOT: Let me defend him a little bit, in the sense that I think what we had was we had a classic mania. Everybody said, hey, it's great, it's fabulous, great times are here. So they didn't want to stop the music, as it were. Then we had a classic panic, global panic, financial panic. And I think that it is difficult for anybody who is in that cockpit to be able to make right decisions when they are shooting with real money, real bullets. And I think anybody would have done much of what Geithner did.

Where I would criticize him is before the crisis. Not anticipating it, letting cit Citibank have all of the money off balance sheet, not doing his fundamental responsibility. But in the panic, I'm not so sure anybody would have done any better.

HENNINGER: I wouldn't disagree with that, Paul. And I think in the middle of the storm, it is very difficult to operate, for sure. What came after I think is a big problem. You know, when you have a big financial crisis like this, somebody will take the fall for it afterwards. And the bureaucracies and the regulators --


GIGOT: Then don't take the fall.


HENNINGER: The problem here that they have so overreacted by not -- they are regulating these banks now in a way that essentially is making them public utilities. As John Mack, the former head of Morgan Stanley, said to his successor, the government is your number-one client now. And that is the problem that the Obama administration has put on the financial system. They have enveloped it now, they are over regulating.

FREEMAN: That's right. We are not just talking about history here. This is current events. This is going forward. The -- the Too Big to Fail idea that the government stands ready to rescue large banks is still with us. In fact, in the book, Mr. Geithner says that a problem with Dodd-Frank is it still does not allow enough bailout authority, as much as firepower as he would like the government to have. So and now they are proceeding to name other banks as systemically important. This idea continues.

GIGOT: They are also still banking on the prescience of regulators to prepare us and prevent the next crisis when, of course, Geithner acknowledges that he couldn't predict the last one.

O'GRADY: Right. That's the idea of the Consumer Financial Protection Bureau. But, you know, also, he talks about how ending Too Big to Fail is an impossibility in his mind. Government's job is to just stand by and always put out the fire using taxpayer money and all of the discretion it can muster. And that seems to me like a very dangerous lesson, considering the fact that, you know, if you look from 1971 to today, you have more and more financial crises. They are deeper and deeper and they come more frequently.

GIGOT: All right.

When we come back, New Jersey Governor Chris Christie raising fresh speculation this week about a presidential run. But with the Garden State's budget in shambles, could Bridgegate be the least of his problems in 2016?



UNIDENTIFIED MALE: Are you still thinking about president? When will you make a decision on that?

GOV. CHRIS CHRISTIE, R-N.J.: Yes, and later.




GIGOT: New Jersey Governor Chris Christie on Wednesday indicating that a 2016 presidential run is still very much on the table. But as he tries to put the George Washington Bridge scandal behind him and restore his national standing, he faces an $807 million budget shortfall in the Garden State as well downgrades from all three of the major credit rating agencies. So could New Jersey's fiscal woes sink his presidential plans?

Mary, talk about the New Jersey miracle a while back. What happened to it?

O'GRADY: Yeah, I think fundamentally, he had two problems. One, he ran and started his term talking about keeping taxes low, reigning in government, and getting faster growth in the state. The unemployment rate is still above the national average.

GIGOT: 7.2 percent, I think.

O'GRADY: Right. And he had disappointing tax revenue. So that was one reason why he has this big gaping hole in the budget. But on the other side of the balance sheet, he also was not able to get the kind of cuts that he needed in health care for state workers and in pensions. You know, he did a pension reform but it looks like it wasn't enough. So that's how he got here.

GIGOT: Yeah. It looks like, James, that the pension reform which was -- was broadcast when he first got it, I think 2011, as a big deal, just is not adequate. They are talking about an $800 million extra payment to make that will soon be $4.8 billion a year in revenue just to pay for pensions.

FREEMAN: It is a lot of money on a budget of roughly $34 billion a year. And these are problems, to be fair, he didn't create. I think that he had a lot of momentum the first two years in office. He did get a start on reining in some of these entitlement programs. He did make a move towards reform. But really, what has happened is, since 2011, when they -- a new legislative map basically locked in Democratic majorities in both houses of the New Jersey legislature, everyone has figured out that they really don't -- legislators figured out they do not need to deal with them. So I think the problem is he is going be owning two terms of New Jersey governorship.


GIGOT: Which is --


FREEMAN: -- where the economy will not be going to be that great because he can't get the reforms.

GIGOT: New Jersey not a growth stock.


HENNINGER: Well, I mean, that's Chris Christie's bad luck. He happens to be a Republican who was born in New Jersey and is going to try to run for president from New Jersey, which by and large is hopeless for the reasons that James just articulated.

GIGOT: But he did have -- he did pass a cap of two percentage points increase max on property taxes each year. That's presumably will be one of his big talking points.

HENNINGER: Yeah. And he's going to be under pressure to raise taxes. The top marginal individual rate in New Jersey is nearly 9 percent. It is 6.4 percent or nearly so on incomes over $75,000. This is a very high tax state. So I think that Christie is in a bind right now politically. But the question is, can he still offer himself to the Republican Party out there in the country as the strong political personality? And I think that's probably where he has to go now is start talking about national issues.

GIGOT: But, Mary, I mean, if you are -- you need to rationale to run for president, right? A rationale that says I presided over gridlock. That's not really much of an alternative to Obama.

O'GRADY: Right. I think that his -- in the end, his record as a governor, as to what he did in New Jersey, is going to be the most important element. I agree with Dan. The country is looking for someone who can articulate ideas, who can -- who looks like a leader. And he has some of the qualities. But I would say that this is really going to make it an uphill climb for him. And he also has a little bit of baggage with his style. Some people just don't like his style. So he has to offset those things. And I think he was counting on good performance in New Jersey.

GIGOT: You talking to me? You talking to me?


FREEMAN: I like his style.


I mean, I think he's got challenges in terms of how he's going to show a turnaround. But I like his style. And I think he also -- as he's thinking about a run, he has a national fundraising network with a lot of - - which a lot of other candidates don't have. And that property tax cap, that is restraining local government spending in New Jersey. Now, you know --


GIGOT: Speaking as a taxpayer --


FREEMAN: Yes. I wish he was going further. I wish he had gotten more reform. But he also has shown that he can make the case for reform even of -- of initially popular entitlements. So I think those rhetorical skills may be a appealing to Republican voters.

GIGOT: But if you are talking about the Republican electorate, and they're looking -- a lot of them are talking about governors because they have been producing real results in the states. But you have a record of reform for Scott Walker in Wisconsin. You've got John Kasich in Ohio. Rick Perry has a decade-long record for Texas.

HENNINGER: Rick Snyder in Michigan.

GIGOT: Yeah.

That -- they are all going to bring to the table, if they run, better track records of accomplishment than Christie.

HENNINGER: Very much uphill for Chris Christie at this point. And the news out of New Jersey is just not going to get better. It is not necessarily his fault. But he is going to have to accept it and deal with it somehow.

GIGOT: Do you think he's still going to run? Anybody here think he's not going to run?


HENNINGER: I think he's too --


O'GRADY: I think he's going to try.

GIGOT: He's going to try and --

FREEMAN: He's going to run, I would expect.

GIGOT: He's going to run.

All right. And is he going to have a good shot at the nomination, James?

FREEMAN: I think these economic challenges are -- make me think maybe it is going to be someone else. But, hey, he is a contender. And if he is not the lock that he once was, he's still a formidable candidate.

GIGOT: All right, thank you.

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


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

Kimberly Strassel, first to you.

STRASSEL: Paul, a hit to GOP primary voters in North Carolina and Nebraska, who in recent weeks managed to tune out all of the media-inspired nonsense over a GOP civil war, over who was establishment and who was Tea Party, and instead, came together to elect two very talented conservatives, Ben Sasse in Nebraska, Tom Tillis in North Carolina, who had appeared to be the guys with the best chance of winning the party's seats to the Senate in the fall. If the Republicans are going to win the Senate, they are going on have to remain united. And the voters, once again, showed a lot more common sense than the media and outside political groups who were sowing discord in these races.

GIGOT: All right.


O'GRADY: This is a miss for the Russian ice hockey players who took a dive this week for the team --


-- and allowed Vladimir Putin six goals and five assists. And you may be surprised or you may not be surprised to learn that Putin's team won, 21-4.


Not only that, but Russian news interrupted its regularly scheduled broadcasts to break the news that Putin's team had done so well. And I think that was because most Russians were sitting on the edge of their seat wondering who would win.

GIGOT: Let's see.


Siberia, allow a goal.


GIGOT: All right, Dan?

HENNINGER: All right. Well, hold your breath, folks, but we are going to give a big hit to Harvard University and its president, Drew Faust, for condemning a planned black mass that was going to be held by the Harvard Cultural Studies group up there. President Faust, instead, led a group of 1,500 people in a pro-Catholic event at St. Paul's Church. Now, I just wish that there was a way that these college presidents could have the same backbone against the most satanic religion on campus, which is political correctness.


That's it for this week's show. Thanks to my panel and to all of you for watching. I'm Paul Gigot. Hope to see you right here next week.

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