This is a rush transcript from "The Journal Editorial Report," September 25, 2010. This copy may not be in its final form and may be updated.

PAUL GIGOT, FOX HOST: This week on the Journal Editorial Report, the Republican roll out. Is the new GOP agenda a campaign gimmick or a guide to governing?

And with some key provisions of Obamacare kicking in this week, the president tries once again to sell the overhaul it to the American people. But will it prove toxic for Democrats this November?

Plus, the school reform movement gets a boost from the left as Al Gore's movie director takes on the teacher unions. But will D.C. Chancellor Michelle Rhee be their latest victim?

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

House Republicans unveiled their so-called "Pledge to America" this week, calling it a governing agenda they plan to pursue if they regain control of Congress in November. The pledge includes proposals to permanently extend all the Bush-era tax cuts, including those for high earners; gives small business owners a 20 percent tax deduction on their income; canceled all unspent stimulus funds; and roll back spending to pre-stimulus and pre-bailout levels; and repeal Obamacare and replace it with proposals that include limits on malpractice lawsuits among other things. The pledge is widely seen as an effort to do what the Republicans did when they won the House in 1994, with a "Contract with America." So, will it work?

Joining the panel this week, Wall Street Journal columnist and deputy editor, Dan Henninger; opinionjournal.com columnist, John Fund; and Washington columnist, Kim Strassel.

So, Dan, some conservatives are out there saying, this is weak. They wanted more. Are they right?

DAN HENNINGER, COLUMNIST & DEPUTY EDITOR: Well, Paul, I'd say they're right, but they have the wrong election.


This is a document for the election of 2010, the congressional election. What they're talking about is the big enchilada, the election in 2012. What Congress has done, the Republicans are trying to show that they've got religion. And I think this document does a pretty good job of that, especially the item you mentioned about pushing spending back to below 2008 spending levels. That would be a big deal. But if you want big ideas and a big agenda, you're going to have to wait for the presidential candidates for that.

GIGOT: John, what's the best thing in this, the best policy proposal in this document?

JOHN FUND, OPINIONJOURNAL.COM COLUMNIST: All of Obama's proposals, expanding government, are frozen in place and the attempt is made to reverse them. In other words, the horrible stimulus package —

GIGOT: Right.

FUND: — which didn't create any jobs; Obamacare; the health care plan, which is below 40 percent approval rating; and all of the other regulatory initiatives that have been job killers —

GIGOT: Right.

FUND: — rolled back. That's something the base of the Republican Party, the conservative movement can cheer.

GIGOT: But isn't that just, Kim, like the party-of-no accusation that the Democrats make about the Republicans, that this is a party that just wants to stop everything, and doesn't have ideas of its own?

KIM STRASSEL, WASHINGTON COLUMNIST: It does have ideas of its own. But remember — I mean, most of the country wants to stop this right now. So the Republicans are on to something with this.


They needed to do two things, here, which is actually to show at that they're not just the party of no. that they have ideas and they have some of the health care provisions in there. They have some stuff on taxes and issues on government transparency, which is going to resonate a lot out there with the public. They also —

GIGOT: What are those? Hold on. Let's talk about that. One is a 72-hour period before you vote on a final bill so everybody can actually read it, as opposed to sticking it in front of members who have no idea what they're doing. What else is in the reform area here?

STRASSEL: Well, no, that's the big one. And this is a deliberately — and there has just been so much discussion out there of how — I mean, half of the members didn't read the health care bill, didn't read the stimulus bill, don't know what's in any of these things. And it's a major issue with the Tea Parties. So that's going to probably help them a lot.

FUND: There's one other great idea — the constitutionality of every piece of legislation, a specific reference giving it constitutionality has to be included. And I heard from one member of Congress today who called up a legislative analyst on Capitol Hill and said, can you find me the part of the constitution I have to cite —


— in order to produce this bill. This is symbolic, but important.

GIGOT: Kim, where does this fall short?

STRASSEL: There's a couple of things. One, earmarks. The Republicans, House Republicans unilaterally disavowed them. That was a mark in their favor among a lot of voters. This has been dropped from the new pledge. I think they were hoping no one would notice, but I think they don't understand how symbolic this has become for a lot of Tea Party voters, in particular, and Independents. So that's not good. Also, not a lot on good tax policy. There's a few things in there — and the problem is there's a big focus in here on spending caps and reducing the deficit. But if you don't have policies out there growing the government, you're never really going to get out of this debt — I'm sorry, growing the economy.

GIGOT: Growing the economy.

STRASSEL: Economy — sorry — growing the economy, you're never going to get out of the deficits.


They don't have as much on that and they will need to work on it.

GIGOT: Yes, that's where I think it falls short, Dan.

HENNINGER: Well, Paul, what Democrats didn't count on, even the Republicans, is they're in the new media age. Can you imagine we're sitting here talking about earmarks and process reform? For an entire year, the American people watched and exchanged e-mail messages about it. They know how Congress works now and they don't like it.

GIGOT: The other big news this week, John, the Democrats apparently decided to hold off the vote on the extending the Bush tax cuts past the election and presumably do it on the lame duck, which means that if nothing happens, all of the Bush tax cuts on the high earners, but also on everybody else, will expire January 1st. Smart politics or not?

FUND: Inexplicable political incompetence. This gives every Republican challenger the ability to go out and say, this party has controlled Washington for two years and done nothing to extend the tax cuts that will expire on December 31st and raise all of your taxes.

GIGOT: But Democrats are presumably smart enough to know that's what the Republicans will do. Why not have the vote. The president could —

FUND: Because —

GIGOT: — and say —

FUND: They're panicking.

GIGOT: They're panicking. They don't want to vote on taxes because they feel they'll lose the debate?

FUND: They have a left wing that insists the tax cuts for higher earners not be extended. They have moderates that basically can't wait to get home and they think they're all going to try to save themselves. Every man and woman for himself is the mantra of the Democratic House caucus right now.

GIGOT: Oh, boy. Wow. OK.

When we come back, Obamacare and the midterm elections. With the first provisions of the health care law kicking in this week, the president once again tries to sell it to the American people. But are they buying it or is the issue toxic for Democrats as they head into the fall campaign stretch?


GIGOT: Well, with some key provisions of Obamacare kicking in this week, the president renewed his effort to convince Americans of the advantage of his health care overhaul. But just six weeks before the midterm elections, it's proving to be a tough sell.

The plan has proved to be more of a liability than an asset for embattled Democrats. A new poll showed 61 percent of likely voters favor repealing the law. And opponents of Obama-care are seizing on that unpopularity with ads aimed at Democrats who voted for the legislation.

This one is funded by Revere America, a group headed by former New York Governor George Pataki, and targets New York Congressman John Hall.


AD NARRATOR: Congressman Hall voted for Obamacare, government-run health care. It is a bad plan. Government bureaucrats will benefit. Seniors will get hurt. Costs will go up, care will go down; longer waits in doctor's offices. You're right to keep your own doctor may be taken away. It's a plan we didn't want and don't need. But Hall voted for it anyway. Defeat Congressman Hall.


GIGOT: Well, Kim, that was subtle.


The Democrats that remain — have maintained radio silence about health care all summer. Suddenly, they speak up. Why get back into this debate now?

STRASSEL: Well, the reason the president is jumping back in here is because things are looking so dismal. I think that there's a fear in the White House that if they don't go out there, someone doesn't go out there and start saying something nice about the health care bill, there's going to be, come January, not just Republicans, but members of the president's own party that are out there saying that the bill needs to be revealed in some way, changed, elements of it killed. And they're trying to make the kiss and gin up a little enthusiasm.

GIGOT: OK, stop the panic, stop the rout.

Dan, they wrote this bill so the benefits would kick in a few weeks before the election and the president said they could brag about it. What are the new provisions?

HENNINGER: Well, free preventive health care —

GIGOT: Free?


GIGOT: Allegedly free.

HENNINGER: Allegedly free.


You know, a ban on lifetime spending caps and have to cover children up to the age of 26. All was just basically was intended to punish the insurance industry. And I think the effect is going to be very interesting because, inevitably, premiums are going to rise to cover these things. They're going to cost money.

GIGOT: Mandates cost money.

HENNINGER: Right. And we just saw HHS Secretary Sebelius last week in this kind of speech in which she punished the insurance industry. That's going to continue for the next six months.

GIGOT: And many major insurers decided to drop their child's-only coverage, which now cover about a million children with policies that parents buy, typically, when their kids go off to school. And are no longer covered by their parents' employer health care policy, they buy the supplemental coverage. They dropped the coverage altogether rather than abide by these mandates.

FUND: I talked to a Democratic congressman who voted for Obamacare, but he had strong political misgiving about it because he told his colleagues back in March, if you vote for this, what will prevent the insurance companies from raising premiums and adjusting premiums just before the elections. It may wash away benefits from the new provisions. And you know what, the people are watching what the insurance companies are doing, blaming them, in part, but they're also blaming the Congress that passed this.

GIGOT: Dan, the White House is —


GIGOT: — and the HHS secretary, Kathleen Sebelius, directly blaming the insurers, calling them — blaming them for a misinformation campaign and threatening them.

HENNINGER: Yes, well, you know, we talked here, Paul, as though this phrase, "repeal and replace" is just a phrase, as though somehow all this momentum is going to roll back Obamacare. It's not going to be that easy. This is the law, right?

GIGOT: No, not at all. That's right.

HENNINGER: I think what the White House is doing is making sure that they've pushed back hard and make it difficult to overturn pieces of the law, which are going to be expensive and cost money this country money for a long time. But don't expect the Republicans just to waltz in in January and—

FUND: But that's where the courts come in. IN early January, we're probably going to get a decision from a district judge in Florida who is hearing a suit from 23 attorneys generals against Obama-care's constitutionality. That may drop Obama-care off the map constitutionally. If one piece is taken away, the whole edifice collapses.

GIGOT: Kim, what about the Republican proposal to repeal and replace. There's not a lot of specifics there. The one specific thing they'll repeal is the mandate on small businesses to report all transactions with any contractor above $600, which is a huge paperwork burden. But other than that, I don't see a lot of specific repeal planks in their new platform.

STRASSEL: No, I mean, they're bobbing along on the notion that they're going to repeal this in its entirety. As Dan says, that's highly unlikely. They're going to need to be more specific.

One idea, too, percolating out there, is simply an idea to not fund it, not to give money to it and strangle it that way. And then I know that a lot of Republicans are thinking of it in that way.

In terms of their own replace ideas, it's a lot of things that Republicans talked about before — allowing you to buy insurance policies across state lines, but that will be a while coming. They've got to deal with the Obama law first.

GIGOT: All right.

On the politics end, Bill Clinton promised Democrats if they only voted for this bill, it would become popular before the election. Is he going have to offer a lot of the people jobs at his foundation after they're run out of town after the election?


HENNINGER: Paul, Bill Clinton led them down the garden path —


— as did Barack Obama. This was perhaps the greatest political miscalculation in the last 50 years. This thing is not selling. And, yes, he is going to have to offer them jobs in that foundation.

GIGOT: The line is going to be long.

When we come back, the latest salvos in the battle over school reforms. The movement gets a boost as Al Gore's movie director sets his sights on the teachers union. But they have the D.C.'s school chief, Michelle Rhee, in their sights. Will she hold on to her job?


GIGOT: With the future of school reform in Washington, D.C., very much in the balance, that city's hard-charging chancellor, Michelle Rhee, met this week with the man who will decide her fate, Democratic mayoral nominee, Vincent Gray. Gray defeated Mayor Adrian Fenty, who hired Rhee to turn around D.C.'s failed public school system.

In the Democratic primary, last Tuesday, thanks, in large part, to the support of the teacher's union, under Rhee's tenure, more than 200 underperforming teachers have been fired, almost 20 failing schools have been closed, and teacher's pay has been tied to merit evaluations.

Rhee, who has become the national face of education reform, figures prominently in a new documentary that opens this weekend called, "Waiting for Superman," produced by Davis Guggenheim, the Academy-Award winning director of Al Gore's global warming documentary, "An Inconvenient Truth." The film takes a devastating look inside America's public school system.


UNIDENTIFIED MALE: I think about 60,000 people have gone to the school and 40,000 didn't graduate. This is the damage that the school has done in this neighborhood.

UNIDENTIFIED MALE: A child that doesn't finish high school will earn less and be eight times more likely to go to prison.

UNIDENTIFIED BOY: I want to go to school.

UNIDENTIFIED MALE: For these kids, the only chance for getting a great school depends whether their number is picked in a lottery.

UNIDENTIFIED MALE: So if Francisca (ph) doesn't get it, is there another chance?



GIGOT: Wall Street Journal columnist, Bill McGurn, and editorial board member, Jason Riley, join me with more.

Bill, you and I have been making these arguments over education reform for, I hate to say it, something like 30 years.


Why is this film significant?

BILL MCGURN, COLUMNIST: This film is significant because it comes from a liberal. The way he talks about public schools — you saw that gentleman in the trailer? He's at Locke High School. And he talks about this high school that has failed 40,000 its 60,000 students, the way Erin Brockovich would talk about a factory that's polluting the drinking water of the local community. He shows himself driving past three public schools every morning to drop his kids off at a private school.

You know, he said when he made his film on global warming, he was aiming to try to persuade the guy who drives the pickup, not a Prius.

GIGOT: Right.

MCGURN: This is aimed at liberals and it's very powerful.

GIGOT: Is this a major cultural turn in the argument, Jason? This is the second such movie we've talked about earlier this year. "The Lottery" a similar movie about — focused on the Harlem reform. Is this a significant cultural term?

JASON RILEY, EDITORIAL BOARD MEMBER: I hope so. And you'd think it has that potential to sway public opinion. But we know from covering education over the years that you really need to get your hands dirty in terms of the politics and the public policy.

And the sad reality is that one of the stars of this movie, Bill, is now fighting for her job.

GIGOT: For her job.

RILEY: Michelle Rhee.

GIGOT: It's extraordinary.

RILEY: And this is a woman who is appearing on Oprah, on the cover of Time magazine.

GIGOT: But more than that, she is achieving actual results on the ground in terms of actually helping kids.

RILEY: One of the celebrated reformers in the country is fighting for her job, because the teacher's unions spent a million dollars trying to fire her boss.

GIGOT: And they won.

RILEY: They won.

GIGOT: This is what they think about the teacher's union, Bill? They think they can wait you out.

MCGURN: Right.

GIGOT: And they typically prevail. Remember what Stalin said about the pope — how many divisions does the pope have?

MCGURN: Right. Right.

GIGOT: How many divisions does a movie director have?

MCGURN: I think it's pretty strong. He's likened taking Michelle Rhee out now to turning the lights out during heart surgery. And I think one things — you know, we're waiting to hear from President Obama on this, with one word. If he said we need to keep the reforms, I don't think anybody would doubt—

GIGOT: Has he spoken up?

MCGURN: So far, he's been silent.

GIGOT: Has his education secretary spoken up?

MCGURN: Not that I know of. He was silent when they took away the voucher thing.

MCGURN: There is a —

GIGOT: A voucher program that's quite successful. The Democrats in Congress have zeroed that out.

MCGURN: Right.

GIGOT: And they have not opposed that act by the Congress.

MCGURN: So if they're silence on this — you know, he's intervened in a New York Islamic center dispute and a Boston cop dispute. It'd be nice to intervene for kids in D.C., for which the federal government has some responsibility. And I think this is where Barack Obama could use his influence in a very healthy way. We're waiting.

GIGOT: There's another decision this week. Mark Zuckerberg, the Facebook billionaire, has decided to donate $100 million to New Jersey schools, contingent on some reforms. And it looks like New Jersey Governor Chris Christie might invite Newark mayor, Cory Booker, a Democrat, but a reformer, to take charge of the Newark schools. Is that a big development?

RILEY: It's a big development not so much because of the money. Because we all know that Newark schools in particular —

GIGOT: Are some of the worst in the world.

RILEY: — are some of the worst. But also, per pupil spending is already very high at these schools. So we're really talking about how the money will be spent. The nice thing about this donation is apparently, reportedly, it will be conditioned or be targeted to certain reforms. Cory Book, the mayor of Newark, will be able to use it to expand charter schools and for teacher evaluation systems and so forth. So it's money-targeting reforms that we know can be effective.

GIGOT: Are they going to change — does it have the potential, Bill, all of this momentum, to change the way that Democratic Party thinks about education? Because there have been the big protector of union interests, not children's interests.

MCGURN: Exactly. Give Barack Obama credit. During the campaign, he did say something that got the teacher's unions very upset. Let's see, look, the problem is not that the school system is failing. The problem is this corrupt school system is working for adults. It's working for the teachers unions —

GIGOT: Teachers unions.

MCGURN: — for the politicians and bureaucrats —

GIGOT: Not for the kids.

MCGURN: It's not working for the kids.

GIGOT: All right.

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


GIGOT: Time now for "Hits and Misses" — Bill?

MCGURN: Paul, a hit a Medal of Honor winner, for an unsung hero of Vietnam. Name was Richard Etchberger. He was working in a secret CIA raider station in Laos when it came under attack by the North Vietnamese. Only seven of 19 Americans made it off the hill that day. Three, because of this guy. But because the operation was classified, even his children didn't know of his heroism. We know that in war, there are many unsung acts of heroism and self-sacrifice, but it's still good to see a good man get his due from a grateful nation.

GIGOT: Great, Bill.


RILEY: This is a miss for Harvard, which has said it will continue to ban ROTC from campus until gays are allowed to serve openly in the U.S. military. Now Harvard is also lobbying Congress to allow illegal immigrant students to matriculate at Harvard and gain legal status. So apparently, they're policy is to allow illegal immigrants but ban military personnel from campus. I think these priorities are exactly backward.

GIGOT: All right.


HENNINGER: Paul, a big hit for whatever mysterious force in New York State this week caused —


— to say that Republican insurgent Carl Paladino is within six points, six points of Democratic titan, Andrew Cuomo. Followed by Republican Mayor Mike Bloomberg endorsing Mr. Cuomo. Followed by former Democratic Mayor Eliot Spitzer saying that Cuomo is the dirtiest, nastiest politician out there. Isn't political competition wonderful?

GIGOT: The Buffalo storm in coming across Albany.


All right, Dan, thank.

And if you have a "Hit or Miss," please send it to us to jer@FOXnews.com.

That's it for this week's edition of the "Journal Editorial Report." Thanks to my panel and to all of you for watching.

I'm Paul Gigot. We hope to see you right here next week.

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