Kevin Hassett talks corporate tax cut, rising wages

This is a rush transcript from "The Journal Editorial Report," September 23, 2018. 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.

The confirmation proceedings for Supreme Court Nominee Brett Kavanaugh thrown into turmoil this week following accusations that he sexually assaulted a young woman more than three and a half decades ago. His accuser, Christine Blasey Ford, now tentatively agreeing to sit down with Senate Judiciary Committee members next week to answer questions about the alleged incident, which Kavanaugh has categorically and unequivocally denied. In a letter to Judiciary Committee Chair Chuck Grassley, on Thursday, Kavanaugh asked for a hearing as soon as possible so that he can clear his name.

Let's bring in Wall Street Journal columnist and deputy editor, Dan Henninger, and columnists Kim Strassel and Mary Anastasia O'Grady.

So, Mary, what do you make about the nature of facts of this whole accusation?

MARY ANASTASIA O'GRADY, COLUMNIST: I think the most important thing to establish right out of the box here is that there's no way to prove either side of this case. One side is saying one thing and the other side is saying the other thing. We're not going to get proof of a 35-yawr-old case.

GIGOT: There's not enough witnesses, not enough corroboration, too old?

O'GRADY: There are not even enough facts from the accuser, who doesn't know where it happened, et cetera. But I think what matters here for the Republicans are the optics of the fair -- the optics in terms of fairness, that they are treating her fairly in her process of making the accusations and that they're treating the judge fairly in his response. That's why I think it's very important that they don't start saying that she's not credible, very important that they don't say boy's will be boys. These are the kinds of things they should stay away from. The should listen to her. But they should also remember that believing her in the faith of him denying it categorically, well, that's destroying a person without any proof. And all of this idea that women will side with her, I don't think that's necessarily true. We all have fathers, brothers, husbands, sons, and we all would want them to be treated fairly in something like this. I think it's just as important they treat her fairly but also showing they are treating him fairly.

DAN HENNINGER, COLUMNIST & DEPUTY EDITOR: So what does fairly mean? He makes this argument. This word gets tossed around a lot, fair. It's like when you were three years old and you had a fight with your brother. That's not fair. And your mother would say, well, life isn't fair. He's being asked to disprove an allegation that cannot be disproven. The standard has become, if he cannot disprove, then he should be disqualified from the Supreme Court. On that is a complete overturning of reality.

GIGOT: On that point, Dan, Anita Hill, of the hearings with -- the allegations she made against Clarence Thomas nearly 30 years ago, she said that explicitly. He, she said, has the burden of persuasion and that is only fair. That's a reversal of normal due process.

HENNINGER: Back then, it was only Anita Hill saying that. Roll forward to now, it is the entire liberal and, I would day say, much of the legal community, saying that we want to reverse due process in cases like this.

GIGOT: If that holds, Kim, what that means, if the standard is established, as a standard, it means that anybody up for a nomination like this, who is faced with an accuser, the facts, no matter how clear or unclear the facts, can disqualify someone if they can't come up with adequate disproof.

KIM STRASSEL, COLUMNIST: Yes. You absolutely weaponize, full-out weaponize sexual harassment allegations. I'm going to call it the Feinstein precedent. But it's something that, in fact, Democrats should be very concerned about. Because at some point, they will have a president back in the White House and a new opening on the Supreme Court. They're going to fill judges, they're going to want to fill -- it's not just a question to the judiciary. Any person nominated for any position in the federal court or the federal government. All you need is one even totally unsubstantiated allegation and you are out of that business for life.

GIGOT: President Trump, Mary, was pretty cool and calm through the week, saying, well, let's let the Senate play it out. And then late in the week, with a tweet that basically said that, "I have no doubt that the attack on Dr. Ford was as bad as she says, charges would have been immediately filed with local law enforcement authorities by either her or her loving parents. I ask that you bring those filings forward so that we can learn date, time and place."

By her own statement, she didn't tell anybody, much less the police.

O'GRADY: Yes. I don't think the president's tweet is really that helpful at this time. I agree with him that she should bring those facts forward. Whether she filed back then, people who have studied sexual assault cases say the victim often doesn't talk about at the time. Let's give her a pass on that. But the important thing is, when she wants to make an accusation now, I think she is to be more specific than she's been. Particularly, because the judge will have an opportunity to respond and you can't just be dragged out in the public square and hung without some specifics about what you supposedly have done. And that hasn't occurred yet.

GIGOT: Thirty seconds, Dan. That means a full cross-examination which is really Brett Kavanaugh's right.

HENNINGER: Which the Democrats want to deny him. They are making it clear that he should not be allowed to do that. So it comes back to where we walked in, "she said/he said." And then the members of the committee, like the Roman coliseum, vote thumbs up or thumbs down on his nomination. That's not my idea of advice and consent, Paul.

GIGOT: All right. I think that's where we are, unfortunately.


GIGOT: When we come back, Democrats continue to demand an FBI investigation into the allegations against Brett Kavanaugh. But is that an appropriate role for the bureau to play?



UNIDENTIFIED SENATOR: I'm just absolutely stunned at why we are so - why the Republicans and the president is opposed to letting the FBI do what the FBI has done for decades and that is background checks on nominees.

UNIDENTIFIED FEMALE: Even in the Anita Hill hearings, they reopened the FBI background check investigation and spent time to do that.

SENATE MINORITY LEADER CHUCK SCHUMER, D-N.Y.: So it is now the FBI's responsibility to investigate these claims, update the analysis to Judge Kavanaugh's background, and report back to the Senate.


GIGOT: Democrats this week calling for the FBI to investigate the sexual assault allegations against Brett Kavanaugh. So is that the proper role of the agency in the Supreme Court confirmation process?

Let's ask Gregg Nunziata. He served as chief nominations counsel to the Senate Judiciary Committee during confirmations of Justices John Roberts and Samuel Alito.

Mr. Nunziata, welcome.


GIGOT: Let me ask you -- let me ask you first about what -- how well do you think Chairman Chuck Grassley is doing in handling this very difficult, contentious situation?

NUNZIATA: I think he's been doing a great job. He's been maybe patient even to a fault. This has been -- from the beginning, Democrats have made it clear they don't want this president to fill the Supreme Court seat and they were going to oppose just about whoever was nominated. And they began, remember, the first day of the hearings trying to disrupt the hearings, trying to prevent them from even starting. But Senator Grassley is a veteran of the Senate. He's been many through this many times and he's been dogged about moving this along while giving as much deference as reasonable to his colleagues on the other side.

GIGOT: So do you think he had any choice other than to allow a hearing to go forward here of some kind make an offer of a public or private hearing as he has to Christine Ford?

NUNZIATA: So I think it is a shame we're at this place to start with. Senator Feinstein, the ranking member, the lead Democrat on the committee, had these allegations a couple of months ago. And there's a process within the committee to investigate allegations like that, that is discrete, that is confidential, that is searching for the truth and not politics. And instead, she chose not to go down that route. And if we had these allegations come public after the hearings, after the process that's designed to weigh things like this. I think that there are serious enough allegations that Chairman Grassley was right to do what he could to give Dr. Ford the opportunity to tell her story, whether that was in public or in private, to Senators or to staff.

GIGOT: Well, you mentioned this process, that would normally be followed. What would that process be? What normally happens if a Senator on the committee came in to have an allegation like this or be aware of it, what would happen under normal circumstances?

NUNZIATA: So under normal circumstances -- and this is not the just, by the way, something that happens every few years, a Supreme Court vacancy. The committee has a process it applies to every nomination it considers, so hundreds of nominations for federal judgeships and Justice Department positions. What happens is the FBI goes out and interviews associates, friends, neighbors of the nominee --

GIGOT: Right.

NUNZIATA: -- over the course of their life. They create a big file. This is FBI background investigation. It is not analysis. It is not a review of whether or not the nominee is fit to be confirmed. That is the role of the Senate. It is data. It is nonpublic information that is given to the Senate, the Senate keeps, in a confidential setting, and reviews. If there's something of concern in that file, or if something else comes to the committee that would be relevant to that file, like a letter that Senator Feinstein received, that could be added to the file. If she raised this a couple months ago, I have no doubt that the committee probably would have sent out an FBI agent just to do an interview or two to make sure these allegations were in the file. The situation we have now is the allegations are already there, we have heard the allegations, but no --

GIGOT: They were leaked.


GIGOT: They were leaked.

NUNZIATA: Yes. So this is not part of the confidential process, like was the case in the Hill/Thomas hearings. That was leaked after the FBI investigation. But it was, of course, leaked.

At this point, the next logical step is for the committee to follow up on this allegation and the categorical denial from the judge.

GIGOT: And by follow up, you mean committee staff do interviews, if they sit down and say, all right, let's ask some questions of these two people, and any witnesses relevant, and they and the staff provides that information to the Senators. Then if you have a public or private hearing, depending on what they want and the witness wants, and then the Senate make up their mind about this?

NUNZIATA: That is correct. And people should also understand that it is a federal crime, punishable by prison, to lie to congressional investigators. There's been a lot of weight on the need to have the FBI ask questions, but lying to FBI a crime. It's an equal crime to lie to Congress.

GIGOT: So what is - what -- I mean, so these demands by Democrats, and for a while, at least, by Ms. Ford's lawyer to get the FBI involved here, is that just superfluous at this stage? Is it unnecessary? What are they trying to accomplish?

NUNZIATA: I believe, though, and I think that the demands can only be understood in the context of the strategy the Democrats have had the entire time, which is to delay and disrupt these proceedings. I assume that they are hoping they can get them past election and maybe they will pull off a miracle and win control of the Senate, and then, succeed in their end goal of preventing this president from filling the vacancy. It's not a reasonable request for more information. Every -- every Senator on that committee knows how this works. They know that they could ask the questions themselves. It is up to them to make their judgment according to the Constitution. And besides, I might add, every Democrat on the committee knew they were going to vote against this nomination before these allegations arose.

GIGOT: In terms of the standard of evidence -- we don't have a lot of time, but in terms of standard of evidence that the Senators use to make their decision, it is basically whatever they want it to be, right? I mean, it's ultimately a yes or no on the nomination, not necessarily on this particular allegation?

NUNZIATA: Yes. That is right. They have the sole constitutional authority to give their advice and consent and decide who deserves a lifelong tenure on the court.

GIGOT: All right. Gregg Nunziata, thank you very much for being here. Appreciate it.

NUNZIATA: Thank you for having me.

GIGOT: When we come back, with the Kavanaugh confirmation hanging in the balance, the stakes couldn't be higher in the battle for control of the U.S. Senate. We'll look at the races to watch and how a protracted Supreme Court fight could influence voters in the midterm elections.



PRESIDENT DONALD TRUMP: They've got to get out for the midterms.


TRUMP: Got to vote. You got to vote. We need more Republicans. You know, when they say we have a majority, it is like this -- it is like this. If somebody has a cold, we don't have a majority that day.


GIGOT: President Trump in Las Vegas, Nevada, Thursday, stumping for Republican Senator Dean Heller, who is locked in a tight race for reelection against Democratic Congresswoman Jacky Rosen, just one of the close contests playing out in battleground states. And with the Kavanaugh confirmation now hanging in the balance, the stakes could not be higher for the fight for control of the Senate.

We are back with Dan Henninger, Kim Strassel, and Wall Street Journal assistant editorial page editor, James Freeman.

Kim, let me start with you. You wrote in your column this week that if Judge Kavanaugh is forced to withdraw, that will be a disaster for Republicans in the midterms. Explain.

STRASSEL: Well, look, there's a reason Democrats are fighting this so fiercely. It's not just because they disagree with Kavanaugh's ideology, or even that they want to spare their colleagues from having to vote on this before midterms. It is because they know this is a fabulous issue with their base. It really riles them up, gins up the enthusiasm. They will be out. They will claim, if they kill this, they will claim, look, give us a majority in the Senate and we will hold that seat open until 2020 when we can win back the White House. And conversely, it would be enormously demoralizing to Republicans who gave the Senate and the White House to Republicans, in part, to have a say over the Supreme Court, and they do not appreciate these tactics and they would consider it a failure of will by Republican leadership.

GIGOT: James, I have to say, I agree with Kim about that. That is, even if the president nominated somebody like Amy Coney Barrett to -- if Kavanaugh withdrew before the election.

JAMES FREEMAN, ASSITANT EDITORIAL PAGE EDITOR: Yes. Republicans need to get Kavanaugh through. I think they will. And the downside if he does go through, is you have a lot of Democratic Senators, incumbents, in Trump states. We've talked about 10 states where Trump won, Democrats running for reelection, five states where he won by more than 10. They are going to be in a very tough spot when they have to make this vote. It's why they want to keep delaying it. They do not want to have to go on the record. But any of them that vote against Kavanaugh are probably going to pay a price in those races.

GIGOT: Claire McCaskill, of Missouri, seems to thing -- she is one of those locked in a very close race. She came out against Kavanaugh this week. She must think that these charges are kind of cover for her politically.

FREEMAN: They may have given her comfort, but they haven't emboldened people like Heidi Heitkamp, in North Dakota, to jump on the anti-Kavanaugh bandwagon. Now she may, but that will have a cost with that electorate.

GIGOT: And if Kavanaugh, even if he is confirmed, Dan, I think Democrats are looking at this thing, OK, well, we loss that one but this is still a great issue for us because we can use these hearings to portray Republicans as hating woman and rive our turnout and maybe cast a -- demoralize some Republican women voters in the suburbs.

HENNINGER: Yes. That is entirely possible. That is the game they are playing. They've been playing that game for months now to drive their turnout. How the Democratic base could get more enraged and enraged and crazy than it already is, it's hard to imagine.


But, look, the Kavanaugh nomination is not just another political incident weighing on election. I think a watershed political event. The Democratic tactics, the Democrats' sort of reversal of reality, legal reality in the Kavanaugh event, I believe --

GIGOT: Due process.

HENNINGER: -- due process -- is just building day by day. Sure, Claire McCaskill earlier in the week said she's coming out against Kavanaugh. This is going to play out for about another four or five days, to the ultimate event, confirmation or rejection. My reading is, a lot of independent voters out there and certainly Republican are disgusted by what they have seen. I think their turnout will be stronger than one might have guessed.

GIGOT: Kim, it looks to me like there are about seven races within margin of error in Senate. Three held by Republicans, Nevada, Arizona, Tennessee. And then four by Democrats, North Dakota, Missouri, Indiana, Florida. As we know from history, sometimes all those races at the end go one way or another. So Senate control is in the balance here.

STRASSEL: We have no way of knowing, although, it will depend very much on what happens in coming weeks with the Kavanaugh nomination. I am convinced. I think what should concern Republicans is they should be in better shape than they are right now. You know, those 10 seats Democrats are defending this year, they are within that margin of error. They are doing well. Other than Heidi Heitkamp, in North Dakota, who is showing to be behind in polls --

GIGOT: Right.

STRASSEL: -- they are in good shape. Republicans, these three seats, Nevada and Arizona and also -- what is the last one?

GIGOT: Tennessee.

STRASSEL: Tennessee. Exactly. They have got problems there, so. By the way, just a note here for the record. It's started. Early voting began in North Carolina this week. It will continue with growing numbers of states going forward. People are already going to the polls.

GIGOT: James, you have been out touting the economy for a long time here. Republicans' change of policy, tax cuts, deregulation, tax reform. Why haven't they been able to use this effectively to justify reelection?

FREEMAN: I think they can. I think they have been confused by some polls, which seem to say that most people don't think the tax cuts were great, and, amazingly, didn't think their taxes were cut, even for more than 90 percent of people that did get a tax cut. But the statistics that matter, Americans understand the economies better. This is the one area where Trump actually is in positive territory, clearly, 50-51 percent, eight- point margin, approval on the economy versus disapproval. Since September of 2016, his wrong track/right track has improved by 25 points. So these are happy Americans who think the country is headed in a better direction. The Republicans can sell that.

GIGOT: All right. Thank you James.

Still ahead, White House economic advisor, Kevin Hassett, has caused a stir recently with claims the corporate tax cuts are paying for themselves, and that wages are rising faster than advertised. We'll talk to Mr. Hassett next.


GIGOT: White House economic advisor, Kevin Hassett, causing a stir in recent weeks for claiming the corporate tax cut that President Trump signed into law last year has almost paid for itself. Hassett also contends that wages are rising faster than some data seem to show.

Kevin Hassett joins me now. He is chairman of the White House Council of Economic Advisers.

Good to see you again, Kevin.


GIGOT: So you created a fuss this week about the deficit and corporate tax cuts paying for itself. Almost there. What is the case for that?

HASSETT: Well, as you know about Washington, right, there's only a fuss when you say something that's true that people don't like, right? So one of the things that happen was that we ran over, we ran the number. If you go back to January of 2017, the Congressional Budget Office said we would have about 2 percent growth this year, and instead, we are looking closer really to 3.5 percent growth. That extra 1.5 percent growth gives you so much revenue over 10 years that it's easy to envision the tax cuts on corporate side paying for themselves. It is really, really simple math. In fact, you saw Steve Moore in the Wall Street Journal this week actually laid it out in detail for the people, something I couldn't in White House press conference.

GIGOT: I looked at Congressional Budget Office revenue numbers this year. I mean, for the fiscal year, which ends at the end of September. Corporate tax revenues are down about --


HASSETT: Corporate revenues are down.

GIGOT: -- 30 percent. And individual revenues are up about 7 percent or so, which is really healthy. But how do you mesh this point about corporate tax cuts paying for themselves with these corporate revenues being down?

HASSETT: Yes. That is a great question. And the point is that if you get more GDP, you get more revenue from all sources, right? So if we have, you know, an extra dollar of GDP, then we are going to get about 18 cents of extra revenue and that is going to come from payroll taxes because people have jobs, from income tax because they have income, and also higher-than- baseline corporate tax. The corporate tax receipts this year down, but as you know, GDP is skyrocketing, markets are skyrocketing. That's going to five us a lot of capital gains revenue. All of that stuff adds up to a much better looking next 10 years than we thought just back in 2017 when President Trump was inaugurated.

GIGOT: OK so is it basically a higher, a faster growth story.

So let's look at, though --


GIGOT: -- the deficit that is going to roll in now, CBO says, for this fiscal year that closes later this month, about $800 billion, kind of give or take, and that 4 percent of GDP, 4 percent of the economy. How worried should we be about deficits of that magnitude?

HASSETT: Well, I think that we should definitely be worried a lot about long-run deficits. And this country desperately needs a fiscal consolidation, something I have written about a lot before my public life began at the White House. A fiscal consolidation is when basically both parties get together, look at the long-run entitlement programs and everything else, they put everything on the table and they come up with a way to restore the long-run balance. This is -- if you go back look, there have been commissions that have studied this and put out proposals, and yet we've made little progress as a country. Absolutely, as economist, I can tell you that it's urgent we do that. But the near-term stress I think is really not something to be concerned about. In fact, I think that what we're seeing with really high GDP growth and the celebration of markets is a response to kind of releasing or opening up a valve, releasing a lot of pent-up demand for capital spending and so on because of the lower corporate tax rate. So that is reducing revenue this year because, like expensing, for example, is more costly when people are buying lots of machines but they buy all those machines and then the machines produce output in the future. So I think that the tax cuts are giving us more growth, that is going to put us in a better situation to deal with the long-run budget problem. But --

GIGOT: You --


HASSETT: -- I think that ultimately it's got to be a bipartisan solution.

GIGOT: We still have to deal with those entitlement issues going forward.


GIGOT: Let's talk about wages because one of the promises you guys made in the White House was that, if you cut corporate tax rates, and if you cut individual rates, it will re-down to higher wages. Some of your critics say, look, we haven't had the increase in wages, particularly after inflation, that you guys promised. You did a different, a little bit of a different calculation and said, you know what, we're having bigger wage raises. How do you explain that?

HASSETT: Right. Well, in fact, you know, it's very, very simple that the people who are saying that wages are not growing are excluding benefits. In fact, you guys in the Wall Street Journal had a great article about how benefits are skyrocketing. And they also don't account for tax cuts, which were pretty big. So if you want to know what is happening to the after-tax wage, which is what your viewers take home and it's the money they have, you know, after the government takes its part, that they can spend on rent and food and everything else -- the after-tax wage is growing over the last year about 1.5 percent after adjusting for inflation. And that's pretty healthy wage growth.

GIGOT: Yes, but people say, hey, hey, hey, wait a minute, wait a minute, you guys criticized us, the Obama people, because we didn't have rapid enough wage growth, and, suddenly, you are saying you are adding benefits and you are adding bonuses to that calculation. That is not the way -- that is not the way wages are usually calculated. They are done from, as you know, a basic Bureau of Labor stats calculation every month.

HASSETT: Yes. I think that what matters to Americans is the amount of money they have to take home and spend on their kids and everything else. And that was true for President Obama as well. And at the end of the Obama administration, they had wage growth that looked a little bit like what we're seeing right now. So if you adjust for taxes, of course, that is not going to give you a lot of help for wage growth, President Obama, because, for most people, taxes went up. For a lot of people, taxes went up. But if you adjust for benefits, it actually is a positive going way back. Because there has been maybe 10 or 15 years of really gradual shifts towards more benefits. So it is not -- the benefits, by the way, are not just health care spending. They are expanded benefits like more vacation days and stuff, going on right now. Especially in this tight labor market employers competing for workers with generous benefits. So it's not just health care.

GIGOT: Quick finalizing question. What is your prediction for third- quarter GPD growth after 4.2 percent in the second quarter?

HASSETT: Yes. We update our columnists every day, mindful of the fact that we are not, you know, super good at doing this, this early in the quarter. We think 3.5 is about the sweet spot right now. We think that -- but there's a big range of possibilities. I think that the range -- 3.5 is a conservative call right now. And the odds of being above 4 are certainly a lot higher than the odds of being below 3. But my job is partly to be the conservative guy that keeps reminding people that bad things can happen. So I am being pretty consecutive right now. There are other people that estimate third quarter that are above 4. But I am at 3.5 right now.

GIGOT: All right. Thank you, Kevin Hassett.

HASSETT: It's great to be here.

GIGOT: Still ahead, President Trump orders the declassification of key documents in the Russia probe and Democrats cry foul. Is the president now walking back those plans and why?


GIGOT: President Trump ordered the declassification of key documents in the Russia probe this week, including 21 pages from the application for a warrant to spy on former Trump campaign aide, Carter Page, and unredacted text messages sent by former FBI officials, Peter Strzok, James Comey and Andrew McCabe. But after critics cried foul, the president appeared to walk back that order Friday, tweeting, quote, "I met with the DOJ concerning the declassification of various unredacted documents. They agreed to release them but stated so doing may have a perceived negative impact on the Russia probe. Also, key allies called to ask not to release. Therefore, the inspector general has been asked to review these documents on an expedited basis. I believe he will move quickly on this. In the end, I can always declassify if it proves necessary. Speed is very important to me and everyone."

We are back with Dan Henninger and Kim Strassel.

So, Kim, this is a startling development here. We urged the president for weeks, months to declassify. He finally did so. And now this walk back. How do you explain it?

STRASSEL: Yes, it's a very disturbing development, Paul, because -- and I hate to say it -- but it looks like president got rolled here. He has the DOJ and the FBI, the same people that refused to release all of this, even to Congress, now go to the president with the exact same argument they used for why they didn't want to hand this over, even to members of the intelligence community to see. And somehow got into his head, and he has now agreed to have the inspector general review these questions of what will or will not be released.



GIGOT: No. Go ahead.

I mean, here is the question. He said this would somehow imping upon the Russia probe. How does more transparency hurt the Russia probe? This is about making documents public. It's not concealing them.

STRASSEL: Exactly. I mean I think, again, the entire point of putting these out is to provide clarity on the Russia probe. Now some of that may not speak well of the Department of Justice and the FBI and the product that was ultimately handed over to Bob Mueller. But be that as it may, it's something that the United States and the public still deserves to know about.

GIGOT: Dan, this is a claim, as well, that the foreign intelligence agencies didn't want it released, maybe because, you know, there might be some secrets in there that they would rather not have clues to. But presumably, that can be protected. And the DOJ and FBI have shown that when they redacted documents in this case, they redacted a lot of stuff that is not jeopardizing national security.

HENNINGER: Yes. That is right. Look, at this point, we can only hypothesize, guess why President Trump walked this back. Here is my guess. That he is somehow being assured that Mueller has reached the end of his investigation, and he is not going to be called to account for the original collusion narrative with the Russians. Having said that, it is hard to see how this would be in his interest. Because the collusion narrative is based on, largely, the Steele dossier. The Steele dossier was being handed around by national intelligence, the CIA and FBI and, ultimately, the Washington press corps, which ran all these anonymous stories based on that. These documents were going to give us the beginning of a road map to who was doing what with that dossier. Presumably, if there was nothing there, that would be in the president's interest. So it's hard to understand why he has walked it back.

GIGOT: Kim, time is of the essence here, because if Republicans lose the House, as I expect they will, in November, the Democrats are going to take over House Intelligence Committee. Devin Nunes will be in the minority, if he is still in Congress. And they're going to shut this down, everything about the intelligence probe into the FBI and Justice Department, except for anything that relates to Trump and Russia.

STRASSEL: Yes, shut it down on day one. You can rest assured that you are not going to find out anything more about what really happened in 2016 from a Democratic House. You are also not going to get it from the FBI or DOJ itself. And sadly, it seems we are not going to get any of it from the Mueller probe, who has decided not to look into this at all. So this is very crucial.

The only other thing I can think of, too, Paul, is whether or not there were some members of Trump's national security team that, you know, in essence, threatened to resign or something if it went fully out unredacted. Perhaps this is a way of mitigating against that and trying to come to a compromise. It's just unclear what happened here.

GIGOT: Extraordinary event, though, Dan. Our friends in the press deciding, suddenly, oh, my god, he is going to declassify documents. Aren't we for transparency? Aren't we for accountability?

HENNINGER: You know what else we're for? We are for the credibility of the press and the institutions involved. And at the moment, their credibility stands damaged with at least half of the public. You would think we want to restore that.


GIGOT: Release the documents.


GIGOT: When we come back, Secretary of State Mike Pompeo announcing he will restart talks with North Korea. But has Kim Jong-Un giving any concrete sign that he is ready to give up his nuclear weapons. We'll ask General Jack Keane, next.



TRUMP: Prior to my coming into office, a lot of people thought we were going -- it was inevitable we were going to war in North Korea. Now, we're -- the relationship, I have to tell you, at least on a personal basis, they're very good. It's very much calmed down.


GIGOT: President Trump this week touting progress in the push to denuclearize the Korean peninsula. His comments coming on the heels of meetings this week between South Korean President Moon Jae-in and North Korean leader, Kim Jong-Un, after which Kim vowed to dismantle parts of his nuclear program in exchange for certain concessions from the United States. Secretary of State Mike Pompeo said Wednesday that he would restart the nuclearization talks with North Korea with a goal of completing the process by 2021.

Retired four-star general, Jack Keane, is a FOX News senior strategic analyst.

Always good to have you here, General.


GIGOT: What do you make of this meeting between North and South? Any strategic progress?

KEANE: Well, I think it is relation building. And I think, to be frank about it, President Moon is on a little bit different page than United States. He's looking for reconciliation, socially, politically, economically. I don't think denuclearization is top priority for him. It is for the United States. It is our central objective. I think we've got to stay close to President Moon so he doesn't make any concessions. It looks like he is trying to set up an industrial base on the northern side of the border, like we had once before, an economic industrial base. If he does that, that is violating U.N. sanctions.

GIGOT: Yes, that's a clear violation.

KEANE: Because that's putting money in their pocket.

GIGOT: Right.

KEANE: But, yes I think -- I think the real issue is, despite the ancillary progress of connecting rail lines, connecting families, returning remains, the real central issue of denuclearization means that they have to give up nuclear weapons and we have to observe them being dismantled and destroyed, and the same thing with their ballistic missiles, and none of that has happened.

GIGOT: That is where I think I have questions. You have the Yongbyon nuclear facility, which they promised again to dismantle. They promised that a decade ago, as you a recall --

KEANE: Right.

GIGOT: -- and then they made progress towards it. Then they threw out the inspectors, went back to business as usual. Now they're saying, OK, we will we will close it again, but you have to do certain things, unspecified. Presumably, they want maybe an end to the Korean War, which would have implications for American troops. Maybe they want the sanctions eased. Are we buying the same horse twice here?

KEANE: If we agree to reciprocation, we are buying the same horse twice. I don't think this team is going to do that at all. I think they are clear-eyed about it. Look, if we go and end the war, and end the armistice, so to speak, the next thing they will say, well, OK, there's no reason for U.S. troops to be in South Korea.

GIGOT: Exactly.

KEANE: There will be pressure on to us do that. I don't think we are going to fall in that trap. And, clearly, if we walk away from any of the sanctions, then we have given up our leverage. I don't think that is going to happen.

GIGOT: The last time Mike Pompeo was in North Korea, he said, here is what you need to do if you're sincere. You need to give us a list of all your facilities. Where are the researchers, where are the bombs, how many bombs do you have, where are your missile launches? The whole list of things to be able to know how big the program is, and how to verify whether they are giving it up. They haven't done any of that.

KEANE: Yes. Then we want to send in independent inspectors to verify those locations. Now we have our own list of where things are, but our list is not as complete as theirs, to be frank.

GIGOT: Right. So, but we will be able to tell if they're being honest with us because some of that we have accuracy on. But they have not provided any of that.

KEANE: Isn't that kind of the minimalist requirement if they really mean what they are saying about denuclearizing? How can you otherwise decide, to know what they are doing?

KEANE: If the first discussions Secretary Pompeo had with the North Koreans, he told them to make any progress with us on denuclearization, this is our going-in requirement.

GIGOT: So when Pompeo goes there, if he doesn't get that, then this would be a big setback? Or how long can we wait for this?

KEANE: I don't think we can wait much longer, because dragging this thing out like this, is part of the tact that they have used. We have fallen into that trap.

GIGOT: The other evidence I've been looking at is that sanctions, which, for a while there, at least, looked to be really tightening, the enforcement of sanctions I mean. Now seem to be, this enforcement seems to be wearing down. The Russia, for example, have been blatantly violating sanctions.

KEANE: They always have been.

GIGOT: Our intelligence is that it's not as watertight. And because of all the good feeling around this, you know, a lot of countries are saying, well, you know, it doesn't matter so much, so let's keep -- let's start trading again.

KEANE: You put your finger on the problem. Enforcement has always been the issue, even though people agree, Russians have never publicly agreed with sanctions, always violated them. The Chinese have opened the door wider and commodities are flowing into North Korea. It will take a lot of work on the part of the State Department -- they know it -- to keep the countries enforcing the sanctions when there's profit, and not enforcing it, and there's no missiles flying and there's no nuclear test taken. There is no aura of crisis, and that is why it is much more difficult. But this administration has got to press hard to do it, because our leverage is sanctions. Also, we can we can block aid ships from going into North Korea. We can get tougher. We can start saying we are not going to send families anymore into South Korea.

GIGOT: That's pretty high risk.

KEANE: We can start bringing in capacity into the into the region. There's lots of options for us, if we believe that they are just gaming us and this is heading into a dark hole.

GIGOT: But then you are going to have tensions with Moon, President Moon, of South Korea.

KEANE: And China.

GIGOT: And China. Because Moon, in particular, his goal here is unification.

KEANE: Yes, at any cost.

GIGOT: Yes. That is right.

OK, General, thank you very much. Great to have you here as always.

KEANE: Good talking with you, Paul.

GIGOT: 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, start us off.

STASSEL: Paul, President Trump rains a lot of flak down on his attorney general for recusing himself from Russian matters. While I feel his frustration, one consequence is it overshadows some otherwise really important work at the Department of Justice. So, yes, this is a hit for Jeff Sessions for his very important remarks on the Frist Amendment on campus this week. And also for having directed his team to intervene in a number of cases on behalf of students who have had their free speech robbed by campus police and administrators. So put Russia side for a little bit. It is great to see a DOJ who again cares about the Constitution.

GIGOT: All right, Kim.


O'GRADY: Paul, a hit for Susan Hendry Tureau, a retired librarian, who just recently learned that a painting of Jesus that hung in her childhood home in Baton Rouge was actually a Da Vinci. And her father's estate sold it for $10,000 in 2005 and it just went to auction for $450 million. Rather than bemoaning the money she could have had, she expressed gratitude for having had the painting in her home. And she said the idea just brings me alive.

GIGOT: Pretty cool.

All right. James?

JAMES FREEMAN, ASSISTANT EDITORIAL PAGE EDITOR: My story is not as uplifting. This was a miss to University of Michigan Professor John Cheney-Lippold, who agreed to write a recommendation letter for a student that wanted to study abroad until he found out the destination where she wanted to study. A country, apparently, he can't tolerate. Was it North Korea? Was it Putin's Russia? Was it Cuba? No. It was a democracy called Israel. We're used to students doing crazy things on campus, but now professors are boycotting students. Unbelievable.

GIGOT: All right.


HENNINGER: Well, this is a really large miss to the bank of Denmark, which discovered recently that it had not noticed that $230 billion had been laundered through its branch in Estonia, mostly by Russia and Azerbaijani money-laundering operations. The Brits are now trying to find out how much ended up there. You know, these Scandinavian countries always have a reputation for being as clean as the driven snow. Maybe not quite.

GIGOT: All right, Dan.

Remember, if you have your own hit or miss, be sure to tweet it to us, @JERonFNC.

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

Content and Programming Copyright 2018 Fox News Network, LLC. ALL RIGHTS RESERVED. Copyright 2018 CQ-Roll Call, Inc. All materials herein are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of CQ-Roll Call. You may not alter or remove any trademark, copyright or other notice from copies of the content.