This is a rush transcript from "Journal Editorial Report," November 15, 2014. This copy may not be in its final form and may be updated.

PAUL GIGOT, HOST: This week on the "Journal Editorial Report," President Obama reacts to the Democrat's midterm rout by moving left and ramping up his rule by regulation. From immigration to climate change to control of the Internet, we'll preview the coming confrontations with the new Congress.

Plus, the Supreme Court takes up another ObamaCare challenge as one of the law's chief architects sparks outrage with some controversial comments.

And tensions rise as Russian troops and tanks pour over the Ukraine border. So what is Vladimir Putin's next move?

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

Well, if there was any question about what President Obama's response to the midterm rout would be, it was answered this week with the administration making it clear that it's moving left and ramping up its rule by regulation. And from a China climate deal to imminent executive action on immigration, the president and his party seem to be set on a collision course with the new Republican Congress. So how should the GOP respond?

Let's ask Wall Street Journal columnist and deputy editor, Dan Henninger; assistant editorial page editor, James Freeman, and Washington columnist, Kim Strassel.

So, Kim, most presidents who take a beating in a midterm election, do -- they either sound contrite or they move to the middle or both. This president doesn't seem to be doing that.


What is the White House calculation in so directly confronting Congress in so many areas?

KIM STRASSEL, WASHINGTON COLUMNIST: I think the argument here that the president has taken on is that he believes that they didn't lose this election because the voting public disapproved of them. They lost it because they didn't turn out their base. They didn't do enough to energize their side. And so he's going to run out and he's doing climate environmental issues, he's going to do immigration to talk to Hispanics, and the idea is to rally up his base and get them on board on the path to 2016.

GIGOT: So they don't think that Obama's popularity was at all an issue here? They think that it's basically that -- what the president put it in the compressed conference to those two-thirds of the public who didn't vote --


GIGOT: I heard you and we're going to mobilize those for next time. And they do that by saying to the Republican Congress, we don't care what you do, I am going to do what I want to do.

STRASSEL: Yeah. Nancy Pelosi said this, too, in her press conference. She said the Republicans didn't win because people approve of Republican policies. We just had a bad night.



GIGOT: Yeah, that was a bad night, all right.

OK, all right.


DAN HENNINGER, COLUMNIST, DEPUTY EDITOR: They are delusional. Colorado, a state we talked about a lot on this show, Senator Mark Udall, the Democrat, ran on climate change and the war on women. Mark Udall was not a bad candidate. He pressed their message very hard, and -- and supporting him, and he lost because Cory Gardner talked about other things, like benefits from energy and the economy. So it's not as though the message did not get out. It's that in these elections, they lost. And as Kim is suggesting, they now think it's because their base didn't vote.

GIGOT: So, James, immigration. Looks like that will be one of the early new regulations. An executive order that may provide amnesty, stop deporting up to as many as six million people. We'll have to wait to see the details. What's the president's calculation here? Because in my view, that will really make it very hard to get any kind of durable reform out of this Congress.

JAMES FREEMAN, ASSISTANT EDITORIAL PAGE EDITOR: Well, I guess depending on whether you think it's delusional or cynical. If the calculation is that we've got to get the minority turnout, we've get Hispanic turnout, we, the Democrats, back to where it was in previous years, I think his calculation is, so what if I could get a deal and solve the immigration problem with the Republicans, the better play politically is to start the fight with a constitutionally dubious move that forces them into an argument where they once again sound like the anti-immigrant party.


FREEMAN: Other than that cynical political calculation, I don't see how anyone could think this is the right move.

GIGOT: Well, it doesn't solve a lot of the immigration problems, such as what is the incentive for coming over. Right? It's economic attraction. So you want to give a kind of quest worker program, flexibility, so people can come over, but then go back, based on labor demand. And they are not solving the problem for agricultural workers. They're not solving the problem for high-tech workers or engineering or science degrees, nothing like that.

FREEMAN: And the Republicans in both the House and the Senate, the leadership, have said, I think just about every way they know how, a lot of those things can get done, not necessarily in a big bill, but piecemeal. They think they can get the votes to get all of those reforms, but he doesn't want the solution.

GIGOT: It looks, Kim, like he's going to be sowing chaos. Maybe that's not -- I mean, that might not be too strong a word in the Republican ranks, as they are divided over how to respond to this, with some people saying let's use the power of the purse to cut off funds for it, which, of course, he would veto, which could potentially lead to a shutdown. How do you think the Republicans will respond and what should they do?

STRASSEL: I'm in the cynicism camp of James here. This is why he did it. He did it to divide them.


GIGOT: You know, Kim, you weren't cynical before you went to Washington.


STRASSEL: It's your fault, Paul. You sent me down here.


But they are going to have to -- that's the most important thing, what you just said, they have to retain unity in the party and have a strategy for going forward. The best thing they can do is go out and criticize this as extra-legal authority, talk about, as you just did, the fact that this is not solving the problem, in fact, for Hispanics. And then get to work on an actual immigration law. Maybe done in a piecemeal fashion and send it to him that does solve the problems and dare him to not accept what they've sent him.

GIGOT: All right, I don't have a lot of confidence that the Republicans are going to act like that, but we also have the Democrats basically re-electing their leadership, Nancy Pelosi in the House and Harry Reid in the Senate.


HENNINGER: And bringing Elizabeth Warren into the leadership.

GIGOT: The popular Senator, who doesn't like banks and --

HENNINGER: But she is a tremendous fundraiser for the party. And a lot of this is going to be about raising political money. If the Republicans react and go nuts, then they are going to say to their base, accepted us money to drive them out of office.

GIGOT: Quickly, James, will the Keystone vote, the Keystone Pipeline vote that Harry Reid has suddenly discovered an urgent need to have in the lame-duck session --


-- after blocking it for two or four years, is that going to save Mary Landrieu in Louisiana?

FREEMAN: I kind of doubt it. It sounds like maybe we're going to get a veto out of the White House. The president dismissing it as Canadian oil, a sort of absurd suggestion that we get no benefit from this massive pipeline down to our refineries --


GIGOT: Especially since it will carry North Dakota oil too.


GIGOT: All right. Still ahead, it's back. ObamaCare returns to the headlines as the Supreme Court agrees to hear a fresh challenge to a key part of the controversial law, and its chief architect tells the truth about the administration's view of the American voter.


GIGOT: Well, ObamaCare is making a post-midterm return to the headlines with the Supreme Court announcing last week that it will review a centerpiece of the Affordable Care Act and decide this term whether the Obama administration is improperly providing tax credits to consumers who purchase insurance through the federal exchanges that now operate in more than 30 states. That, as three separate videos emerged this week of MIT professor and ObamaCare architect, Jonathan Gruber, suggesting that liberal deception and voter stupidity were key to the law's passage. Here's just one of his comments.


JONATHAN GRUBER, ECONOMIST, MIT, OBAMACARE ARCHITECT: This bill was written in a tortured way to make sure CBO did not secure the mandate of taxes.

If you get a law which said healthy people are going to pay in -- you made it explicit the healthy people play in, and sick people get money, it would not have passed.

Lack of transparency is a huge political advantage. And basically, you know, call it the stupidity of the American voter, or whatever, but basically that was really, really critical to getting the thing to pass.


GIGOT: We're back with Dan Henninger and James Freeman. And Wall Street Journal editorial board member, Joe Rago, also joins the panel.

So, Joe, as Lilly Tomlin once said, you can be cynical but you just can't keep up -- no matter how cynical you get. You can keep your policy if you like it, you can keep your doctor if you like it, it will reduce costs, it's not a tax, and it will reduce the budget deficit, all promises on which this law was sold, all false.


GIGOT: We knew that though. OK? At least those of us condemned to follow this on a daily basis knew this. What importance politically are these Gruber admissions going to provide?

RAGO: Look, nobody likes being called stupid, which is part of the reason these comments have gotten so much attention. But I think the real reason is that he's being candid about what the law does. He's saying there are all kinds of higher taxes, liberal policies for redistribution, for example, embedded in insurance after Obamacare. He's talking about it openly and people are starting to notice. I mean, we've --


GIGOT: All hail the honest man?


RAGO: We've said this all along. He sounds like he writes for the "Wall Street Journal" editorial page.

HENNINGER: Well, the enrollment period is starting again this weekend.

GIGOT: Right.

HENNINGER: This remark has gotten wide publicity. And the average person who has been thinking about signing up for the coverage of this must wonder whether they are stupid to do so. It's created a lot of doubts in people's minds. And especially now that you've gotten the Supreme Court agreeing to take a case over the constitutionality of the exchanges. That has also thrown the future of the law into doubt for a while. So this thing is really going to be treading water now for at least six months until the court decides the case.

FREEMAN: Those voters that he's celebrating how he fooled them, a lot of them didn't buy it. They put Scott Brown into Ted Kennedy's old Senate seat in Massachusetts. They gave the House to Republicans in a historic sweep right after the law was passed. It is kind of amazing to think how unpopular this would have been if its marketers had told the truth about it.

GIGOT: They always thought that the popularity of this would turn around once the subsidies kicked in. That hasn't happened. Still, well over 50 percent of the public still doesn't like the law.

What about this Supreme Court case, Joe? It challenges the subsidies that are provided through the federal exchange because it looks to statute that says that the law -- that subsidies only provided through an exchange established by the states. So what is this -- how important is this case? And could it up-end the law?

RAGO: Well, it's very important. Unlike the previous health care cases over the individual mandate to buy health insurance or else pay a penalty, there's no real constitutional issue here --


GIGOT: This is statutory black-letter law interpretation?

RAGO: It's straight statutory interpretation, conventional statutory interpretation. The real importance of this case is, if they vacant the subsidies in the 36 states with a federal exchange, it essentially throws the law back into Congress and reopens the debate, and Republicans can say, look, we want to help you fix this problem, but we also want to fix all of these other problems caused by the law you passed.

GIGOT: We don't know what the Supreme Court will do. One of my judicial legal sources, legal sources says that probably about a 75 percent chance they will overturn the federal exchange subsidies, Justice Roberts and Kennedy being the two swing votes, as usual.

HENNINGER: Well, I think what we're going to see something here, Paul, it's going to get really ugly. There's going to be an unprecedented attempt to intimidate the justices on the court. Example, "The New Republic" magazine had a headline this week that said, "Supreme Court is now a death panel." What that means is, if they rule against the law, a lot of people are not going to have access to insurance and they'll die. That's the sort of tenor that is going to be pushed at the court.

GIGOT: Was that The Republican or New York magazine?

HENNINGER: I believe it was The New Republic.

RAGO: It was The New Republic.

GIGOT: It was The New Republic, OK.

FREEMAN: But I think that's really the significance of these Gruber comments, is that this is basically -- it's pretty clear in the law that the administration should lose. The subsidies should not go to these exchanges. But the question has been, Kennedy and Roberts, again, do they have the will to withstand political pressure? And that political pressure, that campaign against them to get them to bend to the administration's will, just got a lot tougher with the architect of the law basically admitting they lied to push it through.

GIGOT: Briefly, Joe, how should Republicans respond?

RAGO: I think they've got a few options. I think they should say, look, we've got our own plan. It involves tax deductions. We're going to pass it. Obama is probably not going to sign it because it's a threat to his political control. And after that, they've got to respond to the people who are potentially losing subsidies. After that, I think they should be reasonable, say liberalize the exchanges and so forth.

GIGOT: OK, all right, thanks, Joe.

When we come back, fears rise as Russian troops and military equipment are seen streaming over the Ukraine border. So just what is Vladimir Putin preparing for and how will the West respond?



GEN. PHILLIP BREEDLOVE, NATO SUPREME ALLIED COMMANDER: We have seen columns of Russian equipment, primarily Russian tanks, Russian artillery, Russian air defense systems and Russian combat troops, entering into Ukraine.

Forces, money, support, supplies, weapons are flowing back and forth across this border completely at will. And that is not a good situation.


GIGOT: NATO supreme allied commander, General Phillip Breedlove, confirming Wednesday that Russian military equipment and combat troops have been seen streaming across the border into eastern Ukraine in recent days in what officials fear is a buildup ahead of a renewed military action and the end to the two-month old cease-fire agreement.

"Wall Street Journal" editorial board member, Matt Kaminski, joins us, follower of all things Vladimir Putin.



GIGOT: Well, it keeps you employed.



GIGOT: So what is Putin's game here?

KAMINSKI: Putin is back on the war track. I think that's very clear. What really changed in the last two months, since they signed this cease- fire in early September, is that he was very upset by the outcome of the elections in Ukraine, which saw a sweep by pro-Western parties, and he's a bit frustrated that he can't get the Europeans divided and to give up on sanctions. So he's like, OK, I'm going to get back and rearm these guys in eastern Ukraine, and I'm looking to push toward, by Crimea, either very soon or he may have to wait until next spring when the weather gets better.

GIGOT: He wants to keep the land bridge or establish a land bridge from Russian proper all the way across to Crimea, so Crimea isn't -- they don't have to reinforce Crimea by air?

KAMINSKI: And more importantly, he is really building up a kind of armed fortress, a forward-operating base in the east that will be in constant threat to this new pro-Western government in Ukraine itself.

GIGOT: And I assume, Dan, his conclusion is that the U.S. and Europe simply will lack the will to respond forcefully enough?

HENNINGER: Well, yeah, especially since he's invaded European space with his planes about 40 times. The Swedes now think they have identified a submarine in their waters, undoubtedly Russian. We can't lose sight of what's going on in Russia, though. They just reported the lowest rate of growth since the year 2000. The ruble is at an 11-year low. They have been experiencing capital plight there. He's got real problems at home, which probably makes him even more dangerous because he has to figure out a way to take the minds of Russian people off their own problems and concentrate on the slights that he says are occurring.

GIGOT: Also, with falling oil prices, that's a huge chunk of Russian budget revenue.

So if the U.S. and Europe did unite to really increase sanctions, put the pressure on, how would that affect Putin's mentality?

KAMINSKI: I think there's a danger here of the cornered rat syndrome. That he may be actually more dangerous because he is feeling a bit desperate. He also is not a man who's very flexible and --


GIGOT: Wouldn't it increase --

KAMINSKI: -- compromise.

GIGOT: But wouldn't it increase the domestic pressure on Putin? I mean, if the economy is in recession, if you get inflation because of the ruble falls, which you will, which you are already, you're in capital flight. That's going to hurt the investment. That's going to hurt the economy. Won't that hurt his approval rating domestically?

KAMINSKI: But the way the political system works in Russia now, that he's rally neutralized the more independent players both in business and certainly in politics, they've been all either put in jail or forced in exile. And he's now relying on a circle of the security services, the military and the KGB. And I think he can suffer through a lot of pain because this -- being the war president in Russia, I think, he's decided is the way his regime survived.

GIGOT: The other thing is, from the West, that we could do, is arming Ukraine. The Senate Foreign Relations Committee voted 18-0 recently to send lethal arms to Ukraine. President Obama doesn't support that strategy. Is this something that the Congress should just force on President Obama to pass it and decide if he wants to veto it?

HENNINGER: Oh, absolutely, I think they should. I mean, the former U.S. ambassador to Ukraine, Pifer, said we should at least give them at least anti-tank weapons to fight back against the tanks rolling into their country. Obama won't do it but, yes, the Senate should convey that.

GIGOT: Do you think they will, Matt?

KAMINSKI: I think they'll probably pass it. They should also fund it. It could go into the Defense Act toward the end of the year. But, you know, I think Obama seems very dead set on not going down this road.

GIGOT: This is a very dangerous moment because I think Putin has concluded that President Obama is a historically weak president. He has two more years left. And I think that he's going to try to take advantage of that as much as he can. So watch out rest of Eastern Europe and the Baltics.

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


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

Kim, start us off.

STRASSEL: A hit for Americans for Prosperity, the outside conservative group, that's fresh off electing a whole bunch of Republicans is already back up on air with $200,000 worth of ads in Republican districts pressuring them to do the right thing in an upcoming tax subsidy debate. In particular, AFP and other conservative groups want Republicans to finally allow the death of some of these worst market-distorting handouts, things like the wind production tax credit. It's good to see them trying to keep all their new members honest to their promises of small government.

GIGOT: I understand for consistent free-market principles.


RAGO: Paul, this week, New York City Mayor Bill de Blasio said that anyone found traveling with fewer than 25 grams of pot, of marijuana, will not be arrested but will receive a ticket instead. As you can see in the video, that's kind of a small garbage bag full of marijuana.


I guess this is a hit, as it were, but I wonder about the impact on the rule of law. And it's a good thing I only travel with 24 grams.


GIGOT: I don't know where to begin with that.

It's not true, audience.



KAMINSKI: Here's a hit to the, I guess, the human race, which this week managed to send a space ship to --


KAMINSKI: -- to all of us, particularly to the European Space Agency, which sent, 10 years ago, a space ship called Rosetta, which tracked a comet that loops around the sun in a giant loop, and on Wednesday, managed to land a small probe on a comet traveling at nearly 100,000 miles about millions of miles into deep space. So if we can do that, we should be able to do better on a lot of things.

GIGOT: And maybe it will even revive European innovation.

KAMINSKI: Absolutely.

GIGOT: And self-confidence.

KAMINSKI: Well, they are doing well on that, in this field.

GIGOT: All right, thanks to you all.

And remember, if you have your own hit or miss, be sure to tweet it to us at jer@FOXnews.com.

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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