This is a rush transcript from "Journal Editorial Report," June 22, 2013. 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's approval rating takes a hit, especially among Millennials and Independents. Are recent scandals finally taking their toll?

Plus, sharp divisions over Syria lead to an icy encounter at the G-8. Is U.S. involvement in the conflict too little too late? And does Russia have the upper hand?

And Governor Rick Perry takes aim at New York and Connecticut in his bid to lure jobs to Texas. Could your state be his next target?

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

Some troubling poll numbers for President Obama this week indicate that recent controversies including NSA surveillance and IRS targeting may finally be taking their toll. The president's overall job approval rating dropped 8 points in one month according to a CNN/ORC poll released this week, with 45 percent approving of the job he's doing and 54 percent disapproving. That brings his real-clear politics average well under 50 percent. But perhaps most worrisome for the White House is 17-point drop over the past month among people under 30.

Joining the panel this week, Wall Street Journal columnist and deputy editor, Dan Henninger; assistant editorial page editor, James Freeman; and Washington columnist, Kim Strassel.

So, Kim, how do you read this poll drop? Is it the scandals? And which one in particular?

KIM STRASSEL, WASHINGTON COLUMNIST: Well, I think what you're seeing is different scandals are resonating with different groups. Looking at the Independents that CNN poll, you know, going back a month ago, 36 percent of Independents thought that this was somehow -- tied the IRS scandal to the White House. That number is more than 51 percent. Then you go over to the Millennials, that 17-point drop you mentioned, that seems to be more related to the NSA. These are Facebook, Twitter crowd people and -- and they are concerned the claim of Big Brother. That is -- when you put all these together, and feed it in, it's why you see an overall erosion of the president's jobs approval rating.

GIGOT: Interesting.

To what extent, Dan, does this affect presidential leadership and the perception of presidential leadership and credibility? Is that -- are those central issues here?

DAN HENNINGER, COLUMNIST & DEPUTY EDITOR: Oh, absolutely, Paul. I think what it affects is presidential stature and authority that the -- this is the president that he's supposed to be able to lead the country, but for that, he has to have support and authority. And I think that this -- these things are eroding that authority, not merely in the country but in Washington, among the insiders on Capitol Hill. This is a cumulative effect. First, you had Benghazi. Then you had --

GIGOT: But the Democrats say, oh, that's just Republican parsing.

HENNINGER: That's that they say publicly, Paul. We had stories about the Democrats doing the immigration bill, asking the president not to get involved because they are doing just fine.


HENNINGER: That's because when he got involved in the deficit negotiations, they went south.

The problem is that this president simply does not have significant political skills at that level. He does not like to do that sort of thing. So he pulls himself away from the hurly burley of politics. And in this case, like the NSA scandal where he has refused to come forth and defend a defensible program.

GIGOT: For a full week he didn't.

HENNINGER: For a full week.

GIGOT: He gave a little press conference and then he just for eight days radio silence. Nothing.



HENNINGER: All of that is eroding his support.

GIGOT: Finally -- finally, he went on "Charlie Rose" and said we created the support. No, we didn't.


GIGOT: Carter created the FISA court in 1978. And in 2008, it was applied to overseas wiretaps. He inherited that program.

James, where is this IRS scandal now going? A lot of Democrats saying, you know what, it is over. We've talked to a couple of people in Cincinnati in our investigation. They say that, you know, no big deal. Is that true?

JAMES FREEMAN, ASSISTANT EDITORIAL PAGE EDITOR: It is not over. I think that CNN poll tells you that the American people don't want this to be over. Really striking findings, not just in terms of how much distrust there is about the administration's story, but a full 25 percent of self- described liberals in that poll think that the IRS targeting was directed by senior officials and the White House. We are going to find out what to any extent there was political, White House or -- or political appointees involved in this.

GIGOT: Are we really going to find that out?

FREEMAN: Well, this is the question. And -- the question of leadership and President Obama -- whether or not you think that the political leadership was involved, what has been absolutely true is that his leadership on this issue has been terrible. The moment it came out, he claimed that the IRS was an independent agency. It is not. They work for him. This was a way to try to distance himself --


GIGOT: But he's saying -- he said let's investigate it. He's got Eric Holder investigating. He's got the FBI investigating.

FREEMAN: Well, hold on. Mr. Holder, last month, announced an investigation. A month later, the head of the FBI goes to the House and says I don't know who is running that, I don't know how many people are working on it. This week he, before the Senate and had a little more answers, then, OK, he has some agents on it. But what we are not seeing is any evidence that there is actually an investigation happening in terms of witnesses being interviewed. You don't see Tea Party people being interviewed by the FBI agents. I think if the president wants to work on these polls, he has to show leadership and say I recognize this is a big problem and if the government is targeting my political enemies, I want to find out what happened.

GIGOT: Kim, how is the investigation on Capitol Hill into the IRS going behind the scenes? Is it percolating along? Is it making progress?

STRASSEL: It is. I think what the Republicans learned, there's prior investigations. You can call in the big-name officials like they did with Lois Lerner, who headed the tax-exempt organization, and she ended up taking the Fifth. That's good theater but it does not get you much. What they've learned is you've got to go and start at the bottom and you've got to interview the people. What we have seen from some of the transcripts that have been released or portions of the transcripts released is that those people on the ground are beginning to give some real information, name some names, explain how this process actually worked, and who was making the decisions. Now, that's not been released in full, but that's what the House Republicans are working on behind the scenes. That's why you have seen a bit of a lull is because this is a heavy duty investigation.



FREEMAN: We are still trying to figure out how exactly it all started. But one thing that's clear is that Washington sat on a lot of the applications and, to this day, is still sitting on them.

GIGOT: All right.


HENNINGER: That poll rating -- he has been at 50 percent his entire presidency.

GIGOT: Right.

HENNINGER: The American people give this historic presidency the benefit of the doubt. That five-point drop is really a bad sign for Barack Obama. If he starts falling like that, everything is going to start to pull back from him, including the Democrats, I think, in Washington. He can be a lame duck by the end of the year.

GIGOT: All right, Dan.

When we come back, an icy encounter at the G-8 as President Obama and Vladimir Putin stare each other down over Syria. This U.S. is raising its involvement in the two-year-old civil war but does Russia have the advantage?


GIGOT: A chilly meeting between President Obama and Russian President Vladimir Putin at the G-8 summit in Northern Ireland this week where the two sides clashed over the best way to end the 26-month-old civil war in Syria. The meeting came days after the Obama administration announced it would supply small arms to the Syrian rebels. A move critics say it is too little too late.

For more, we're joined by Wall Street Journal foreign affairs columnist, Bret Stephens, and editorial board member, Matt Kaminski.

So, Matt, the president went over there with the other Western leaders to persuade Vladimir Putin to stop supporting Bashar Assad and try to get rid of him. They didn't succeed. Why not?

MATT KAMINSKI, EDITORIAL BOARD MEMBER: Surprisingly, so. Like for the last two years, they have tried to get Russia to press Assad to leave. The reason why they didn't succeed is because Russia does not want Assad to leave.


GIGOT: Why? What's in it -- what's in it for Russia?

KAMINSKI: Syria is, first of all, Russia's only Arab ally. It's Russia's only port in the Mediterranean Sea.

GIGOT: Right.

KAMINSKI: Most importantly, Vladimir Putin does not want to have happen to Assad what happened to Gadhafi. He does not want to see the West intervene in another country and push a bad leader out. It is a very bad precedent for him at home.

GIGOT: One of the President Obama's big goals coming in was to reset the relations with Russia. What's he have to show for it?

BRET STEPHENS, FOREIGN AFFAIRS COLUMNIST: What he has to do START treaty and you saw him in Berlin --


GIGOT: -- nuclear arms reduction.

STEPHENS: -- nuclear reductions, which an obsession of his. Otherwise, very, very little.

By the way, he was not the first president to try to restart relation was Russia. George W. Bush tried it back in 2001, 2002. And you always find yourself disappointed by Vladimir Putin because he is a Soviet man who believes that the greatest tragedy of the 20th century was the fall of the Soviet empire. And what he has been trying to do in his own way is reconstitute that empire. So keeping Syria and humiliating the United States is part of that strategy.

GIGOT: What about Syria, Dan? The president -- light arms, not heavy arms. And the same day that they announced this change -- the president didn't do it himself, by the way. He sent his deputy of national security adviser to his -- to -- to alert the press of this change. They almost undercut it the same day by saying, well, he was reluctant to do it. He only did it because he wants to get Bashar Assad to the negotiating table. It seemed to undercut their message on Syria. How seriously should we take this arming decision?

HENNINGER: That's a very good decision. I'm sure the Syrians --


GIGOT: -- that question.

HENNINGER: Yeah, would like to know the answer to that themselves. Because that's kind of a recurring problem with this president. What's the level of his commitment? Is he in or is he out or is he somewhere in between? People feel he is often in between. Secretary of State John Kerry is about to go on an overseas trip. He is visiting seven different countries in a two-week period, starting in Qatar, where he will have a meeting about Syria. And the idea is to try to discuss the level of arms they're going to ship in there, but to talk as well, again, about drawing Russia into negotiations in Geneva. That has to confuse every party involved in what is going on in Syria. What exactly do they want?

STEPHENS: Especially so because of what's the incentive for either Assad or the Russians to enter these negotiations? They are winning. This is something that we haven't really cottoned to in the way that we -- the way we should. The Assad forces are making serious inroads. They're using their allies in Hezbollah and their allies in Iran to systematically defeat the Sunni insurgency in various places. One of the tragedies here is that we are trying to provide the insurgency with things that they cannot really already get. Not the things that the United States can uniquely supply, like the no-fly zone, like bombing runways. Those are the things the U.S. can do very effectively.

GIGOT: But isn't the president, President Obama -- doesn't he have public opinion on his side here? There's really no American desire to get involved in another Middle East conflict, is there?

KAMINSKI: Well, he does. Mostly, because he's actually never spoken about Syria himself. The president has to lead. Americans will not be happy to go to war. But they will be -- they will support a president who makes a case for a military kind of intervention. And, again, doesn't mean that American troops will be in Syria. It just means that the U.S. will get in the game. And really, the only kind of game changer there would be, to change the military balance on the ground in Syria is to ground Assad's planes, and that will require American planes and a no-fly zone.

GIGOT: What is the end game for you, if we do that? What do you think -- what do you want to see? Where do you think -- what should the U.S. push for?

KAMINSKI: We want to topple the Assad regime and then --


KAMINSKI: -- after that happens, we sort out what happens in Syria with the rebels. Definitely, will be a clash between the Islamists, who are rising in that movement, and the more mainstream opposition. But the bottom line is that no Arab country has ever willingly supported an al Qaeda-type regime.

GIGOT: So you are saying --


KAMINSKI: So there won't be much support for them in the populace in Syria itself.

STEPHENS: Our responsibility is not to ensure a democratic stable outcome in Syria. Our responsibility is to ensure that this enemy of the United States is toppled, that chemical weapons don't get out of the country, and that Iran is strategically defeated in a key theater. OK? We don't need to then make sure that there is a non-sectarian government that's going to respect the interests of all the people. That's a Syrian problem. We have to look at what the American interests is in Syria. It does not necessarily mean trying to re-engineer Iraq with a democratic government in there.

GIGOT: All right. Thanks very much.

When we come back, Rick Perry has blue-state governors seeing red over his attempts to lure jobs to Texas. This week, he set his sights on the high-tax states of New York and Connecticut. Could yours be next?


GIGOT: Well, first, it was California and Illinois. This week, Texas Governor Rick Perry took his Lone-Star swagger to New York and Connecticut in what some are calling his job-poaching tour. It is all part of Perry's campaign to recruit businesses away from high-tax, high-regulation places like the Empire State.


UNIDENTIFIED MALE: If you took the book of rules and regulations in New York State, it's 49,000 pages. And it is one of the reasons small- business owners tell us New York is such hard place to do business.

UNIDENTIFIED FEMALE: From Main Street, it is not looking good. A lot of those business owners tell us they can't afford to hire more people because of how much it costs them.

UNIDENTIFIED FEMALE: New York City planning to outlaw sales of big sodas and other sweet drinks.

UNIDENTIFIED MALE: You do not have the right to dictate what people eat.

UNIDENTIFIED FEMALE: But to say it is against the law?

UNIDENTIFIED MALE: Governor Cuomo, it is so --

GOV. RICK PERRY, R-TEXAS: Why are more jobs and businesses are moving to Texas than any other state? Our state is number one for business because we have no state income tax. Texas was ranked number one for business for the ninth straight year by "Chief Executive" magazine. And it's added more jobs than any state in the nation over the last five years.


GIGOT: So, James, what do you make of the Texas jobs tour?

FREEMAN: I'm getting excited.


Maybe I'll ask him about opening some --


I think that this is really -- it ought to be a public service announcement. It ought to be aired for free because he's really doing a public service. This is what we hope for when we talk about state competition, where -- the -- they compete and pursue different models. We are seeing in Texas the low-tax and low-regulation model. We are seeing job gains, GDP growth, very low unemployment rate, lower than New York or New Jersey or Connecticut. It is -- you know, it may be the precursor to a Perry presidential run. In the meantime, I think it is a great public service to say let's follow this model.

GIGOT: Dan, I was doing some research this week. And the states in 2012 that had the fastest economic growth in their country were North Dakota, oil and gas boom, and Texas, number two. 4.8 percent increase in state GDP in 2012. Now some of that is oil and gas. But it is more a diversified economy than North Dakota's. Is this red-state/blue-state model kind of argument that Perry is making, is that something that you think is going to have real legs?

HENNINGER: Oh, yeah. I think it has legs, Paul, because what he is talking about is real. He isn't just running ads. These Texans come into these states and they talk to business owners, large corporate CEOs and mid-size business owners. If they go to Texas -- I've looked into this some -- what they will find is not merely this environment that you described, but public officials, whether it is the governor, the attorney general, comptroller's office, who, if you have a problem, they will say, let's work it out and try to help you succeed, rather than, as in New York, where you have an attorney general whose job seems to be to routinely hire and sue businesses -- hammer and sue business in New York. It is a completely different environment. It is not to say they don't have regulation in Texas. These businessmen will say we have to comply, but it's not as an adversarial relationship as it is in the blue states.

GIGOT: Jerry Brown, governor of California, seemed to resent this quite a bit. Sort of took the Perry debate and they had a paid public kind of flap about it. But New York Governor Cuomo ignored it, much like he's ignored the upstate-New York economy.



FREEMAN: -- it is hard for these blue-state governors to figure out how to respond. Because he has got -- Perry has the better economic story. Texas is working. Their states are not. So they have high taxes and they have budget problems and they have high unemployment. Mr. Cuomo is -- part of his response is making excuses for why taxes can be cut here. And I think that's the power of the Texas example, to say without a state income tax, look at all the prosperity.

GIGOT: So this could be a prelude to Rick Perry running for president again in 2016. Didn't do very well in 2012. Has two lessons he said he learned. One was, don't do it if you are injured. He had surgery before he ran. The other was, don't get in late. So if he gets in, he will get in early.

But is this really a good idea? There are more blue states than there are red states, Dan. You have to win more states to win the presidency. Is this the -- is this a good theme to run on?

HENNINGER: I think the theme of economic success is a good one to run on, even in blue states. These are average people who want to succeed, have jobs and have their children to have good jobs. That, I think, would work. I would have one third one going to Rick Perry's concerns, and that's participating in presidential primaries.

GIGOT: You --


HENNINGER: He had a little trouble speaking extemporaneously. So if he can somehow duck the primaries --

GIGOT: I was wrong. It's not more blue states. It's more populist blue states.


FREEMAN: Right. A lot of electoral votes in blue states.

GIGOT: Right.

FREEMAN: But I think Mr. Perry, if he chooses to go this time, he might be a little more formidable. I think, last time -- he got in late because he really, I don't think, intended to run for president. If he intends this time and prepares, he might perform better.

GIGOT: All right, James.

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.

Kim, you start us off.

STRASSEL: A hit to the 62 conservative Republicans who this week killed the nearly $1 trillion farm bill in the House. You know, Paul, Republicans like to brag about their reform credentials. They also like to complain that the Democratic president and Senate stymie them from moving ahead. Yet, here you had a bill they had leverage with where they could have done some of their smart ideas in reforming food stamps and commodity problems -- programs. And yet, instead, we got the same sort of big- spending subsidy blowout that's been the hallmark of every farm bill. So congratulations to those 62 for reminding the party what they are there in Washington for.

GIGOT: All right, great, Kim. Thanks.


STEPHENS: This is a miss to Palestinian President Abbas and, by extension, to Secretary of State John Kerry who is trying to engineer peace talks. Just the other day, the Palestinian prime minister, who has been in office for two weeks, decided he was going to tender his resignation. The Palestinians are already divided between Hamas in Gaza and Fatah in the West Bank. Now, they can't even form a government. How are we supposed to make peace with that?

GIGOT: All right.


KAMINSKI: Paul, Paris has the Eiffel Tower. New York has the Empire State Building. Houston? Houston had the Astrodome, the world's eighth wonder, built by Judge Roy Hofheinz, has been moth balled for years. It was destined to become a parking lot. But this week, the Harris County board stepped in a $194 million plan to turn the Astrodome into a Texas- sized convention center, which seems a small price to pay to save a Texas icon.

GIGOT: It doesn't remind me of the Roman Coliseum.


But OK.

All right. That's it for this week's show. 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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