This is a rush transcript from "Journal Editorial Report," February 4, 2012. 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 race heads west, to Nevada. After a big win in Florida, is Mitt Romney's path clear to the nomination or does February hold new opportunities for his rivals.

As Rick Santorum continues his Romneycare takedown, we'll look at the similarities to Obama's health care overhaul and the trouble that could cause the GOP frontrunner in the fall.

Plus, will the president's new housing plan save struggling home owners or leads to the next big government bailout?

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

The fight for the presidential nomination headed to Nevada where the caucus goers today decide if Mitt Romney's winning streak continues. After a resounding win in Florida, the former Massachusetts governor is again playing the role of GOP frontrunner, and taking on President Obama, and his rivals in Tuesday night's victory speech.


MITT ROMNEY, R - FORMER MASSACHUSETTS GOVERNOR & PRESIDENTIAL CANDIDATE: President Obama demonizing and denigrates almost every sector of our economy. I will make America the most attractive place in the world for entrepreneurs, for innovators and job creators, and unlike other people running for president, I know how to do that because I've done it before.



GIGOT: But can he run on his resume alone? Let's ask, Wall Street Journal columnist and deputy editor, Dan Henninger; Washington columnist, Kim Strassel; and assistant editorial page editor, James Freeman.

So, Kim, is Romney's path to the nomination now clear?

KIM STRASSEL, WASHINGTON COLUMNIST: No, it's not. And for the very reason you say, he cannot run on biography alone. For the nomination, he's going to do very well. He's got a good month going ahead. and Mr. Gingrich is going to struggle to try to catch him at this point. But in terms of the general election, he's still got a lot of problems.

GIGOT: Kim, let's talk about the nomination first. I mean, is he now the presumptive nominee, do you think, or how can he be stopped?

STRASSEL: He is. And here is the problem for Mr. Gingrich. If you look at the races in February, Mr. Gingrich is looking ahead to Super Tuesday, March 6th. A lot of southern states, including his home state of Georgia, which he's hoping will catapult him back into the race. He's got a long February ahead, including the states that Mr. Romney did well in 2000, Maine, Colorado, Michigan and others where he's showing strength. So will the pressure be too great? Can he make it all the way to March?

DAN HENNINGER, COLUMNIST & DEPUTY EDITOR: I think we're in a mysterious period, with the web and debates, it's hard to predict. I don't see anything that's going to stop Mitt Romney from getting in nomination. I mean, between the money and the organization and the fact that he now is the frontrunner, and I think it's that reality is beginning to sink in among Republican voters, it doesn't mean they're enthusiastic, but I think he's on a path to the nomination. The question is, is he going to arrive at the nomination with the wind of the Republican Party at his back.

GIGOT: If you look at exit polls, James, he's still got work to do. He did well mopping all kinds of demographic groups so it was a resounding victory in Florida. But if you look beneath the surface of the exit polls, he still has trouble on the populous Republican right. And the Tea Party right broke even among those voters with Gingrich. Some evangelicals still breaking even with his opponents. So, how can he rally that Republican base, which is a significant part of the GOP? And he needs them in November.

JAMES FREEMAN, ASSISTANT EDITORIAL PAGE EDITOR: He does. They're not enthusiastic. Where you see even in the polling, when he's doing well among Tea Party groups or evangelicals it's often people making the practical decision that they think he can win. But all along, we've been talking about this, Republicans and conservatives resigning themselves to Mr. Romney. And that's the weakness here, especially if --


GIGOT: How does he overcome that, between now and the convention?

FREEMAN: Well, the most important thing would be to get out there with a conservative agenda, instead of a vague biographical pitch that he's a smart guy and he's done well in business, and therefore he knows economics. As we've noted, his economic plan is not as good as his rival's plan.

GIGOT: You know, Kim, some of the liberals say, if Gingrich decides to take this to convention, as he's promising, and Rick Santorum shows no signs of getting out, if they stay in, liberals are saying, you know, this could help Romney against Obama because it would make him appear to be more reasonable, and moderate. What do you think?

STRASSEL: That's not really his problem. As we've been talking about, his problem right now, he does well with Independents. He does well with the center right conservatives. His problem is with self-identified conservatives who are not inspired by him. He's got to do what James said, but more importantly, stop talking on President Obama's terms. The president is talking about class warfare. Mr. Romney keeps falling into that trap. We had the flap this week he was talking about he can't really care about the poor. I mean, this was a bungled message, and actually what he was trying to say is he wanted economic growth. But goes back to his determination not to only talk about his love for the middle class and plays to Obama.

GIGOT: What do we learn about Romney during the primary run so far? We've been critical, but what have we learned about his, his --


HENNINGER: Well, I think we've learned that he's very smart. Very skilled. He's articulate, he's a fast learner, respond quickly, has a lot of energy.

The one thing that we've also learned, Paul, and I'm beginning to find this quite, kind of a concern, he is supposed to have this vaunted organization, and this strong team. We opened with the excerpt from that victory speech in Florida. I watched it and read through it last night. And, you know, it's pretty clunky. It's a big moment and the whole nation is watching, and nothing special in that speech. You'd think someone would have invested the time to do it. It reflects a lack of focus on the part of this super manager. And I think that's reflected in some of these strange things he's been saying the past week.

GIGOT: He's defining himself with Obama. This is what's wrong with Obama and I'm the anti-Obama. But there's nothing transcends that and says, if I win, here's the good thing I'm going to do at the end of the road. That seems to be a fundamental problem with any candidate. You've got to be able to say, if you elect me, it's a better future ahead. There's no better future, it just won't be Obama's future.

FREEMAN: That's right. Also, in terms of what we've learned, we've learned he's not an instinctive conservative. Although he keeps saying, I don't apologize for my wealth, he still feels very defensive about it. Any issue that affects tax policy, under the programs, he has the defensive reaction of someone who doesn't want to appear to be favoring the rich in any way, or promoting free economics, really.

GIGOT: Yes, that could be a long-term problem for him down the road.

When we come back, he's promising to repeal and replace Obama-care if elected. How close is Mitt Romney's Massachusetts reform plan to President Obama's signature legislation? Is Rick Santorum right that it will hurt him in the fall campaign?



RICK SANTORUM, R - FORMER PENNSYLVANIA SENATOR & PRESIDENTIAL CANDIDATE: Governor Romney was the author of Romneycare, which is a top down government run health care system which read an article today has 15 different items directly in common with Obamacare.


GIGOT: That was Rick Santorum at last week's debate in Jacksonville. Drawing parallel to Mitt Romney's health care reform and President Obama's overhaul. Mr. Romney, for his part, denied the similarities and says he'll repeal Obama-care if he's elected in November. Just how alike are the two plans and can he run against President Obama on this issue in the fall?

Grace-Marie Turner is the president of the Galen Institute, and joins me from Washington.

Welcome to the program. Great to have you here.


GIGOT: OK. So, just how similar are the two programs. Mitt Romney says they're not. What are they?

TURNER: You know, Senator Santorum was quoting a study from the Liberal Families USA that listed 16, actually, not 15, key components that are almost identity between Obamacare and Romneycare, everything from both plans, providing expansion of Medicaid coverage, the exchanges, and individual mandate, the level of benefits that both plans have to offer. And it's just not credible, Paul, when Romney says that, I'm going to repeal Obamacare, I hate this plan and, yet, I want to tell the American people what I do instead, and I love Romneycare. So, the voters are understandably confused.

GIGOT: All right, Romney says himself. I didn't have $500 billion worth of Medicare cuts and this was a state program, and the states have a right to experiment and you expected, you liked it in Massachusetts and that's very different than the federal program. You're arguing that that, those differences aren't going to sell. Why not?

TURNER: The same person designed both plans, John McDonough, who has called Obamacare, Romneycare with three more zeros. Instead of millions, we're talking billions. And when Romney says, well, we didn't cut Medicare, states have no authority over Medicare, that's a bogus claim.

GIGOT: All right, well --


TURNER: And he says, well, we didn't raise taxes, well, they've pushed the tax increases on the federal taxpayers because it's an expansion of Medicaid.

GIGOT: This hasn't, however, so far, and some of us, and I would include myself in it, thought this would hurt Romney during the primary season, but it doesn't seem to have done so. Why do you think it's suddenly going to hurt him in the general election, if it hasn't made in difference in the primary?

TURNER: Well, I think it has made a difference. I think that this is one of the reasons that people have been looking for the conservative candidate in this election, which is one of the reasons that Romney continues to not, except in Florida, not even get close to 50 percent of the vote. People don't like Obamacare. And that was one of the points that brought, that Santorum made. He said, folks, we just can't give this issue away. Romney can't defend this. He said that an individual mandate was the right thing for Massachusetts. Only 15 percent of the American people think that the federal government should be able to tell us that we must purchase government-assigned health insurance with our own money or pay a fine. And he's got to defend that.

GIGOT: But he's not going to say it's a mistake. We know that know. He's not going to say I made a mistake and I was wrong.

TURNER: No, he won't do that.

GIGOT: He doesn't want to be seen as a flip-flopper again. What should he do now, to make an issue that's to his advantage in November?

TURNER: I think he needs to change the conversation. When he says, I'm -- of course, we want to repeal and replace Obamacare, and I'm crowd to say what I would replace it with. Well, give us the next level. You look at his web and he's got some bullet points. He's got to change the conversation around things from saying, I'm going to let the states implement Obamacare any way they want to, to saying, this is what my plan would be. And he's got the right components, but he's just got to see it, get off the Romneycare and start talking in specific ways about a positive plan.

GIGOT: He says you can use an executive order to repeal big parts of Obamacare. Is that right or is that just -- do you really need overwhelming majorities in Congress, and do it through legislation?

TURNER: You have to repeal the key components. And in fact, the Congressional Research Service actually did a study and said, you cannot, by executive order, repeal the key components of Obamacare. You can't repeal this huge new entitlement program with all of its massive subsidies and huge expansion of Medicaid that the states are fighting, and $500 billion in cuts to Medicare, the Independent Payment Advisory Board and rationing board. All of these key components and then the mandates, the state mandates, you can't repeal those by executive order. So he's got to get his messaging straight. That's not going to hold up and whether Obama challenges him or not --

GIGOT: Right.

TURNER: -- the super PACs absolutely will.

GIGOT: All right. So he's got to make this a major issue and a major theme to the campaign.

Grace-Marie Turner, thanks for being here.

TURNER: Thank you, Paul.

GIGOT: When we come back, President Obama unveils another plan to save struggling homeowners but could his new plan lead to the next big government bailout?



PRESIDENT BARACK OBAMA: Home prices started a pretty steady decline about five years ago and government certainly can't fix the entire problem on its own. But it is wrong for anybody to suggest that the only option for struggling responsible homeowners is to sit and wait for the housing market to hit bottom.


GIGOT: Conceding that earlier administration efforts to help struggling home owners had fallen short, President Obama this week called on Congress to pass legislation that would make it easier for more borrowers to refinance mortgages, creating a new program through the Federal Housing Administration (FHA) that would have the government guarantee the new loans and assume the risks should borrowers default. This, despite a recent audit that found a 50 percent chance that the FHA would run out of money and require a taxpayer bailout in the next year.

Wall Street Journal editorial board member, Mary Kissel, joins us with more.

Mary, how big a threat to taxpayers is the expansion of the FHA?

MARY KISSEL, EDITORIAL BOARD MEMBER: It's a huge threat. FHA is basically the new Fannie and Freddie. If it were a private company, it would be insolvent. You're looking at a company that went from $350 billion worth of exposure in 2007, to over a trillion today.

GIGOT: Over half -- close to half of all American mortgages?

KISSEL: Around -- around a third of new single family backed mortgages. But, the government says to the FHA, you have to have a 2 percent capital reserve and they have less than .5 percent. And that's -- it keeps falling every time they report. So, the idea that you would put more risk on to FHA, which is 100 percent taxpayer backed is just ludicrous Paul.

GIGOT: Well, here is what the administration would say. I know you want know and I want to ask about it. They would say, look, there isn't enough private financing since the housing market for the crash, what we have to do, we have to have a government agency come in and do it and the FHA is available, they have expertise. What's wrong with that argument?

KISSEL: Well, what's wrong with the argument is the longer you have the government in the market. The more the private sector shrinks, when do you start to roll it back? We had a great example of this last year in October when the he so-called loan limits, which is a technical term for how much Fannie and Freddie and the FHA can back --


GIGOT: On any given mortgage.

KISSEL: On any given mortgage. They fell and immediately the private market came back in and, boom, in November, a bipartisan coalition in Congress says, you know what, we didn't like that, let's move them back up and let, Fannie and Freddie back McMansions. The longer this happens, the more you'll see the private sector --


GIGOT: President Obama must figure, James, nobody knows what the FHA is really. All they know I'm proposing something that sounds good and it's going to help.


I'm going to help you desperate home owners. It'll be a second-term thing if FHA has a program. Am I being too cynical?

FREEMAN: No, there's certainly an appeal. These are people who bought houses and they're sitting on losses. And there's, I guess, a desire to help those people and subsidize them further. But we should point out here that the taxpayer exposure is not just the risk that Mary is describing. It's not theoretical. And the point happens with a $5 to $10 billion tax. It's applied to banks. So it's a transfer of wealth right off the bat from shareholders. Probably some customers of banks end up paying for the new tax that funds this subsidy for people who are underwater.

GIGOT: How likely, is this to pass, Mary?

KISSEL: It's not going to pass. And one more point on, James, to the risks. These are basically no dock loans. It's the --


GIGOT: What's a no dock loan?

KISSEL: Basically, what the administration is saying is, we are going to let you refinance through the taxpayer-backed agency, and to do it you have to meet minimum criteria. Employment history, well, we don't need to look at that. A formal appraisal of the home, oh, forget about that. And so they're not just taking on more risk, they're also degrading the standards that they're using to do this.

GIGOT: Dan, if you look back, you say, isn't this what got us into this mess a few years back? So what -- explain the politics of this from the president's point of view. Why is he doing this now?

HENNINGER: The politics were in the remarks that the president made on screen, which is we can't wait for the housing market to hit bottom. Who said that? Mitt Romney said that last October.

GIGOT: He said you could -- he said we do want it to hit bottom.


GIGOT: If you don't hit bottom, you can't go back up.


GIGOT: You have the clear market and the supply of houses have to clear. That was Romney's argument.

HENNINGER: And the president also said this is the sort of program that makes middle class families whole. Who is running on the middle class? Mitt Romney.

Let me identify the four states, in order, that have the most mortgages underwater --


-- Nevada, Arizona, Florida, Michigan, four of the most important presidential battleground states. This all about politics. You're right, after November, I think the FHA thing is going to float out on a congressional wave.

KISSEL: Yes, but at least it draws attention to an agency that's 100 percent taxpayer backed, that has serious delinquencies of 9.7 percent on a trillion dollar portfolio and it keeps going up.

GIGOT: All right. Thank you very much.

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


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

Mary, first to you.

KISSEL: I'm giving a hit or maybe I should say a like, to network company Facebook that filed this week for the initial public offering. This is the classic capitalist success story, a business started in a college dorm, and went on to Silicon Valley and was funded by private investors, and went on to create a lot of wealth and jobs, all without government help.

GIGOT: Sounds like a thousand millionaires.


KISSEL: Yes, a thousand millionaires. If we could only lift the tax and regulatory burden off business, maybe we could create a thousand for companies like that.

GIGOT: James?

FREEMAN: Paul, I'm not friending Warren Buffett, the Berkshire Hathaway CEO.


This is a miss where his Buffett Rule, which he presents as a way to tax him and his rich friends. Berkshire Hathaway doesn't pay dividends and he's made it clear he's not going to pay capital gains because he's giving his wealth to a family-controlled trust and the Gates Foundation. Basically, the Buffett Rule is hardly going to affect Warren Buffett, although may hit a lot of the rich friends he talked about.

GIGOT: All right, James.


STRASSEL: A hit for Susan G. Komen for the Cure. The charity that has now stopped giving money to Planned Parenthood, Komen listed a lot of boring reasons for stopping the grants. But it's caused a huge backlash among liberals claiming it's political. They're not giving money because Planned Parenthood also does abortions. Whatever the reason, it was the right one. Millions of Americans have taken part in Komen events, thinking they're raising money for a cure for a cancer, not for other things like women's services. This is called mission creep in charity and it undermines faith in giving.

GIGOT: Thank you, Kim.

If you have your own "Hit or Miss," send it to jer@FOXnews.com. And visit us on the web at Foxnews.com/journal.

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 here next week.

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