This is a rush transcript from "The Journal Editorial Report," December 6, 2008. This copy may not be in its final form and may be updated.
PAUL GIGOT, HOST: Up next on "The Journal Editorial Report," Obama makes it official, Hillary's his pick for secretary of state. But will Bill's fund-raising machine complicate the new administration's foreign policy?
Plus, just when you thought the election was over, the drama continues in Minnesota. Could Al Franken steal a seat with the help of some Senate friends?
The big three come back to Capitol Hill making their second pitch for a bailout. Will they get it? And how much will you have to pay?
"The Journal Editorial Report" begins right now.
Welcome to "The Journal Editorial Report." I'm Paul Gigot.
It's official. Barack Obama rolled out his foreign policy team this week with former rival Hillary Clinton as secretary of state. The announcement came after a deal was struck with former President Bill Clinton to disclose publicly the names of more than 200,000 donors to his presidential library and foundation.
Here with a look at what we're likely to find on that list and how it might complicate the administration's foreign policy, "Wall Street Journal" foreign affairs columnist, Bret Stephens; assistant editorial page editor, James Freeman, opinionjournal.com columnist John Fund; and Washington columnist, Kim Strassel.
James, we know they've been raising money, Bill Clinton and his allies.
JAMES FREEMAN, ASSISTANT EDITORIAL PAGE EDITOR: A lot of money.
GIGOT: At least for — since 1997 for his foundation and library. What do we know about that donor list?
FREEMAN: We know the money was ramping up over the last few years perhaps in anticipation of Hillary becoming president. 1997, $129 million in revenue for the William J. Clinton Foundation.
GIGOT: That was 2007.
FREEMAN: Excuse me, 2007. If you go to the website of the William J. Clinton Foundation, you'll see the tax form they file with the IRS. You'll see the all the money. What you will not see is the names of any donors. This remains largely a mystery.
GIGOT: He steadfastly refused to release that during the presidential campaign despite pleas from the press and rivals to do so.
FREEMAN: That's right.
GIGOT: And why could he get away with that?
FREEMAN: I think you have to wonder what's on that list. As far as how he got away with it, I think it's bizarre. Some people might ask why they didn't disclose it then when it was an issue in the campaign, but he's willing to now to let her be secretary of state. We'll find out. The hope is that these names come out soon so people can examine them before her Senate confirmation.
GIGOT: Kim, having refused to do that during the campaign, they nonetheless have agreed, as a price of making her secretary of state with Barack Obama, doesn't Obama get some credit for forcing their hand on this? And what do you think the political implications are?
KIM STRASSEL, WASHINGTON COLUMNIST: Well, look, I don't think he necessarily gets credit. I think this had to be the basic level of disclosure for her to do this. This is as enormous thing. You're talking about one of the most influential people in the world setting policy. You don't know what the ties are with her husband, between all these different people around the world. That's what the policy implications are.
If it comes out that a lot of people on this list are Arab sheiks or other dubious figures across the world, how is that going to influence Hillary Clinton's negotiations with some of these big countries? And that is the big concern.
GIGOT: The potential for conflict of interest really does exist, John. We know, going back to the 1990s with the Riadys of Indonesia and the Lippo Group of China, they have a long string of foreign friends.
JOHN FUND, OPINIONJOURNAL.COM: Well, exactly. And, remember, Bill Clinton has effectively been a de facto ambassador for American foreign policy these past few years, denigrating the Bush administration, explaining away America's foreign policy mistakes.
I think what the Clintons are up to is clearly establishing themselves as a foreign policy franchise. And any time that you've got these donors involved, you're going to have suspicions of conflicts of interest. That is why I think, if these names do not come out immediately — and I think what the Obama's administration is going to try to do is pull a fast one and delay release of them as long as possible — I think it makes the confirmation hearings before the Senate hollow.
GIGOT: James, tell us about the Kazakhstan episode. That's the one with you know about thanks to a report last year in the "New York Times" about a trip Bill Clinton took to that central Asian nation and a donor with a Canadian businessman.
FREEMAN: That's right. The Canadian businessman, Frank Giustra, and Mr. Clinton flew into town. This is late '05. Went to see the president of Kazakhstan, Nursultan Nazarbayev, and...
GIGOT: Very good.
STEPHENS: The long time...
GIGOT: A very long time.
FREEMAN: The end result in a bizarre twist, contradicting both the position of the United States government and the position of Senator Hillary Clinton, Bill Clinton endorsed, right after this meeting, Mr. Nazarbayev, and Kazakhstan to head this group that promotes democracy and monitors elections. This was seen as very bizarre at the time because this guy has run Kazakhstan with an iron fist for 20 years, crushed dissent, occasionally holds an election where he wins with over 90 percent of a vote amid allegations of ballot stuffing.
What was the businessman doing on this trip? Coincidentally, right after this meeting, he got a concession basically. He was allowed to buy into Kazakhstan's state uranium mining operation. It was an enormous windfall for him.
GIGOT: And then he made a big contribution to the...
FREEMAN: And then $31.3 million go from the Canadian mining magnet to the Clinton Foundation.
GIGOT: To the Clinton Foundation.
And we should add that Mr. Giustra insists that there was no connection to this. It was strictly a charitable contribution. He's done that in letters to the editor for the record.
But this is the potential that exists for these kinds of conflicts of interest, Bret. How do you think that complicates Obama's foreign policy?
STEPHENS: We'll find out as these names appear. But it's hard to believe they're not going to — when you're dealing with, for instance, the United Arab Emirates where Bill Clinton is frequently giving speeches or potentially in places that surround — Kazakhstan is, of course, in the greater middle east — that's a huge complication.
But I think we should also stress what an actual Clinton foreign policy might look like.
GIGOT: A Clinton foreign policy? Not an Obama foreign policy? Doesn't she work for him, Bret?
GIGOT: Isn't that the idea. She lost the election, she works for him?
STEPHENS: It's not just a Clinton foreign policy in terms of Hillary, it also Clinton foreign policy in terms of Bill. I think what we're seeing here is the restoration in terms of our foreign policy outlook of the Bill Clinton years. People now look back on that period and say it was a period of peace and prosperity so it's a good thing we're going back to it.
I think it's worth reminding ourselves that during that period, we were storing up a great deal of trouble by failing to go after Osama bin Laden with enough muscle by promoting this phony Arab-Israeli peace process.
GIGOT: But a lot of people are saying that she is to the right of Obama. She was thought to be more hawkish on Iran, for example. Does she bring that point of view to the administration?
STEPHENS: I think what Obama's picks have revealed is that was pure campaign positioning. She thought she had a better chance presenting herself as a moderate. He thought he had a better chance presenting herself as a leftist.
But when I look at this team Obama has assembled, people are saying it's a team of rivals, I disagree. I think it's a team of conformists. These are people who believe in the kind of beltway establishment notions, negotiate with Iran, resume the Arab-Israeli peace process, put on a better face to the rest of the world. I think this rivalry idea is a fiction.
GIGOT: All right, we'll have some fun watching. Thanks, Bret.
When we come back, mayhem in Minnesota. The recount winds down with both candidates claiming the lead. Could the U.S. Senate ultimately decide the Coleman-Franken race?
GIGOT: The Minnesota Senate recount wound down this week but not without more of the drama that has come to characterize the bitter faceoff between incumbent Senator Norm Coleman and comedian Al Franken. The latest 133 ballots that the Franken campaign said disappeared in one county and the discovery of 171 new ballots in another. With each campaign claiming the lead, a court challenge by loser seems all but certain. And the final stop could be the Democratic controlled United States Senate.
Kim, when this recount began, Coleman was up by about 205 votes. Where does it stand now?
STRASSEL: Al Franken's campaign has been claiming they're ahead. There are a whole bunch of outside organizations doing counts, and everybody agrees Norm Coleman has, in fact, increased that lead of 205 by about 100 ballots. He remains in the lead. The recount is winding down.
What you see is a strategy on the Franken side to change tracks. What they're trying to do is suggest that there's funny business going on here to sow doubt about the legitimacy of the election. They're doing this by talking about missing ballots, talking about a failure to count supposedly valid absentee ballots. And the goal is give them greater momentum if they got to court of if they ultimately appeal to the U.S. Senate.
GIGOT: What about this issue of absentee ballots. There's a formal process by which these ballots are either ruled to be admitted as fair votes or disqualified. That's what's happened on Election Day or right around the election. Now the Franken campaign is challenging those decisions and saying let's look at those absentee ballots again. That's happened before in elections, has it?
FUND: In Washington...
STRASSEL: Oh, sorry.
Recounts are supposed to be about recounts. But they're demanding that you go through — even though these ballots have been through a rigorous process already and include them anyway.
FUND: In Washington State, four years ago, the Democratic Party got the names and addresses and phone numbers of the people whose absentee ballots had been rejected. They went door to door and asked them, who did you want to vote for?
GIGOT: Who did you want to vote for?
GIGOT: You might not have voted before, but now you can vote.
FUND: Exactly. Right. And if they said they voted for the Democrat, they said here's an affidavit, fill it out and we'll submit it to get your vote counted. And if they voted for the Republican, they said, have a nice day.
FUND: I think this is highly erosive because, if you're trying to inject new ballots into the contest, you're taking the decision away from the voters and putting it into the courtrooms with a bunch of lawyers. That's not how democracy is supposed to function.
GIGOT: So we go to the courts, they fight it out, assuming Coleman is ahead after the recount. And then if the courts don't admit these absentee ballots, then what happens, it goes to the U.S. Senate, which is the ultimate decider who sits in the Senate itself.
FUND: What concerns people is, in 1975, there was a very contested race in New Hampshire. The Republican candidate got a certificate of election from his state, took it to the Senate and they said, "Hold on there. We want to have our own investigation of these ballots." They held the seat vacate for seven months. There was 100 hours of debates, six attempts at filibuster. Finally everybody just gave up and they had a new election. I think that's what may be what Al Franken went to Washington a couple of weeks ago and talked to Harry Reid about. I don't know what Harry Reid's answer was, but a lot of people are concerned we may only have 99 Senators.
GIGOT: All right, do you see this as going to the U.S. Senate, James? I mean, you have good government in Minnesota. They like to think of themselves as a clean, progressive state. Are they going to tolerate this kind of stuff?
FREEMAN: I can't believe Harry Reid wants to define the new Congress, the first 100 days of Obama, with a strong-arm to kick Norm Coleman out of the Senate and install Franken. I mean...
GIGOT: Why not, 59 votes? Wouldn't they like 59 instead of 58?
FREEMAN: By definition, this is only going to the Senate if Franken has basically lost on the merits as determined by the people of Minnesota and a structure and a machinery that is not a bunch of right-wingers. Secretary of state, a Democrat, votes on this commission who will decide. So it's basically —would have to really ignore the will of the people.
STEPHENS: If I were Mitch McConnell, the Republican leader, I might welcome Al Franken. Let's run against the Al Franken Democrats and the process that he...
FUND: That price might be too high, Brad.
STEPHENS: Have you ever met Al Franken?
GIGOT: But this is a good interesting point. Obama comes in with his idea, the era of new post-partisan good feeling. We want to all get along.
He needs, Kim, does he not, several Republicans to come over to him on issues like health care, perhaps an issue like cap and trade, energy legislation. Could this poison the well if it really becomes ugly?
STRASSEL: Absolutely. You know, he is — he has been very careful. Look at what he's done so far. It's all about trying to unify Democrats behind him, things like the Hillary picks, but also to reach out to Republicans, things like the Gates pick at secretary of defense. He's trying to keep a sound environment and come in with some good feeling.
If Harry Reid were to spend the first six months working on this to seat and kick out a sitting Senator, I think that you could really wreck that Washington environment immediately. He can't want this.
GIGOT: All right, Kim, thanks.
Still ahead, the auto bailout, take two. The big three bosses make their final pitch for aid. What are they asking for this time around? And should they get it?
GIGOT: American automakers made a fresh plea for an emergency bailout this week warning of dire consequences if nothing is done soon. All the big three car companies are asking for $34 billion in federal aid with more than half going to General Motors, which the president of the United Auto Workers Union said could fail by month's end without a cash infusion.
Holman Jenkins writes the Business World column for the "Wall Street Journal" and he joins me here now.
Were you more impressed this time with the big three pitch on Capitol Hill than say a couple weeks ago?
HOLMAN JENKINS, BUSINESS WORLD COLUMNIST: No, it was never going to be impressive. You can't make intelligent strategy in the clear lights of Congress. It was a dog and pony show. The essence of the thing is just terrible. They're going to do cost cutting and downsizing in order to get profitable, which is a good thing, and then they're make all these dream cars that customers don't want and lose money on all of them. They're going to make Congress happy that way, but they're not going to get profitable that way. And that's the essence of the plan.
GIGOT: So what would have to happen in order to make this work?
JENKINS: You have to get rid of Chrysler, I think. Chrysler...
GIGOT: Too much overcapacity in the industry?
JENKINS: Yeah. And Chrysler is not a viable company. You can break it up or sell it to somebody. The other thing is you have to basically free G.M. and Ford to have workable business models.
The tragedy is both of them have very viable auto companies inside of them. They have good global businesses. They have excellent businesses in the U.S. selling SUV's and pickups to Americans, have very good profit margins.
GIGOT: They make money in a lot of their overseas markets, don't they?
JENKINS: They make money even in the U.S., except for the small cars that they're obliged to build to meet the fuel economy rules. They lose tens of billions of dollars over the last 30 years making cars that Americans don't want.
GIGOT: Nobody in Congress is talking about lifting these restrictions on these requirements that they build to — sort of so-called fuel- efficient fleet.
JENKINS: Not only build small cars that are fuel efficient but build them in high-wage UAW factories instead of building them in Korea or some place and bringing them in where they might make a profit doing it.
GIGOT: That's a version of industrial policy that existed since these rules passed in the 1970s and they were recently made more strict.
JENKINS: Completely unmentioned in the two rounds of hearings that have happened so far.
GIGOT: Not even come up at all?
JENKINS: No, because it would mean Congress taking some responsibility for what happened to Detroit. That's not...
GIGOT: That's not what they do for a living up there.
JENKINS: Yeah, that's not the pitch you make to Congress when you say give us money.
GIGOT: The number that Detroit's asking for is $34 billion. They're saying that's all that's needed. I've seen reports, for example, from the economist, Mark Zandi, who likes the deal, not that big a skeptic of the deal. He said this would not be just $34 billion. You could end up with as much as $125 billion. Do you think this is a one-time deal?
JENKINS: No. It will never end until they have a viable business models. Right now, we're just taking on the job of subsidizing them for all the policy errors that they can no longer survive. And we'll have to keep doing that until we change the policies.
GIGOT: Is there a better option? What about the idea of the so- called prepackaged bankruptcy? Because some are saying we'll give you some money to tide you over, but you're going to have to go into bankruptcy which would allow them to make some changes.
JENKINS: It would let them make some changes. It would probably be really good to help them strip down their dealer networks, which are way too large. You can change the UAW contract. The fact is, the UAW comes back four years later and four year after that and four years after that with a new contract negotiation and will get back every cent it can. That's not really going to fix things. They're not going to end the UAW monopoly.
GIGOT: So not only a bankruptcy proceeding. Because one of the virtues of bankruptcy is it gives you new legal freedom to be able to restructure contracts. For example, they could dump their pensions on to the Pension Benefit Guarantee Corporation, which is you and me, the taxpayer. But those would be off the books. Wouldn't that help their cost structure quite a bit?
JENKINS: You could reduce the cost structure but you cannot get to a viable business model until you're allowed to make the cars the customers want enough that they'll pay the cost of building them.
GIGOT: A lot of people are talking about the contrasts between the Detroit auto worker contracts, which is something like $70 an hour if you include all the benefits and historical healthcare costs, with the so- called transplants, the companies, the foreign companies that build cars very profitably in Kentucky and Alabama and parts of the south, where you have a right to work laws that allow — that don't require you to join unions. If you've got the UAW down to that, would that make a big difference?
JENKINS: If he they stay down to that. But, you know, those companies can hire people off the street over — over them — give or take a deal. Come work for us. This is what we're going to pay you. This is what the job is worth to us. As long as you're bound to the UAW and have to negotiate with them every four years, they're going to dictating terms to you and they're going to take every cent they can get.
GIGOT: So what Congress is up to here, I hear you saying, is, number one, protect, to the extent they can, the UAW contracts and its role in the auto companies and, number two, use industrial policy to — congressional mandates, in essence — to force G.M. and those companies to make the cars that Congress wants them to make.
JENKINS: But it's not the big mandates anymore because we've run out the string on that. Now we have to give you direct subsidies year after year to make those cars. That's how it's going to play out, I'm afraid.
GIGOT: So in a way we're — first, we're giving a subsidy to the carmakers. And then if the Americans don't like the small cars that they've mandated to make, we give subsidies to the car buyers.
JENKINS: There's already tax rebates in the law for people to buy G.M.'s new electric car which is going to cost $45,000 a pop and is not going to be that attractive a car to people if gas is selling for $1.50.
GIGOT: People still like to drive bigger cars.
JENKINS: Of course, they do.
GIGOT: When is — is this going to happen, Holman?
JENKINS: Something's going to happen. With the Friday jobs numbers, Congress is going to feel obliged to do something. Maybe it'll just be some money to tie G.M. over until the Obama people get in and come up with their own plan. But I think they're going to come up with something.
GIGOT: I think you're probably right about that.
We have to take one more break. When we come back, our "Hits and Misses" of the week.
GIGOT: Winners and losers, picks and pans, "Hits and Misses," it's our way of calling attention to the best and the worst of the week.
Bret, first to you.
STEPHENS: Well, you tell me if this is a hit or a miss. The German parliamentary report tells us the German soldiers in Afghanistan, all 3500 of them, drank 1.7 million pints of beer last year along with 90,000 bottles of wine. They're one of the few foreign forces that are actually allowed to drink. Of course, they don't do much of the fighting.
Not much of a surprise, they find 40 percent of those soldiers are overweight. Obviously, they are not only barred from contributing to the fight, they probably couldn't fight anyway. Now on the one hand, probably bad news for NATO, but, taking the long view, maybe not such a bad thing.
GIGOT: All right.
FREEMAN: This is the big hit to Senator Arlen Specter. He's trying to help to ends a national tragedy. We recently passed a horrific milestone, more than 100,000 Americans are waiting for organ transplants. 6,000 will die this year. He's created a bill. The Senate should enact it. Encourage more donations by giving people an incentive.
GIGOT: Good for him.
STRASSEL: The big miss to New York's gun laws, the result of which Giant star receiver, Plaxico Burress, is facing a minimum of three and a half years in jail for the crime of shooting himself in the leg in a New York nightclub. I'm not going to defend his handling of firearms, but says a lot about how silly New York laws are. He actually had a handgun permit from Florida. They don't honor it. They also won't give handgun permits to non-residents. And this is all happening in the wake of a Supreme Court decision that struck down D.C.'s handgun law and it probably make New York's unconstitutional, too. So none of this is much consolation to Mr. Burress who is being treated like a robber or a criminal for the simple mistake of carrying a gun for self-defense.
GIGOT: Oh, my gosh, defending Plaxico. All right, thanks.
Remember, if you have your own "Hit or Miss," please send it to us at email@example.com.
That's it for this week's edition of "The Journal Editorial Report." Thanks to my panel and to all of you for watching.
I'm Paul Gigot. We hope to see you right here next week.
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