The White House link to Benghazi

New evidence of administration's involvement in talking points

This is a rush transcript from "Journal Editorial Report," May 3, 2014. This copy may not be in its final form and may be updated.

PAUL GIGOT, HOST: This week on the "Journal Editorial Report," newly released Benghazi e-mails put the White House on the defensive, and raise fresh questions for Hillary Clinton as she gears up for 2016.

Plus, Harry Reid in the hot seat as vulnerable Senate Democrats demand a vote on the Keystone Pipeline.

And a big win for Rick Perry as Toyota moves its headquarters from California to Texas. Can he ride his jobs record all the way to the White House?

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

Fresh questions this week about the Obama administration's efforts to shake the narrative in the days following September 11, 2012, terrorist attack on the U.S. mission in Benghazi, Libya, that killed four American diplomats. Newly released e-mails show that a White House official played a central role I prepping then-U.S. Ambassador Susan Rice for her controversial talk Sunday talk show appearances. With Deputy National Security Advisor Ben Rhodes writing in an e-mail two days before that the administration wanted her, quote, "to underscore that these protests are rooted in an Internet video, and not a broader failure of policy."

Joining the panel this week, Wall Street Journal columnist and deputy editor, Dan Henninger; editorial board member, Matt Kaminski; and columnist, Mary Anastasia O'Grady.

Matt, you've been following this for us. I thought all the e-mails were supposed to have been released long ago. How did this turn up now?

MATT KAMINSKI, EDITORIAL BOARD MEMBER: And so did Congress --

(LAUGHTER)

-- and all the media. This one came out of the request from Judicial Watch, a conservative watchdog group, who put in a Freedom of Information Act request, saying there's more stuff there, we want to see it. They fought it, but they eventually released it last month. And among these 41 documents --

(CROSSTALK)

GIGOT: It just got turned over to committee, though, in the last few days.

KAMINSKI: Exactly. To the committee and to the Judicial Watch.

GIGOT: Right.

KAMINSKI: And among the 41 documents was kind of a fairly long e-mail from Ben Rhodes that basically showed that the narrative of the narrative put up at the White House, this was all information from the CIA, everything we said, that leak in the first week after the attacks was based on what the intelligence community was telling us.

(CROSSTALK)

GIGOT: That's what they had been saying.

KAMINSKI: It was a spontaneous protest that got out of hand. But it turns out actually that Ben Rhodes was very central in directing the narrative from the White House, and putting the blame on the video, which was not in the talking points from the CIA.

GIGOT: And Ben Rhodes, let's make clear, he's not some chief strategist. He's no Henry Kissinger. He's essentially a political operative at the NSC.

KAMINSKI: He was a campaign staffer, campaign speech writer, fairly young guy, who runs the strategy on foreign policy, Paul.

DAN HENNINGER, COLUMNIST & DEPUTY EDITOR: And to that point, go back to what he said, that it was blamed on an anti-Islamic video and, quote, "not a broader policy failure."

GIGOT: So that's the key point there.

HENNINGER: Yeah. It's a political statement. I mean, the argument that emerged after this was whether it was an act of terrorism or the Islamic video. He's putting this blanket over it, saying, we were not at fault. And they were not at fault, because Barack Obama was running for president at that time. And it was claiming that he had put a lid on al Qaeda and terrorism.

GIGOT: This is one of those scandals that I don't get. Why didn't they just admit that it was a terrorist attack?

HENNINGER: Good question.

GIGOT: I mean, the American public knows that, Mary, terrorist attacks happen. And I think if they had been honest about it and said, this is despicable, we're going to fight back, I think the public would have said, OK, you know, it's awful, what did you do to prevent it, but I don't think we would have had this ongoing story.

MARY ANASTASIA O'GRADY, COLUMNIST: I agree, except that there were a lot of things leading up to the terrorist attack that they didn't do. So there was kind of -- this showed a -- it did show a failure of policy in the region. The consulate there had asked for more security.

GIGOT: They had not provided it.

O'GRADY: Right. And I think that it shows that Hillary Clinton was not really responsive to the threats that were in the area. And I think this was something that they didn't want to get out. So they had to say, no, it wasn't something planned that we should have known about. It was something that we could have never have known about, and that's why the video got so much spin.

GIGOT: And it wasn't just Susan Rice who referred to the Internet video. It was Jay Carney on the same day as that Rhodes e-mail was written, went out and said, basically reaction to that Internet video. Hillary Clinton on the same day went to Andrews Air Force Base and mentioned the Internet video, and in this context. So this was a systematic attempt to spin the story, or so it sure sounds like.

KAMINSKI: They had this story eight days after the attacks, where, on that same day, within hours, there was cell phone images, both the CIA guy and the -- another diplomat in Libya said this is definitely an Islamic militia that had planned this. It was too well organized. But I think the problem with the Rhodes e-mail speaks to a broader failure of the administration here.

GIGOT: Which is?

KAMINSKI: Which is they never took this seriously enough. Never gave the American public the feeling they really -- four Americans died, including the ambassador, first time in 30 years this happened. And it's as if they were playing campaign games instead of answering very heard questions about, why weren't we prepared, what did we do during the attacks to maybe try and stop this from happening? And the way they played the aftermath.

O'GRADY: I think that's the key point. Because, you know what Brigadier General Robert Lowell said this week about how he was surprised that there wasn't -- there wasn't some kind of military response to try to help these guys who were under attack.

GIGOT: So the Rhodes e-mail was copied to Jake Sullivan, who was a Hillary Clinton aide at the State Department, if I'm not mistaken, Matt.

And basically, this brings her into all of this -- the spin control at the time. Even as now, of course, she's running for president.

HENNINGER: I think it's a really big problem for Hillary going forward, Paul. On September 11th, she attributed it to the video. She's on public, on video, on September 11th, September 12th and September 13th saying this was undoubtedly resulting because of this Islamic video. I think those public statements are going to be used against her if she runs for president. Because her statements are so soft-soaping of what is going on -- we're investigating and so forth -- it sounds terrible. And so I think it's going to be a huge problem.

GIGOT: But will it matter if the press corps doesn't care about this? Let's face it, Matt, most of the media says, oh, we don't care.

KAMINSKI: But I think it's going to keep coming back at her. And there are videos, the one on the 14th and her testimony in Congress, why does it matter? Remember, she got very emotional in the Senate. Why does it matter what really happened? Well, for many Americans, it actually does really matter what happened, and how the administration was explaining to them what happened in Libya.

GIGOT: Especially if you want to be commander-in-chief.

KAMINSKI: Right.

GIGOT: When we come back, Senate Majority Leader Harry Reid in the hot seat as members of his own party demand a vote on the Keystone Pipeline. Can he avoid a showdown and keep warring Democratic factions in line as the midterms approach?

(COMMERCIAL BREAK)

GIGOT: Senate Majority Leader Harry Reid is coming under increasing pressure to hold a vote on the Keystone XL Pipeline. The Senate supports of a long-delayed project unveiling a bill this week that would bypass the Obama administration and authorize its immediate construction. The legislation, introduced thursday by Democratic Senator Mary Landrieu of Louisiana and Republican Senator John Holman of North Dakota, is sponsored by all 45 Senate Republicans and 11 Democrats, many of whom are facing tough re-election campaigns this year.

For more, I'm joined by Wall Street Journal assistant editorial page editor, James Freeman; and Washington columnist, Kim Strassel.

Kim, fill us in here on the politics of this. Harry Reid wants to block anything from passing the Senate and to desperately avoid anything getting to President Obama's desk that he might have to veto. Senate Democrats want a vote to show they're in favor of it. How does Harry wriggle out of this one?

KIM STRASSEL, WASHINGTON COLUMNIST: Harry is between a rock and a hard place. The White House does not want this, because its environmental left will go nuts, and they're worried about losing the money of billionaires like Tom Steyer, who's offered to spend $100 million to get Democrats elected.

GIGOT: And this money is really what they're after, right?

STRASSEL: Yeah, they want this $100 million to be in some of their most vulnerable races. And they know it will go away if they approve this pipeline. On the other hand, you've got people like Mary Landrieu in Louisiana or Mark Pryor in Arkansas who are getting beat up because of their party's inaction on this pipeline, and are demanding a vote.

GIGOT: How does Harry Reid get out of it?

STRASSEL: So Harry Reid does what he always does. He's attempting to try to find a way in which his guys get to vote for it, but the legislation doesn't even matter. Either because it's a nonbinding resolution, or because the White House is able to veto it, but he's trying to cut the cookie so that everybody gets something they want.

GIGOT: But can he stop it from getting the 60 votes it needs in the Senate to get through? Remember, the House has already passed this many, many times. So if it does pass the Senate, then it will get to the president's desk. Can he find some way to block it in the Senate?

STRASSEL: Well, there could be. Look, right now, there's about 56 members that are publicly on board with this. There are several more, at least six more Democrats, who in the past have voted in a nonbinding fashion for a legislation like this. So they're going to be under a lot of pressure to vote this time. He may not be able to stop the 60 votes. One of his games, though, is to try to keep this in a manner the White House to veto if it needed to.

GIGOT: OK.

Speaking of Mary Landrieu, let's listen to one of her ads as she is running for re-election.

(BEGIN VIDEO CLIP)

ANNOUNCER: For years, she's forced Washington to respect Louisiana.

SEN. MARY LANDRIEU, D- LA.: The administration's policies are simply wrong. When it comes to oil and gas production in this nation.

ANNOUNCER: Like stopping offshore drilling.

LANDRIEU: Nothing about this moratorium makes sense. Nothing.

ANNOUNCER: So she forced it to end.

LANDRIEU: Just Louisiana, it's 300,000 people that go to work every day in this industry. You can't just beat up on them.

(END VIDEO CLIP)

GIGOT: You've got to admire a professional work, James.

(LAUGHTER)

I mean, that's -- I mean, what party is she from again?

(LAUGHTER)

FREEMAN: Yeah. But I think we -- that raises the problem she has which is Harry Reid manages with the president to prevent once again this pipeline from being built. Her candidacy has no premise, because what she is saying is, you've got to keep me as the chairman of the Energy Committee --

GIGOT: To get --

FREEMAN: -- to keep my influence. What influence? No pipeline.

(LAUGHTER)

No end to export ban or crude oil. Not much in terms of exporting liquefied natural gas. So the anti-energy policies stay the same if you buy her argument. I don't get it.

HENNINGER: And what about the underlying political strategy that Kim just described? They're doing this because they want the $100 million from the anti-Keystone people to help them in their vulnerable candidates --

GIGOT: And I would just --

HENNINGER: -- who are getting killed because they're not in favor of Keystone.

GIGOT: I would argue it's even more than $100 million. Thought that's the figure Tom Steyer says he's going to spend and raise, there is also a lot of other big money on the left going in here.

FREEMAN: Right. It's --

(CROSSTALK)

GIGOT: A lot of money.

FREEMAN: Absolutely. But I -- you have to go back to her main problem is ObamaCare. I know we're talking energy --

GIGOT: Mary Landrieu?

FREEMAN: Mary Landrieu, just like a lot of these other incumbents, who are the 60th vote, were looking good last summer. Since then, they're now polling in the low 40s. She is trying to change the subject, and it looks like Harry Reid is not helping her, because now we're going to a subject that is not going to end up with a win for her.

GIGOT: Kim, let's talk about another Democratic candidate who is up, Mark Udall, of Colorado. He came out of the environmental movement. He did not vote for Keystone the last time, even on the symbolic voter, nonbinding resolution. But now he faces a tough challenger in Kory Gardner, a Republican representative. Is he going to change his vote? What's the pressure on him?

STRASSEL: Well, look, this is why Reid and the White House are nervous. There are a growing number of Democrats, as James says, they're under pressure because of ObamaCare, because of the economy, and they see energy as a safe harbor. This is a way for them to look pro-growth, look as though they care about jobs, look about they're really plumping for American industry. So you have guys like Mark Udall, who were supposed to represent this new Western environmentalist Democrat. Up until now, it's all been windmills and solar panels.

GIGOT: Right.

STRASSEL: Suddenly, now, he cannot say enough nice things about natural gas. And he's under pressure to do the same on Keystone and other issues.

GIGOT: All right, Kim.

When we come back, a big win for Texas Governor Rick Perry, as Toyota announces its will move its U.S. headquarters from California to Texas. Will other companies follow the automaker's move? And is the big jobs push a sign that Perry is gearing up for a presidential run?

(COMMERCIAL BREAK)

GIGOT: Texas governor, Rick Perry, taking a victory lap this week after Toyota announced it will move its national headquarters and thousands of jobs to the Lone Star state after 30 years in California. It's a big win for the governor, who has made it his mission to lure companies away from high-tax, high-regulation states.

California Governor Jerry Brown, who is up for re-election this November, had this to say about the automaker's move.

(BEGIN VIDEO CLIP)

GOV. JERRY BROWN, D-CALIF.: We've got a few problems. We have lots of little burdens and regulations and taxes. But smart people figure out how to make it. And as I always say, you get what you pay for.

(END VIDEO CLIP)

GIGOT: "Wall Street Journal" editorial page writer, Allysia Finley, joins us with more.

Well, good to know we get what we pay for. What did Toyota say about its move?

ALLYSIA FINLEY, EDITORIAL PAGE WRITER: Basically, they were very diplomatic about it, and they said, oh, well, Texas has a business-friendly environment, zero income tax, affordable housing. This has nothing to do with California's anti-business environment.

GIGOT: But he just touted the --

FINLEY: Exactly.

GIGOT: -- the pro-business climate --

FINLEY: Of Texas.

GIGOT: -- of Texas. So let's dig a little bit into the costs. What are the relative cost burdens? What are they -- what are the advantages, from a business point of view, of Texas versus California?

FINLEY: First of all, it's Right to Work, so you have the lower unionization.

GIGOT: That allows -- you don't have to join a union.

FINLEY: That's right.

GIGOT: So it reduces union labor.

FINLEY: That's right.

GIGOT: OK.

FINLEY: Lower energy prices.

GIGOT: Why?

FINLEY: Why? Because they don't have the renewable -- all the green policies, renewable mandates --

(CROSSTALK)

GIGOT: Renewable mandates are for solar and wind --

FINLEY: Wind.

GIGOT: -- and other things, which are higher cost. And because California has imposed that on their energy industries, costs are higher in California than in Texas, is that right?

FINLEY: That's right. About 50 percent higher in California.

GIGOT: 50 percent higher!

FINLEY: Yeah. And they're going up. That's the scary thing. They could go up even more.

GIGOT: What else?

FINLEY: Gas prices are about 70 to 80 cents cheaper in Texas and in the rest of the south.

GIGOT: Wow. And then, of course, the tax burden, where the top marginal tax rate in California is, what?

FINLEY: 13.3 percent.

GIGOT: And in Texas?

FINLEY: Zero.

GIGOT: Zero.

(LAUGHTER)

That would seem to be --

(CROSSTALK)

(LAUGHTER)

GIGOT: That will even get Freeman's attention.

(LAUGHTER)

FREEMAN: I think that would get anyone's attention. That's why you've seen Texas really be the job creation star of the United States over the last decade. And also, creating the middle class jobs that the national economy in California have not been creating.

GIGOT: That's an interesting point. This middle class point, Allysia, because a lot of people look at California and they say, you know -- and you're a Californian. They say, look, this is -- Silicon Valley is booming, the tech mecca and so on and so forth. But a report that you've looked at talks about California having a barbell economy. Explain that.

FINLEY: Well, particularly outlay, which is really kind of a microcosm of California's economy. You have the really rich on the west side, and then you have a growing poorer group of people, and really a shrinking middle class, blue-collar people who used to work in manufacturing, industrial output that has since disappeared from L.A., entirely almost.

GIGOT: So the boom in high-tech, which affects the rich --

FINLEY: Yeah, Silicon Valley.

GIGOT: -- that hasn't spread out to the rest of the state.

FINLEY: Oh, no. If you look at the unemployment rates in Central Valley, where all the farms are, it's about 13 percent. In L.A., the city of L.A., it's 9.7 percent, which is amazing.

GIGOT: How does this affect Rick Perry?

HENNINGER: Let's talk about Rick Perry. Governor Perry runs these ads saying that in the last 10 years, Texas has created one-third of the net new jobs in the United States. You know what? He's right. Bureau of Labor of statistics says there were 5.3 net new jobs created over the last 10 years --

GIGOT: 5.3?

HENNINGER: Million.

GIGOT: Yeah.

HENNINGER: Texas created 1.75 million of them. That's about a third. I mean, they do have a pro-business climate down there. They help you.

I think the question for Rick Perry is whether that can translate into running the national government or Washington. That's why we have federalism. States like Texas or South Carolina are able to do this thing and attract business. But what is he going to do to translate his success to the federal government?

GIGOT: But the red state/blue state economic model and relative performance is one of the big stories now in the United States. The red states have tended to do better, whereas Illinois and Connecticut, and to some extent California, at least parts of California, not doing nearly as well.

FREEMAN: That's right. You see, we talk about the California-Texas contrast. You also see the contrast between deep blue Illinois and its Midwestern neighbors that have reformed in the last few years, growing jobs more, growing their economies.

And as far as California and Texas, though, I'm not sure California realizes the size of the challenge. We have talked a lot about Texas' economy, low tax, low regulation, but also it's -- these have become cultural meccas. Houston and Dallas, a lot of performing arts, a lot of museums, very competitive for luring corporations.

GIGOT: Indeed.

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

(COMMERCIAL BREAK)

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

Kim, start with you.

STRASSEL: A miss to retired Supreme Court Justice John Paul Stevens, which this week lectured at a Senate hearing that political money is not speech. Justice Stevens' problem is that the Supreme Court says it is, and that in all his decades on the bench, he was never able to marshal an argument good enough to get the court to change its mind. So now he's back in front of a separate branch of government demanding it pass a constitutional amendment to crack down on the First Amendment. He would be better off paying some deference to the framers of the Constitution.

GIGOT: OK.

Mary?

O'GRADY: This is a hit for Republicans. Senate Democrats wanted to raise the minimum wage from $7.25 an hour to $10.10 an hour. The Congressional Budget Office said that it could cost 500,000 jobs. Senate Republicans blocked it this week. And so it's a hit for Senate Republicans, because they stood up for people who want to work.

GIGOT: Especially at the poorest end of the labor scale.

Matt?

KAMINSKI: Paul, here's a hit to my name sake, but no relation, unfortunately. Frank Kaminsky, who is star center on the University of Wisconsin basketball team, who announced this week he's staying for his senior year of college and passing up the opportunity of millions as a top NBA draft pick. It's been a tough week for the NBA, as you know, with the scandal with the Clippers. And Kaminsky said that the NBA is flat-out boring and he prefers to stay in college and see his senior year through, unlike a lot of star college players.

If he would only spell his name with an "I" instead of a "Y" at the end.

(LAUGHTER)

GIGOT: And next week, they're going to the finals.

(LAUGHTER)

And remember, if you have your own "Hit or Miss, please send it to jer@foxnews.com. And be sure to follow us on Twitter, @JERonFNC.

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

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