Transcript: 'The Journal Editorial Report,' February 23, 2008

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This is a rush transcript from "The Journal Editorial Report," February 23, 2008.

PAUL GIGOT, HOST: Coming up next on the "Journal Editorial Report," the Democrats' new economic populism. From trade to taxes, Hillary Clinton and Barack Obama are trying to out-left each other in their fight for the nomination. Is it pure politics? Or a true sign of how they will govern?

Health care question. We will take a hard look at the plans being put forth by both Democratic candidates.

Adios, Fidel. Our panel looks at life in Cuba after Castro.

But first, these headlines.


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

He may be long gone from the Democratic race but John Edwards' message is alive and well. Ahead of key contests in Ohio and Pennsylvania, both Hillary Clinton and Barack Obama have taken on a markedly populist tone, taking up trade and taxes anxious to win over blue-collar workers and union support. Is it for the sake of the nomination or a true sign of they will govern?

Joining the panel this week, Wall Street Journal, columnist and deputy editor Dan Henninger, columnist Mary Anastasia O'Grady and senior economics writer Steve Moore.

Let me start with you, Steve.

Bill Clinton supported NAFTA and passed it. He supported a cut in the capital gains tax back in 1997. Is this still on economic policy Bill Clinton's Democratic Party?

STEVE MOORE, SENIOR ECONOMICS WRITER: No, not at all action Paul. In fact, if Barack Obama were elected president, he would be the first protectionist president since Herbert Hoover. If you listen to both what Hillary and Barack are talking about in terms of taxes and this populist message that we will give tax cuts to the middle class but we'll hammer the rich with higher tack rates.

Another area to think about, Paul, is this kind of phony pro consumerism where the both Hillary Clinton and Barack want to go after credit card companies, drug conditions, the oil companies. They always use big in front of whatever industry it is.

GIGOT: Steve, let me push you on the spot about Obama. He supported the Peru free trade agreement. Now he says he was the most consistently against NAFTA of all of the Democratic. Of course he wasn't in Congress at the time and didn't have to vote for whereas Hillary Clinton was in the White House when her husband supported it. Is Barack Obama really a protectionist or is this just for the campaign.

MOORE: Paul, he says he is for fair trade, not free trade...

GIGOT: But the Republicans say that much. Everyone says that nowadays.

MOORE: That's true. What he would do in terms of his trade policy is encumber these trade agreements with labor and environmental policies that could unravel the trade deals in the first place.

DAN HENNINGER, COLUMNIST & DEPUTY EDITOR: Paul, the party moved so much further left. Steve is right is it as far left since the 1930s. I think it is all politics. Nobody really thinks protectionism work.

But they are playing with fire. You just have to light the match and if you get the protection analyst thing going, which I suspects they don't want to do, then you get into a sequence that we did have back in the 1930s. I don't think the unions truly believe that.

GIGOT: There is no question there is a union component here. Obama got the teamster's endorsement this week, not long after coming out against the South Korean free trade agreement. That is still pending in Congress.

But why are they doing this? What makes them think this is actually good politics now. As you say, it has been a long time since a candidate has run like this. I am not just talking about just on trade. I am talking the whole economic populist agenda that Steve talked about.

HENNINGER: I think it is the stress of globalization. It is obviously — the competitive world is stressing everybody. The head of Gallup spoke out on this recently.

GIGOT: The pollster.

HENNINGER: The pollster. He said that their polls — not just in the United States, Mexico, Japan, China. In there poles the all folks that they were being screwed by free trade. Even on both sides of the same free trade agreement, which isn't possible. But everyone is stressed in the world by this tighter competition. So can you make political hay out of it.

GIGOT: Mary, you cover countries where they are trying to open up to the world — Columbia, Latin America. Do you buy stresses of globalization?

MARY ANASTASIA O'GRADY, COLUMNIST: I don't buy that. And I think they are exposing themselves to huge geopolitical risks. If they shoot down Columbia free trade agreement, they will really have a lot to answer for in the years going forward.

I think one thing that's bothering Americans is the inflation and the weak dollar. I think people feel poorer. They don't know what the reason is but they feel things are tougher than they thus used to be. A lot of that can be traced to the weak dollar.

GIGOT: I agree with that.

I think that's what people are facing, Steve. They don't feel there purchase power is the same as it was. Prices are rising for gasoline, food, health care these things. That has nothing to do with globalization, per se. But politically...

MOORE: Paul, by the way, the greatest antidote to higher inflation, you are right, people are feel a pinch on the wallet, is precisely trade. If you look at the CPI numbers — I just looked at them this week — the very industry that are most trade sensitive — apparels, toys, commuter software — those are areas where prices are falling. It is only the industries where you don't see a lot of international trade pressures at lower prices where you see the increases.

GIGOT: Steve, let me ask you about politics. Whoever the nominee is going to be more populist — whoever the Democratic nominee is will be more partisan on taxes than Bill Clinton was. Is this is a winning agenda. Is the country so economically anxious now that they can tap into it and win in November?

MOORE: I hope not. Look at the history in this. Economic populism has not been a warning formula. If you listen to Barack Obama, he is not that entirely different from what John Kerry was saying four years ago. It is so important the moratorium of the United States be for free trade because, as you know, Paul, Congress will always protect their parochial interests. Pennsylvania's going to protect their steel mills and so on. If you don't have a president who is for free trade, then I think the ability to move forward on trade agreements is very...

HENNINGER: But if the economy is from deeper trouble in November the Democrats will win. Reagan beat Jimmy Carter who was presiding over a terrible economy. The in-power party is always going to lose if the economy is in the dumpster.

GIGOT: It depends very much on the economy. It also depends on how well John McCain can articulate the opposition to some of these policies, if, in fact, he can.

O'GRADY: He has to show and point out that even though there are jobs that went overseas there are a lot of jobs creation. Every single American is benefiting from greater access to goods from around the world, both as a consumer and in value-added businesses.

MOORE: But... OK.

GIGOT: Sorry Steve, we have to go.

Still ahead, health care questions a hard look if he Clinton and Obama plans for coverage when we come back.



HILLARY CLINTON, (D), PRESIDENTIAL CANDIDATE: He has a mandate for parents to be sure to insure their children. I agree with that. I just know if we don't go and require everyone to have health insurance, the health insurance industry will still game the system.

BARACK OBAMA, (D), PRESIDENTIAL CANDIDATE: Understand that, when Senator Clinton says a mandate, it is not a mandate on government to provide health insurance. It is a mandate on individuals to purchase it.


GIGOT: Hillary Clinton and Barack Obama squaring off over their health care plans in a debate Thursday in Texas, the state with the highest rate of uninsured adults.

Here with a look at what each candidate proposes is Betsy McCoy, former lieutenant governor of New York and adjunct senior fellow at the Hudson Institute.

Betsy McCoy, welcome.


GIGOT: What are the key elements of the Hillary Clinton Obama plans?

MCCOY: Senator Clinton's plan would require everyone to purchase a health plan. Some people would be eligible for government subsidies but everyone would be required to purchase it. And if they didn't, they would face penalties, perhaps even having their wages garnished.

Under Senator Obama's plan, he pledges to make health insurance affordable, but would require only that parents buy health insurance for their children. As he pointed out in the debate Thursday night, two-thirds of the children are quote, "uninsured," are actually already eligible for government programs but their parents have failed to sign them up. Out of the 9 million children who are considered uninsured, 6 million are eligible for government programs. And in Texas, 850,000 children classified as uninsured by the U.S. census are actually eligible for Medicaid or SCHIPs.

GIGOT: If that's true, two-thirds qualify for medication, qualify for SCHIP, already government programs, why...

MCCOY: Excellent ones that provide dental coverage, prescription drugs, hospitalization.

GIGOT: Why aren't they enrolled? And do we need another government program to help them out?

MCCOY: I wish the moderators in the debate had asked such an important question. The state of Texas runs radio ads, hands out brochures in many languages, and engages community groups to reach out to parents, but many parents fail to enroll their children.

Do we need another government program? That's a very important question. That's an important question nationwide because 14 million of the 47 million so-called uninsured are eligible for government programs and we will get health care the minute then need it.

GIGOT: One issue, Obama makes is one issue with health care is price, affordability. A lot of people don't want to spend the money because it's expensive if you don't get if from your employer. Do either candidate, Obama or Clinton, do anything to try to lower the price of coverage?

MCCOY: Actually, no. In fact, both plans would increase the price of coverage but offer government subsidies for people who need help buying it. But they increased the price by requiring people have a health plan but a fully loaded health plan — a comprehensive plan that includes many extras.

GIGOT: What are those elements that are fully loaded?

MCCOY: Well, from state to state it varies. In Texas, for example, it has to encourage marriage counseling.

GIGOT: Marriage counseling?

MCCOY: Marriage counseling, acupuncture.

GIGOT: Health insurance?

MCCOY: And many extras. In fact...

GIGOT: You mean something like in-vitro fertilization in some cases?

MCCOY: Yes. Most states have done this. The state lawmakers have passed law after law in response to lobbyists requiring every plan sold it that state include these extras.

The first day I became lieutenant governor of New York I reported to my office for the first time, there was a long line of lobbyists waiting to see me. Number one in line, the acupuncturists. Number three, the chiropractors. They were there to convince me that every plan sold in New York State had to include unlimited benefits in their field.

So the providers make out well. And the politicians who pass these laws receive huge campaign contributions from these providers. But the consumers find that they can't afford insurance.

GIGOT: Because it is all loaded up.

Let me ask you about young people, in particular. Young people think they will live forever so they don't need insurance and they don't want to pay their marginal income to buy insurance. But...

MCCOY: I am very surprised that Senator Obama did not raise this issue, because the Clinton plan is an unfair hidden tax on young adults. She would require all young adults, people in their 20s and 30's, to buy health insurance, but more than that, to pay the same price for it as a 55- year-old, this middle-ager.

GIGOT: What's the justification for that?

MCCOY: She says one price for all is fairer. In fact, what she is doing is requiring young adults, who are already subsidizing the elderly through Medicare payroll taxes, Social Security taxes, she wants them to subsidize the middle-aged group. And I was surprised Senator Obama didn't call her on this because in Texas, for example, right now, a 25-year-old man can buy a 100,000 deductible for $70. A 55-year-old man has to pay $272. She would require they pay the same price, obviously, a lot more for the young adult.

GIGOT: That means it's going to be harder for young adults to be able to afford insurance?

MCCOY: Yet, they will be forced to buy it. Her plan would outlaw the price breaks that insurers now give adults in 47 out of 50 states.

GIGOT: Thank you, Betsy McCoy. Very informative. We appreciate it.

Still ahead, adios, Castro. Our panel weighs in on what Castro's exit may mean for America's relationship with Cuba, when we come back.



O'GRADY: My big story for 2008 is I think we're going to see change in Cuba. I am not going out on a limb to predict that Fidel Castro will ever die. That's too risky. But I do think he might be shuffled aside in 2008. We could see a change in Cuba.


GIGOT: A prescient Mary O'Grady, predicting, in our final show of 2007, the end of the Fidel Castro era. After nearly 50 years in power, the ailing communist dictator announced that he won't accept another term as president of Cuba.

We are back with Dan Henninger and Mary Anastasia O'Grady. Also joining the panel, foreign affairs journalist Bret Stephens.

Mary, is there a chance with Fidel moving on that we could get a Cuban Mikhail Gorbachev and perestroika?

O'GRADY: I don't think that Raul Castro is capable of that. He is a Stalinist thug who has spent the last 50 years of his life doing the dirty work for his brother. The only thing he's capable of is, I think, is doing some pragmatic things he has to do because civil society in Cuba is starting to go rumble.

GIGOT: Raul is 76 years old. Not much longer than his brother. What about the next generation of leaders? Is there a younger generation that, if they come to power, could change?

O'GRADY: Inside the regime right now, what you see mostly are people who follow Raul and obey Raul. There are rumblings of discontent inside the military because the military is getting all their dollar revenues from tourism. High-ranking military members are living very well, while the rest of the island is living very poorly. There is a high degree of dissatisfaction with that.

Inside other places like the universities, students are starting to complain out loud, which was unheard of 20 years ago. So I think he has to start to change things.

GIGOT: So they don't want to change, Bret, but maybe they can't afford not to change. That's a very dangerous situation for any dictatorial regime.

BRET STEPHENS, FOREIGN AFFAIRS COLUMNIST: We have seen this played out in other countries. It places did very differently. There are models like the former East Germany, the GDR, where things change quickly. And that usually has to do with historical situations or internal situations or really the decisions the local leaders make.

On the other hand, in 1994, when Kim il-Sung died in north Korea there were widespread predictions the this, the other last hold out of a Stalinist Soviet model, would very quickly crumble and people expected that the two Koreas would combine.

GIGOT: I know that, but North Korea is not 90 miles away from the Florida Keys. They are not potentially bombarded with American influence. They are more isolated.

Isn't going to be more difficult, without the charismatic Fidel and his revolutionary memories, to be able to keep a lid on this?

STEPHENS: Well, you are right. But this is a regime that has, over great many odds, managed to keep its grip on power for 50 years, including 17 or 18 years without its patron the Soviet Union. It is wrong to underestimate its staying power.

O'GRADY: Paul, one thing that's important here — Raul is five years younger than Fidel. He won't last a lot longer than that. One of the things that held Cuba together was the charisma of Fidel Castro. If was very unique. No one can really put their finger on exactly how he did it. But after Raul Castro is dead, they will have a harder time because people inside the regime will start fighting over the spoils.

GIGOT: The thing they want to do, Dan, is a China model I suppose. You want to open up economically but keep a tight lid on politics and power. But again, China is a great continental power with a long history of central control. Cuba is 90 miles from the border with all of that influence from American emigres. I don't know if they can do it.

HENNINGER: I don't think they can do it. The key thing there is the Army. The reason it has worked in China is because the Army has been willing to repress the population. Would the Cuban army be willing to do a Tiananmen Square and Havana? I don't think to. I really don't. I think as it is a volatile situation. And what you'll be heading towards is something more like Romania under Ceausescu, where you have an opening and people get pent up. And they'll take Raul out and shoot him.

GIGOT: I thought I would get an optimist. Here I get Ceausescu from Henninger.


O'GRADY: But you also have to think about the fact that Raul has made several overtures, I would say, to the U.S. And it is very clear that he wants a better U.S. economic policy toward Cuba, something that would be more helpful.

GIGOT: More open.

O'GRADY: Yes, but something that would generate growth for Cuba. He extradited a drug dealer back to Columbia recently. It let four prisoners of conscience out. There are another 300 political prisoners in Cuba. But he is trying to put a good face on it.

On Sunday, I think he will probably choose a civilian to be in the government, to lead the government. There is a good chance of that. If he does that, what you will end up seeing is a lot of people in this country starting to say, look, he is different. He is better than his brother. Let's do business with him.

GIGOT: There will be no lifting of the embargo until you see real fundamental change in Cuba. That's what I suspect.

OK, thanks, Mary.

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


GIGOT: Winners be losers, picks and pans, "Hits and Misses," it's our way of calling attention to the best and the worst of the week.

Item one, Blu-ray carries the day — Dan?

HENNINGER: You think Barack vs. Hillary is big. This is really big. Blu-ray defeated Toshiba HD. The hottest story on the web. One thing everybody wanted to read. It is like politics. There is no real difference between the two technologies, but like Barack and Hillary, they are totally incompatible. Blu-ray won.

Now people are sitting out there in their home theaters, on their flat-panel televisions listening to Hillary and Barack describing who has a bleaker view of life in America. The really big question is, how do I get the money to buy a Blu-ray DVD player. As Mitt Romney said, help is on the way. Use that Uncle Sam stimulus check to buy yourself a better life.

GIGOT: All right, Dan, thanks.

Score one for missile defense — Mary?

O'GRADY: This week I have a direct hilt. The U.S. Lake Erie launched a missile at a satellite that was heading toward earth. And the U.S. government decided it should be destroyed before it came down to somewhere on planet earth. This is a great success for the U.S. Navy, not only because the satellite could have caused harm on earth, but also because it shows missile defense is workable. And it sent a good message to China and Russia, both of which were very upset that it happened. I say go Navy.

GIGOT: All right, thanks, Mary.

Finally, the Islamists defeat in Pakistan — Bret?

STEPHENS: I think we will have to dust off our copies of the Bush doctrine, which seems to be working. In a key Muslim country, a secular party won the largest share of votes in Pakistan parliamentary elections earlier this week. The Isalmists lost votes in a number of regional elections. And this forms part of a broader trend that we are seeing across the Muslim world in which elections are not, in fact, bringing the radicals and the extremists to power. There was, of course, the exception with the Palestinians with Hamas, but that looks increasingly like an exception that proves the rule. And I think it demonstrates that democracy has a future in the Middle East, despite what the naysayers have been telling us.

GIGOT: All right, Bret, thanks very much.

That's it for this week's edition of the "Journal Editorial Report." Send your e-mails to and visit us on the web at

Thanks to my panel and to all of you for watching. I'm Paul Gigot. We help to see you right here next week.

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