What can we expect from the next budget battle?

This is a rush transcript from "Journal Editorial Report," October 19, 2013. This copy may not be in its final form and may be updated.

PAUL GIGOT, HOST: This week on the "Journal Editorial Report," an 11th-hour deal ends the government shutdown and avoids default but for how long? A look at the battle ahead as Congress negotiates a long-term budget.

And almost three weeks after a very rocky rollout, those health care exchange glitches don't seem to be getting any better. So who's responsible for this high-dollar debacle?

And the Virginia governor's race heats up and gains national attention. Why this campaign is one to watch.

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

An 11th-hour deal to reopen the government and avoid default passed Congress late Wednesday, ending the budget stalemate in Washington, at least for now. The Senate-negotiated agreement keeps the government running through January 15, raises the debt ceiling through February 7th, and instructs a bipartisan committee to report back on a broader budget plan by mid-December. So what can we expect 13 weeks from now?

Let's ask Wall Street Journal columnist and deputy editor, Dan Henninger; Washington columnist, Kim Strassel; and senior economics writer, Steve Moore.

So before we get to looking ahead at the budget fight, Kim, what's the big lesson you take away from this showdown battle?

KIM STRASSEL, WASHINGTON COLUMNIST: Well, I think the big lesson for Republicans are don't walk into box canyons that you don't have much of an escape from. Look, nobody really won in this deal at all, neither the Republicans --

GIGOT: Right.

STRASSEL: -- nor the White House. But the Republicans certainly took the bigger brunt of this. Their poll numbers are way down. The party is divided. There are a lot of conservatives angry. They were promised something that they could never actually achieve other than blowback to Republican candidates, for instance, running for the governor's race in Virginia. So this has really been hard for the party.

Now, one thing they do emerge with is another shot at this. And with, still, what is their best leverage --

GIGOT: Right.

STRASSEL: -- which is the sequester, the sequester levels.

GIGOT: I want to get -- I want to get to that later.

Dan, how big is the split here, do you think, between the Tea Party or the folks that push this shutdown, and the business community, which is clearly not happy with it?

DAN HENNINGER, COLUMNIST & DEPUTY EDITOR: Yeah. Well, I think it's beyond a split, Paul. These are fissures and fractures. I think some really significant damage has been done to the Republican Party. There are divisions inside the Congress itself. There are divisions between the conservative community. Usually, in politics, you win some, you lose some, life goes on. There's a lot of deep bitterness out there.

And now the idea that the business community says they're going to put arm's length between them and the GOP, we're not talking about the Fortune 500. These were sort of midlevel manufacturers and so forth. They're very nervous about the Republican Party right now. Someone has a big job putting Humpty Dumpty back together.


GIGOT: You know, Steve, when a lot of conservatives out there are saying -- that even Paul Ryan, the House Budget chairman, and Marco Rubio, who only two years ago was a hero of the Tea Party -- when they are somehow labeled sellouts for wanting to work with, say, on immigration or some kind of long-term tax reform, you've got a real problem within the GOP, don't you?

STEVE MOORE, SENIOR ECONOMICS WRITER: You really do. Look, I think the Tea Party needs some adult supervision. They just need to get a lot smarter about tactics. It's interesting. Dan is right. There is this big fissure between the business community, the people who put money in these races, and the Tea Party. What the Tea Party tell me in response to this, Paul, is, look, maybe we screwed up, but we're not going to advance a kind of conservative free-enterprise agenda in Washington without the kind of grassroots of the Tea Party movement. So this divide right now could be crippling for the party that the big beneficiaries of it could be Barack Obama and the Democrats in 2014.

GIGOT: Right, and particularly if you go into the 2014 elections and get third-party candidates who split the --


GIGOT: -- conservative right-leaning vote. Then that would help perhaps the Democrats take back Capitol Hill.

So, Kim, how bad do you think this divide is? Can you put it back together?

STRASSEL: It's awfully hard because part of the problem here -- look, this shouldn't be such a big deal, Paul, in that, ideologically, there isn't necessarily a huge split out there. There isn't a single conservative you talk to who don't all despise ObamaCare.

GIGOT: Right.

STRASSEL: But one of the things that happened as a result of this is that guys like Ted Cruz and some of these outside groups, like Heritage Action, they took what was, in fact, a strategic divide in the party, and they suggested it was an ideological divide. So you do have a lot of conservatives out there, who have turned against what they consider the establishment in the party, and they're very angry and feel what has to happen first is some sort of purge within the conservative movement, and then move on to tackling Democrats. And that can be very disruptive.

GIGOT: Steve, with that as a backdrop, what do you think can possibly get done here in the next couple of months on these things? The president talked about three things this week. He talks about progress on the budget. He talked about a potential farm bill. And he talked about the immigration reform. Any prospects for movement on those?

MOORE: The environment is toxic right now in Washington in the aftermath of this battle than any time that I've seen in the 30 years I've been there, so I'm extremely skeptical that you're going to see these big deals. By the way, right after the deal was reached, President Obama was on his high horse saying we're going to go for more spending, more taxes. He's feeling his oats right now. But Kim is right. The one card that Republicans have, that Democrats desperately want to take from the Republicans, is the sequester.

GIGOT: Right.

MOORE: And I pray they don't give that away it because, if you do, that spending is going to go right back through the roof again.

GIGOT: But to get a budget deal, Dan, the president has to take his demand for a tax increase off the table. You could trade the sequester budget caps on discretionary spending for entitlement reform. But if he insists on a tax increase, nothing gets done.

HENNINGER: That's right. We used to say Social Security was the third rail in politics. For Republicans now, raising taxes is the third rail.

GIGOT: Because they raised them in January.

HENNINGER: Because they raised them in January.

GIGOT: Right.

HENNINGER: If they do it again, it will totally, totally dispirit the Republican base across the country. And that arguably is what Barack Obama wants. And that is why one might predict there is not going to be a deal. He'll hold out for higher taxes.

GIGOT: Kim, are you as pessimistic --

MOORE: And by the way --

GIGOT: -- as Steve -- go ahead, quickly.

MOORE: Let me just make one quick point. When have the Democrats, when has President Obama ever put any serious entitlement reform on the table? This is the ultimate unicorn. It doesn't exist.


GIGOT: Kim, are you as pessimistic as our two friends here?

STRASSEL: Yeah. Look, if the president's come out and already said more revenue, that's an instant deal killer. The question is whether or not he can be made to move slightly on some of his own entitlement reform proposals he's put in his budget this year.

GIGOT: All right, thank you, all.

Still ahead, it's been almost three weeks now since the Affordable Care Act health care exchanges went live. So after a very rocky rollout, have things gotten any better? And who should take responsibility for the mess?



JAY CARNEY, WHITE HOUSE PRESS SECRETARY: Despite the glitches that we acknowledge, and that absolutely must be fixed, people are getting on and enrolling. They are finding an enormous array of options available to them that weren't available to them in the past.


GIGOT: White House Press Secretary Jay Carney this week putting a positive spin on the problems that continue to plague healthcare.gov and the 36 federally run insurance exchanges. So three weeks in, are they any closer to fixing the glitches? And what do we know about who is enrolling?

Wall Street Journal editorial board member, and all things ObamaCare, Joe Rago, is here with us.

Joe, so a couple of facts on the table. How long have they had to prepare?

JOE RAGO, EDITORIAL BOARD MEMBER: About three and a half years, Paul.

GIGOT: How much have they spent?

RAGO: More than half a billion dollars, but we don't know. The money's been drawn from various government accounts and --


GIGOT: So we don't even know how much they've spent really?

RAGO: That's right. Just more than a half billion dollars.

GIGOT: More than a half billion dollars. So how serious are these problems?

RAGO: They're pretty serious. To call this glitches is an insult to glitches. There are two major problems. One is on the consumer-facing side and --

GIGOT: That's where you and I would go to get insurance.

RAGO: Right, that where normal people would go to try to log on to this website. And it's really -- it's sort of a website that's supposed to be functioning like a 2013 website, and it's built using 1990s coding language, so you get all kinds of error messages, crashes, freezes and so forth.

GIGOT: But how could that be? This is a country that gave us Google and Amazon and Apple, and the government cannot create a functioning consumer-oriented website?

RAGO: Right.


Well, and a lot of this is deliberate political choices. So, for example, the Health and Human Services Department didn't want people to see what the total cost of the plans would be. They only wanted them to see -- they only wanted them to see the cost, less subsidies, the net cost, what they would pay out of pocket. So it requires you to go through a very intensive registration process where you have to give them your Social Security number, income, and all the rest of it, and only then can you browse plans, see what's available.


RAG: And that creates all kinds of technological problems behind the scenes.

GIGOT: You mentioned two problems. What's the other one, other than the consumer-facing one?

RAGO: The other is, it's transmitting wrong information to the insurers who are supposed to be providing the plans to consumers. So it sends inaccurate information about them. It adds them and deletes them over and over again. And the insurers get unusable information that they have to process by hand. And even then, they don't know if it's right. So it's -- you have three parties, the exchange consumers and insurers. And all of them might have different ideas about who is enrolled where.

GIGOT: And because of the exchanges, in order to operate effectively, need enrollees, particularly young, healthy enrollees, if you can't get those people on -- if go on five times and you say, forget it, I'm not going to go on, and you might have been on the margin to begin with, you are just not going to get enough people to enroll to make these things work.

RAGO: That's right. And we actually have no information about the 36 exchanges that the federal government is running. They've refused to release any kind of information. How many people are enrolling? What kinds of plans they're choosing. How healthy they are. HHS refuses to testify before Congress, at least so far. So it's really a black box here.

GIGOT: Kim, political accountability for any of this? I know that that's an unheard of concept in Washington, but if anything like this happened in the private sector, the V.P. or the senior V.P. would be out on his ear. What - who's going to be held responsible?

STRASSEL: Well, one of the problems here is because we just spent two weeks with all the headlines on government shutdown, this story has not been as great as it should have been. You're beginning to get a little bit of blowback. For instance, you had a Republican Senator this week call on HHS Secretary Kathleen Sebelius to resign. And you're probably going to hear some more calls along those lines. At the very least, there's going to be a focus on who was actually running this technology program from within the administration. You've even got Democrats now suggesting that there are heads that should roll, so you may see some firings. But that doesn't get to the fundamental question of how you actually fix this, and that could be much harder, Paul.

GIGOT: Forget Republicans. If I were a Democrat, I'd be furious. This is their signature program. This is supposed to be wonderful. The government gives you free insurance. It's easy. This is how modern government, modern governments can function.

HENNINGER: Exactly, Paul. This is the P.S. (ph) to raise the stance (ph) of big government and big government is in pieces. I think you have to put responsibility on Barack Obama. This is a perfect reflection of his hubris. The president thinks, if he thinks or says something, just waves it into reality, it happens, like Tunkhannock (ph) telling the waves to recede. In this case, it is not happening. They overreached. And I think the Republicans should just point that out over and over. This is big government falling apart.

GIGOT: And HHS isn't -- is refusing even to go to Congress and talk about it.

RAGO: That's right. All the contractors that HHS hired are denying paternity --


-- you know, wiping down their websites. "We have no part of this."


Some of the big ones, CGI Federal, it's a Canadian company, and some of these other ones are refusing to talk to the press. It's amazing.

GIGOT: What a debacle.

When we come back, an increasingly nasty statewide campaign with big implications for national politics. From the Democrats' war-on-women strategy to Hillary Clinton's 2016 ambitions, a look at what's at stake in the Virginia governor's race, next.


GIGOT: The race for governor in Virginia is heating up. And with just over three weeks to go, the battle between former Democratic National Committee Chairman Terry McAuliffe and Republican Attorney General Ken Cuccinelli is taking on national significance as both sides assess the potential fallout from the government shutdown, the success of the Democrat's war-on-women strategy, and Hillary Clinton's plans for 2016.

We're back with Dan Henninger, Kim Strassel and Steve Moore.

So I want to show you all an ad that Terry McAuliffe is running against Ken Cuccinelli to start. Let's roll.


UNIDENTIFIED ACTRESS: I've very troubled by Ken Cuccinelli.

UNIDENTIFIED ACTRESS: He tried to change Virginia's divorce laws.

UNIDENTIFIED ACTRESS: To prevent women from getting out a bad marriage.

UNIDENTIFIED ACTOR: Ken Cuccinelli denies climate change exists.

UNIDENTIFIED ACTOR: And he used taxpayer dollars to investigate a UVA professor doing research.

UNIDENTIFIED ACTRESS: And Cuccinelli tried to ban common forms of birth control.



UNIDENTIFIED ACTOR: Ken Cuccinelli is just way too extreme.


UNIDENTIFIED ACTOR: Way too extreme.

UNIDENTIFIED ACTRESS: Way too extreme for Virginia.


GIGOT: You got that? That way too extreme?


That bill that in enough to drive that message home?


So, Kim, what do you make of that strategy?


STRASSEL: This is not a new strategy, Paul.


This is actually a strategy that Democrats fine-tuned last year in the presidential election. They used in states like Indiana and North Dakota. You go into a purple or a red state, you take the social conservative, you focus on wedge issues, things like divorce, abortion, contraception --

GIGOT: He's not really against divorce?

STRASSEL: No, of course, he's not. Of course, he's not.


GIGOT: You can't ban divorce.

STRASSEL: Ken Cuccinelli is a respected lawyer. And he's not for any of these things that this claims. But you go out there, you claim those guys are too extreme for the state they're in. You drive up their negatives, particularly among these key voting groups, like women, suburban women, for instance, and then you -- the Democrat swoops in and says, I'm the moderate, sensible alternative, and you win the election.

GIGOT: You know, Steve, this is a different campaign that McAuliffe is running. He's running really in Virginia as an Obama liberal on the culture. And previous Democratic winners in recent decades in the state have run more as cultural centrists. I'm talking about Tim Kaine and Mark Warner. They were very cautious on things like gun control, like the abortion issue, like the environment. But now, McAuliffe's really running on this new coalition, this coalition of young people, as Kim talked about, women, minorities. Does that mean Virginia's changing as a state and becoming much more Democratic?

MOORE: Well, by the way, Terry McAuliffe is about as much a Virginian as you and Dan Henninger are.



GIGOT: Hey, I lived in Virginia for 13 years, my friend.


MOORE: I know you did. But you know --


GIGOT: I escaped the Beltway. You stayed there!


MOORE: He's about as -- look --


-- he is a creature of Washington. And the point about Virginia politics, it's very interesting, there's northern Virginia, which has a huge population, which is connected to Washington, but then there's the rest of the state, which is more a southern state. And Ken Cuccinelli will have to clean up in those areas outside of northern Virginia in a big way, places like Virginia Beach and Richmond, to make up for the ground that he loses.

But you're right. Virginia is the ultimate battleground state right now. If Terry McAuliffe wins with this strategy in Virginia, you can bet your -- you know, you can bet that this is going to be used in a lot of states in 2014.

GIGOT: How does the shutdown in Virginia -- about 30 percent of the electorate is in the D.C. -- Washington, D.C., suburban area. A lot of them are government workers. This can't be helping Cuccinelli.

HENNINGER: It can't be helping at all. And I think it probably just reinforces the negative message that McAuliffe is running against Cuccinelli. It's the last thing he needed.

Now his people are saying, we didn't need the government shutdown because it makes it hard for us to talk about all the positive things that Cuccinelli represents. Just to pick up Kim's point, the Democrats, from the president on down, in every election, run the same negative model over and over. I remember watching Hillary Clinton in the Democratic primaries four years ago. She was terrific, but it was an entirely negative message. By now you would think Republican candidates would have figured out how to respond to these charges. They would be prepared going in for them. But it seems they never are.

GIGOT: How important is this campaign, McAuliffe's victory, for the Hillary Clinton candidacy in 2016, Kim?

STRASSEL: Look, Hillary Clinton is out stumping for him, has endorsed him, is raising money for him. Because she knows that Virginia is one of those absolutely vital state to getting the electoral votes that you need if you want to win the presidency. And Terry McAuliffe is many, many things, not all of them pleasant, but what he is very good at is raising money and getting out the vote. If he is the governor of Virginia, he is going to make sure that every little last piece of apparatus in that state is geared towards helping a Hillary Clinton's presidential run.

GIGOT: Steve, prediction? Briefly?

MOORE: Ken Cuccinelli is not out of this race. He's down in the polls but I think it could be very close.

GIGOT: All right, thank you.

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.

Steve, first to you.

MOORE: This week, DreamWorks rolls out its new movie, the "Fifth Estate." This is a movie that aggrandizes the Julian Assange of WikiLeaks, which of course, is the organization that leaked tens of thousands of highly sensitive information. All it benefited was the terrorists. Shame on Hollywood. Paul, if you want to do your patriotic duty this weekend, do not go see this movie.



RAGO: Paul, the sharks are back. A hit this week to Mark Cuban, the owner of the Dallas Mavericks, who beat specious insider-trading charges brought by the SEC. Defendants usually settle, rather than fight. Hopefully, this will help set a precedent for the non-billionaire accused.



HENNINGER: Paul, a huge hit this week to Army Captain William Swenson, who was given the Army's highest award, the Medal of Honor, the military's highest award, for actions he took at the Battle of Gonjall (ph) in 2009 in Afghanistan, repeatedly running under enemy fire to save wounded comrades and get them on to safety. Barack Obama talks all the time about how we are getting out of Afghanistan. I'm glad we're recognizing the best people we have and what they did while we were in Afghanistan.

GIGOT: Hear, hear, Dan.

On the Mark Cuban case, it's five year, this is nearly five years this case is going on. Mark Cuban is a billionaire. He could afford to defend himself in court and spend all that money on legal fees. As he said, after the verdict, the average person just doesn't have those resources.

RAGO: Right, just gets completely crushed by the federal apparatus.

GIGOT: So hear, hear. Maybe he should finance some of the other folks that want to defend themselves.


And remember, if you have your own hit or miss, please send it to us at jer@FOXnews.com. And be sure to follow on us Twitter, @JERonFNC.

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

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