This is a rush transcript from "Journal Editorial Report," June 28, 2013. This copy may not be in its final form and may be updated.

PAUL GIGOT, HOST: This week on the "Journal Editorial Report," the NSA leaker still on the run while the Obama administration faces another setback as Russia refuses to return Edward Snowden. How should the U.S. respond to this latest diplomatic embarrassment?

Plus, landmark rulings from the Supreme Court on voting rights, racial preferences and more. We'll break down what the high court's decisions means for race in America.

And a key Senate vote puts immigration reform in the hands of the House. Now it faces an uphill battle. Will lawmakers get onboard with the overhaul?

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

The hunt for NSA leaker, Edward Snowden, straining already tense diplomatic relations between the United States and Russia. Snowden apparently still in a Moscow airport while President Obama says he shouldn't have to call Vladimir Putin to get him back.


PRESIDENT BARACK OBAMA: I'm not going to have one case of a suspect who we are trying to extradite suddenly being elevated to the point where I've got to start doing wheeling and dealing and trading on a whole host of other issues simply to get a guy extradited so that he can face the justice system here in the United States.


GIGOT: How will this affect the administration and the United States' influence abroad?

Joining the panel this week, Wall Street Journal columnist and deputy editor, Dan Henninger; foreign affairs columnist, Bret Stephens; Washington columnist, Kim Strassel.

So, Bret, the president says that, hey, it's just a 29-year-old hacker, I shouldn't have to scramble the jets, as he put it --



GIGOT: -- to get him back.

STEPHENS: The head of his National Security Agency, General Keith Alexander, says that Snowden has done irreparable damage to American security.

GIGOT: He's not only one. Others have, too.

Which is it?

STEPHENS: I would -- I would trust General Alexander. He is the guy that knows what sort of secrets Snowden had in his possession and the sort of secrets the Chinese and Hong Kong or the Russians at the airport in Moscow could easily have downloaded.


GIGOT: Almost certainly download, don't you think?

STEPHENS: Almost certainly. This is what these guys do for a living. Oh, we would like to borrow your computer for a brief inspection. We will give it back to you tomorrow, that kind of thing.

This is a major breach of American security, whether Snowden meant to hand over these documents, inadvertently or advertently. The Russians and Chinese now have access to the National Security Agency in a way they didn't have before. And terrorists can begin to understand already how it is that we go -- we look at patterns of communications to see how they may or may not be speaking. So for the president to say this is not a big deal is a big deal.

GIGOT: Kim, why is -- would the president politically downplay this when Justice Department is -- brought charge against Snowden?

KIM STRASSEL, WASHINGTON COLUMNIST: Well, I think it goes to that question you had in the opening, Paul, was American influence. I think the president is worried their influence is such that they may not be able to get Snowden back. And so, if they turn this into a very high-profile issue and lose, then they look back.

I think there's also, Paul, an element of incompetence, too. There's been a strong tendency to rely on very legalistic means of doing this --

GIGOT: Of trying to get him back, yeah.

STRASSEL: Of filing the right papers. Yes. And the president hinted, we've done all this, this should be routine. It's not routine. And this president seems -- seems not to understand that you do have to pick up the phone on things like this. You have to exert pressure because just going through the motions is not going to get you what you want.

DAN HENNINGER, COLUMNIST & DEPUTY EDITOR: Can I just reemphasize what Kim said?

GIGOT: Yeah.

HENNINGER: That statement we listened from Barack Obama was unpresidential. I cannot imagine George Bush or Bill Clinton would just go out and say, I'm not going to deal with some guy because it is not the president's job to say that in public. And that sort of unpresidential behavior is watched closely by leaders all over the world. And if they see, as Kim is suggesting, that he's not up to the job, it gives them an incentive to move forward and take risks that we wouldn't want them to be take.

STEPHENS: This is the Rodney Dangerfield presidency.

GIGOT: I get no respect.

STEPHENS: I get no respect. Which is funny, given that this was the president who is supposed to restore respect.

GIGOT: But the implication with Dangerfield was he deserved respect.


This president -- your point is he does not deserve respect because he does not seek it.

STEPHENS: Also because there are no consequences to confronting the United States, with challenging the United States. You know, in India, John Kerry said there would be consequences -- he didn't specify what they would be -- for the Russians for the Chinese. The president is dialing even that back. He should be on the phone talking to his good friend, Vladimir, and saying, look, you and your billionaire friends want visas to the United States, access to the West, if you don't hand over Snowden quickly, there will be restrictions on that.


GIGOT: That's the leverage we have, Kim?


GIGOT: We basically may have to say, look, there will be consequences and they will be A, B, C, D, and they will be -- not necessarily regarding Snowden but on other things like visas and relations.

STRASSEL: That's right. It's been left to Congress -- this is a great joke here -- to make some of those threats at least with regard to Ecuador, for instance, where Snowden is supposedly looking to potentially ask for asylum. We have members of Congress coming out and saying, look, Ecuador, we've got a free trade agreement with you that's up for renewal next month. And you better think hard before you give this guy sanctuary because we are going to block access to your goods. So, you know, but the president has not been the one making those, outlining those issues.

GIGOT: There's some evidence that Snowden may have been working with some other people before he took the job at the consultant, Booz Allen, and had so much access to these NSA files. He was working with -- apparently with the reporter, Glenn Greenwald, before he took the job.

What -- do we know everything yet about this story or is there a lot more to come?

HENNINGER: Oh, there is a lot more to come, Paul. The idea that one guy could have pulled all of this off -- he had help in Hong Kong. He had safe houses there. Regardless of how the president once characterized it, the FBI and national intelligence has got to chase this guy down and pursue this story until we get him back and get the full story out.

STEPHENS: This is not the case of a whistleblower. He went to the NSA looking to leak information.

GIGOT: Right. And could a person of that experience have access to that stuff, so much across the board? We really need to get to the bottom of this.

When we come back, a big week for the Supreme Court, including a surprising ruling that dramatically shifts the debate on race in America. Is this the end of racial preference?


GIGOT: The U.S. Supreme Court redefines civil rights and equality in America this week in a series of landmark rulings. In one controversial decision, the court struck down a key part of the Voting Rights Act of 1965. One dissenting justice said it amounted to the demolition of the law.

For more, I'm joined by Political Diary editor, Jason Riley, and senior editorial page writer, Collin Levy.

Collin, let's take on the voting rights decision first. A lot of liberals saying that this is going to send us back to the era before the Voting Rights Act, back to the era of Jim Crowe where black voters were disenfranchised. How do you see this decision?

COLLIN LEVY, SENIOR EDITORIAL PAGE WRITER: I think it is really important to note here that this was not a radical decision. What the court said here basically was that the Constitution requires that all states be treated equally except in extraordinary circumstances. Those extraordinary circumstances existed in 1965 when the Voting Rights Act was passed because there was rampant and extreme discrimination in certain states. Those conditions no longer exist. And as Chief Justice Roberts wrote, current burdens on the states need to be justified by current needs.

GIGOT: Right.

LEVY: So they said take the formula that you had in 1965 and reconsider it. If you still think this is important, that's fine, we can do it, but you need to come up with a new formula for which states get this extra scrutiny.

GIGOT: And Roberts signaled this in 2009, an earlier case, inviting Congress to rewrite that formula. It didn't.


GIGOT: And he said --

LEVY: That's right. That was an 8-1 decision, by the way.

GIGOT: Right.

And Roberts pointed to the Democratic -- to liberal justices who supported that signaling, even though they opposed this decision.

JASON RILEY, POLITICAL DIARY EDITOR: The president's view on this, his reaction to the decision, his disappointment in the decision is very telling. It's telling of the left's view. The first black president pretending like nothing has changed on the voting rights front in the past 40 years is just a ridiculous notion to begin with.

But it speaks to why the left likes this provision. They don't like it because they are worried about voter access or black voter access. Black voter registration in the South exceeds what it is in other regions. In the last election, black voter turnout exceed white voter turnout.

GIGOT: It's hard to make the case for disenfranchisement.

RILEY: They like this law for what it can do to help them determine election outcomes -- racial gerrymandering, blocking voter I.D. laws in states and ballot integrity and so forth. That's why they are so wedded to this provision. It has nothing to do with ballot access, which was the original intent of the Voting Rights Act. It's been a huge success on that front.

GIGOT: Dan, let's move on to the Fisher case where there was a more ambiguous ruling on racial preferences. The court said -- in education -- basically said Texas and the lower courts must revisit their formula for admitting students, and not make race as prominent a feature. But -- so that was a victory for the plaintiff, Abigail Fisher, but it did not declare racial preferences were unconstitutional.

HENNINGER: Well, it said that they have to make -- Justice Kennedy argued, because he was in the dissent in McGruder (ph), the previous decision, which said the diversity was a -- was an acceptable --

GIGOT: A justification.

HENNINGER: A justification. And they had this test called strict scrutiny, and what Kennedy said in this case was that you cannot just gesture in the direction of scrutiny and say, oh, we have tried to have a race-neutral program, it doesn't work, so we are going to go to a race- based program.


HENNINGER: You have to prove it. You have to do analysis. And there is a lot of legal analysis going on about this case by people that have written about it, like Edward Blum, of the Project of Fair Representation, who was on Ms. Fisher's legal team. They think that a lot of these universities are really going to have a difficult time passing Justice Kennedy's test, that there will be a move away, lest they face a wave of litigation of this sort.

GIGOT: That's not a universal view, though, Jason, because a lot of people think, well, Justice Kennedy, 76 years old, he's the swing vote on these cases. He missed maybe one of his last opportunities to really make a firm clear declaration on racial preferences.

RILEY: Right. Are racial preferences constitutional? That's the question we need decided. Justice Thomas gets this and in his concurrence he pointed this out.

The problem here with these baby steps is the harm that racial preferences are doing to the intended beneficiaries. We have a lot of new research showing that it is hurting black graduation rates, as kids are sent to schools where they are less likely to graduate, instead of going to schools where they can succeed. It hurts the number of black scientists and doctors that we get because kids are going at the fields where it is easier to graduate than -- because of the schools they are going to.

GIGOT: Right.

RILEY: So there's actual harm being done. It is not just about the equal protection and so forth. The intended beneficiaries of these policies are actually being damaged by these policies.

GIGOT: So, Collin, would you agree --


LEVY: I appreciate, yes.

GIGOT: Go ahead.

LEVY: I appreciate -- yeah. I appreciate Jason's point. That's absolutely true in the larger sense. But I really think that you can't minimize the fact that you have seven justices signing on to this opinion that says that racial preferences are extremely disfavored, and that the universities are entitled to known deference in how they enact those policies in terms of, you know, trying to put through race-based policies when race-neutral ones are available. I think that's a big deal and I think it signals where the court is going to go in the future.

GIGOT: Dan, we have to mention here the gay marriage rulings, which are obviously landmarks as well. What does this tell us about the future of gay marriage in America?

HENNINGER: Well, I think it tells us that the effort to enact gay marriage, make it valid and the states will continue, but the battle will be joined in the states out there. And rather than -- you cannot get redress in the Congress or the federal government. That will not work. The battle will continue in the states.

GIGOT: Because they overturned the federal statute so the battle returns to the states and we will see where that ends up.

All right. Coming up next, the Senate passes historic immigration legislation. But will hurdles in the House bring this reform plan to a halt?


GIGOT: The Senate took a major step towards overhauling the nation's immigration laws this week in what some are calling the most comprehensive reform bill in decades. But as it heads to the House, the battle is far from over. What are the prospects for this legislation going forward?

Jason, let's deal with the merits of the Senate bill first. Is this an improvement on current law?

RILEY: On balance, I would say it is an improvement because I think the major problem with the current system is two-fold. One, too few legal ways for people to come. This expands that, gives people more legal ways into the country, which is really what drives illegal immigration to begin with.

Secondly, it does something about the huge illegal population we already have here now.

GIGOT: Puts them on path to citizenship --


RILEY: If they meet certain requirements.

GIGOT: -- 15 years down the road.

RILEY: Yeah. I would say those are the two major problems we have today. This bill takes a step in the right direction to address both of them.

GIGOT: Isn't the 1,200-page bill, though, by some definition, flawed? I mean, just -- you write this omnibus legislation that has so much in there that isn't even related to immigration. What's the -- what are the problems with this bill?

HENNINGER: Well, the problems with the bill, Paul, it is too complex, just like every piece of legislation they write right now is too complex. I think we have to get over that. It is not going on change. All right? As Jason is suggesting, it does, in principle, create a better system, guest workers, H1-B visas for high-tech workers --


GIGOT: A lot of automatic green cards for science and technology --


GIGOT: -- graduates from foreign countries. So if you graduate from, say, Stanford, and intel makes you a job offer, you are in. You can stay in this country rather than return to India or China and have to start a company there.

HENNINGER: And I think to resolve the grinding problems at the center of each of those subjects that we should probably move forward and get the bill passed and let the Americans marketplace sort through it. Won't be easy. I think we have enough faith in the market to assume they will be able to get it across the goal line.

GIGOT: Kim, what about the prospects in the House? Speaker Boehner is saying he is not going to pass anything that does not have a majority of Republicans in support, Republicans in support. That's a pretty tall barrier, given the fact some Republicans simply will not vote for this path to citizenship that Jason describes.

STRASSEL: Yes. That line he put out the there could really prove a problem, Paul, and here is the reason why. All along, the House has been saying it is going to pass it in pieces. It's not going to take up the Senate bill and it's not going to pass an overwhelming -- and the reason --


GIGOT: And that makes sense. That makes sense.

STRASSEL: It does. It does. It is because Boehner knows that he has certain coalitions of Republicans that support some of the free-market aspects of this bill. For instance, the guest worker program, et cetera. The problem he has always had is whether or not he can get a majority of the majority to support a pathway to citizenship. That's a big problem, too. Because if the Republicans think that they can pass a sort of halfway immigration bill out or pieces of it that does not include that pathway, and the president may sign it, they are cheating themselves.

GIGOT: Dan says pass and it then let the market sort it out.

Jason, what's your advice to the House?

RILEY: I would keep in mind that there are a bunch of Democrats out there that want this issue. They think the demographics are on their side. They think time is on their side. The --


GIGOT: They don't want to pass this bill is what you're saying.

RILEY: Exactly. They don't want to pass it because they want the issue, not only next year in the midterm but going forward for decades. Democrats would love to be able to paint Republicans as anti-Hispanic. They know that immigration is a symbolic issue among a lot of Hispanic voters. So a lot of Democrats are indifferent as to whether this goes forward.


GIGOT: Yours would be to pass it, but how you would improve it?

RILEY: Well, one way to improve it would be to expand the legal ways to come, particularly for low-skilled workers. I think that's a big deal.

GIGOT: The visas are not adequate in the guest worker program --

RILEY: Not to meet the demand.

GIGOT: -- and for agriculture and that's -- it becomes an incentive for more illegal immigration.

RILEY: Exactly. And that's the problem with 1986 that people talk about. They talk about the amnesty provision. But the real problem with '86 was labor flows going forward, giving U.S. employers access to the labor they need going forward. 86 didn't do that. They shouldn't make the same mistake again.


HENNINGER: Paul, the path to citizenship -- we are talking about 11 million illegals. They can't become citizens until 10 or 13 years from now. I think just a fraction of those 11 million illegals are actually going to wait that long to become citizens, tht the problem is overstated. And that the Republicans fight it out in the political marketplace over the next decade. They will not be voting for 10 years.

GIGOT: Kim, what do you think the real prospects are? Just thinking about it in cold-blooded fashion?

STRASSEL: I think from a very cold-blooded fashion, I think that the most likely thing that you see, at least looking at things right now, is that you see the House pass out a border security element because that's, of course, something Republicans are obsessed on. You also see them potentially doing something on some of these guest working programs. I think a lot less certainty about, for instance, the pathway to citizenship and some of the other reforms that are in the Senate bill.

GIGOT: But it sounds like you think this thing could really go down in the House.

STRASSEL: I think that the Republicans are -- Republican leadership at least, understands that it would not be to their favor to not pass anything. I think that there are going to try to pass a product. The question is, will it add up to a comprehensive bill that the president signs? That's, I think, the real issue in the question.

GIGOT: Yeah, the Republicans -- in my view, if the Republicans were smart, they would use their power in the House to improve this bill, increase the avenues for legal immigration, and worry less about harassing the business and letting big labor get in and set wage rates.

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


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

Kim, first to you.

STRASSEL: A serious miss for President Obama for his latest attack on the economy in terms of -- which came in the form of his sweeping climate proposals of this week. There's new fuel efficiency standards for cars, there's new money for Solyndra-like products, there's new attempts to shut down coal plants. All of this is going to have a terrible effect on the economy and jobs. If the president put half as much interest and passion in things that would help all of those out of work, the economy might be get something where.

GIGOT: All right.


STEPHENS: Another serious miss to Susan Rice, outgoing United States ambassador to the United Nations, who, in leaving the U.N., denounced that body for which she said was the disgrace of its performance on Syria, saying history would judge the U.N. harshly. It is funny that she should denounce the U.N. for doing nothing about Syria when it is her own administration that has been leading from behind and doing absolutely nothing to stop the bloodletting in Syria.

GIGOT: All right.


LEVY: I have a miss, too. Sandra Levin, the ranking Democrat on the House Ways and Means Committee, who this week suggested that, hey, there was no political bias when the IRS tried to slow roll hundreds of conservative groups because the word "progressive" appeared on one look-out list and some liberal groups may have been screened, too. I think Democrats are trying to make this story go away, Paul, and it is not really work.

GIGOT: So progressives really were not as targeted as the others?

LEVY: Right.

GIGOT: All right.

That's it for this week's show. Thanks to my panel and to all of you for watching. Be sure to follow us on Twitter at JERonFNC. I'm Paul Gigot. Hope to see you all right here next week.

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