This is a rush transcript from "Journal Editorial Report," April 13, 2013. This copy may not be in its final form and may be updated.

STUART VARNEY, GUEST HOST: This week on the "Journal Editorial Report," President Obama releases his budget, pitching it as a peace offering to Republicans. But a closer look at the details suggests there's plenty more conflict ahead.

Plus, the Senate moves forward on gun control legislation, but is the bill they're looking at really what the president wanted? And could some red state Democrats wind up paying with their political lives?

And Beyonce and Jay-Z's Cuba trip sparks outrage. Other celebrities have done it, so what's the big deal?


PRESIDENT BARACK OBAMA: For years, the debate in this town has raged between reducing our deficits at all costs and making investments that start to grow our economy. And this budget answers that argument because we can do both.


VARNEY: Welcome to the "Journal Editorial Report." I'm Stuart Varney, in this week for Paul Gigot.

Well, at long last, President Obama released his budget for 2014 this week, calling it a fiscally responsible blueprint for middle class jobs and growth, and pitching it as a peace offering to Republicans. But after looking at the details, should we be hoping for gridlock? Let's ask Wall Street Journal columnist and deputy editor, Dan Henninger; assistant editorial page editor, James Freeman; and Washington columnist, Kim Strassel.

Dan, hoping for gridlock? What? You don't like this?

DAN HENNINGER, COLUMNIST & DEPUTY EDITOR: It sounds good for me based on what I heard President Obama say. So, on the one hand, he says, in the past, we've been trying to reduce deficits at all costs. That means cutting spending, as opposed to making some of the investments we need, which means increasing spending. And he says he's solved it. Well, he has. He has increased spending. It's up to 22 percent of GDP.

Here is an interesting fact. Before 2008, spending, federal spending was $2.7 trillion. In this budget, it's $3.7 trillion. Obama has increased spending in four years by a trillion dollars. Now, he's doing that because he wants it pay for infrastructure, high-speed rail, electric cars, even as the industry is going bankrupt and to do that he's going to need to raise taxes. Am I for gridlock, Stuart? I say so.


VARNEY: Kim, give me the big picture here, where there's talk that this budget is a compromise. Is it?

KIM STRASSEL, WASHINGTON COLUMNIST: This is not a compromise. It was certainly -- the White House wanted that to be the argument, but think of it rather as a fig leaf or a diversion away from what Dan was just talking about, a budget that's exactly the same that we've seen from this administration for the past four years. And that's why there will be gridlock. Because while you had this one little item in there, like an unchained CPI or the way that you calculate cost-of-living adjustments, something that the Republicans have talked about, and the president put that out, this is just a tiny item in the budget. The other 99.9 percent of the budget is a problem and it's the reason why you're not likely to see this grand deal that the press has been excited about this week. There is simply too big of a gulf. The White House wants vastly more spending and the Republicans are focused on the big problem of deficits and debt.

VARNEY: James, part of the budget is a plan to cap how much you can have in IRAs and Keoghs.


VARNEY: What's the latest on that?

FREEMAN: It's kind of amazing. When you look at this economy's slow growth, we've got a terrible employment report, and the administration decides that going after the incentive to work, save and invest, reducing that incentive is what's needed now. It's kind of amazing. So basically the administration, Barack Obama decided that a reasonable amount of retirement saving is roughly $2 to $3 million, and beyond that, nobody needs any more tax advantages in these plans.

VARNEY: The White House did use that word, "need." We know how much you need.

FREEMAN: Right. And reasonable. And the idea -- it should be -- it bothers any American that the government decides how much you ought to be making, I think. But beyond that, people who save, who fund America through their investments and who build up a large nest egg through hard work and thrift, ought to be rewarded and celebrated. And unfortunately, it's kind of a commentary on their hero that now is going after them.

VARNEY: Then there's a cigarette tax increase, 94 cents a pack, and that will be used to pay for universal pre-school.

Kim, what do you make of that?

STRASSEL: I think that that this is going nowhere. And it's also -- interestingly, we also wonder what guides Barack Obama. You can look out at a lot of big liberal states like Illinois where he came from, places like this that has instituted cigarette tax. What they quickly found out, placing every higher burden on taxes on a diminishing group of taxpayers like smokers is not a very good way to fund your long-term ambitions. The problem the administration has is it has got to come up with the money somewhere and smokers' tax sounds better than most things, so that's what it threw out there for its preschool initiative.


HENNINGER: The way that they hope to come up with the money is -- can be summed up in two words, a "grand bargain." The White House wants to pull the Republicans into a negotiation over a grand bargain in which they commit to some reduced spending, but the Republicans have to raise some taxes. Politically, that's a poison chalice for the Republican Party. If they do that, they're probably going to lose the House in 2014. And that's the only thing that Barack Obama has his eye on right now. And the question is, will the Republicans take the bait.

VARNEY: Is it really a reduction in spending? That's only in a very narrow area.

HENNINGER: The promised of reduction in spending.

VARNEY: It's a minuscule reduction in spending. And I believe in this budget, President Obama becomes the first president in history to spend $4 trillion in one year. And we do that in the fiscal year 2015. Spending goes up every single year.

FREEMAN: And trillions of more debt --


FREEMAN: My favorite moment from that from Wednesday announcement was when he said there's not a lot of smoke and mirrors in his budget. In other words, yes, I'm trying to get some gimmickry and pull stuff through in this package, but other parts of it are OK.


VARNEY: Kim, will it fly politically?

STRASSEL: No, this is nowhere. This is coming a month after both the House and the -- I mean, the House and the Senate passed their own budgets. You almost have to wonder what the point of this was. The idea behind budgets the president puts out a plan, a blueprint to guide the rest of Congress to put forward his ambitions and then it cements what sort of shapes what comes after. This came a month later. The debate is short of largely done. He has a little concession on calculating retirement benefits. But this has done nothing to move the ball toward a bigger discussion or a bigger debate or a grand bargain.

VARNEY: All right.

When we come back, the Senate moves to debate gun control legislation, but is it the bill that President Obama wanted? And could this decision to push forward on the issue cost some in his party their jobs in 2014?



OBAMA: Connecticut, this is not about me. This is not about politics. This is about doing the right thing for all the families who are here that have been torn apart by gun violence.



VARNEY: President Obama in Connecticut Monday ahead of what turned out to be a big week in the fight over gun control. Despite a filibuster effort by some Republicans, the Senate voted Thursday to move ahead with the debate on a bill. That includes a bipartisan deal brokered by Democrat Joe Manchin and Republican Pat Toomey to expand background checks to purchases made at gun shows and over the Internet.

Kim, the president just said, it's not about politics, but is it? What are the politics here?

STRASSEL: I think what -- the way you need to look at this, Stuart, is what this bill, what is on the floor of the Senate now is answering whether politics of gun control have changed. The White House made an enormous bet that it had, and their plan to put out this very aggressive plan for gun control and lambaste them and use outrage against Republicans if they stood in the way. What has happened is that most of the president's proposal, things like the assault weapons ban, limits on magazines have all been stripped out of this bill, and they've been stripped out by the president's own party. Because what many of the Senate Democrats from Alaska, Montana, Arkansas, Louisiana realized the politics haven't changed and this could be a career ending vote if they go along with it, not just because the voters don't like it, but potentially it is unconstitutional given the Supreme Court's recent ruling in Heller.

VARNEY: Dan, what do make of the politics of where are we now on the gun control issue?

HENNINGER: Stuart, I think what I make of it is that I think it's entirely possible that there's not going to be a gun control bill, pretty much for the reasons Kim was suggesting, that the White House has overplayed its hands.

Let me read some quotes from the Democratic Senators at the center of this. David Pryor, of Arkansas, says, "As a general rule, people in Arkansas do not want any gun control. It's just sort of a blanket statement." Heidi Heitkamp, of North Dakota, when she was running, ran on schools, tractors and guns, it's how we live. She met with the Newtown families and she said to them directly to their face, "I'm going to vote for the voters of North Dakota."

Gun control in the states that Kim just mentioned is simply an issue. No matter what they pass, those voters are going to vote against their elected representatives. It's just that hard out there in the country. And the White House doesn't understand that. And that's why Harry Reid is having such a difficult time getting any sort of bill through the Senate.

VARNEY: Did Newtown not change the political equation?

HENNINGER: Not out in the country, I don't think it did.

FREEMAN: For a while it did, but you're already seeing, at least according to the most recent Wall Street Journal/NBC poll, that the demand for gun controls is being reduced. It's coming down dramatically over the last month. But part of it is the public looking what's happening. The president says it's not about me, it's not about politics. Well, you look at what these bills would do. All of these recent shootings were about mentally ill people shooting unarmed victims. There's nothing in either of the Toomey amendment or the underlying bill that addresses this tough question of, how do you keep guns out of the hands of mentally ill people.


FREEMAN: There's also nothing about violence in the media. I'm not saying I want to control the media. But if you want to talk about, why do these things happen, Campbell Brown had a very interesting op-ed for us recently going through the factors that drive someone to do this.

VARNEY: Why is there nothing in this bill or these proposals about mental health and accessibility?

FREEMAN: I think the politicians probably understand that anytime you're saying, let's create more authority to lock people up or to force them to take medication, you're going to get a big pushback, both from civil liberties groups on the left, and Libertarians on the right. It's a very tough issue. It's not something that the president can solve by making a speech and getting people fired up to attack Republicans. These are tough issues on when can the state force people to do things.

But that is the issue that if they wanted to wrestle with a tough one, it's, how do you see mentally ill people from getting weapons.

VARNEY: Kim, could this issue cost the Democrats the Senate in 2014 or am I going way too far on that?

STRASSEL: No, it certainly could cost them a number of seats. And this is why you see them -- they are the ones -- you know, you hear the White House and it likes to say that Republicans are still in the way. The Republicans have not touched this Senate bill. To the extent most of the president's proposals have been stripped out, it has been at the demands of Senate Democrats from places like Arkansas and Arkansas, because Harry Reid knows they will not vote for these provisions.

But as Dan said, the bigger question, if they vote for any gun control, will there be a backlash among their voters? And that is why you saw some Senate Democrats, just as we vote against even having a debate on the bill, and they didn't want to bring it to the floor.

VARNEY: Two Republicans -- two Democrats, I believe, actually joined the filibuster.

HENNINGER: Senators --


VARNEY: As you pointed out.

HENNINGER: -- and Pryor. Yes.

VARNEY: This puts Harry Reid in an impossible position, doesn't it?

HENNINGER: I think he's got to be --

VARNEY: Or difficult, for sure.

HENNINGER: He's got to be extremely uncomfortable. He has other business to take care of. For instance, the Senator from Montana is Max Baucus, the chairman of the Finance Committee, and he's the one who is supposed to be taking care of tax reform, which is one of the biggest issues on the table. And poor Max Baucus is there saying, don't push this gun control debate at me.


VARNEY: Well, where does the president stand? Does he win or lose out of this gun control -- I'm going to call it a mess. Does he win or lose?

HENNINGER: I think he's probably going to lose. He believes he will win because then he can tag the Republicans as the opponents of gun control. And then he's going to try to convince the country to push them out of office in 2014. That's the theory.

VARNEY: Last word, Kim. Does the president win or lose on the gun control issue?

STRASSEL: This is the problem is that he wanted the headlines to be Republicans are the problem and, in fact, it's his own party that's standing in the way.

VARNEY: All right.

When we come back, a visit to Cuba by superstar couple Beyonce and Jay-Z sparks outrage. Well, other American celebrities have done it, so what is the big deal?


VARNEY: Well, outrage from many Cuban-Americans and some Republican lawmakers after pop singer, Beyonce, and her rapper husband, Jay-Z, paid a visit to Cuba. The pair celebrated their fifth wedding anniversary in Havana last week, part of a trip sanctioned by the Treasury Department. Now, under U.S. law, American citizens can't travel to Cuba as tourists, but can obtain permission for academic and cultural exchange purposes. The visit comes as Secretary of State John Kerry considers whether the Communist nation should be taken off the list of state sponsors of terrorism. A decision on that, expected by the end of this month.

Wall Street Journal columnist, Mary Anastasia O'Grady, joins me with more.

I'm inclined to ask, what's the big deal about a couple of celebrities going to Cuba? Because -- listen to this -- from Republican Senator Jeff Flake, he says, "So Beyonce and Jay-Z are in Cuba, fine by me, every American has the right to travel there." What's the big deal?

MARY ANASTASIA O'GRADY, EDITORIAL BOARD MEMBER: Frankly, Stuart, I'm surprised that a U.S. Senator is recommending that Americans break the law. I mean, this is a law that Beyonce and Jay-Z don't like. I can tell you some other laws that I don't like and I don't think he's recommending that I break the law. So if he wants to change the law, I'm fine with that, and I think there are reasons why -- you know, you could make arguments that the law should be changed. But I don't think the outrage is about the law. I think it's a moral issue.

VARNEY: Well, the treasury sanctioned it. They said it's legal to go there.

O'GRADY: Well, yes, and that's because --

VARNEY: That's a legal argument.

O'GRADY: -- if you're a privileged person, you can get in these academic groups that are allowed to go to Cuba. Probably, technically, it's legal, but that's not what the outrage is about.

VARNEY: Put the legal stuff on one side. Give me the moral outrage. Why should I be morally outraged that these two go to Cuba?

O'GRADY: Well, you know, Cuba is a police state, OK? It's a police state run by a bunch of old white guys, if you'll forgive me, and many of the people who are in jail are young black people, OK? So that sort of makes you think about, for example, South Africa. Now, in the case of South Africa, we didn't have an embargo, but there was a moral outrage about the idea that some people -- that the government was oppressing a major segment of the population. And I would think that if Jay-Z and Beyonce want to go to Cuba, they would say to the Cuban government, you know what, we would like to visit with, for example, Sonia Gato, a black woman in prison because she spoke out against the regime, or one of the rappers who is now in prison right now. There is a whole hip-hop underground rap scene in Cuba that is very disrespectful to the old dictator, and they are frequently put in jail. Instead, they go to Cuba and parade in the streets with the police state, and basically, get on their side of the argument. I think that's really reprehensible.

VARNEY: Does Cuba get something out of this? What do they get out of it?

O'GRADY: Well, Cuba wants to lift the embargo and be taken off the list of state-sponsored terrorists. Now, this is kind of a glam tour for them, you know, to present to the world what a normal place they are. But we have to remember that Cuba provides R&R and medical care to FARC terrorists from Colombia. Whenever the terrorists want to break from the jungle in Colombia, they go to Cuba and relax.

VARNEY: What's your judgment? Do you think that this police state is enhanced in its attempt to get off the list of terrorist sponsoring nations? Does it improve its chances of getting off a list by inviting these two to Cuba?

O'GRADY: Yes. It's all part of an image makeover they've been working on for a while. They other thing is they want the embargo lifted because they want credit from the World Bank, the other multi-laterals, and from America banks. You know, Stuart, that Cuba defaulted on billions of dollars of debt from all over the world in the last 50 years? No one will lend them money anymore. The only country that doesn't have defaulted debt with them is the U.S. And that's why they want to open the credit lines from the U.S.

VARNEY: Call it. Will John Kerry take them off the embargo?

O'GRADY: I don't think he will.

VARNEY: No? He won't do that?

O'GRADY: I don't think he will. No. I think, given their relationship with Iran, their relationship with FARC terrorists, I think it would send a bad signal from the administration, and I don't think he'll do it.

VARNEY: We'll get the decision this month, I believe, right, at the end of the month?


VARNEY: All right. Thank you, Mary.

O'GRADY: Sure.

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


VARNEY: It is time now for our "Hits and Misses" of the week.

And, James, you're first.

FREEMAN: This is a miss to Congressman -- former Congressman Anthony Weiner, the rumored new entering into the New York mayoral race. It's a big letdown, Stuart, because a lot of New Yorkers -- pardon the expression --


-- a lot of New Yorkers have been hoping that police commissioner, Ray Kelly, who has been responsible for this dramatic reduction in crime, would enter the race, and we end up with, it looks like Anthony Weiner, yet again.

VARNEY: That was the easiest miss of the week I've ever heard in my life.


FREEMAN: Absolutely.


VARNEY: Mary, you're next.

O'GRADY: This is a miss for a bill filed in the California legislature that would legally require health insurance companies to offer infertility treatment to gay couples. This is asking the insurance companies to pay for treatments of a condition that the insured does not have. Obviously, gay couples are not going to conceive on their own, but - -


-- that hardly makes them infertile. Of course, this is going to cost all of -- everyone who wants to be insured something, so it's not a question of --

VARNEY: This was legislation. This is not a court interpretation of equality? This is legislation?

O'GRADY: It's a bill.

VARNEY: We want this.

O'GRADY: Yes, exactly.

VARNEY: That's a miss, I believe --


-- on your part.

O'GRADY: Yes, it is.

VARNEY: All right, thank you very much, indeed.


HENNINGER: Stuart, I'm giving a miss to the world's most popular social media, Twitter. Everyone recalls that Andy Warhol said that everyone would have 15 minutes of fame. Well, your 15 minutes are up. Job recruiters are now asking applicants to send their resumes in via Twitter. That means you have to reduce your life, your resume to 140 characters. So, Mr. Varney, you know, would you sell yourself to --


HENNINGER: -- right now, 10 seconds.

VARNEY: you know perfectly well I was going to ask you to put your resume into 140 characters or less.




VARNEY: All right, everyone, thank you very much, indeed. Remember, if you have your own "Hit or Miss," please send it to us at jer@FOXnews.com. And be sure to follow us on Twitter: @jer on FNC.

That's it for this show. Paul is back next week. And we do hope to see you then.

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