This is a rush transcript from "Journal Editorial Report," September 22, 2012. This copy may not be in its final form and may be updated.

PAUL GIGOT, HOST: This week on the "Journal Editorial Report," another rough week for Mitt Romney has his campaign settling on a new strategy. Will their reboot work?

Plus, a closer look at the latest polls reveals some bright spots for the embattled Republican. We'll tell you what they are.

And, new information about the deadly consulate attack in Libya raises new questions about the administration's response. We'll have the latest on that.

And a look at the winners and the losers in the Chicago teachers strike.

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

After another rough week for Republican presidential hopeful, Mitt Romney, his advisors have reportedly settled on a plan to reset the struggling campaign dubbed "More Mitt." The idea is to put the candidate and his policy ideas front and center in speeches, campaign appearances and TV ads like this one.


MITT ROMNEY, R-FORMER MASSACHUSETTS GOVERNOR & PRESIDENTIAL CANDIDATE: My plan is to help the middle class. Trade has to work for America. That means crack down on cheaters like China. It means open up new markets. Next, you've got to balance the budget. You've got to cut the deficit. You've got to stop spending more money than we take in. And finally, champion small business. Have tax policies, regulations and health care policies that help small business. We put those in place, we'll have 12 million new jobs in four years.


GIGOT: The question is, will it work?

Let's ask Wall Street Journal columnist and deputy editor, Dan Henninger; assistant editorial page editor, James Freeman; and Washington columnist, Kim Strassel.

So, Kim, what do you think about this new strategy? And I guess maybe start with the question of, what does it say about the campaign that they feel they need a new strategy or a new direction focus two weeks after -- three weeks after the Republican convention?

KIM STRASSEL, WASHINGTON COLUMNIST: Well, they have had this perfect storm over the last couple of weeks. They saw their poll numbers going down following the Democratic convention. There was this flap over Mr. Romney and his comments about Egypt and Libya. And then, you know, now the latest thing what he said about the 47 percent out there. So there's been a lot of nervousness in the Republican field. And the silver ling of this, if there is one, it does give them an opportunity to go out and reboot and try to buck up some of those conservatives who are worried.

What their strategy seems to be is "More Mitt." We're going to put him out there more and have him talking more. I think the test is going to be, whether or not -- if people are just seeing him, that doesn't help.

They need to be hearing from him what he's going to do.

OK. And, Dan, so, but hearing him say, what?

DAN HENNINGER, COLUMNIST & DEPUTY EDITOR: Yes, that's a good question.

GIGOT: And what about that ad? He did list specifics. I think the campaign, two of their conservative critics would say, what do you want, Henninger, Gigot.


GIGOT: Not you, Dan. Me. What do you want Gigot?

HENNINGER: I want answers.


GIGOT: So what about --

HENNINGER: Not to put too fine a point on it, Paul, I thought the ad was ridiculous.


The first thing what he said is, what we need is a stronger trade policy. That's the issue foremost in the minds of voters trying to decide which one to vote for?

Secondly, the deficit, a balanced budget, which is something, kind of conservative hobby horse. It really is not resonating.

And thirdly, why does he think that these sound bites -- the trade, the deficit, small business -- are going to turn voters in his direction? Those are simply kind of platitudes with no substance beneath them. And if he's going to just do that for the next five weeks, I think he's going to be in big trouble.

GIGOT: James?



FREEMAN: Was a bit vague. I didn't like the trade stuff. On the other hand, you had a message of smaller government. And a message of tax and regulatory relief to small businesses is often much bigger deal than taxes. It's unknown, difficult to deal with but and time consuming, but he needs to get more specific.

GIGOT: But are those points compelling to make the sale for middle class voters? To basically tell them, look, Obama hasn't done enough for you. I can do much more, which seems to be what the swing voters are really, really looking for.

FREEMAN: I think it's a step in the right direction. He has to get a little more aggressive, detailing the problem and saying, here is how I'm going to get the burden of government off of business. And here is how we're going to grow jobs. I think he needs to go maybe beyond the 10 seconds in the commercial so say, here is how lower taxes and lower regulations will create more hiring.

GIGOT: Well, you can't do that on a 30-second spot.

FREEMAN: That's right. That's right. Drop the trade stuff and get a few more sentences in --


GIGOT: If he does -- he will have an opportunity in the debates. And if he gave some press conferences and town halls, he could do it.

HENNINGER: He could give some speeches. Why does he not give a series of set 30-minute speeches on the Obama record, on the economy, what his proposals would do on all of the specific issues? Why doesn't he go deeper than that campaign has been willing to go so far, as he obviously did not do in the acceptance speech? I don't get it. Why are they afraid to simply lay it out on the table at this point and give the American people a chance to choose between these two policies?

GIGOT: Kim, can you answer Dan's question? Because based on my reporting, I cannot.


STRASSEL: Well, I mean, I think the real issue here, what they're not doing is -- the problem I have, they keep seeming to think they can go out and tell people Obama's done a terrible job. But here is the thing, Obama has his own message and his own message right now is, you know, here -- it could be worse, it could have been worse. I fixed it. And by the way, this other guy, he is going to do all kinds of terrible things.

GIGOT: On that point --

STRASSEL: The only way to rebut that is go out and say what you're going to do.

GIGOT: On that point, Kim, we want to run a clip from an Obama ad making some of their points.


AD ANNOUNCER: He keeps saying it.

ROMNEY: This president cannot tell us that you're better off today than when he took office.

AD ANNOUNCER: Well, here is where we were in 2008.

BRIAN WILLIAMS, NBC NEWS ANCHOR: Worse financial collapse since the Great Depression.

LESTER HOLT, NBC NEWS ANCHOR: American workers were laid off in numbers not even in over three decades.

AD ANNOUNCER: And here is where we are today. 30 months of private sector job growth, creating 4.6 million new jobs. We're not there yet, but the real question is, whose plan is better for you?

The president's plan asks millionaires to pay a little more, to help invest in a strong middle class, clean energy and cut the deficit.

Mitt Romney's plan? A new 250,000 tax break for multi-millionaires, roll back regulations on the banks that crater economy, and raise taxes on the middle class.


GIGOT: James? Effective ad?

FREEMAN: Possibly. It included the mythical tax increase plan at the end there.

GIGOT: Totally, totally false.

FREEMAN: But, no, I think it could be effective because Mr. Romney has not done what -- you look back to 1980, it echoed in the beginning of that ad, are you better off than four years ago. We talked about the speeches. One thing Ronald Reagan did is he didn't say that the economy stinks under Jimmy Carter. He explained how government was strangling the economy and government had grown too big and it was a burden on the country. So I think this is an effective ad if Mr. Romney does not fell the story how we got here and how we get out.

GIGOT: Does he need to -- the Republican candidate -- need to separate himself some, explain to voters why he's not the same as George W. Bush? Because Obama is clearly trying to link the two and say, you say it's not better, it is better and, by the way, he'd take us right back to Bush.

HENNINGER: I think it's a little bit late to be doing that, Paul. On this Bush issue, I think perhaps what Romney should be doing is pointing out how false this charge is. George Bush did not cause the financial collapse of autumn of 2008. That was obviously rooted in toxic mortgage-backed securities, a policy that dated back at least 15 years, including Democrats who supported this sort of thing. That's explainable. So I think he should put some distance between himself and that, and then talk about what Barack Obama did in response to it, which was to spend 18 months passing the Affordable Health Care Act, which had nothing to do with raising jobs and the economy.

GIGOT: We'll see if he gets that message together.

When we come back, new information about the deadly attack on the U.S. Consulate in Benghazi leaves the White House scrambling. Was it terrorism, was it preplanned? We'll have the latest, next.



SUSAN RICE, U.S. AMBASSADOR TO THE UNITED NATIONS: What happened initially was that it was a spontaneous reaction to what had just transpired in Cairo, as a consequence of the video, that people gathered outside the embassy and then it grew very violent. Those with extremist ties joined the fray and came with heavy weapons, which unfortunately are quite common in post-revolutionary Libya, and that then spun out of control.

GIGOT: That was U.N. Ambassador Susan Rice on last weekend's "Fox News Sunday," describing the attack on the U.S. consulate in Benghazi as a spontaneous demonstration sparked by an anti-Muslim video that was taken over by extremists. After initially declining to characterize it as such, the Obama administration this week finally called the assault a terrorist attack, but says there was no clear evidence of advanced planning or coordination. But new information paints a far more complicated picture of the events that ended with the death of four Americans, including U.S. Ambassador Chris Stevens.

Wall Street Journal foreign affairs columnist, Bret Stephens; and editorial board member, Mary Kissel, join us with more.

Bret, how does the Susan Rice argument hold up a week later?

BRET STEPHENS, FOREIGN AFFAIRS COLUMNIST: Well, either she very poorly briefed or she was deliberately misleading her audience.

GIGOT: Because it's not true.

STEPHENS: It's just not true. It doesn't square with all of the reporting that's coming out about an attack that clearly was very well- coordinated, clearly very well-thought out. And this administration really needs to reconsider whether it's going to blame this video and go on an apology tour throughout the Muslim world, instead of dealing squarely with what is a terrorist attack on the U.S. diplomatic facility.

GIGOT: Is there evidence that the U.S. knew about this in advance, and should have done more to protect that consulate?

STEPHENS: There were a series of attacks on this, on this consulate and the --


GIGOT: Before the September 11th anniversary.

STEPHENS: Going back all the way to June and before then. It was very well-known that extremists, militants were well-entrenched in Benghazi, that it was a very dangerous place to be. And yet, there seemed to be an attitude on the part of the embassy and on the part of the State Department that we didn't want too much of a military presence to guard our embassies, because somehow that would be provocative. In that way, it's kind of an emblem of the Obama administration as a whole. Let's not put in too much force there because maybe they'll attack us. And the lesson is the opposite.

GIGOT: Mary, I guess if it's the video, that it's not their fault. There isn't any responsibility. They couldn't do anything about it. It was just spontaneous street combustion, and maybe that's the motivation for the analysis last week?

MARY KISSEL, EDITORIAL BOARD MEMBER: It's interesting, as you're reading the news reports coming out a week later, you're starting to see unnamed officials and unnamed State Department officials start to cover themselves, saying, look, we had an attack, for example, in June, and that worked just fine. It's not easy to get the Marines at the drop of a hat. They're not sitting there drinking coffee at the airport.

But I think to Bret's point, the evidence I think is building up here and it's very damning. John McCain said, after he was briefed this week, says it shows an abysmal level of knowledge out of the administration of terror attacks. And you know, if you're sitting in an embassy a consulate or a compound like this overseas, I think you've got to be pretty worried.

GIGOT: Dan, let's broaden this out. A lot of foreign policy news coming out, the demonstrations across the Arab world against the United States. You've got events elsewhere. Foreign policy is supposed to be a big, big Barack Obama advantage in these campaigns. Are these events changing that perception?

HENNINGER: I think they are and I think they should be. One might ask, what is Barack Obama's foreign policy? The part of the problem is there's no sense that there's any sort of strategic idea --


GIGOT: I disagree with that. He would say to you, he would say, look, we're tough on terror, we got bin Laden, we've decimated the Al Qaeda, and meanwhile, we've approached the Islamic world in a different way, we've reached out, we've put on a better American face --


GIGOT: -- the war like Bush. So my foreign policy has been to engage the world. They like us a lot more. And, meanwhile, we're killing the really bad guy.

HENNINGER: Tactical, it's not strategic.

GIGOT: But is that wrong?

STEPHENS: But the foreign policy -- Barack Obama's foreign policy is, I'm Barack Obama.


He came to Cairo in June of 2009 and says, hi, I'm Barack Obama. I'm not George W. Bush. We're going to have a nice conversation. I speak, you know, your language or wish I did. I grew up in Indonesia. I have Muslim relatives. So therefore, his analysis of the problem with the Bush administration is that essentially George W. Bush gave America big, bad PR problem, that Barack Obama himself could solve. And the lesson four years later, after -- after all of this time of Barack Obama's healing glow over the Muslim world, is that we're every bit of detested as we were before, but considerably less feared.

HENNINGER: He has essentially lowered our profile. Specifically, and consciously, it was to pull back and lower the U.S. profile in these areas of the world. What has happened is you've, in effect, created a vacuum in all of the areas and they're all exploding -- the Middle East, the South China Sea, Africa. The pulling back has allowed people, the bad actors, to step forward and fill the vacuum with what we're seeing on television right now.

KISSEL: It's also -- look at Iraq. It's also reduced our leverage on players that are inclined to help us. There was news again just this week of over-flights from Iran to Syria. And the Iraqi government basically can't do anything about it because we don't have a U.S. presence there anymore.

GIGOT: Well, Joe Biden expressly asked the prime minister of Iraq, please stop these flights, and he's been rebuffed. And John Kerry, the Senate Foreign Relations Committee, is saying, look, we may have to withdraw the aid if you don't stop the flight. But they don't have --


KISSEL: The leverage.

GIGOT: We have a lot less leverage with them.

Bret, should Mitt Romney make foreign policy more an issue in the campaign?

STEPHENS: I think that Obama is actually vulnerable on foreign policy. There's an image that Obama got Usama therefore he's invulnerable, he's beyond criticism. But you have a Russia reset that's a complete failure. As Dan pointed out, a very bad position, increasingly aggressive enough on the part of the Chinese and a Middle East that's in flames. And by the way, an Iran rushing towards a nuclear weapon.

GIGOT: OK, well, he can do that. He's going to have an opportunity, one of the debates, almost all on foreign policy.


I know Bret can't wait for that.


Well, forget the Middle East. If you're following presidential campaign, you may think that China is our biggest threat. On the heels of some harsh criticism from Mitt Romney, the president announced new trade sanctions against that country this week. But is China-bashing a solid strategy for either campaign?







OBAMA: These are some things that harm men and women on the assembly lines in Ohio and Michigan, and across the Midwest, and we're going to stop it.


OBAMA: It's not right, it's against the rules, and we will not let it stand.


GIGOT: That was President Obama, announcing this week that he'll seek trade sanctions for China for illegally subsidizing exports of automobiles and automobile parts, and putting U.S. manufacturers at a disadvantage.

The announcement, made in the swing state of Ohio, comes on the heels of attacks by the Romney campaign, accusing the administration of being soft upon China.


AD ANNOUNCER: This is America's manufacturing when President Obama took office. This is China's. Under Obama, we've lost over half a million manufacturing jobs and for the first time, China is beating us. Seven times Obama could have stopped China's cheating. Seven times he refused.

ROMNEY: It's time to stand up to the cheaters and make sure we protect jobs for the American people.


GIGOT: So, Mary, let's first talk about the merits of the Obama trade sanction for -- against China for subsidizing its automobile industry. Fair?

KISSEL: Yes, isn't it terrible, Paul, that Chinese citizens are subsidizing cheaper automobiles for millions and millions of American consumers, which is what neither ad would acknowledge. Look, it may be a compare complaint. That's what the WTO is there to do --


GIGOT: World Trade Organization.

KISSEL: World Trade Organization -- is it arbitrate these complaints? But the problem is that the Obama administration has politicized this process, as we saw today or with the announcement, made that announcement in Ohio. The administration has been politicizing trade since 2009 when they launched their first case against China at the behest of the United Steel Workers. So when that happens, it's hard to tell if it's a fair complaint. Because the way that they've prosecuted these cases is --


KISSEL: -- it's very political.

STEPHENS: Blame has to be equally apportioned to Mitt Romney, who -- this is a guy who really ought to know better. When he's talking about protecting jobs, that's a Democratic talking point. He should be talking about creating jobs.

KISSEL: And opening markets.

STEPHENS: And opening markets, and that's exactly it. And this is why, I think, so many voters are uncomfortable with Mitt Romney, because he's not presenting an alternative. He's presenting a kind of "me too" populism, which we haven't seen, by the way. I don't know if we've had two protectionist candidates for the presidency since 1920s.

GIGOT: You call Mitt Romney protectionist, but this is the contradiction of his message. On the one hand he says expand trade opportunities as one of the five pillars of his job-creation agenda and then he turns around and contradicts that by saying, well, except for China, where we're going to slap them with trade sanctions. It doesn't really connect.

HENNINGER: Yes. It doesn't really connect.


Let's look at the simple politics of this. This is obviously aimed at the auto-producing states around the Great Lakes. So Mitt Romney goes into Ohio and says, the Chinese are cheaters, all right? He lays his cards on the table. Then the president comes in and says he's launching his WTO complaint, and talks about the things he's done on China. And it seems to me that it's basically like Chess. Mitt moved in, the president moved in, you default to the president, because it's a very complicated subject. I think it was a complete waste of political capital and time by the Romney administration.

GIGOT: It takes a difference of opinion to make a horse race, as they say. And if you don't have a difference in the campaign --


GIGOT: -- there's no real advantage, particularly if you're the opposition, who is trying to make a case, find some issues with which he can criticize the president instead of the president saying, I'm just as tough as Mitt.

KISSEL: And meanwhile, what's happening in global trade -- well, a lot of free trade agreements between the countries of the Asia Pacific but absolutely zero in the United States and the EU? So you have all of these countries in the fastest-growing part of the world creating markets and, meanwhile, the Obama administration is doing nothing, but implementing what the Bush administration inked.

GIGOT: But --


STEPHENS: The Romney campaign also has an opportunity to educate American voters to say that even when we have Chinese imports, and they're not always -- sometimes they're what's, quote, "made in China," isn't really made in China. Those are creating hundreds of thousands of jobs along the value chain in the United States. There was a Heritage Institute study that came out just a couple of weeks ago that said that clothing and toy manufacture alone, we're talking about half a million or so jobs that were supported in 2010. So, again, this is a chance for Romney to do what Reagan did, which was educate people about the benefits of free trade, of capitalism, of prosperity, of opening markets, and it's his inability to do this.

GIGOT: All fine and good, Bret, but he would say, look, what about the voters who don't have college degrees. What about those folks who are struggling who rely on manufacturing, and I've got to speak up for them. And that's fine for you college-educated folks, but I've got to not only get those voters, but I have to speak to their aspirations.

STEPHENS: By all means, do that as part of the aspiration of a growing economy that's creating job. Also there's a manufacturing renaissance in the United States largely due or increasingly due to the domestic energy supplies, another point he can raise against Barack Obama. This is a guy who is cutting off Keystone. I want to increase our domestic energy sources.

GIGOT: All right.

Thank you all.

Still ahead, with new swing state polls showing President Obama ahead, even some Republicans are ready to pack it in. But is the surrender premature? GOP pollster, Whit Ayers, takes a closer look at the numbers when we come back.


GIGOT: Was the Obama convention bounce a bust? Much has been made this past week about the president's lead in the polls, with pundits on the left and the right, suggesting that Republican rival, Mitt Romney, is headed towards certain defeat. But GOP pollster Whit Ayers has taken a closer look at the numbers and he sees something else.

So welcome back to the program, Whit. Good to see you again.

WHIT AYERS, REPUBLICAN POLLSTER: Paul, great to be with you.

GIGOT: Let's take the question first about the bounce. Has it faded?

AYERS: This rush to judgment is truly breath taking.


There's so many people who've basically declared the Mitt Romney campaign over six weeks before the election, before four debates, before an October jobs report. I think if you really want to get a sense of where this race is, Paul, you need to forget the headlines and look at the data. There are a number of good web sites that aggregate the data -- RealClearPolitics, Pollster.com.

GIGOT: Right.

AYERS: If you do that, what you'll discover is that the Obama lead over Romney in June, as an average of all polls, was 2.3 percent. In July, it was 2.5. In August, it was 2.4. And in September, so far, it's somewhere between 2.5 and 3, depending on the day you look. So essentially, this race is no different now than it was throughout the summer.

GIGOT: OK, but --


AYERS: And yet, everybody's declared the campaign over.

GIGOT: OK, but explain something to, I think, viewers who are looking at the -- these media polls, many media polls that come out, the Pew poll, the Wall Street Journal/NBC poll, and they show Romney behind, four, five, sometimes seven percentage points, whereas, the Gallup poll is now essentially tied. How do you explain that contradiction? The Gallup poll is one that's been doing this for decades and tracks daily, on a daily basis.

AYERS: A lot of the difference in these polls, Paul, is in the Democrat-versus-Republican balance in the sample. In 2008, according to exit polls, there were seven points more Democrats in the electorate than Republicans. But in 2010, there was no difference. In 2004, there was no difference. So a lot of the difference in these polls depends upon what you assume the electorate will look like. Many of the polls, with the biggest leads for Obama, are counting on the 2008, plus seven Democratic ballots.

GIGOT: Which is a big gap.

AYERS: I don't think that's going to happen. That's a big gap. I don't think it's going to happen. It's never happened before in the last 14 years.

GIGOT: So do you follow Gallup or do you think that the average of the poll, like the RealClearPolitics averages are right? Which is the best number to look at for people who really care about this on a daily basis?

AYERS: I think the best number to look at is the average of credible,

professionally done polls and you've mentioned several right now. But if

you take a look at the average of the polls and even out some of the sampling differences, and I think it's fair to say right now, President Obama is ahead by somewhere around three percentage points.

GIGOT: Three percentage points. The other thing happening, if you look at the data, is the president's approval rating has been creeping up. It's now, in some polls, 49, 50 percent, not too far, pretty close to where it was with George W. Bush in 2004 when he later won reelection in November when he was creeping town 49, 50, in September. Is that a very important number to watch?

AYERS: Yes, it is. President Obama is right on the cusp. He's well below the job approval ratings of Bill Clinton and Ronald Reagan when they were reelected, but well above the approval ratings of Bush 41 and Jimmy Carter when they lost. So he's right on the cusp.

Another good number to look at is how satisfied people are in this country. According to Gallup, 68 percent are dissatisfied.

GIGOT: Right.

AYERS: That's down from 77 percent.


But we've gone from absolutely terrible, to just really, really bad. That is not something the president can count on.

GIGOT: I assume that gives an opening for Mitt Romney to be able to make up that 3-point average gap. What are the other bright spots in the data for Romney, saying, OK, how can I make up this lead?

AYERS: Bright spot are that people are still focused almost exclusively on the economy and who can get this economy going. We've seen how, in the Middle East, our attention can be diverted temporarily, but people out there in real America are totally focused on who can get this economy going. They're scared. They're open to Mitt Romney. He hasn't yet made the sale.

GIGOT: And in making the sale, does that mean being specific about his economic plan? Because I've had this view that people are looking for somebody who, not just going to make general promises or criticize the current president, but say, look, here is how I'm going to improve our lives, and improve the economy. Does he have to do that with some specificity?

AYERS: He has to paint a compelling vision and be very persuasive that he knows how to fix it. I don't know that he needs 57 specific points.


GIGOT: How about three?

AYERS: But I do --


I do think he needs three or four or five, but he needs to put some meat on the bones and paint a compelling, comprehensive vision for how he knows how to fix this problem because Barack Obama clearly has not fixed it.

GIGOT: Whit Ayers, thanks so much for being here and telling us where the race really stands.

AYERS: So good to be with you, Paul.

GIGOT: Still ahead, Mitt Romney took some heat a few weeks back for claiming that the Obama administration was gutting Bill Clinton's landmark welfare reform law. But what if it's worse than he said? Inside the Obama work waiver, next.



FORMER PRESIDENT BILL CLINTON: When some Republican governors asked if they could have wavers to try new ways to put people on welfare back to work, the Obama administration listened, and the administration agreed to give wavers to those governors and others only if they had a credible plan to increase employment by 20 percent. And they could keep the wavers only if they did increase employment. Now, did I make myself clear? The requirement was for more work, not less.


GIGOT: That was former President Bill Clinton at the Democratic National Convention, defending President Obama's efforts to rewrite his 1996 welfare reform legislation. The House voted this week to block the administration's changes to that landmark law, changes Mitt Romney says will gut welfare-to-work requirements.

We're back with Dan Henninger, James Freeman and Kim Strassel.

So, Dan, President Clinton says that was all about expanding work. Is that true?

DAN HENNINGER, COLUMNIST & DEPUTY EDITOR: No, it's not true. The actual -- you know, progressives, the left have been upset about welfare reform since Bill Clinton passed it. Well, I was going to say it's a little shameless for the president, but Clinton --

GIGOT: That's what he does.

HENNINGER: That's what he does. It's all about the -- I mean, it's very kind of bureaucratic, but it's about the definition of what the work requirement is. And they are proposing to expand it in such a way that it virtually has no meaning.

As for that 20 percent increase in employment, this is the sort of thing that the bureaucracies themselves self-define. And the problem -- the biggest problem here, Paul, is that the good thing about Clinton's welfare reform is it prevented the states or anyone, or HHS from gaming the system like this --

GIGOT: Right.

HENNINGER: -- and causing spending to increase. It was one of the few forms of this sort that doesn't let the bureaucracies game it, and that's why spending always rises. This one worked, and now they're cutting it like that.

GIGOT: The architect this have waiver, Mark Greenberg, was a critic of welfare reform working outside of the administration with the law -- with the Center on Law and Social Policy. Now he's at HHS, in the policy shop that issued the waiver.


Our college, Joe Rago, dug up this very important fact. So this is rooted in actually an ideological criticism of welfare reform.

FREEMAN: We now have a reality check. Clinton and other Democrats claiming for a while claiming, oh, this doesn't gut the reform. Nothing to see here. And 19 Democrats in the House this week, voting with the Republicans to affirm the earlier policy.

GIGOT: The vote was 250-164, which is an overwhelming number.

Kim, what about the politics this has? One of the things that just stuns me this week is that the Romney campaign had made welfare reform in the summer a big issue, the issue of the work waiver. And this week, despite the House vote, you don't hear a peep from the Romney campaign.

What is this? Why --


KIM STRASSEL, WASHINGTON COLUMNIST: Yes. We talked about it earlier.

They were having kind after bad week.


I think that sort of passed through.


But, look, what they've hit on, why they brought this up this summer, is it is a very powerful issue for a lot of Americans. Here is the thing. Most Americans think they don't mind America having a social safety net and giving something to those who are truly are in need, but they want to know that this is limited and that we have a policy making people go back to work if they are able to do so. And especially in this economic times that are very tough, they get very annoyed at the idea of people simply who are not working and receiving welfare benefits when they might be. And that's what Mr. Romney has been tapping into. And it's powerful, which is why you saw those Democrats vote with Republicans.

GIGOT: It's so powerful that the Romney campaign is going to stop talking about it? Is that where we're at? I just don't get it. I don't get it.

FREEMAN: They shouldn't. And there's a lot more to talk about if Mr.

Romney chooses to. The other part of this we haven't mentioned is this

1996 law gave the president no authority to do what he did. Many architects of that law have talked about how there is no waiver authority.

So this is not legal. But --


GIGOT: That was part of the debate in 1996, about just how much discretion the states would have.

FREEMAN: That's right. But for Mr. Romney, the opportunity here is, here we have still another reminder to a lot of Americans, how many people there are struggling in this economy, how many people need assistance. And another case where the Obama administration is looking for still another way to transfer wealth from taxpayers to others, instead of figuring out how you get the private economy growing. If you could just create some incentives to get the private capital in here, you wouldn't need all of these government programs.

HENNINGER: And one other issue that's in the air right now, dependency, dependency on government programs. Welfare reform was passed because dependency on welfare was a real destructive problem. You had mothers and grandmothers handing the --


GIGOT: Generation to generation.

HENNINGER: General to generation. And the idea here nice and make it easy for some of these people to go on welfare if they really need it. It's backsliding into a culture of dependency. Romney should be able to talk about that.

GIGOT: We want people to escape poverty and get out --


GIGOT: -- and that means you've got to get into the work force.

When we come back, Chicago kids went back to school this week after teachers there suspended their strike. The union president called it a victory for education. Was it?



CHICAGO MAYOR RAHM EMANUEL: In this contract, we gave our children a seat at the table. In past negotiations, taxpayers paid more, but our kids got less. This time, our taxpayers are paying less and our kids are getting more.


GIGOT: Three hundred and fifty thousand Chicago school children returned to class on Wednesday after the teachers union there voted to suspend its seven-day strike. Chicago Mayor Rahm Emanuel called the new contract an honest compromise, but who really won?

Wall Street Journal senior editorial page writer, Collin Levy; and assistant editorial features editor, David Feith, have been following the Chicago story. They join me now.

So, Collin, what's your take on who won? You heard Rahm Emanuel. Was he right?

COLLIN LEVY, SENIOR EDITORIAL PAGE WRITER: Well, I think when we look at this, basically -- I guess the answer is basically no. When you look at this five, 10 years from now, I think a lot of people who have been following the numbers on this are going to look back and say, hey, this was a moment where we saw a train wreck coming and we decided to basically continue down the same track. The city got some significant incremental improvements here. They managed to keep some of the principal control and some -- you know, they did get some movement on teacher evaluation. But overall, I think that this is still going to be a situation where the unions are in control here, and I think they've proved that. Now, the big thing coming down the line is the pensions issue for the teachers.

GIGOT: Right.


GIGOT: -- big, big payments due coming to the state, each year.

Something -- several hundred million dollars.

But, Collin, Rahm Emanuel might say, you want this perfect, but these things take time. We've got incremental change. That's the way that the system works. We got our foot in the door on student test scores and teacher evacuations. Next time we can get more. What's wrong with that argument?

LEVY: What's wrong with that argument, Paul, is the students there now are going to suffer in the interim. If you look at this, you basically have -- this is a civil rights issue. You have a situation where under 60 percent of Chicago students are graduating from high school. And in the really bad neighborhoods, it's even worse than that. So those students are being failed right now. And that's not something that can necessarily wait. They had a chance here, I think, to fight a little bit harder, but they didn't for, I think, partially political reasons.

GIGOT: And the political reason was because there's an election coming and a showdown would not be very good politics?


LEVY: -- an election coming. This is Obama's hometown. This is Democrats facing off with the unions. It isn't a story that anyone really wants to talk about here. So I think that was a large part of it.

GIGOT: David, you met with Rahm Emanuel the week before the strike was settled. And he had a pretty -- you wrote that he had a pretty calm, cool attitude toward this. A guy who is not necessarily known for political cool. He can get pretty combative. You, what's your take on the outcome?

DAVID FEITH, ASSISTANT EDITORIAL FEATURES EDITOR: Well, when we met that week as the strike was going on, he was a man who wanted to make a deal. As you said, he didn't bring the fire and the -- the flamboyant --


-- aggressiveness that he brings --


GIGOT: That he brings to Republicans.

FEITH: Right. And he wanted to make a deal, essentially because there's an election coming up. He's a chief fundraiser for President Obama and this wasn't an appropriate time, six or seven weeks before the election, to have a major fight in the president's hometown with organized labor. And that essentially followed consistently through the week. He, in fact, did make that deal. and I think that an additional point is, not only is this incremental and not only is it harmful for kids over the next three or four contract years, but there's an additional point that this was an enormous opportunity cost. If this was an opportunity in a high-profile way to bring the moral and the fiscal case for school reform out of the subterranean and bring it to national attention, Rahm Emanuel clearly decided he didn't want to do that and je succeeded in not doing it.

GIGOT: But Joel Klein, the former New York schools chancellor, and now running the education subsidiary of our parent company, News Corp, wrote in our paper this week that this was actually a watershed event, because it showed Democrats, not just Republicans, not just conservative, but Democratic leaders were willing to take a strike and confront the unions. So that this is actually a really big moment politically that's going to play out in the years to come?

FEITH: I think the gravity of the moment is yet to be determined.

It's true that he took a strike. He is true that he largely had a reform agenda. And it is true that, in that, he joins other Democrats, like the mayor of Los Angeles, Antonio Villaraigosa, for example. So there's a movement, as Mr. Klein wrote, where Democrats are willing to take this on. But if they're willing to take it on in a way that always ends up in a 17.5 percent raise for teachers, and really incremental moves on teacher evaluations, it's not going to help the kids very much.

GIGOT: Is this going down well, briefly, in Chicago that it's finally over, Collin?

LEVY: I think that parents are relieved to have their kids back in school. But it's going to something where, down the line, it's going to have enormous costs for the school system. and I think -- even Moody's looked at this and said, look, -- it was actually credit negative here, this strike.

GIGOT: Right.

LEVY: So they're going to have to make more quick adjustments. Maybe more charter schools.

GIGOT: Well, that would be a good outcome, if you can get them. But that will be fought every step of the way by the unions, too.

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


GIGOT: Time now for our big closer, "Hits and Misses" of the week.

Kim, first to you.

STRASSEL: I hit to Monica Lewinsky for having the savvy and the good timing to this week reportedly land a $12 million contract for a new tell-all memoir about her time with Bill Clinton. Just as old Bill is back out there charming the pants off the nation on behalf of Barack Obama, just as Democrats are ramping up their argument that Republicans wage a war on women, here comes Mrs. Lewinsky with some vivid and, no doubt, graphic reminders of what life was really like under our last president.

GIGOT: All right, Kim.


FEITH: This is big miss and then a little hit to the hip retailer, Urban Outfitters. The store has been selling a poster that glorifies Che Guevara, the Communist Cuban revolutionary who has become iconic, even though he was a murderer who helped install the tyranny that still dominates Cuba 50 years later. After criticism from the New York-based Human Rights Foundation, Urban Outfitters announced it would no longer sell the poster. So it's better late than never.


All right, Collin, can you out-do Strassel?


LEVY: No one can do that.


This is a hit to the Second Court of Appeals judge, Raymond Lohier, who blocked a lower-court decision that would have thrown U.S. detention policy overseas into chaos. Basically, a group of journalists, led by former New York Times foreign correspondent, Chris Hedges, sued the Obama administration saying they were afraid they were going to be arrested by a policy that allows the government to detain associated forces to Al Qaeda. This decision basically kept things more toward the status quo and it'll keep things from really becoming a mess overseas.

GIGOT: All right. Here, here, Collin.

OK, Bret?

BRET STEPHENS, FOREIGN AFFAIRS COLUMNIST: You know those wind turbines that turn slowly and slowly and slowly? You know what turns those turbines? Your tax dollars. Right now, we're learning maybe, just maybe congressional Republicans are going to kill the billion-dollars-a-year tax credit that has been moving those useless turbines and providing high-cost electricity. So it's a hit to congressional Republicans, a hit for Mitt Romney for being courageous on this issue. A miss to the green jobs revolution of President Obama.

GIGOT: All right. Thanks, Bret.

That is it for this week's edition of the "Journal Editorial Report." Thanks to my panel and to all of you for watching. I'm Paul Gigot. And we hope to see you right here next week.

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