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Lieberman gives the nod, as Republicans take a second look. Plus can America survive the writers strike?

Paul Gigot: This week on "The Journal Editorial Report," he's crossing party lines to endorse John McCain for president. Sen. Joe Lieberman's here to tell us why. And with Rudy Giuliani slipping in the national polls, our panel takes a look at the wide-open Republican race. Plus, the Hollywood writers strike is looming large over the Oscars and Golden Globes. Will celebs cross the picket line to get their awards, and who stands to lose the most in the seven-week-old showdown? Our panel weighs in after the headlines.

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

The campaign of Republican presidential candidate John McCain is enjoying a resurgence of late, with two new polls putting him in second place in the all-important state of New Hampshire. With that primary less than three weeks away, he's gotten lots of positive buzz and a handful of new endorsements, including one from my guest this week. Independent Democratic Senator Joe Lieberman joins me now from Connecticut.

Senator, thanks for being here. Good to have you.

Lieberman: Good to be with you, Paul. Thank you.

Gigot: All right, so, you've endorsed John McCain. What response have you received from your fellow Democrats this week?

Lieberman: Oh, some puzzlement, some anger, I mean, a lot of phone calls. People were angry. But you know, to me, I know it's unusual for a Democrat, even an independent Democrat, to endorse a Republican, but there's too much as stake in this presidential election to let the choice be governed solely by what party you're in. And to me, John McCain is simply the best qualified to lead our country forward, so I wasn't going to stop from endorsing him because he happens to have an "R" after his name and I happen to have a "D"--or an "ID," as it were.

Gigot: One of the reasons you've cited is the fact that you think a President McCain could reach across the aisle and restore some bipartisanship to foreign policy. Why would he be able to do that better than, say, somebody like Sen. Obama, one of whose main themes is kind of get beyond this partisan divide and bring the country together?

Lieberman: Right. Look, there are two reasons, two main reasons, that I supported and am proud to support John McCain. One is his very strong record on national security. I think he understands the threat of Islamist extremism. He understands how to put together a principled, strong American foreign and defense policy. So I'm with him on all that.

The second reason is that he's had a record of working across party lines over a long period of time. John McCain is a proud Republican, but he has a restless desire to get things done, and he knows that, to do it, you've got to work across party lines. So more than any of the other candidates, I think he's got the proven record.

And look, with all respect to Sen. Obama, who is a friend of mine, I simply disagree with him on a lot of the positions he's taken on national security, with regard to Iraq, Iran, for instance. Whereas, I totally agree with John McCain, worked side-by-side with him, so I think he's got the ability from the--day one, to be a strong commander in chief who will bring us back, Paul, to where we used to be on foreign policy, which was that you had debates here at home, but then, as former senator Arthur Vandenberg famously said, politics ends at the water's edge because we've got common enemies.

Gigot: When Sen. McCain came in to see us at the Wall Street Journal last week, we asked him how he would explain the opposition from Nancy Pelosi and Harry Reid to the surge in Iraq and support for more funding. He attributed it to, quote, "a lack of patriotism," unquote. That's pretty tough. Do you agree with that?

Lieberman: Yeah, well, it is tough, and John's a straight talker. I'd say I agree with him in the sense that I'm afraid too many Democrats put both ideology and partisan interests ahead of the national interest, and so even after--it was one thing to say last year--earlier this year, let's say--that people were skeptical about whether we could win the war in Iraq. And then when Gen. Petraeus and the president came forward with the surge strategy, whether it would work. But now it is working, quite miraculously. And so for people to continue to say the war is lost and to fight to cut funding for our troops or set deadlines for withdrawal--to me, that's not having partisan politics end at the water's edge.

Gigot: Let me ask you a question about Iraq. Do you think that no matter who's president next year, Democrat or Republican, that there are going to be American troops, maybe tens of thousands of American troops, in Iraq for many years to come?

Lieberman: I believe so, and I suppose I'd say I think it's important to our security that that is so. Look, here's the good news. Because the surge in Iraq is working, we are now beginning to draw down over 20,000 troops from now until July. Gen. Petraeus is going to come back and speak to the Congress and the president in April. He'll tell us whether he thinks we can withdraw more in the rest of the year. That all has got to depend not on some arbitrary formula dictated by Congress but on conditions on the ground.

But no one thinks--unless you just want to give up on Iraq and let al Qaeda and Iran take it over--that all of our troops are going to be out of Iraq in 2009, and it was interesting in one of the Democratic debates, Sen. Clinton, Obama and Edwards, much to my surprise, all said if they were president, we would still have troops in Iraq in 2009.

Gigot: Let me ask you about another bit of news in the Middle East this week. Iran, where the Russians are supplying fuel, announced that they're going to supply nuclear fuel for what they say is a civilian nuclear plant at Bushehr. President Bush said he had no problem with that. Are you as sanguine as the president?

Lieberman: I'm not, and frankly, I think with all respect to the president, that he was putting a good face on this, because I think in the best of all worlds, particularly with all the evidence--the National Intelligence Estimate notwithstanding--that we have and that the international community has, that Iran is enriching nuclear fuel to get ready to build a bomb, that we don't want to encourage them in any way. And I think the Russian sale of this fuel does encourage them.

Look, it's great--not great--but it is better that apparently this fuel will be under the control of the International Atomic Energy Agency. But this is not a time when I'd give this fanatical anti-American extremist regime anything that takes them closer to having a nuclear weapon. So I regret what the Russians did.

Gigot: But it sounds like there's not much we can do about it. They're going to deliver it, and what else can the president do?

Lieberman: There's not much we can do about that right now. We can of course go forward and try to pass another sanctions program in the United Nations, which we I hope will do after the first of the year.

I'll tell you what else. I'm really glad that the secretary of state has designated the Iranian Guard Corps and the Quds Force there as terrorist organizations, now with the capacity to impose economic sanctions on them. I hope after the U.N. resolution, that the United States will use the legal powers we have to impose some economic sanctions, both on the Iranians and on some foreign companies that are doing business with them in a way that we think makes it easier for them to get nuclear weapons, which everyone here in American politics pretty much says we will not allow to happen.

So Iran is a menace under this regime. The Iranian people are not. Iran is in this fanatical regime, and we've got to do everything we can to both contain them, to support the reformers in Iran, and to stop them from getting nuclear weapons.

Gigot: All right, Sen. Joseph Lieberman. Thanks so much for being here.

Lieberman: Paul, great to be with you. Take care.

Gigot: Still ahead, Rudy Giuliani slips in the national polls and the Hucka-boom continues. With less than two weeks to Iowa, our panel handicaps the Republican race.

Gigot: With the nation's first primary contest less than two weeks away, the GOP race is wide open. Two new national polls show former New York City mayor Rudy Giuliani losing significant ground with the so-called Hucka-boom taking a toll on the onetime front-runner.

Joining the panel this week, Wall Street Journal columnist and deputy editor Dan Henninger, editorial board members Dorothy Rabinowitz and Jason Riley and, in Washington, Steve Moore.

Dan, I have to say this Republican race is as wide open as any in my adult lifetime. Why hasn't any candidate been able to break from the pack?

Henninger: As you just noted, Paul, there's a feeling out there Rudy Giuliani's candidacy is in decline and others are rising. You know, I think we all in this business kind of flatter ourselves on the idea that this campaign's been running since January, and the conceit is the whole country is waiting with bated breath day-to-day to see. That's not the way it works. The Iowa caucus is Jan. 3. New Hampshire is just over that. Obviously what's going on is people are beginning to pay attention and focus. And they're starting to think about which candidate makes the most sense to them, and, as always, the pack is beginning to tighten.

Gigot: But what's the problem with the nature of this pack--these candidates, Jason, that nobody--there's no Ronald Reagan this time, there's no George W. Bush from 2000, somebody who is really the clear front-runner?

Riley: True. But at the same time I think you have to question Giuliani's strategy to some extent, which is basically to ignore Iowa and concentrate on states that were going to hold primaries in February. And it's backfired to some extent.

Henninger: Well, just to get back for a second to Paul's question. I think one of the problems, Paul, is that there's no really authentic Southern conservative or authentic conservative from California or the West. You know, George Allen of Virginia thought he was going to be that guy. We know what happened to him. Fred Thompson really hasn't caught fire. So as a result, you've got conservatives like Giuliani, who are economic and national security conservatives, but social-issue moderates. And so this has created a lot of confusion for the Republican base.

Gigot: Go ahead, Steve.

Moore: I was just going to say, to me the big story of how this has evolved is you've got two kind of frontrunners in Rudy Giuliani and Romney--the ones with the most money and name recognition. And if you look at the polls today, the two of them combined are only getting about a third of the Republican primary vote, and what that suggests to me is that there are a lot of doubts among Republican primary voters about what I call the big two. That's the reason you've got this Huckabee boom that you're talking about.

Gigot: Steve, why haven't they been able to make the sale?

Moore: Clearly, Rudy Giuliani is culturally too far to the left for Republican voters. He's from New York. Don't forget, all of you up in New York, a lot of the people around the rest of the country have a negative attitude towards New York.

Gigot: We never forget about that, Steve, OK?

Moore: And Romney, I just do think, has an authenticity issue.

The one other point I'd like to make, Paul, is that Democrats that I talk to--and Kim Strassel talked about this in her column--Democrats are salivating for Mike Huckabee, because they know he is the weakest candidate in the general election for the Republicans.

Gigot: Now, the Huckabee boom is explainable, in part, I think as a result of the social conservatives, particularly in Iowa. But there's something else that's happening here, Dorothy, and that is of late something of a resurgence--a mini-resurgence, at least--for John McCain, who a lot of people had written off. Is this real, and how do you explain it?

Rabinowitz: Yes, I think it's real, because underneath the surface all the time, not just now, people were daunted by the--uh, he's gone. There was a tremendously bad news over the summer about his campaign falling apart. But underneath it all, if you asked people, what do you think? Well, it was always McCain. In the end, when they thought about it, it was always he ranks better. He's the most likely to defeat the Democratic candidate; he's the one can you depend on for security reasons. And it has all come together now, magically but not surprisingly.

Gigot: Particularly, as Rudy Giuliani descends and he picks up some of the support from the former Giuliani supporters.

Riley: Right. He does, he does. And he will definitely benefit from Huckabee's surge in Iowa, that is McCain in New Hampshire. It'll take some wind out of Romney's sails.

But the other thing to remember about McCain is he matches up very well against the Democratic front-runners, not only Clinton, whom he matches up against much better than Romney or Giuliani, but also against Obama. He matches up much better against them in the general election than Romney and Giuliani.

Gigot: Steve, let me ask you a question about Fred Thompson, who was supposed to be the Southern conservative that Dan talked about. He has not gone anywhere so far. But is there's a chance here at the end, particularly if Huckabee deflates, that he could be the de facto landing place for some of these conservatives?

Moore: No, I think he has flatlined. And the other big story here has been that where Huckabee is right now, Paul, is where Fred Thompson should be. This is where a lot of us who are political prognosticators thought that Thompson would come in as the conservative and rush into first place. The difference between Huckabee and Fred Thompson is Huckabee has energy and charisma, and unfortunately, Thompson really falls flat with voters.

Gigot: All right, Steve, thank you.

Still ahead, would Letterman and Leno actually be funny with nobody to write their stuff? Well, we may be about to find out. When we come back, a look at the winners and losers in the seven-week-old showdown between Hollywood writers and the studios.

Gigot: If the jokes seem particularly bad at the upcoming Golden Globes and Oscars, blame the ongoing writers strike. The Writers Guild of America denied requests this week to let comedy writers prepare material for both of the annual award shows. The six-week-old strike is threatening to make attendance at the ceremonies scarce as well, with talk of picket lines sure to spook the union-friendly folks in Hollywood.

Dorothy, this fight is about downstream revenues for things like DVDs and new technology, I gather. Who has the upper hand, the studios or writers?

Rabinowitz: In my view, unequivocally the studios have. They have deep pockets. They have a chance now to renegotiate some very extensive contracts. Don't forget, NBC is owned by Westinghouse. These are people who can wait it out. There are writers who have been living for a long time as though they were in the dot-com era making scads of money, some making $10 million a year, and this is the opportunity. They are now going to face problems with the Directors Guild, which is about to set to negotiate separately. And they are not going to support the writers strike.

Somehow or other, the union has put itself in a terrible place. They are not going to win this, because the studios can wait. Now, can you say that they don't have scripts and they don't have--

Gigot: But I thought content was king here. Isn't that what we in the media have been telling ourselves for a long time?

Riley: But it doesn't mean they'll be out of content, first of all. They can negotiate contracts with international studios, for instance. They can bring in writers. They have other channels. As Dorothy said, these are big companies. I mean, Disney owns ABC. GE owns NBC. And these companies would like to see some more efficiencies in the business anyway, so they have an incentive to wait out the large contracts.

Moore: Yeah, but Jason--

Gigot: Hold it. Go ahead, Steve. Steve, you're for the working man.

Moore: I guess Jason and Dorothy aren't watching evening TV, because I am, and it's lousy stuff. I mean ,Dorothy, have you seen this new game show they've got on, "The Duel"? I mean, it's horrible stuff.

The people that I talk to in Hollywood, they're, on both sides, are getting nervous. I call this strike mutually assured destruction. And the one question really is, if these shows go on, like Letterman and Leno and the Oscars--you said are they going to be any less funny? I don't think they're funny right now. And the question is, if Leno and Letterman go on and they're pretty funny, a lot of people are going to wonder, Well, maybe we don't need these writers after all.

Henninger: But let's make one thing clear here. This is not about television, OK? This is about the Web. It's about new distribution channels. It's about cell phones. And no one yet understands how that economic model is going to work, because most people think what they get on the Web should basically be free.

Gigot: And the writers want a big guaranteed take on that? Is that what they want?

Henninger: They want a big guaranteed take. The question is what's the take? Where's it coming from? Nobody knows that yet.

Gigot: Nobody knows what it will be. What about the proliferation of reality TV, which is doing pretty well, it doesn't cost a lot of money? Can't the studios use that, not have to pay a lot of money for content, and ride this out.

Riley: Well, some can.

Rabinowitz: They are doing it.

Riley: FOX's No. 1 show is "American Idol." They're sort of strike-proof here.

Rabinowitz: They are strike-proof. But that started a long time before this writers strike. It was cheap stuff, and it didn't depend on the writers strike.

But the writers learned from the DVD experience, they were getting nothing. And this so enraged them that they have now been catapulted into this adversarial position because they think this world of technology's going to produce that.

Gigot: All right, Jason, briefly, are those actors and actresses going to cross the picket lines at these award shows to--they've got the glitz and the publicity. Will they have to give that up?

Riley: I think some will and some won't. I think they're going to wait and see who does. No one wants to go first, but someone will go first.

Gigot: Someone will cross it.

Moore: They're looking out for No. 1.

Gigot: OK, Steve. All right. Thanks.

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

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

Item one, Dan Henninger's about to get $25 richer. Congratulations, Dan.

Henninger: Thank you. This is a class-action settlement notice that I received in the mail last week, and I suspect a few of our viewers did too. Thirty million of them have been sent out. It involves a class-action settlement with Diner's Club, MasterCard and Visa, which came to $336 million. Now, it involves some surcharges on foreign transactions, but primarily what this says is that if you take the first easy option, you get a refund of $25.

Now, apparently a lot of people who've received this think it's a scam--that it's sort of like swampland sale in South Carolina, and they've been throwing it away. Well, maybe it is a scam, because the lawyers involved are going to get $86 million. Happy New Year.

Gigot: All right, Dan.

Next, a hit to the newest owner of the Magna Carta. Jason?

Riley: Yes, this is a big hit for David Rubenstein. I'm sure we all remember this from ninth-grade history class, but the Magna Carta, which dates to 1215, is one of the most important documents in the history of democracy. And there are only 17 copies in existence, and only one here in the United States. It came up for auction a few days ago, and Mr. Rubenstein, who made a fortune in private equity, went out and paid $21 million to make sure that it stays on display at the U.S. Archives in Washington. That was a very classy move.

Gigot: Yeah, it really is. Terrific.

Finally, the reality TV explosion. Dorothy?

Rabinowitz: Yes, well, how can I persuade you enough that this started long before any writers strike? So ask yourself, what happens when your relatives complain to you there's nothing to watch on television? You know what they're talking about? They're talking about network TV. And why? It's because of these reality shows, one worse than another.

And the worst aspect of them is that everybody is crying and sobbing on them relentlessly and at the drop of the hat. All of the contestants are doing this, whether they've lost 40 pounds or 140 pounds or gained it on this program. They are sobbing.

And I want to ask now, in all honesty, whether if people who are so worried--those political sages--about our place in the world, our profile to the world, why, instead of stopping the administration, don't they pause here first and think about this American image. Can this be the image of America projected around the globe? Can these be the people who will reassure our allies and make our enemies fearful? These sobbing masses? I doubt it.

Gigot: You know, if you keep this up, you're going to get an invitation to be on "Dancing With the Stars." They're going to insist on it.

Henninger: Can't wait.

Gigot: All right, thank you, Dorothy.

That's 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. Merry Christmas. We hope to see you right here next week.