up next on "the journal editorial report," week two of the government shutdown leaves both sides scrambling to end the stalemate. so who's bearing the brunt of the blame? plus, is janet yelli ining good the economy? what president obama's fed nominee means for your money. and a pair of terror raids ends with a big al qaeda capture in africa and reignites the political debate over guantanamo bay here at home. welcome to "the journal editorial report." i'm paul gigot. as the parties work around the clock to end the standoff, it

appears neither side is coming out of the budget fight unscathed. gallup reports that 60% of americans now disapprove of the way president obama is doing his job and just 28% view the republican party favorably. down from 38% last month. joining the panel this week, "wall street journal" columnist and deputy editor dan hedinger. washington columnist kim strasle and senior economics writer steve moore. lots to blame in washington this week about how the administration is managing this shutdown. some people say they're trying to increase the pain, make it look as hard as possible, closing the monuments and denying death benefits for the casualties coming back from afghanistan. how do you see it? >> yes, this has been in some way a repeat of their sequester strategy which is to do similar things to make this as hard as

possible for average americans. the reality is not much of the government is shut down. something like 83% of spending is still going out on the major things that people care about most like social security, the mail service, et cetera. so what they've done is focused on these small points of pressure. but that has backfired to a certain degree as it has come out. and that's what happened in the sequester, too. the headlines started to roll about whether or not the white house has had to take some of these actions that they had. they haven't had to do it. they've had to roll back some of this because of the bad press. >> not surprising. if you're running the executive branch, you want to increase the pressure, put maximum pressure on the congress. that seems to be what they're doing. >> seems as though they're succeeding. the congress is supposed to vote to allow these two things to happen. and the republicans are really getting hit hard. there's no question about it. think it's going to cause significant problems for them going forward in these elections

such as the governor cuccinelli in virginia. this november, all those suburbs in northern virginia, a lot of federal workers, so, you know, virginia could go democratic. let's not doubt the fact democrats are being hurt as well. nobody in these polls is above 50%. the american people are pretty disgusted with washington generally. it's hard to predict where there's's going play out over the next three years. >> how do you see the blame game here in terms of who's taking most of the hits for the shutdown? which is not popular with the american people. >> right, look, this is the hatfields versus the mccoys. there's just no love lost between these two parties right now. let me just defend the republicans for an minute. i agree with dan's analysis. what they would say, paul, look, the congress and the house of representatives has the power of the purse. and when i talk to republican leaders and some of the tea party members, their argument is we have the authority to decide what we want to fund and what we don't want to fund.

that's the argument. >> wait a minute. yes, they have the power of the purse with the senate. not just one house of congress. this is constitution 101, okay. only one house of congress. you need two. and then you have to get the president's signature. there is this natural thing. you can't just blame the republicans. that's just the reality. >> that is the reality. this is one of the first times the republicans have basically put their foot down and said, look, we're not running. everyone knows this comes down to obama care. i don't think they're in the end probably going to win that fight but we have the authority to decide we don't want to fund something and that's what it's about. >> you think this is working for them? >> no, politically it is not. but what they would say, paul, again, republicans defense, we have elevated this issue of obama care to a whole new sphere

and it is true as congress' approval ratings have fallen, so have the approval ratings obama care. >> last time i checked, the president wasn't on the ballot but republicans are. how do you read this in terms of the damage being done to either side? >> well, look, part of the calculation here, at least on the republican side, is, yes, they are taking most of the heat, the blame, when people have signed up for having shut down the government. although the president is taking some too, and a failure of leadership to stop it. republican calculation here is that voter memories can at times be short. there are a lot of americans who are not personally feeling the pain of this shutdown so aren't necessarily furious or angry about it yet at least. if they get something out of this in the end that does resonate with the american people for issues like spending and the debt, then it may in

fact work to their benefit in the longer run. >> dan, you had a op-ed, or at least a plan to get out of this by paul ryan on our page, the house budget chairman, former vice presidential nominee of the republican party. did this offering, to move away from obama care and defunding to let's talk about the budget, get a downpayment on the bet? >> yes, i think this is important. the republicans wanted to say something about obama care and about federal spending. they have said it. they've now got to get past this fight over the continuing resolution and the debt ceiling so they have some space to talk about things like entitlement spending, medicare, social security and tax reform. as paul ryan suggests. substantive things for which they can have a real argument. these two subjects are a little hard to have an argument with the american people. the others are things the american people can focus on and have a serious discussions about. >> they could also trade these

discretionary spending cuts for something that -- which the democrats hate, for something -- >> but that's a real debate. we're not having a real debate right now. >> all right, dan, thanks very much. when we come back, president chooses janet yellen to head the central bank. we'll tell you what the pick means for your money. i'm beth... and i'm michelle. and we own the paper cottage. it's a stationery and gifts store. anything we purchase for the paper cottage goes on our ink card. so you can manage your business expenses and access them online instantly with the game changing app from ink. we didn't get into business to spend time managing receipts, that's why we have ink. we like being in business because we like being creative, we like interacting with people. so you have time to focus on the things you love. infrom chase. so you can. to get our adt security system. and one really big reason -- the house next door. our neighbor's house was broken into.

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predecess predecessor? we're back with dan hetinger, anastasia o'grady joins the panel. the markets seem to be cheering the pick based on continuity, that she'll follow what bernanke's been doing. bond purchases, low interest rates. what do you think? >> think that's right. she's been around the fed for more than a decade. all of her work points to someone who's really focused on the unemployment issue. that's where she's -- in fact, she's written if there's a tradeoff between unemployment and inflation, we should let inflation go a little higher in order to solve unemployment. given the current malaise of the economy, i think that suggests that she's going to stick with the bond buying program, stick with the zero interest rates, and hope they can get us out of a problem even though we know that the problems that are giving us slow growth cannot be

solved by monetary policy. >> they're more fiscally related or -- >> absolutely, there's tax, regulation, obama care, all of those things are creating a lot of uncertainty. >> steve, what are the differences? are there any between ben bernanke and janet yellen? as monetary policy? >> i think she's likely to put her foot on the accelerator even more so than ben bernanke. it's fascinating, paul, this is the first democratic nominee to be the head of the fed, dating back to the late 1970s when jimmy carter selected paul volcker. paul volcker was a guy who came in and slammed the breakes on te money supply to break the back of inflation. i don't think yellen believes in that philosophy. when mary was talking about this philosophy of a tradeoff between inflation and unemployment, mary's right, that janet yellen believes in that, but i totally

reject that. i look at the evidence and it looks to me like low inflation actually helps grow the economy and create jobs. i think it's a false tradeoff. >> there is this philosophical difference. for greenspan and volcker and volcker and then alan greenspan focused on price stability as the main goal. at least that's what they said was their main goal. janet yellen really focuses on job creation and output. jobs, that's her focus. that's a throwback really to the philosophy of the '60s. >> the philosophy espoused by nobel prize winning economist james tobin of yale, and she is a student of james tobin. in 1993 tobin said this about spending. spending money is spending money is spending money. no matter what on. that is just pure -- >> you dig holes in the ground, it will create jobs. >> so tapering.

the big subject. >> slowing the bond purchases that are now 85 billion a month. >> everyone thought that might be imminent. think that's now in the distant future if janet yellen has her way with the fed board. that she was going to just keep, as mary's been suggesting, pushing the money out, until she sees that unemployment rate come down, period. >> the key test of any fed chairman in my view is not when everybody's cheering you for easy money. that's easy. everybody loves you, right? wall street loves you. the politicians love you. it's when you have to reel it back in. you have to titan money. do we know whether she has the fort attitude and will to do that? >> well, you wonder about what kind of an exit strategy they would have here, right, because they would have to stop the bond buying program and raise interest rates. whether she has the fortitude or not, we know the data are not reliable. they're always revising the data. so the fed tends to act late.

and the problem is if all these reserves start getting out into the system and you have an inflation problem and they have to act late, then they have to jam on the brakes and you might kill a recovery. so she's in a very bad situation. i mean, her best case is if the president and congress continue with bad policies so we continue with, you know, very low growth. then, then she doesn't are a problem because the reserves never get out into the system. >> i think the bottom line, the american people can expect zero interest rates or close to it for a very long time with janet yellen at the controls. is that fair? >> that's right. she's going to continue these policies and more so. as mary knows, studying central america, if printing money created job, than argentina, bolivia and mexico would be the world economic superpowers today. >> the problem is they they have won. yes, bernanke feels like he won because, you know, we don't have high inflation.

he's bailed out the banks by buying their mortgage-backed securities. so they're doing a victory lap now. they say we fought off deflation. >> the job creation is they want a growth, just hasn't been there. i hope it comes. we'll see. when we come back, twin terror raids lead to the capture of an al qaeda kingpin in africa and reopen an old debate at home. should al libi be tried in civilian court or sent to guantanamo bay? need a tow or lock your keys in the car, geico's emergency roadside assistance is there 24/7. oh dear, i got a flat tire. hmmm. uh... yeah, can you find a take where it's a bit more dramatic on that last line, yeah? yeah i got it right here. someone help me!!! i have a flat tire!!! well it's good... good for me. what do you think? geico. fifteen minutes could save you fifteen percent or more on car insurance.

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a pair of daring raids by u.s. special forces in africa last weekend netted one of the world's most wanted tear rifts, abu anas al libi, an al qaeda ope operative charged in the

bombings of kenya and tanzania. he was transferred to a u.s. navy ship for integration. a move criticized by some republicans including south carolina senator lindsey graham. >> in al libi's case, he is on an american warship somewhere in the mediterranean. because the administration refuses to use guantanamo bay. putting him on a navy vessel for a matter of days or weeks is not a proper way to gather intelligence on the wore ar on terror. >> dan, let's go to you first. how big a capture is this? >> i think he's thought of as an enormously important capture. a specialist calls him a jackpot in terms of interrogation possibilities. he even thinks he's more important than the 9/11 mastermind khalid shaikh mohammed. >> wow. >> that would be a big deal. so theoretically is extremely important for them to interrogate him properly to get

the maximum. he was with al qaeda almost from the beginning. he has spent years in iran. he can talk about the connection between the iranians and al qaeda. so this has just been an enormously important capture. >> he reportedly was being sent to africa, returned to africa, to be able to build up al qaeda's presence there, and plan attacks there. so this could be from an intelligence standpoint a big get. but what about this issue, of putting him on a ship for weeks or maybe months and not at guantanamo? what's the difference? >> we, it's pure domestic u.s. politics. there's no difference really. you can put integrators on a big navy vessel, or at guantanamo, but president obama does not want to add to the prisoner population and he doesn't want to build up the military commissions that were set up by several acts of congress to try these kinds of guy because he ultimately wants him to end up in a new york courtroom where

he'll presumably get convicted but it undermines the anti-terrorist atmosphere created by george bush. >> it blends the distinction between actual civilian criminals, common criminals, and enemy, illegal enemy combatants. >> about the interrogation, there will be absolutely nothing resembling enhanced integration on that ship. they're going to have to, as barack obama ruled in 2009, use the army field manual to integrate him. >> why isn't the left saying secret prison be? i know the red cross has got in to see him. isn't this -- i mean, nobody knows where this ship -- i guess it's in the mediterranean but nobody has access to it. the press certainly doesn't. i mean, why -- from a legal point of view, is there any difference between the ship and guantanamo? >> none whatsoever. it's important to understand why. i think it's actually -- we

should credit the administration for doing this and say this is a good thing. as al qaeda -- >> capture hip as opposed to just shoot him from drones. >> the last two year, al qaeda's really bounced back. at the same time the president is saying this war is receding, but with africa and the attack in somalia. the fact we've captured this high value target to get the intel. we try to do we did in somalia to get another terrorist leader. we have to take these guys on where they are. >> so you give -- even though the raid and capturing the target, the terrorist, in somalia failed on the weekend, you would credit the administration for trying and taking the risk? >> there was one other capture of a guy in africa, but very reluctant to take these guys alive, preferring to kill them by drones. we need the intelligence.

think this is a good change in policy. >> now, the question is why has al qaeda moved to north africa? they used to be in afghanistan. they're in mali now, somalia. they look to operate where there are weak governments. >> dysfunctional governments. >> they're not just sitting there, they are train, they are importing arms and they are planning. they need to be left alone. so they have found a series weak governments where they can also recruit. that's the reason why they were in libya, benghazi. this is the new command headquarters for al qaeda in the world. >> that suggests we have to try to build up those governments, in particular, in libya, where the weakness of the new post gadhafi government has allowed some of these terror groups to develop. and we've got to keep doing that. work with these local governments to get them up and running. >> this is part of the al qaeda strategy. ever since we went after their command central in pakistan and afghanistan. they saw that it could not fight

the u.s. effectively from there. they said, we're going to franchise. it's a franchise business strategy. we're going to get these guys to set up operations in various countries. >> the administration going on offense again against these guys. we have to take one more break. [ coughs, sneezes ] i have a big meeting when we land, but i am so stuffed up, i can't rest. [ male announcer ] nyquil cold and flu liquid gels don't unstuff your nose. they don't? alka seltzer plus night fights your worst cold symptoms, plus has a decongestant. [ inhales deeply ] oh. what a relief it is. [ inhales deeply ] customer erin swenson ordebut they didn't fit.line customer's not happy, i'm not happy. sales go down, i'm not happy. merch comes back, i'm not happy. use ups. they make returns easy. unhappy customer becomes happy customer.

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silver artifact to the country. supposedly it had been smuggled out and showed up in new york and the state department captured it and was giving it back. turns out it wasn't made in 700 bc, it was made around 1989. it's a fake. it's hard to say who looks more foolish. the obama administration or the iranian official who received it with such delight. >> i think i bought carpets like that. >> you're probably too young to remember but 40 years ago this month america was hit by the arab oil epbarrimbargo. the price of oil and gas went through the roof. 40 years later, america is now the number one energy producer in the world. no one would have thought it. in fact, 40 years ago, people thought america was running out of oil. today be we're running into it. >> all right, super news. if you have your own hit or miss, please send it to us.

be sure to follow us on twitter. @jeronfnc. to all of you watching, hope to see you right here next week. budget negotiations in washington hitting a brick wall. this, as the government shutdown enters its 12th day. hello, everyone. welcome to a brand-new hour inside america's news headquarters. >> that's not the only fiscal setback, however. a senate team has now rejected a plan to raise the debt ceiling only days before our country faces what some claim is the risk of defaulting on its debt. as dismay and frustration to be sure is growing meantime, senat democrats have just held a new