this week on the i had for yal report. states are paying. california, new jersey and new york all on the brink of insolvency after decades of failed policies is. federal government headed down the same path? as they work to push a climate bill. a look at the true cost of cap and trade and how things look. and banning the burka, muslim validate isn't welcome in his country. the journal editorial reported starts right now. welcome to the journal editorial ri port. i'm paul gigot. new jersey, california and

new york a decade ago was among the states most prosperous but after progressive tax policies they are on now on the brink of insolvency. california has begun to hand out ious to its creditors. doesn't sound good for the rest of the country but is the federal government headed down to the same road? here is deputy editor dan hairringter and steve moore. you paid a lot of attention to all these states. what policies do they have in common? >> the wheels have come off in california, new jersey an new york. none of them can pay their bills. california is sending out ious. first time in that history that has happened. you look at policies of those states, those are obama economics. they have the highest tax rates on small businesses and on individuals in the country.

yet they can't pay their bills. they have the highest rates of unionization and forced union policies. highest unemployment. the other factor that these are supposed to be worker pair dies with liberal policies but people and businesses are moving in droves out of those states. >> that's true. what is a good citizen who wants to do something about this to do? is there a way you can rein this in? >> first question is whether you are going to have the national government do this. this is what people are focused on. these are exactly what president barack obama says that they want. a good example if you want to talk about this is health care since that a discussion. these are states that have intense amount of government intervention. regulating private insurance policies with certain mandates tends to increase the price of the private insurance and also

in new york, medicaid? >> that's right. >> huge section is on medicaid, double than most of the rest of states. >> yeah, we are told if this is what you do and on a national level you are going to get better levels of care and lower prices, what you actually see, new york, for instance, the average insurance cost is twice that of rest of the nation and most is more people are uninsured because the prices are so high. >> where is all of this going for california and, no. >> where is the money going, where is the direction going? >> where is the state of their fiscal health going, off the cliff. i think what will happen, there has to be a solution. they just can't die. i think probably what is it going to happen to them is the same thing that happened to new york city in the 1970s, which is you created what was then called a financial control board.

city's finances was put in the hands of a group of people who had statutory authorities to run the city's finances. like be a brother gate union contracts and they ran the city. >> they put the politicians on an allowance. >> exactly. >> we're going collect the money and we are going to dole it out to you. >> it's going to happen to california and new york state. >> steve, one of the things that mario cuomo said, liberal democrat, they should have a constitutional convention in new york to rewrite the state constitution to make albany more accountable. you think that is the path some of the states is going to go? >> i think its potential path. the same thing is being talked about in california. dan's pointed, i think it's interesting. california and new york the chrysler and gm of states because they can't pay their bills.

dan, i would not be surprised if both california and new york come hand in hand in washington and say bail us out. washington can't pay its bills either. let's not forget one other point california and new york haven't been involved in these kind of cap and trade schemes. california has renewable energy standards, they passed their own cap and trade and businesses are moving out of the state because of those, as well. >> these do have very high tax rates. every time they say, let's raise them some more. and the states with a biggest budgets. >> part of the reason why, people are picking up their bags and going because they do not want to be the one who get stuck paying all these bills. one of new york's big problems, they have come to rely so heavily on marginal tax ratings organization the highest income

earners. >> paying a huge proportion, 50% of stated revenue. >> when you have a recession like this, that money goes poof. >> you really do need tax reform and ultimately need tax limitations. >> when we come back, the cap and trade controversy. we'll take a look how similar skeemsz have worked or not in europe and what the true costs the inside scoop on healthy hair?

[ male announcer ] best shampoo, self magazine. experts at good housekeeping agree. they gave it their seal. [ male announcer ] pantene delivers damage protection results leading salon brands can't beat. you be the expert. experience pantene. i have to climb stairs 20-30 times a day. now joint comfort is easier with new triple flex liquid softgels. the first liquid softgel joint supplement formulated to work in as little as 7 days. learn more at tripleflex.com. nature made. fuel your greatness.

the director of the copenhagen consensus and author of "cool it," a guide to skepticist guide to global warming. >> so congress and president are

pushing cap and trade here in the united states, good idea? >> pretty bad idea. in sense that both, it's not going to do very much to climate. it's not going to reduce temperatures very much. our estimate show 0.2 degrees by the end of the century. >> it's the way that it's constructed that it turns out, you can out and buy a lot of permits elsewhere. so there is a huge barn door open for actually not reducing very much. >> unless you really push that cap down. >> second part, is the u.s. is only a fair small player towards the end of the century. vast majority of emissions are going from china and india. it costs a lot of money. you end up paying a lot, but chances are most of these kinds of legislation is going to be bungled because there is a huge a.m. amount of political interest.

so essentially you are going to have bill that is not going to do much nor the climate. >> okay, after the kyoto protocol, how well has it worked in europe? >> almost not reduced emissions. it probably has a tiny about it. but if you look major impacted what has happened in europe, england went to gases. east jeary was incorporated into west germany. >> so it had very little to do with kyoto what happened in europe. what you also saw was the main people gaining from kyoto, who was that? that was the energy companies in europe. they got all the permits for free. had he charged the consumers. so they made tens of billions of

euros every year from kyoto. >> so had th is the climate-industrial complex. what do you mean when you talk about this. this is a relationship between business and government on this kind of climate legislation. give me an example? >> the problem, of course, there is a lot of companies that going to make a lot of money. from ge, again electric, he would like us to buy more windmills and t. boone pickens, they say climate is terrible. they told us we were going to see eight story high sea level rises which is beyond anything that al gore has been claiming. you want to buy into cap and trade.

>> if you talk to some of the ceos they say we have no choice to play ball with the government because if we don't play, we're on the menu. so we have to protect our shareholders and if they are going to tax us or limit what we can do, we have to fight and lobby to get some kind of benefits that we can offset those costs. what is wrong with that? >> you are absolutely right. many businesses want security and they don't know what is it going to happen. therefore they wanted to have something happening. the problem is playing for much higher taxes and much higher cap and trade because they are going to make money. we do need certainty. we should be honest that climate is a problem. we should tax it at the relevant rate and the answer is about $7 a ton. >> congress is thinking of 20 or more. >> right and kyoto, 30 or $40,

next kyoto is probably going to be more. >> so impose, if you are serious about global warming and wanted to do it, you have a tax across the board on carbon. but that is politically improbable, that would raise gas prices, that would be something consumers could see directly. cap and trade is businesses is hidden so is that part of the cal indication. >> absolutely. but the crucial factor to remember even if you put a $7 tax on carbon, i won't mean much. it means 6 cents per gallon of gasoline so it won't be a terrible disaster. this is the thing that is missing in the whole discussion, you need much more research and development. you need to get green energy to much more cheaper. solar panels are incredibly expensive. >> we have been subsidizing solar panels for about 30 years

and they are still competitive with regular carbon energy. why are you going to throw more money at the bad? >> because you have been doing it badly. you have been subsidizing people putting up inefficient solar panels. we need better tech nothing because we want that and much cheaper and the benefit is that the only way you are going to get the chinese and indians on board. invest in research and develop so they become cheaper. >> so imagine if we can do it by 2040 we would solve global warming because everybody would shift to these solar panels. not because they are green because we made it cheaper. >> all right. excellent discussion. thanks, mark. >> still ahead. should the burka be banned?

should the burka be banned? they declared the muslim should the burka be banned? they declared the muslim fair, straight-forward pricing. that's what td ameritrade stands for. think about it. why pay investing fees you shouldn't have to? or account fees that aren't clear? like inactivity fees? or maintenance fees? it's not right. and you know it. and the thing is, the other investment firms know it. but they do it anyway. and that's just not fair or straight-forward. td ameritrade. independence is the spirit that drives america's most successful investors.

french president nicolas sarkozy created an international stir when he told lawmakers he was in favor of banning the burka. he told the french parliament the problem of the burka is not a religious problem. this is an issue of a woman's freedom and dignity. this is not a religious symbol, it's a sign of lowering and i want to say solemnly the burka is not welcome in france. we're back with dan and joining us "wall street journal"ist brett stevens, editor for yal

board member matt and barry wies. do you agree on banning the burka? >> the burka offense my sensibilities terribly. i have to say that, i'm coming down in defense of it. i don't think the state should be in the business of telling women what they can and cannot wear. that is like saudi arabia. some of us might be offended by women's choice to wear the burka but it's her choice. >> even if it's a sign of the men and even if the women themselves wanted to wear it. >> i think women -- that is precisely the point. some are choosing to wear them what they view is a religious obligation. on even if it's not mandated by muslim laws they are choosing to do it. >> brett, i know you like french politicians, do you agree with

them? >> i do. i agree nicolas sarcozy has done and he is integrated french muslims into french political life. there is an important point that transcends france and the united states. we're talking about liberalism is about. it's the politics of the individual. that means the individual who has rights, who has responsibilities, but who also has to have an identity in the political sphere. when you put a woman in what amounts head to toe coverage so you can't see her face, you can't identify who she is, she identifies herself only as a muslim, only as a particular kind of muslim, you are erasing her identity. that is against what liberal democracy. there are all kinds of things you can't do. you can't walk around naked. there are regulations in terms of the kinds of choices you make. there are regulations in terms

of religious choices you can make. you are can't take peyote. >> there some on doubt that the state has to limit expression for public order, in you might be stretching it by talking about personal identity. but do you agree with it? >> i think fashion police are an idiot. there is a concern in this country and western europe and in societies about how the fundamental lift islam is affecting us. our response should not be to adopt their methods. when this is having a ministry and publication of prevention of this 'in the societies is mirror image of what the saudis are doing they can't wear a mini skirt. >> beyond fashion is the fact that these women are sometimes

beaten up by relatives, brothers fathers, if they violate this prescription. this sort of really significant violence against these women is the the other is of thing that the french should be prosecuting. that would send a message to islamic culture. this is not going to be tolerated not that, not any activity of that sort, but they won't go there and take on those men who are beating up these women. >> to the extent this is a sign of religious expression, a burka for many women it is. they are not all forced to wear it. but how is this different from amish or other symbols? >> it is significant difference, part your identity is able to see your face. i know you are paul. for example with the amish, ultra orthodox jews, muslims cover their heads --

>> no problem with that. those are signs of identity and signs of choice. this is a kind of necessity gas station of personality -- negation of personality. the idea that this is about women's choice. that they freely choose to dress that way, the amount of social co-shergs astonishing. >> the prime minister of turkey, he said his daughter wanted to go to the school in united states and wanted to know the reason she wanted to come here, she can wear the veil which is banned turkey. we could expose her to free expression and tolerance. >> absolutely. i think the second you try and strip someone of their choice and ban it, they're going to cling to it even more. if the goal is assimilation in french culture, i think you can do that. i think the sarcozy can do it con struck i have ways, better

education and job opportunities. i don't think that this marginal symbol is the way to go. >> we have to take one more break. when we come back, our hits and misses of the week. [ female ann] one size fits all. myth. head & shoulders is just for dandruff. myth. the fact is, it gives you... seven scalp and hair benefits including beautiful, 100% flake-free hair. respect the scalp. love the hair. at amway global, it's the foundation of our business. because opportunity built nutrilite, the world's...

top-selling vitamin, mineral, and supplement brand. and artistry, one of the world's best-selling beauty brands. which makes amway global the online... health and beauty leader. and worldwide, amway has over 8 billion in annual sales. for your opportunity to be part of this success... and to start making more money for yourself, contact an amway global independent business owner... or visit amwayglobal.com.

time for hits and misses of week. >> a big miss, paul. you were in utah which i know you are not, but one thing you know for sure last year's undefeated utah football team did not get invited into the bowl khiosh series. so naturally orrin hatch accuses them of antitrust violations. this is a cartel he said because they got 90 of the 94 slots in the championship series. wow! that is a pretty big cartel. the senator says they ought to be accused of sherman antitrust violations and everybody expects a lot of hot air. >> this is a gentleness to a u.k. real estate company called willis holdings. they have been the lead tenant in the sears tower and they are going to rename it the willis

tower. now, no one is disputing their right to do this but you do not mess with iconic architecture. it's not like new owners of chrysler saying abu-dabi tower. think i'm with it on this. >> steve? >> title nine that brought gender equity to sports but many universities had to cancel their men's tennis and volleyball programs. now, the obama administration wants to bring it to science and engineering classes, they want 50% of the people in classes to be women. the threat here is if they don't reach that gender parity many may have to cancel other programs. it's the one area in america we shouldn't have to have political correctness is in science and engineering.