arizona immigration. will the present law stand. the push for federal student loans and mitt romney and some in congress agree, is it a good idea? and sarkozy's last stand with an economy in shambles, the french president faces an uphill battle for reelection. will france jump off the socialist cliff? are there lessons for the united states? welcome to the journal editorial report, i'm paul gigot. the the supreme court waded into another controversial election year issue this week hearing oral arguments on arizona immigration law. the obama justice department sued arizona over that 2010 law, arguing that governor jan brewer violated the constitution's supremacy law, and enforcing federal immigration statutes, are the justice's buying the administration's argument.

joining us, wall street editor, paul henninger, and jason riley and joe rago. this is a case about federal versus state power and the supreme court this week, both liberal and conservative justices did not seem very sympathetic to the federal government's argument. >> no, they didn't because arizona very carefully crafted the state law to fit into the federal law. so, really, all they're doing is saying, look, if the police happen to pick up somebody, maybe they need to verify their legal status, that's part of federal immigration law. so-- >> the state is saying, we're just going to enforce the law and supplement what you do. what about the provision of the law, arizona law that says, look, if you're illegal, it is a crime. if you're illegally here, it's a crime to go look for work. that in the oral arguments of the supreme court seemed to be the part of the law most in jeopardy. >> i think so. and that's definitely the part

that's most out there. >> paul: in terms of maybe exceeding the federal statute? >> exactly. what's the argument that arizona used that said that was fine? >> well, what they said was, it's already a crime to be an illegal immigrant, so, we're supplementing that. >> paul: by saying if you look for work, it's another statute. it's another crime. jason, why, if the justice department may lose here, 8-0, it's possible, we don't know for sure, but it could. why would they have advanced this argument? >> i think they did it for political reasons, paul. this is about the hispanic vote, showing that they care, the justice department did not need to bring this case. other groups, civil rights groups and so forth were suing and could have let the cases run their course. the obama administration jumped in here, it doesn't look like it's close.

looks like parts of the law will be upheld, but the justice like sonya sotomayor is skeptical and-- >> what about the case that it's racial profiling, not argued in the course, even the government isn't making that case, but a lot of outside groups have been saying that that's what this is and therefore, that's a violation of the law. is that even at issue here? >> well, i believe that the law, specifically, bans that practice and chief justice made that clear during the oral arguments. there's no racial pro filings, you're not alleging that, right. >> no, we're the not. >> dan, explain the politics, if you lose 8-0 at the supreme court, that doesn't strike me as good politics. >> i think that the obama white house and democrats reached the point it doesn't matter to them all that much whether the supreme court rules against them 8-0 on

this. they take away the issue of the republicans and mitt romney being anti-hispanic. and i don't think the voting block is going to be paying really close attention to the federalism issues at the center of this case, they're going to be able to run against the republicans and arizona, the right will at least get the law, as being anti-hispanic and it's purely a political play. and you have to ask yourself as jason was suggesting, why did they bring such a loser case to the supreme court. are they now enlisting the supreme court itself in their political strategy? >> i should add there are only eight justices sitting on the case because elena kagan eliminated herself because she was at the justice department when this was. >> and there's a law whether it's constitutional and whether efforts like this are effective in reducing illegal immigration, which is the goal here.

that's what we all want. and the jury is still out on that, on that. there's a law that-- >> five other states, at least five other states have passed arizona type laws. some have walked them back a little bit. the business community doesn't like them and law enforcement isn't crazy about them being deputized and due to the day jobs, people think they're deportation agents and so forth. so, we have to ask ourselves, whether the laws work or whether there's another way to go in terms of determining how much foreign labor. >> the big story on immigration is not this enforcement, but it's collapsing and falling dramatically from mexico and it has, according to pew foundation survey this week, showed that it's really, really-- >> net zero. >> net zero. >> and the amazing thing about this, that trend began in 2000. that trend succeeded this

whole uproar we've been having about immigration and before the state laws passed and illegal immigration. >> okay, but the restrictionists would say it's because of greater enforcement could you agree with that? >> i'm sure that greater enforcement has something to do with fewer illegal, less illegal immigration, no doubt about that. but we also have a poor economy and we know that most of these are economic migrants coming here in search of jobs. >> paul: what about the politics of this, joe, going forward. let's say the supreme court does agree mostly with the state of arizona, chuck schumer this week, the democratic senator from new york says he would introduce a law that would overturn the supreme court decision in the case. what's he up to? >> look, i think he's trying to be the majority leader here and ride this for all it's worth. the people that oppose this law, they think it's a reign of terror and they think it's a racial police state.

so, i think they're really going to do whatever they can to oppose this and i think that explain the weakness of the justice department's argument. >> so, the the democrats given their interest groups feel they have no choice, but to fight on this ground even if it's a loser. fascinating politically. when we come back, lowering student loan interest rates. president obama is pushing it, mitt romney says he supports it, and even some republicans in congress are voting for it. so, what's not to like? find out next. ♪

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>> this country has always made a commitment to put a good education within the reach of all who are willing to work for it. that's what makes it special. that's what made us an economic super power. that's what kept us at the forefront of business and science and technology and medicine and that's a commitment we have to reaffirm today in 2012. >> that was president obama hitting the college circuit this week and pitching an eyed near and dear to many student hearts. for federally subsidized student loans, set to double from 3.4 to-- on july 1st. mitt romney thinks it's a good idea and many republicans. and is it? we're back with assistant editorial page editor james

freeman and washington columnist, kim strassel. kim, i'm a simple man. explain the politics of this to me. >> okay, so what you have here is the president basically setting the agenda. he's rolling out a very carefully orchestrated election campaign, he's targeting different groups, a few weeks ago, it was women. this week, it's students and he's out talking about the student loan issue, unfortunately, mitt romney is allowing himself to be dragged along. when he's for that rate. romney says i am, too, and put pressure on house republicans and they are, too, and the only question how we'll pay for it. >> mitt romney thinks it's a loser if he gets on the wrong side testify? >> well, everyone is fighting for the young person's vote and they obviously were a key part of barack obama's victory in 2008. not a happy crowd. people under the age of 25,

with college degrees, a battle is going on to see if they can get them to turn out. >> and you can pay them back with the jobs you're not going to get. >> that's right. >> paul: let's look at the substantive change. is this loan idea a good idea, good policy? >> as you pointed out it's not going to help anyone who is now looking for work or a senior coming out for work, it's going to offer mod test help for other people, but for taxpayers-- >> because it only applies to-- >> nobody is getting a rate cut on anything and even on the new loans going forward it's not everybody, not all category of students loans, but it's enough and under budget rules, 6 billion next year and 3.4% rate is capped, a lot more in the future. >> if it's capped for one year as the proposal would do, probably going to be very hard to ever raise, is it not. >> that's the danger, if this becomes a part of this

washington herd of sacred cattle, 3.4% raise becomes a basic american right and look an at uncle sam borrow heing at 3.1. let's say interest rates spike, taxpayers could be losing on every loan even before the inevitable default. >> paul: we already have default risk, students won't pay the loans back, on a trillion dollars, 900 billion of that now government loans. this adds credit risk. explain to viewers what that means? >> you've got the credit risk because the government doesn't check your fico score and other things the way they would on a different type of loan. it's bigger now, bigger than credit cards and auto loans and now it's adding the interest rate risk, which is that if would he say, 3.4% student loans are now the new american right and that's clearly what president obama wants to do, you look at these speeches he's giving and he talks about it as a necessity, this student funding program, and if those--

if interest rates. if the government is borrowing at higher rates than they have to offer the kids, it's a guaranteed loser. >> the secret winner here, jason, are colleges, aren't they? >> exactly. >> and well, tuitions have been outpacing inflation for three decades. and one of the reasons is because every time these subsidies increase, the schools see it as a green light to raise their prices and that's exactly what they'll continue doing. >> kim, why are house republicans being dragged along with this? >> well, again, what you've got here is a newly minted punitive g.o.p. nominee, mitt romney. for them, he came out and said he was for capping the rates and to have gone against him would have been a huge embarrassment for the standard bearer of the party, and how you pay for it. would you strip the money like the republicans, out of the

health care bill, and what the democrats are proposing again and again and again and again, to tax wealthier americans to pay for it. >> paul: the big problem for me, james, the loan guaranteed. they're free lines for politicians, they don't have any cost, they don't appear to have costs exhe september when they go bad and you pay for them, some future congress and-- >> and it's also, even, it's not just that they say it has no costs and want people to pretend that, they actually pre ten because of bogus accounting that it makes tons of money that this is a huge winner for the taxpayers and yet, they had a funny series of letters where the head of the congressional budget office said, well, i know this is bogus accounting, but we've got to do it anyway, it's absurd. >> paul: all right. still ahead, high unemployment, slow economic growth. a familiar combination and may cause french president nicolas sarkozy his job. when he we come back, french voters face the socialist cliff. will they jump?

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>> a struggling economy and high unemployment led nicolas sarkozy to a second place finish in the first round of voting in france's presidential election on sunday. mr. sarkozy is the first incumbent french president to lose a vote in the modern era. finishing behind francois hollande. and joining us with more, matt, what difference will it make if france elects a socialist as president? >> i think the markets will tumble on the promised to tax

the rich to the hilt and all kinds of-- >> 75% marginal rate. >> to be fair, sarkozy has been saying the same and he's sort of lost his way and i'm he not sure, i think that hollande may dabble and get a bit from the minister of finance and saying you can't do this. and in a way, you know, france needs a change and sarkozy has been a disappointment in many ways. >> you mean a change psychologically? >> a change to the leadership and i'm not sure that hollande is the french tony blair much less margaret thatcher and i'm not so sure-- not as worried as some people that france will go off the cliff here. >> what's the implications for the larger euro crisis that they see if hollande gets elected. >> france is the fifth largest economy in the world and second largest in europe. it was, ll about a year ago,

when people started discovering the depths of french problems, one. motors ever the european economy, italy, spain. if france begins to fail, the europe project begins to fail. and both on the european central banks calls for them to ease up even further on their lending, and essentially to debase the europe as a way of getting themselves out of their mounting debt. innate, inflate. >> inflate indeed and spend. today has gotten around to a point where we can understand the real divisions. the european central bank gave a speech this week in which he said, spending alone is not sufficient to produce growth. and francois hollande is getting credit for--

angela merkel says spending alone is not going to solve our growth problems here, we need structure reforms and labor market reform and i think that's the division that's now showed up in the european debates. >> and they've always wanted to undermine the ecb and mettle with the ecb. the germans, are stronger than they've been. >>. biggest economy. >> and merkel is facing her own election. >> and the last thing that she wants to do is give into the french on this. >> what's astonishing and interesting, here you have germany. the one functioning economy europe. they underwent. painful labor reforms and liberalizing the labor market easier to hire and fire employees. >> cutting the corporate tax rates dramatically and now, germany is doing well. you would think that the countries like france, to say nothing of spain and italy would look at the german

example and say how is it they turned out so well, a decade account that germany was in a great deal of trouble. >> well, spain did pass the market reform in february and you can take it to the court and challenge it, which boggs it down and marion monty got his head handed to him in the parliament. ne know what they have to do, but in the southern tier countries it's almost impossible to get over the unions and create the reforms. >> maybe not just southern tier, france is the heart as bret said of the euro project. >> is europe getting its arms around its real economic problems or is this french election really showing us in fact, that they're not there yet? >> i think it's too early to say, i think if europe manages to do what it needs to do and widely what needs to happen. needs to put in place incentives for the economies to grow. >> for private sector. >> absolutely. not just free-standing.

and germany is an example and poland is doing well. so there are european success stories out there, but europe needs to get past this crisis and if it does implement the things you should do, it will emerge stronger and-- >> and that's so strong and that's really the worry. >> the terms of the debate that europe now has are wrong. and raise taxes for the the sake of austerity budgets. >> for the sake of growth and spending. >> yeah, but basically what they're saying, we need to balance the national things, and so you raise taxes, you cut certain spending, that's what the british are trying to do with no success, they've done into yet another recession and on the other side, so on the other side you have the socialists, long debate. you need a pre market side. >> we have to take one more break. when we come back, hits and misses of the week. i'm really going to miss you. my new apartment isn't that far away.

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>> time now for hits and misses of the week. kim, first to you. >> this is a miss for president obama's campaign team, which this week on the website publicly named and shamed eight private citizens for the crime of donating to mitt romney's campaign. ever since nixon's enemy list, presidents have been careful about not targeting individual individuals for politics and for good reason. they're so powerful that they can chill the environment for political participation and they're supposed to represent all americans. this was a big no-no. >> all right. bret. >> a hit for mr. miss, newt gingrich that says, yes, he's going to withdraw from the race, we don't know exactly on what timetable, he's building the suspense. but i think on the whole we deserve to, he we ought to be thanking newt and made the race interesting, sometimes exciting and sometimes he made it a real race and he sharpened mitt romney's

performance and made it very entertaining, thank you, newt gingrich. >> charles taylor, the former president of liberia and an african war lord became the first head of states this week to be convicted of war crimes by an international tribunal, a well earned distinction, many bad leaders for sierra leone during that civil war and credits to britain which intervened in that civil war and u.s. pressing the u.s. to hand him over to the court in the first place. >> paul: that's it for this week's edition of the journal editorial report and thanks to my panel and especially to all of you for watching. and we hope to see you right here next week. . >> jon: on fox news watch. >> thank you pennsylvania, delaware, rhode island, connecticut and new york. >> jon: no surprise, m