Paul Gigot: This week on "The Journal Editorial Report," jubilation in Egypt and on the Arab street as a dictator falls. Is it a vindication of the Bush freedom agenda? We'll ask one of the architects, Paul Wolfowitz. Plus, the tea party wins round one of the House budget battle as GOP leaders announce a deal to slash $100 billion in spending. And David Cameron's wake-up call. The British prime minister delivers a scorching critique of multiculturalism in Britain. We'll tell you what he said and why the U.S. should take heed.

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

There was elation in the streets in the streets of Cairo following the resignation Friday of embattled President Hosni Mubarak after 18 days of pro-democracy protests.

As deputy defense secretary, Paul Wolfowitz was deeply involved with President George W. Bush's freedom agenda in the Middle East. As a State Department official, he's also been at the forefront of several democratic transitions, including one in the Philippines in the 1980s.

Secretary Wolfowitz, welcome.

Wolfowitz: Good to be with you.

Gigot: You've been saying for years that democracy was possible among the Arabs and they shouldn't be denied it, like the rest the world has fallen for the democracy wave that began sometime in the 1980s. How do you feel about the fall of Mubarak?

Wolfowitz: Well, I think it's a terrific vindication for the Egyptian people. And the people who said for years that somehow Arabs didn't care about freedom are just dead wrong. The Tunisians were out there making human shapes that could be photographed on Google Maps. It was Arabic letters for the word "freedom," horreya. In Egypt, they were carrying signs that said, "This isn't about bread, it's about freedom." This wasn't a bread riot. This was a freedom demonstration. And that's a huge step forward.

I have to say, also, that I had optimism, and I retain it, that Arabs are capable of freedom. But that's the next chapter here, and it hasn't been written yet.

Gigot: Do you think that in the end Mubarak acted like a patriot in leaving when he did? Because it looked, only 24 hours earlier, that in fact he was going to make this much more difficult.

Wolfowitz: Well, actually, if you read his three-page speech, he was trying to catch up, I thought, with the criticism that the first time around he'd expressed no sympathy for the families that lost kids and so forth. It's a confused speech. I don't know whether he acted out of patriotism, but he did the right thing. And I think at this point, the more credit Egyptians can give him, the more forgiveness, the better it will be for the country going forward. It's not about Mubarak, it's about Egypt. But these transformations work much, much better when there's not a bloodletting or a score-settling afterward. Most famously, we have South Africa, where Nelson Mandela said: If you tell the truth, we'll reconcile. But I can give you a dozen other examples where that kind of putting the past behind has been critical.

Gigot: So that's one of the lessons of democracy revolutions that have succeeded. But there's no Nelson Mandela figure right now, at least that I've been able to see, emerging from the streets of Egypt.

Wolfowitz: Mandela was unique. But in most of the other cases I know of, there's been someone who's taken the lead. Or in the case of Indonesia, the vice president that Suharto installed made a number of really bold moves. I would actually say that's the most important thing right now for whoever thinks they're running the show, and it sounds like it's this military committee.

Gigot: Right.

Wolfowitz: They need to, as quickly as possible, lift the emergency law. They need to release political prisoners. They need to set about with a new constitution. And from what I've heard, the best thing they could do would be to go back to the constitution that was drafted in 1954. It was so good, the military refused to adopt it. The present constitution is just absolute rule in thinly layered disguise.

Gigot: Well, what can the U.S. do now to nurture this transition and make sure it goes in the right direction?

Wolfowitz: Well, for one thing, I think enthusiasm is in order.

Gigot: Shouldn't be too restrained, in other words.

Wolfowitz: There's been too--there's really been too much hand-wringing. Yes, there a lot of ways this can go wrong. But, you know, I'm reminded that when the Berlin Wall came down, someone I admire, Margaret Thatcher, and her counterpart in France, Francois Mitterrand, were wringing their hands with the specter of a revived German threat in Europe. And President Bush said: Look, let's celebrate what the Germans have done, lets embrace unity, and then we'll have a chance to steer this in the right direction. And I wish he'd kept with that advice when he visited Ukraine, and unfortunately, he warned the Ukrainians against voting for Independence. But fortunately, they didn't pay too much attention to him.

Look, when the tide of freedom is sweeping, we should love it. And when it's headed in the wrong direction, then we'll have a lot more credibility to say, "Whoa, this isn't freedom anymore."

Gigot: Should we use our military aid, which is about $1.5 billion a year, to--as a leverage point with the Egyptian military in saying--in trying to get them to support a transition to genuine democracy and political free institutions?

Wolfowitz: I think I'd be careful with it. I think I would have strongly urged using it if they had resorted to violence, but they didn't. We need to give them a lot of credit for the way this came out so peacefully. They did it for their own sake and in their own interests. But if they had chosen to do what the Chinese did in Tiananmen Square, we'd be talking of a very different conversation today. And I think Egypt will be much better off if the military is respected. so we shouldn't be leading a charge against the military. If they start to go off the rails, if they go back to this practice of finding every liberal democrat they can find and throwing them in jail, that's a different matter. But I don't think we're heading backwards. I think the demand for a free media, the demand for ending this tyranny and oppression is so strong, I think we should let this tie go, until we see a real problem.

Gigot: All right, briefly, very briefly, Paul, should the Muslim Brotherhood participate in this transition?

Wolfowitz: I could offer you an opinion, but I really hesitate to do so, because I think Egyptians have to decide that. And I hope they will think about, as they make those decisions, whether a legitimate political party, a party, political party in Egypt can be considered legitimate, if, for example, they don't concede equal rights to women. There are standards. They should be Egyptians standards.

Gigot: All right. All right, Paul, thanks very much.

When we come back, the Tea Party wins round one of the House budget battle as GOP leaders announce a deal to cut $100 billion in spending. Now comes round two. Can they win the showdown with President Obama and the Democrats?

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