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The McLaughlin Group Host: John McLaughlin Panel: Pat Buchanan, MSNBC; Eleanor Clift, Newsweek; Thomas Friedman, New York Times; Mort Zuckerman, U.S. News & World Report Taped: Friday, November 11, 2011 Broadcast: Weekend of November 12-13, 2011

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JOHN MCLAUGHLIN: Issue One: Asia Pivot.

SECRETARY OF STATE HILLARY CLINTON: (From videotape.) As we end the war in Iraq and begin bringing troops back from Afghanistan, we are making an important pivot. The world's strategic and economic center of gravity is shifting east, and we are focusing more on the Asia-Pacific region.

DEFENSE SECRETARY LEON PANETTA: (From videotape.) The United States, as a Pacific nation, is and will remain a Pacific power in this region. MR. MCLAUGHLIN: President Obama travels to Honolulu, Hawaii's capital, to host APEC, the Asia Pacific Economic Cooperation conference. It will be the first meeting this year of APEC world leaders. The prestigious and powerful APEC consists of 21 Asian and Pacific Ocean nations.

APEC began 21 years ago. The mission of APEC is to foster, quote, "sustainable economic growth and prosperity in the Asia-Pacific region," unquote. Attendees at this week's Hawaii APEC meeting are Australia, Brunei, Canada, Indonesia, Japan, South Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, Taipei, Hong Kong, China, Mexico, New Guinea, Chile, Peru, Russia, Vietnam and the USA. Attendees also include business leaders and academics from around the world.

Aggregated, these 21 nations want to be called, quote-unquote, "economies," and not, quote-unquote, "nations." They want to emphasize that Asian-Pacific economic cooperation economies collectively have no political agenda. Rather, they have an economic agenda, notably trade.

These collected economies present a massive volume of power.

Item: APEC gross domestic product, all goods and services of 21 economies. APEC constitutes more than half of the total GDP of the planet, 55 percent.

Item: APEC trade. Of the total trade of the planet, APEC economies constitute 43 percent.

Item: U.S. exports to APEC. APEC economies constitute nearly 60 percent of the total of the United States export volume. Worldwide, APEC may soon be repositioned ahead of the European Union as the world's dominant economic coalition.

Question: Is APEC at this point more powerful than the European Union, right now?

PAT BUCHANAN: Well, let me talk about it. Europe, John, is clearly -- the Eurozone is collapsing. Europe is dying. There's not a single European nation that has a birth rate that will enable it to stay alive in its present form through this century.

The new century is probably going to be the American-Asian society. The only two superpowers militarily on earth are going to be China and the United States. The great economies that are growing are in Asia. Where I disagree with you is you need a bifurcation here, because the Southeast Asian countries -- Japan, Korea and these other nations -- are deeply apprehensive over the rise of China, which is behaving a little bit like the kaiser's Germany at the beginning of the last century. So I think you're going to see sort of a coalescing of these countries around the United States and a hope that the United States will remain militarily, economically and every other way committed to Asia. And that's what Obama and Mr. Panetta are trying to do.

MR. MCLAUGHLIN: Which kaiser -- Wilhelm?

MR. BUCHANAN: Kaiser Wilhelm II, John, the second one.

MR. MCLAUGHLIN: What year did he die?

MR. BUCHANAN: He died in early 1940, but he had a bad year in 1918. (Laughs.)

MR. MCLAUGHLIN: Eleanor.

ELEANOR CLIFT: Pat's right.

MR. MCLAUGHLIN: Pretty good. He's doing pretty well.

MR. BUCHANAN: (Laughs.)

MS. CLIFT: The U.S. presence is welcomed in this area of the world because we do balance off a rising China. And if you look at the European economies, they're all struggling. These Asian economies are booming. And I think the White House, this administration, certainly recognize the 21st century belongs to Asia and not to Europe.

And so there is a pivot, as we are winding down two wars. The president is appropriately going over there to assure them that we remain committed to Asia and that all our economic problems don't mean that we're pulling back and that we're going to pull back on our military presence. And jobs -- this is all about job creation as well. I mean, the president just completed the South Korean trade pact. They're trying to put together another free trade pact that would include Japan. So is the future economically, definitely.

MR. MCLAUGHLIN: Tom Friedman, can you pick any of that up, or --

THOMAS FRIEDMAN: Absolutely. You know, John, I just came from India two days ago, and India -- half the population is under the age of 25. And that really applies really throughout this APEC region. These are young countries compared to Europe, number one.

Of course, the EU is a true alliance. APEC is basically a club. It's an economic club, people who share economic interests. But ultimately what will work for the United States' advantage is that China is bounded by hard powers. It's bounded by Russia, OK. It's bounded by Korea. It's bounded by Japan; obviously to the south by Indonesia. And so it's going to be a very easy sell for the United States to find partners there to balance off China. It's not going to require, I think, some huge extraordinary American military presence. We've got a lot of people there who want the United States in that neighborhood. And in a funny way, China does too, because our presence there assures all the other countries that China can dominate them economically, but with America there, it won't dominate them politically, and therefore it provides for a lot of stability in that neighborhood.

MR. MCLAUGHLIN: India is this part of the world too, South Asia. And when you're talking about Asian Pacific, you're kind of including --

MR. FRIEDMAN: Absolutely.

MR. MCLAUGHLIN: -- India. India doesn't fit very well in any other blocs.

MR. FRIEDMAN: Absolutely.

MR. MCLAUGHLIN: Is India suffering -- I want to take a moment here on India. Is India suffering from the lack of a strong government structure? And if it wishes to move, say, a plant with 20,000 workers and it's really got to build a hotel and the infrastructure, which becomes then a private responsibility of the company moving in -- you've seen that literature.

MR. FRIEDMAN: Yes.

MR. MCLAUGHLIN: Did you see that when you were there? Or is the government more active now in creating things like clean water and electricity?

MR. FRIEDMAN: You definitely see that when you're there. You know, one of the things that Indian multinationals will tell you is everything we achieve, we achieve despite the government, not thanks to the government, not with the enablement of the government.

And I would say India's reaching the limit, John, where it can grow despite the government. You know, there's an understanding now that the biggest thing holding India back, especially compared to China, is its lack of governance. It's not cute anymore. I think Indian entrepreneurs understand that. And that's something they're really going to have to start focusing on. And there is a movement there, a groundswell movement, in that direction.

MR. MCLAUGHLIN: Mort.

MORT ZUCKERMAN: Yeah, just to focus on China for a moment, I don't think China has military ambitions or geographical ambitions. What they do have are economic ambitions, and they are really determined and they've done an extraordinary job to rebuild that economy, to grow that economy, to grow the exports of that economy. And they are doing whatever it takes in terms of infrastructure, in terms of education, and in terms of frankly penetrating abroad. And they're doing a first-rate job of that.

That, I think, is going to be the real threat, if you want to put it that way, because they have the ability to manufacture goods at very low cost compared to what we in the United States can do. And it's really undermining a great deal of what we once used to be, which was a blue-collar manufacturing economy. We saw that in the first decade of this century, where we lost 6 million of these kinds of industrial jobs. It's a huge problem for the United States.

MR. MCLAUGHLIN: Exit question: Is President Obama determined to refocus U.S. diplomacy and worldwide attention away from the Middle East and South Asia towards East Asia and China, even away from India?

MR. BUCHANAN: I think he is, John. But the -- you have to realize that politically in the year 2012, the Middle East and Israel is going to be a very, very big issue. But there's no question the center of gravity of the world is moving to Asia, the Pacific, the United States, that region.

MR. FRIEDMAN: The center of gravity is moving there, John, as Pat says, but the center of trouble is still in the Middle East. We've got Iran now approaching nuclearization in terms of its ability to develop a nuclear bomb. You have the Arab spring, the Arab awakening, now really churning every government there. And so, as much as the president may want to refocus from that region, the fact is the Middle East has a way of yanking you back.

MS. CLIFT: Right. And I don't think we should be overly cowed by China. They've got problems. They've still got millions of people on basic sustenance. And they've got a housing bubble that is yet to break and is about to break. So, you know, there's that saying, the bigger you are, the harder you fall. I think China is not necessarily the big colossus we're making it out to be.

MR. MCLAUGHLIN: He certainly has changed the debate, though, with this trip over there.

MR. ZUCKERMAN: Yeah, to an extent. But in many ways, the debate was increasingly focused on Asia and on China, and for the right reasons. So I think it was absolutely the right thing for him to concentrate on that and try and develop relationships here that do not represent just economic competition but political cooperation.

MR. MCLAUGHLIN: Well, it's new, relatively new.

MR. ZUCKERMAN: Yeah, for sure. But the emergence of China is relatively new. MR. MCLAUGHLIN: What kind of grade do you give Obama on a foreign policy/foreign achievement scale?

MR. ZUCKERMAN: Well, I mean, I think the real test --

MR. MCLAUGHLIN: You know --

MR. ZUCKERMAN: -- the real test for him, frankly, is going to be in the Middle East. And that is, as we say, TK. That is to come. We don't know how his policies there are going to work. But that's where the real threats to the United States are. In 10 years, by the way, since I believe the United States is going to become virtually energy sufficient, self-sufficient in 10 years because of all this new technology that we're developing for oil and natural gas, I think the role of the Middle East will decline.

MR. MCLAUGHLIN: Obama has had quite a success, though, in many respects.

MR. BUCHANAN: John --

MR. MCLAUGHLIN: For example, the top three people of al-Qaida have disappeared.

MR. FRIEDMAN: I'd give Obama --

MR. MCLAUGHLIN: Meaning exterminated.

MR. FRIEDMAN: I'd give Obama high marks for fulfilling Bush's foreign policy. I think he's been very good at executing Bush's foreign policy, particularly the war on terrorism, and very focused. He's, I think, brought power to bear in a very smart way. He's gotten the people he needed getting.

In terms of his own foreign policy, I'd agree with Mort. I think it's TK. I think the issues that he has taken on himself, whether his Arab-Israel diplomacy or building a different relationship with China, still to be determined. The key thing here is leverage.

MS. CLIFT: Well, politically --

MR. MCLAUGHLIN: You don't think --

MS. CLIFT: Politically --

MR. MCLAUGHLIN: -- the fact that he is carrying forward the Bush-Cheney policy, that that diminishes what Obama is doing.

MR. FRIEDMAN: Oh, no.

MR. MCLAUGHLIN: Doesn't that really say something about the stature of Obama? He's willing to see credibility and truth where it is.

MR. BUCHANAN: John, we don't know how --

MR. FRIEDMAN: Yeah. And he's done it in an effective way.

MR. BUCHANAN: We don't know how --

MR. ZUCKERMAN: It's in our national interest.

MS. CLIFT: Politically --

MR. ZUCKERMAN: We absolutely must deal with the issue of terrorism. And I think he's right to follow it.

MS. CLIFT: Politically he's reversed expectations. Democrats are supposed to be good on the domestic issues and the economy and weak on national security.

MR. BUCHANAN: But we don't know how --

MS. CLIFT: He's flipped that.

MR. BUCHANAN: We don't know how Iraq's going to turn out. We don't know how Afghanistan's going to turn out. We don't know how Iran's going to turn out. We don't know how Egypt's going to turn out --

MR. ZUCKERMAN: Right.

MR. BUCHANAN: -- or the Middle East; Israel, the whole Palestinian thing's going to turn out. That's for a second term.

MR. MCLAUGHLIN: Do you think Obama has better mediation overall? In other words, he can settle an argument -- MR. BUCHANAN: I don't --

MR. MCLAUGHLIN: -- by reason rather than by a fight.

MR. BUCHANAN: I think a lot of what Obama's done is right, and I think it is wise. And I think some of the things -- getting out of there, I think we've got to get out of Afghanistan and Iraq.

MR. MCLAUGHLIN: Yeah.

MR. BUCHANAN: But I don't know how it's going to turn out.

MR. MCLAUGHLIN: So you think he's going to win a second term. Is that it?

MR. BUCHANAN: No, I think it's 50-50.

MR. MCLAUGHLIN: Fifty-50?

MR. BUCHANAN: Yeah.

MR. MCLAUGHLIN: Eleanor.

MS. CLIFT: That's pretty good odds when you look at 9.1 percent unemployment. (Laughter.)

MR. BUCHANAN: Well, look at the Republican field, Eleanor. (Laughs.)

MR. MCLAUGHLIN: I can't improve on your observation --

MS. CLIFT: Thank you, John.

MR. MCLAUGHLIN: -- when you consider the unemployment figure comes barreling down the road.

Issue Two: That Used To Be Us.

PRESIDENT BARACK OBAMA: (From videotape.) We should be able to agree now that it makes no sense for China to have better rail systems than us and Singapore having better airports than us. And we just learned that China now has the fastest supercomputer on earth. That used to be us.

MR. MCLAUGHLIN: President Obama delivered those remarks roughly one year ago. Mr. Obama says that when he sees the growth and innovation of other countries, he thinks to himself, that used to be us. In other words, the American dream is on the ropes; 15 million Americans now unemployed. Fifty million Americans now live in poverty. Salaries for Americans are at the lowest in nearly 20 years.

The U.S.'s decline is the subject of a book titled "That Used To Be Us: How America Fell Behind in the World It Invented and How We Can Come Back." The book was co-written by New York Times columnist Tom Friedman, our guest panelist. The book's co-author is Johns Hopkins University Professor Michael Mandelbaum.

The authors describe their book as a wakeup call for collective action to keep the American dream alive and thus preserve American power in the world. The key to America's resurgency, Friedman and Mandelbaum argue, is to mimic China's surging without mimicking China's politics.

Tom Friedman, the book's proposition appears to be that America has fallen behind the world that America invented. Can you give us a rap sheet on that?

MR. FRIEDMAN: Well, the basic argument, John, is very simple. We argue that what made America great was that we had an amazing public-private partnership in this country. And the public side in that that enabled the private sector and all our growth these years was built on five pillars.

One, we educated our people up to and beyond whatever the technology was, whether it was the cotton gin or the supercomputer, so they could get the most out of it.

Second, we had the world's, you know, best infrastructure -- roads, airports, telecom.

Third, we had the most open immigration policy to attract the brightest minds in the world and the most energetic people to start 30 to 40 percent of the companies every year in Silicon Valley.

Fourth, we had the best rules for capital formation, incentivizing risk taking and preventing recklessness.

And lastly, we had the most government-funded research to push out the boundaries of science and physics and chemistry.

So let's look at all five of those today. The first one, education, we've really fallen down the international table. Infrastructure -- I just flew from Hong Kong to LAX, Los Angeles airport. It's like flying from the Jetsons to the Flintstones when you now see our infrastructure.

MR. MCLAUGHLIN: You mean the quality of the airport --

MR. FRIEDMAN: Exactly.

MR. MCLAUGHLIN: -- in --

MR. FRIEDMAN: In Hong Kong --

MR. MCLAUGHLIN: -- Hong King. MR. FRIEDMAN: -- compared to LAX.

MR. MCLAUGHLIN: Right, right.

MR. FRIEDMAN: Third, immigration -- we basically -- we have a Republican debate who can put up the most electric fences. The message is go away. We want to educate you here and then get the heck out of our country.

Rules for capital investing. How'd you like that subprime crisis? And government-funded research -- have you seen that graph? It looks like an EKG heading for a heart attack.

So if you look at the five pillars of our success as a country, they're all heading in the wrong direction. And therefore, we're not getting the most out of our system. We think America is the greatest political system in the world. China is inferior. But China today, John, is getting 90 percent out of an inferior system and we're getting 50 percent out of a superior system.

MR. MCLAUGHLIN: So this is -- this is ledge time? We're going to go out on the ledge and take a jump?

MR. FRIEDMAN: I don't think --

MR. MCLAUGHLIN: Meaning that -- is it that bad?

MR. FRIEDMAN: No, I think it's all fixable.

MR. MCLAUGHLIN: I mean, in the wake of what Buchanan says the problems of the United States are, it's really a very, very dreary picture that's out there.

MR. FRIEDMAN: I think it's all fixable.

MR. BUCHANAN: Well --

MS. CLIFT: This is -- I think it's a great diagnostic and it's a worthy book full of worthy ideas. Bill Clinton also has a book out about how to put Americans to work. But I don't think what either of you do is give any prescriptions how to penetrate the political paralysis that's in this country. And I think President Obama, if he were here, would agree with everything you said. He gave you the phrase for your book.

MR. FRIEDMAN: Right.

MR. BUCHANAN: John -- MR. FRIEDMAN: We actually do have a -- we do believe we may need a third party in this country.

MR. BUCHANAN: But we do have an ideological --

MR. FRIEDMAN: (Inaudible) -- shock therapy.

MR. BUCHANAN: We do have an ideological --

MR. MCLAUGHLIN: Is this the time for a third party if there's ever going to be one?

MR. FRIEDMAN: Yeah.

MR. BUCHANAN: John --

MR. FRIEDMAN: We think that there's a huge unrepresented --

MR. MCLAUGHLIN: How about an independent candidate?

MR. FRIEDMAN: Independent candidate, third party, either one.

MR. MCLAUGHLIN: Would work too.

MR. BUCHANAN: An independent --

MR. MCLAUGHLIN: You think it's time for --

MR. FRIEDMAN: We think this is --

MR. MCLAUGHLIN: -- Bloomberg to run from New York?

MR. BUCHANAN: John --

MR. FRIEDMAN: If Bloomberg ran tomorrow, he'd have 40 percent of the vote right out of the box.

MR. BUCHANAN: Bloomberg --

MR. MCLAUGHLIN: Would he?

MR. FRIEDMAN: Right out of the gate.

MR. MCLAUGHLIN: Would Bloomberg be a good --

MS. CLIFT: That's not a winning --

MR. MCLAUGHLIN: Would Bloomberg be a good president?

MR. FRIEDMAN: I don't think -- we actually don't think you have to win.

MR. BUCHANAN: Bloomberg would not carry New York City. MR. MCLAUGHLIN: Would the editorial board of The New York Times --

MR. BUCHANAN: He wouldn't carry New York City.

MR. MCLAUGHLIN: -- support a Bloomberg candidacy?

MR. BUCHANAN: Obama would carry New York City. Let me tell you, a third party would sink the candidate to whom it's closest. Let me tell you the problem here, John. One of them is -- Eleanor's touched on it -- we've got an ideological and political gridlock in this country. People disagree profoundly on what to do. We can't even build that pipeline from Canada down to the Gulf of Mexico.

MS. CLIFT: Well, that's --

MR. BUCHANAN: They're putting it off for 17 more months. China would have that up.

MS. CLIFT: Excuse me.

MR. BUCHANAN: But China's got a problem --

MS. CLIFT: That's because a Republican governor said it interferes with --

MR. BUCHANAN: Well, I don't care whether it's Republican or Democrat.

MS. CLIFT: -- the water aquifer.

MR. BUCHANAN: There's a deadlock.

MS. CLIFT: Right.

MR. BUCHANAN: There's a deadlock.

MS. CLIFT: There's a scientific reason too. I would not -- that's not political paralysis.

MR. BUCHANAN: Well, you know, could you build Hoover Dam now? No. Could you build the interstate highway system?

MS. CLIFT: Yes.

MR. BUCHANAN: No. You couldn't get the permits.

MR. MCLAUGHLIN: Who paid for Hoover Dam?

MS. CLIFT: It's not about permits.

MR. BUCHANAN: Who paid for Hoover Dam? MR. MCLAUGHLIN: Who paid for Hoover Dam?

MR. BUCHANAN: Well, FDR did, John. He wrote a check.

MR. MCLAUGHLIN: There you are.

MR. BUCHANAN: OK.

MR. MCLAUGHLIN: Where does that leave your theory about capitalism at work?

MR. BUCHANAN: All right, you can't build the Tellico Dam because of the snail darter.

MR. MCLAUGHLIN: All right, this is what -- this is what Friedman says in his book, Friedman and Mandelbaum. Quote: "Our biggest problem is not that we're failing to keep up with China's best practices" -- you made that point in the dialogue a moment ago here on the set -- "but that we've strayed so far from our own best practices. America's future depends not on our adapting features of the Chinese system" -- note that, Pat; that'll give you comfort -- "but on making our own democratic system work with the kind of focus, moral authority, seriousness, collective action and stick-to-itiveness that China has managed to generate" --

MR. BUCHANAN: John --

MR. MCLAUGHLIN: -- "by authoritarian means for the last several decades" --

MR. BUCHANAN: John, we don't --

MR. MCLAUGHLIN: -- which is the point you just made a moment ago.

MR. BUCHANAN: But we don't agree, John. This is the problem. The Americans no longer agree on what we ought to do --

MS. CLIFT: But it's not about --

MR. ZUCKERMAN: That's right.

MS. CLIFT: It's not about solutions. MR. MCLAUGHLIN: Let her in.

MS. CLIFT: It's not about solutions. It's about power. And the Republicans have been very successful at creating political dysfunctionality and then blaming President Obama for not being able to fix it.

MR. MCLAUGHLIN: I've got a question for Mort.

MR. BUCHANAN: We've got a deadlock.

MS. CLIFT: The environment movement --

MR. MCLAUGHLIN: I've got a question for Mort.

MS. CLIFT: -- is not what's wrong with this country. It's what's right with this country.

MR. MCLAUGHLIN: Mort ought to know the answer to this, judging from where he comes from on the --

MR. BUCHANAN: The fourth seat?

MR. MCLAUGHLIN: -- plutocracy ladder, right? (Laughter.)

MR. ZUCKERMAN: Fortunately --

MR. MCLAUGHLIN: I can't let go of that, Mort. I'm sorry.

MR. ZUCKERMAN: -- it's not the plutocracy ledge, because I ain't jumping off, guys. I'm just telling you that.

MR. MCLAUGHLIN: I want to know whether capitalism, not in its purest pure form, not laissez faire, but whether capitalism is slowly running out of steam.

MR. ZUCKERMAN: I don't think so at all. I think that what you have now -- and it's implicit in what was just being discussed here -- is you have a sense that the bureaucratic and political environment is one of the great inhibitors of what capitalism really can do for this country, and did for many, many decades.

MR. MCLAUGHLIN: I want to -- do you translate that as Mort saying if you had the tenacity of purpose to fulfill the serious underwriting of capitalism, you would have what you have in your book? A, do you think that's what he's saying? And B, do you believe that?

MR. FRIEDMAN: Well, you know, I really think honestly that we're not that far away from what we need to be. OK, we haven't gone over the cliff.

MR. MCLAUGHLIN: You mean in our present -- MR. FRIEDMAN: Exactly.

MR. MCLAUGHLIN: -- attitude, system of capitalism.

MR. FRIEDMAN: We are -- I think the system can work, OK. We are not that far away. We need a grand bargain right now between the two parties -- some short-term stimulus, some long-term fiscal responsibility of the Simpson-Bowles nature. The problem is right now, yes, the Republicans have been blocking President Obama, no question; but my problem with President Obama is that he isn't putting that grand plan out there, OK.

MR. BUCHANAN: Right.

MR. FRIEDMAN: That's my problem.

MR. BUCHANAN: John --

MR. MCLAUGHLIN: Why is that?

MR. ZUCKERMAN: And he's lost --

MR. MCLAUGHLIN: What?

MR. ZUCKERMAN: He's lost the political and moral authority, frankly, to do that now, for whatever reason.

MR. MCLAUGHLIN: For good?

MR. ZUCKERMAN: No, it's not necessarily for good. But you see his approval level and the fact that he has no personal relations with the leaders of the other party. It's just really amazing how bad --

MR. MCLAUGHLIN: It's the latter part of that that's hurting him more than anything.

MR. BUCHANAN: Hey, John --

MR. ZUCKERMAN: Both of them are hurting him, because they don't have to pay attention to him.

MR. BUCHANAN: John, where are you going to get the money when the Republicans aren't going to give you a nickel in new taxes --

MS. CLIFT: That's right.

MR. BUCHANAN: -- for what Tom Friedman wants to do?

MR. MCLAUGHLIN: There you are -- capitalism tied down --

MS. CLIFT: Well --

MR. MCLAUGHLIN: -- strangulated at the neck by the Republicans. Issue Three: Bashing Bibi.

ISRAELI PRIME MINISTER BENJAMIN NETANYAHU: (From videotape.) The bond between Israel and the United States is unbreakable. And I can affirm that to you today.

PRESIDENT OBAMA: (From videotape.) But understand this as well. America's commitment to Israel's security is unshakable. Our friendship with Israel is deep and enduring.

MR. MCLAUGHLIN: President Barack Obama and Israeli Prime Minister Benjamin Netanyahu both say that the U.S.-Israel relationship is beyond rupture. Well, that claim may have been put to the test this week. A report surfaced quoting an exchange between French President Nicolas Sarkozy and President Obama at the G-20 summit.

President Sarkozy said this about Prime Minister Netanyahu. Quote: "I cannot bear Netanyahu. He's a liar," unquote. President Obama then is said to have said this to President Sarkozy. Quote: "You're fed up with him, but I have to deal with him even more often than you."

Question: How much will this bring the U.S.-Israeli partnership into, what, disrepair, danger?

MR. ZUCKERMAN: Well, I don't think it'll bring it into danger, but I think there are real strains that go beyond it being personal between Obama and Netanyahu. There are real strains about what's going on in the Middle East and what Israel could and should do.

MR. MCLAUGHLIN: And Iran.

MR. ZUCKERMAN: And Iran. Of course, that is another huge issue that is at this point still under the surface, which is that the Israelis feel this is an existential threat. And the question is, what are they going to do about it and what is the United States going to do?

MR. MCLAUGHLIN: Do you want to speak to Iran?

MR. ZUCKERMAN: Do you want to what?

MR. MCLAUGHLIN: Do you want to speak to Iran?

MR. ZUCKERMAN: On that issue? MR. MCLAUGHLIN: Yeah, on that -- on that -- it's not conjecture -- on those reports that it has been building a -- it has been strategically building a nuclear bomb since 2003, according to the atomic international agency on nuclear development.

MR. ZUCKERMAN: There's no question about it. This would have been a statement issued by the same organization years ago.

MR. MCLAUGHLIN: The IAEA.

MR. ZUCKERMAN: Yes. If it hadn't been headed by ElBaradei, who was an Egyptian who frankly smothered a lot of this, but now that he's no longer the chairman of it, it came out and it's -- everybody has known that this has been the case.

MR. MCLAUGHLIN: You know ElBaradei. Did you ever meet him?

MR. FRIEDMAN: I met him actually in Egypt.

MR. MCLAUGHLIN: Do you think he's a man of honor, or do you think as described by Mort Zuckerman?

MR. FRIEDMAN: I really don't know. I mean, he's certainly a man of honor in my own dealings with him, but I was dealing with him as a presidential candidate in the Egyptian elections, John, to be honest. I think Mort's point is right, though, that, you know, one of the worst-kept secrets in this town, John, is that Bibi Netanyahu and Barack Obama don't like each other particularly.

But I think that the geopolitics is going to trump the politics right now. We are in a really critical geopolitical moment in the Middle East, what to do about the Iran nuclear issue. And Israel and the United States are going to have to work very closely on that.

MR. MCLAUGHLIN: All right.

MR. FRIEDMAN: And I don't think any of this is going to really --

MR. MCLAUGHLIN: Let me digress with Tom, and I want you others to pay attention. Here is a man who goes to the areas that he covers. He was in India this week. And you've written a couple of columns on India. India has become a source of great interest to you.

MR. FRIEDMAN: Yeah.

MR. MCLAUGHLIN: Will you tell us why and, more importantly, even what you found there?

MR. FRIEDMAN: Well, you know, India is a miracle to me. It's 1.2 billion people, speaking 100 different languages, multiple, you know, ethnicities that somehow come together every five years and hold a free and fair election. Imagine if India was living like Iraq, Afghanistan. The world -- the world would be a different place. So, first of all, we are blessed by having this democracy basically that's emerged in India.

Second, it's a young country and it's a country that really is on the way up, you know, in terms of innovation and entrepreneurship; a lot of incredibly exciting stuff going on. And it's a source of stability in the world --

MS. CLIFT: Yeah, I --

MR. FRIEDMAN: -- and will be a counterbalance to China.

MR. MCLAUGHLIN: Do you agree with Jack Welch, who says the chances are that the competition between the two and the longevity of the two nations, China and India, India will win?

MR. FRIEDMAN: Well, I think both of them have strengths. I don't think it's going to be so simple, because China has got real problems. It's got to make a political transition. India's got a problem with its government.

MR. MCLAUGHLIN: He feels that India has learned how to develop government, use government, and is on the way to getting the kind of (success ?) a government needs and to clear up, you know, where do we get our fresh water and so forth.

MR. FRIEDMAN: John, I think he's a little optimistic about that.

MR. MCLAUGHLIN: You think he is.

MR. FRIEDMAN: Yeah.

MR. MCLAUGHLIN: Well, he says that China, he feels -- I don't want to put words in Jack Welch's mouth, but as I recall, Jack Welch has got a big operation in Bangalore, right?

MR. FRIEDMAN: Yeah.

MR. MCLAUGHLIN: Jack Welch of GE, formerly of GE, head of GE for years, he says that the odds of China getting into trouble with its system and that there be real internal problems there is far greater than India. Do you agree with that?

MR. FRIEDMAN: No question about that.

MR. MCLAUGHLIN: Out of time. Bye-bye.

END.