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Fareed Zakaria GPS

State of Afghan War; Israeli-Palestinian Conflicts

Aired June 27, 2010 - 10:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

FAREED ZAKARIA, HOST: This is GPS, the GLOBAL PUBLIC SQUARE.

Welcome to our viewers in the United States and around the world. I'm Fareed Zakaria.

The big news of the week was, of course, President Obama's decision to fire General Stanley McChrystal from his command in Afghanistan. It was the right decision, made even smarter by the choice of replacement in David Petraeus.

McChrystal was guilty not merely of insubordination, in my view, but of incompetence. The counterinsurgency, which is what we are doing in Afghanistan, is all about the military working closely with nonmilitary agencies because the political, social, economic functions are as crucial as the war-making ones.

If General McChrystal and his team had as much contempt as the article suggests, and there was as much friction with all the various civilian agencies involved in Afghan policy from Vice President Biden, to the American ambassador in Kabul, to Richard Holbrooke, how could he be working seamlessly with them to execute a harmonious counterinsurgency policy?

Compare McChrystal's approach to that of General Petraeus in Iraq, who almost always gave his briefings with the American ambassador, Ryan Crocker. He always praised his civilian counterparts and gave them attention and respect, even though he, General Petraeus, was really calling all the shots. David Petraeus literally wrote the book on counterinsurgency, the Army manual, which is a good thing, because it may need to be revised in light of Afghanistan.

We all point out that Afghanistan is much poorer than Iraq, war- torn, et cetera, but the crucial difference is that the insurgency in Afghanistan is entirely a local affair, composed and directed by Afghans. Many of the leaders of the insurgency live in Pakistan, but they are still Afghans, and Pashtuns, particularly. Simply put, a large number of Pashtuns believe that the Karzai government is their enemy.

Now, Pashtuns make up 50 percent of the Afghan population and 100 percent of the insurgency. You cannot kill, capture, destroy, drive away all these people. You have to make deals to bring many of them into the fold. And that strategy was, in fact, at the heart of the success of the surge even in Iraq. The Sunni awakening in which large numbers of Sunni tribes switched sides and stopped killing Americans and began supporting the Baghdad government was the turning point of the Iraq War. So what would it take to engineer something like that in Afghanistan?

This is the challenge Petraeus faces. And it will take all his political and diplomatic skills to solve them.

On the program today, we have a collection of star commentators and columnists to talk about all of this week's news from McChrystal, to Obama's leadership, to inevitably the BP oil spill.

Starting with Tom Friedman of the "The New York Times"; Arianna Huffington, Katrina vanden Heuvel; Ross Douthat; and in his first appearance since being given a CNN show of his own, the former governor of New York, Eliot Spitzer. We'll also delve deeper into the tactics and strategy of counterinsurgency in Afghanistan.

We'll talk about all of this on GPS. Don't miss it.

And now I welcome the Pulitzer Prize-winning "New York Times" columnist Thomas Friedman.

Welcome, Tom.

TOM FRIEDMAN, "NEW YORK TIMES": Great to be here, Fareed. Thank you.

ZAKARIA: You agree that Obama had to let McChrystal go?

FRIEDMAN: Yes. It seemed that for the reasons you really outlined, Fareed. This is a team effort, and when a key player on the team has either indirectly, or through his colleagues and subordinates, dissed every other member of the team, it's hard to see how they can work together, especially in a situation like this, which is under enormous stress.

And people have to have each other's back. People have to trust each other. People can't feel like, I'm positioning myself right now so I'll be able to blame you or whatever.

So, it was inevitable. I think it's tragic. I think Stan McChrystal was an American warrior and the kind of person we need.

ZAKARIA: Do you think Petraeus will be able to stabilize things?

FRIEDMAN: Well, you know, I hope so. As an American, you know, I hope so, Fareed.

Our troops are there, we certainly have stakes. But as you know, I've been dubious about this from the beginning.

ZAKARIA: This surge?

FRIEDMAN: This surge. And because I ask myself just really simple questions. You know, which is, one is, we're training the Afghan army.

Why are we training the Afghan army how to fight? I mean, if there's one thing you'd think Afghans know how to do by now, it's that. You know what I mean? It truly is like training Brazilians to play soccer. I don't think you have to do that.

I mean, who is training the Taliban? They can't even read. They don't know what a map looks like, but they've fought the American superpower to a draw.

So, the point for me, Fareed, is it's not about the way. It's about the will. You know?

And it seems to me that one side has a lot of will. And our side, you know, doesn't.

Well, why is that? Maybe because the second problem, they have a leader who stole the election.

Now, you can say, as many senior officials did, well, he would have won anyway, he's the best we're going to get, we can manage him. But the fact is you said our ultimate goal there is to build a decent government so Afghans will want to side with the government, not the Taliban. Yet, the government, at its very core, is built on a stolen election.

And so these aren't -- I'm no Afghan expert, but, like, I just know how to read the paper. You know?

These are questions that a child would ask if they were strategically inclined. Which is, "Daddy, why are we training those people when we don't have to train those people at all, their enemy?"

And so, these are the questions that bother me, Fareed. And I am not going to sit silent with them and hope that it's all going to work out.

ZAKARIA: I wonder about another aspect of this, which is, when you talk about the loss of will, partly, I think there is a loss of will on the American side. I don't mean the troops. I don't mean the commanders. But the American nation. Because I think there are many Americans wondering, is this really worth it?

In other words, we will have now spent a trillion dollars in Afghanistan, but do we really need to be there in those numbers, on that scale, to prevent terrorist attacks from occurring? Are there cheaper ways? You know, I think there's a whole rethinking of the way in which we have considered this whole war on terror.

FRIEDMAN: Well, you know, and that's really been my third point, which is that we desperately need nation-building at home here. And yes, the ideal situation would be, stabilize Afghanistan, get a decent government there. God, I'd love to see young girls, Afghan girls, being able to get an education.

But the fact is we have young Americans right now who can't get an education. I'm not one to say just stop the war, come home. I realize we've got to make a responsible transition. But it seems to me, we ought to keep this at a lower level because, after all, Fareed, the biggest danger is this virtual Afghanistan.

If you look at the last three attacks, the December, the Christmas Day bombing, Fort Hood, and Times Square, all of these were part of a very complex web of young Muslim males who got attracted to jihadism over the virtual Afghanistan, the World Wide Web, and then ran over to Pakistan, not Afghanistan, to get trained, and then came back here. So, we're dealing with this really complex, adaptive system that's very different from that first al Qaeda base in Kandahar.

ZAKARIA: And it's all lone rangers.

FRIEDMAN: Right.

ZAKARIA: It's not directed by al Qaeda. It's not groups of people planned. It's these disaffected, perhaps troubled, kids who then get radicalized on the Internet, as you say, get trained in Pakistan. So, the approach that views this as a kind of, you know, how do you break down the large group, when the problem is really these lone rangers --

FRIEDMAN: That's right.

ZAKARIA: -- and you're never going to be able to stop some disaffected kid in Nigeria from getting radicalized. The best you can do is to hope you stop them here, you apprehend them, and then you respond and you show resilience to whatever attack happens.

FRIEDMAN: Well, you can. And right now, the biggest response -- you know, I know this for a fact. We've told the Pakistani government -- we, the United States -- that if there's another Times Square bomber, we don't really care about your sovereignty. We are going to go after the base or the house where this guy was trained.

So, what I fear, what I'm sure President Obama fears, is after spending another trillion dollars in Afghanistan, you know, some guy is going to walk across the Mexican border or -- and with a backpack. And then what? What was it all about?

ZAKARIA: Let me ask you, since we have you, another big thing Obama is dealing with is Israel. He's meeting with Prime Minister Netanyahu soon.

You were just in Israel. What is your sense of -- you know, what is the state of play?

FRIEDMAN: I have a very simple view about the history of Arab- Israeli relations. It can be summarized in one sentence: War, timeout, war, timeout, war, timeout, war, timeout, war, timeout, going back to 1948.

And the whole history of Israeli-Arab relations is simply that Israel did better with its timeouts than the Arabs did . It was more productive of its timeouts. But that's all it's about.

Now, what's new, strategically new today, Fareed, is that Israel bought its early timeouts for 30 years with conventional wars against conventional states. It bought the current timeout with three wars: one against Yasser Arafat's corrupt autocracy, one against Hezbollah in Lebanon, and one against Hamas in Gaza. It bought those timeouts with a very unconventional war against a non-state actor nested in civilian populations who used rockets launched from rooftops, school backyards and living rooms.

And the only way to win those wars, to win those timeouts, was to, unfortunately, tragically, kill civilians. And the Israelis chose to do that.

So, they bought this timeout with running the risk of being accused of war crimes. And that's why you have this oddity of Israel, on the one hand, more illegitimate than ever, be accused of basically war crimes. Prime Minister Netanyahu has got to get off the dime here and understand the danger and opportunity of an Israel that has to buy its timeouts with this currency. OK?

And this is the moment. And unfortunately, Netanyahu is doing what he did the first time around. I call it dog-paddling in the Rubicon.

He never quite crosses the Rubicon. He dog-paddles in the middle. You know? He's caught. He's in this kind of paralysis.

And I just want to say to him, Prime Minister, if your term ended tomorrow, this second term as prime minister, it would not be a footnote to a footnote, Fareed, in Israeli history. Basically nothing has happened here. OK? And he has got to get off the dime and understand Israel has this incredible opportunity and this tremendous peril, because another war like this against a non-state actor that kills civilians, as happened in Gaza and Hamas, I believe will have staggering negative implications for Israel.

ZAKARIA: Do you think that the Obama administration should be tougher on the Israelis, should be less tough? You know, there's a big debate in the American-Jewish community in particular. "Commentary" magazine has a big symposium.

FRIEDMAN: Right. Sure. My view of this is very simple: friends don't let friends drive drunk. You know?

And right now, you have an Israeli government that seems to me is not acting on its obvious interest, because we've kept one part of this story that's hugely important. We now have a Palestinian government in the West Bank, in Ramallah, led by Salam Fayyad Mahmoud Abbas, that has built up a security force, is building up institutions, is doing it the Israeli way. OK?

They are getting their act together. So, for the first time, the old Israeli line, which was true for a long time -- Who do we have to talk to? -- well, there is an address. There is a need. There is an opportunity. And if Prime Minister Netanyahu can't see that, then I hope President Obama draws his attention to it. And I don't care whether it's with a 2 x 4 or with a Havdalah candles on Saturday night at the White House.

What previous American presidents have always understood is that we play a necessary role for the Israeli prime minister. He needs to go to his cabinet and say, look, I'd never do this, I'd never do this, but that anti-Semite in the White House, he broke my arm. He had it behind my back. I would never do this, but the Americans are -- if we don't play that role, if he we just sit here and we listen to all these people say, oh, no, you have to be nice, this is not a nice neighborhood. OK?

Bashir Jamali (ph) used to say, this is not Denmark and this is not Norway. And it's not Denmark. It's not Norway. And you have to be able to exercise force there in the right way, diplomatic and military, if you are going to survive.

ZAKARIA: On that note, Tom Friedman, thank you very much.

FRIEDMAN: Thank you.

ZAKARIA: When we come back, we'll be joined by David Killcullen, and we will go much deeper into Afghanistan and counterinsurgency.

We'll be right back.

(BEGIN VIDEO CLIP)

ZAKARIA: How do you get out? This is a war involving 40 NATO countries, commitments made in Afghanistan to people, commitments made in Pakistan and India. It's not like turning on the television channel.

FRIEDMAN: And I never suggested that.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

ZAKARIA: And now Tom Friedman and I are joined by David Kilcullen, one of the world's great experts on counterterrorism. He served as an adviser to General David Petraeus during the surge in Iraq.

David, a number of people say the problem here is not the change in personnel, what we need is a change in policy. That counterinsurgency can't really work in Afghanistan. Afghanistan is too different from Iraq.

DAVID KILCULLEN, COUNTERINSURGENCY EXPERT: I don't think it's a matter of whether counterinsurgency can work or not. I think it's a matter of certain fundamental problems in the campaign, which I think you are right, are independent of who the commander is. If we were having this conversation last week, and you said, what are the main problems in Afghanistan, I wouldn't have listed General McChrystal amongst them. He's a very solid, capable guy who was doing a great job leading a force in a very difficult environment.

But there are four basic problems: the political problem to do with Karzai and the Karzai government; the strategic problem of the timeline; the operational problem of the Pakistan safe haven for Taliban; and the tactical problem of lack of resources. And those four problems --

ZAKARIA: Other than that, Mrs. Lincoln, how would --

(CROSSTALK)

KILCULLEN: Well, if you think about those four problems, only one of them, Pakistan's safe haven, can be considered as anything other than self-inflicted.

ZAKARIA: Tom, when we think about the four things Dave pointed out, to me the Pakistan one is sort of the killer in the sense that you get everything right if you've got this very large safe haven with potentially some elements of the state -- and almost everyone now agrees. There's a London School of Economics report on the continuing ties between the Pakistani military and the Afghan Taliban.

With the government supporting it, how do you win?

FRIEDMAN: Well, you know, we can be the anvil, but if Pakistan isn't ready to be the hammer, and hammer those Afghan Taliban into submission, then I don't see how the policy succeeds.

When the president announced his policy, Fareed, I said this can work. This can really work if three things happen: Pakistan becomes a new country, Karzai becomes a new man, and Obama succeeds in Afghanistan at doing what he expressly has told the American people he isn't, nation-building. So, that was my problem with the policy all along. It was built on so many "if-then" statements and not what seemed to be something organic growing from the ground up.

ZAKARIA: So, when you talked about the four things you talked about, you said three are self-inflicted. So, you think you can reverse course on three?

KILCULLEN: Well, I think what makes these things a crisis rather than a problem, right -- all these things we've just talked about, they are problems, and they'll continue to be problems. What makes them a crisis is the deadline.

We've got to fix all these problems by next summer, or we're not going to meet the objectives. And that's something that we can do something about.

And I am aware, of course, that when the president articulated the deadline in his speech in December, he just said, well, we'll think about beginning a drawdown. But I was in Afghanistan at that time, and what Afghans heard was the Americans are leaving. And the Taliban heard that, too, and came out and said, hey, the Americans are leaving in 18 months, what are you doing on month 19? Who are you backing then?

ZAKARIA: Listen, what do you say to that, Tom? Because I know you've been -- basically, you want to get out, as far as I can tell.

FRIEDMAN: Yes. Well, I think the deadline reflects a larger issue, Fareed, which is that we desperately need nation-building at home in America right now.

This is happening not in a vacuum. This is happening in a context of an America that is really struggling to get on its feet.

We are like an out-of-work couple who just adopted a special- needs baby. We have a huge nation-building project here.

ZAKARIA: But how do you get out? How do -- you know, this is a war involving 40 NATO countries, commitments made in Afghanistan to people, commitments made in Pakistan and India. It's not like turning off a television channel.

(CROSSTALK)

ZAKARIA: And I never suggested that. What I was suggesting was, keep it on a much lower -- I think, basically, Bush stumbled into the best policy.

Now, were we losing? Was it perfect? Perfect isn't on the menu there. OK? Everything is going to be imperfect. But it seemed to me something much lower level.

Once we raised the thing with the surge, everybody came out. The whole thing, expectations were raised. The costs are raised. The costs of losing was raised. And this seemed to me to be best kept on a low boil.

ZAKARIA: At the heart of this is winning over some element of the Taliban, because when there's 50 percent of the country, 100 percent of the insurgency, they're not going to run away to Saudi Arabia. They're going to live in Afghanistan. So, that part of it, the equivalent of the Sunni awakening, isn't happening.

KILCULLEN: Well, I think -- you know, I just wrote another book called "Counterinsurgency," which, unlike my first book, takes a very large and perspective look at the 385 or so insurgencies since the end of the Napoleonic wars.

And one of the interesting things about that large body of data is in about 80 percent of cases, the government wins and the insurgents lose. But if you look at those, you normally find there are two things in common: you're fighting in your own country and you're willing to negotiate politically.

And if you're not fighting in your own country and you are willing to negotiate, you still have a reasonably good chance at success. But if you're not willing to negotiate and you are in somebody else's country, you are screwed. And that's just not --

(CROSSTALK)

ZAKARIA: So why aren't we making deals with the Taliban?

KILCULLEN: Well, I think that one of the reasons we're not is because we're not seen as strong enough yet. And you could, therefore, articulate the military role in Afghanistan as being to get ourselves into the strongest possible negotiating position so that significant parts of the Taliban and al Qaeda syndicate start to change sides, which is what happened in Iraq.

I mean, a lot of people say it was just good luck and that the Sunnis happened to change sides. No. We got ourselves into a strong enough position that they decided we were the strong horse and decided to back us.

FRIEDMAN: And if you're watching this, Fareed, the scenario David outlined, that's what you have to be watching. If you're an American, you're uncomfortable about this, but we're there, you really have to hope that we can deliver a big enough blow that enough Taliban will negotiate and you can get a stable deal that will be self- sustaining.

ZAKARIA: Right. I mean, to me, that means really letting in a lot of these Taliban, because at the end of the day --

FRIEDMAN: Yes. And we haven't had that conversation, by the way.

ZAKARIA: Right.

FRIEDMAN: The president hasn't come and said we were fighting about this to have a coalition government with the Taliban.

ZAKARIA: Right.

KILCULLEN: The classic deal that ends a counterinsurgency is something like that Good Friday agreement in northern Ireland that you were just talking about, where the insurgents agree to lay the weapon down in return for a seat at the political table. And often, just the very offer of that kind of deal causes the insurgent movement to splinter, and people start to leave it, and it divides. That's the sort of thing we're looking for.

ZAKARIA: Last thoughts, because you've been pretty pessimistic. In your last column, you said we have only the choice to lose big, lose small, lose early, lose late. I mean, you don't think that there's some possible path here where we stabilize the situation, talk to the Taliban, cut a deal, declare victory and leave?

FRIEDMAN: I really hope so, Fareed, but there's a couple of things that really hold me back from that.

One is, sadly -- and we've been party to this -- a completely fractured society. And that with infinite time and infinite money, we can coalesce enough critical mass of negotiating parties to put the kind of pillars in place for a self-sustaining -- and that is the only thing that matters -- stable outcome. But I'm just really dubious about it.

ZAKARIA: On that note, Tom Friedman and David Kilcullen, thank you very much.

And we will be right back.

(BEGIN VIDEO CLIP)

ELIOT SPITZER, FMR. NEW YORK GOVERNOR: He trusts people too much. He trusted Wall Street. He trusted the Republicans to engage in a meaningful way. He trusted BP. He's 0 for 3.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

ZAKARIA: President Obama is front and center in the news again this week. This time it's for the firing of Stanley McChrystal. Before that, he was being criticized for his handling of the oil spill.

His approval levels are down, and the nattering nabobs of negativism have been hammering him around the clock. Even some of the most left-leaning of the commentary have turned on Barack Obama.

So, what does all of this mean? What does Afghanistan mean? What does the BP spill mean?

We have gathered together an extraordinary panel of smart people, not a nattering nabob among them, to talk about where the president stands.

Joining me now are Eliot Spitzer, the former governor of New York, who I am delighted to say will soon be my colleague with a new program here on CNN; Arianna Huffington, the co-founder and editor-in- chief of "The Huffington Post"; Katrina vanden Heuvel, editor and publisher of "The Nation" magazine; and The New York Times' columnist Ross Douthat. I was going to say The New York Times' conservative columnist.

Welcome to all of you.

Let me ask you, Eliot, about the president's leadership in general.

Before the McChrystal moment in which he has reasserted presidential authority, it seemed under a shadow. Was that fair?

I mean, you've been a chief executive. This is an accident. You know, you can't plug the hole using the federal government.

How should -- how do you think Obama did on the BP oil spill? SPITZER: Look, let's accept as a given he has been dealt a very bad hand of cards to play, one thing on top of the next. From the economy to BP being the last example of that. He did not appear to challenge BP at the very first moment. He trusts people too much.

He trusted Wall Street. He trusted the Republicans to engage in a meaningful way. He trusted BP. He's 0 for 3.

He should understand that language, as beautiful as it is, does not persuade people to do things contrary to their interest. And time and time again, he has believed he could bring people in to work with him instead of recognizing he's the president, act with force, act with fortitude, dictate the outcome he wants, and act that way.

ARIANNA HUFFINGTON, "HUFFINGTON POST": What Eliot says is absolutely critical. It's not just trust.

I think there is almost like a reverence that the president has for authority. You know, a reverence for establishments. You know, the Wall Street establishment, the military establishment, the BP establishment. You know, even his own admiral in charge of the BP oil spill.

A few weeks ago said that, "I trust what Tony Hayward is telling me." He actually used those words. So that is really a very fundamental problem that is affecting his whole presidency.

ZAKARIA: David Brooks' column in The Times today, he says, so imagine this dream scenario where liberals get, you know, a liberal Democratic president who does an $800 billion stimulus plan. Then he gives universal health care to Americans. Then he decides to bash Wall Street.

And still it's not enough. Liberals are dismayed. They're angry. They are abandoning him.

HUFFINGTON: I think, honestly, this whole framing as a right- versus-left debate, a liberal-versus-conservative debate is completely flawed, it's obsolete. It's making it much harder for us to solve our problems as a country.

Wall Street reform is a classic example where some of the best conservative minds and some of the best liberal minds agree that if you don't have the end of "too big to fail," if you don't have fundamental derivative reform, everything else is ultimately cosmetic.

KATRINA VANDEN HEUVEL, THE NATION: If it's not Right/Left, I do think there is something about top/down. I do think in this country today that working people are getting shafted. The rich are getting richer, inequality is growing.

And I think part of what Obama faced with financial sector, which was much stronger than when Roosevelt came in, he's never really loved economics. He was not a populist, and that forces of money and establishment, Supreme Court decisions, giving corporate power, the ability to sluice through our democracy - we need to think that one election isn't going to change the balance of power. We need re- democratization in America.

(CROSSTALK)

ZAKARIA: The net effect - the net effect of what all of you are saying - Eliot, you understand this as a politician, once, was you're - you're destroying the presidency of a guy who is suddenly going to be better on all these issues than Sarah Palin or Jeb Bush is.

SPITZER: What we're saying is - is that what the president needs to do is embrace genuine reform in a much more fundamental way. I said the moment I saw his cabinet, I said this is continuity you can believe in. Other than perhaps in education and, to a limited extent, in the environmental areas, from a policy perspective, everything was continuity.

ZAKARIA: They're laughing all the way to the elections.

(CROSSTALK)

ROSS DOUTHAT, THE NEW YORK TIMES: I just - I just wonder, I mean, I think you can make a case that there are places where presidential leadership might have made more of a difference. But I think you can also make a case that a lot of what Obama is dealing with is the balance of power and not the House of Representatives, really, but the balance of power in the Senate and the fact that, as Fareed was saying, this has been an administration that has pushed through a large number of very, very large and sweeping bills.

Now, obviously, there are - You know, they're not necessarily sweeping in the way that the "Huffington Post" wanted them to be, sweeping, but -

HUFFINGTON: No, but it's - it's not about that. It's like - it's really what Lloyd George said, you know, the British prime minister, when he said you cannot jump across a chasm in two leaps. There's no point in producing an $800 billion stimulus bill that does not really create jobs.

ZAKARIA: But if you think about the way in which the Republican or the conservative commentary supported George Bush through thick and thin, you know, breaking ranks only at the end on a few - here you guys are. You're piling on to Obama -

VANDEN HEUVEL: We're Democrats.

ZAKARIA: Right. That's right.

VANDEN HEUVEL: I mean, small "d", too.

SPITZER: We're going to be - we're more fractioned, but I happen to think that Scott Brown's election in Massachusetts was the best thing that happened to the Democratic Party because it finally forced us to say, what a minutes, this isn't working. We're going to have to produce our own votes to get reform and they gave up on this faux bipartisanship that had gotten the president absolutely nothing.

So I think that is when those in the White House who said we are going to get something done, how do we do it? Count the noses.

VANDEN HEUVEL: Yes.

DOUTHAT: Well, but - but -

SPITZER: Force it through.

DOUTHAT: -- but the faux - the faux bipartisanship part, I mean, one thing you have to keep in mind is that - and I - I agree that Scott Brown's election is, in this sense, good news for the Democrats, but one reason -

(CROSSTALK)

DOUTHAT: Well, there aren't - there aren't Republican votes for bills in part because the Republicans who would have voted for the bills were defeated by Democrats in 2006 and 2008. If you reduce the Democratic Party play 40-vote rump in the Senate, and then you brought in a Republican president with a sweeping ambitious domestic agenda, you wouldn't have - I mean, think of the Democrats who -

VANDEN HEUVEL: We don't have moderate Republicans anymore. They are an extinct species.

DOUTHAT: Because you beat them. You beat them.

(CROSSTALK)

ZAKARIA: -- polarizes this point is the two parties are now ideological -

VANDEN HEUVEL: But, you know what? I think Arianna is right because the Left and Right construct is artificial, and I think too much of it is the - the establishment media.

For example, this whole -

(CROSSTALK)

VANDEN HEUVEL: But we're independent. We've been independent since 1865. We have points of view in a nation which I - I hate to say could be in all kinds of places. I mean, but - but we need - we need -

DOUTHAT: They could be in "Mother Jones". They could be in dissent.

No, I'm - I'm kidding. I'm kidding. No, I agree.

HUFFFINGTON: But, you know, the point here is that there is something really important about this Left and Right obsession that the media have. I mean, at the "Huffington Post" we have a tag line called beyond Left and Right, and we use it a lot. We're just using it today over immigration reform, when you have Mayor Bloomberg coming together with FOX News to push for real immigration reform. On - on drug reform, you know, that - this is a huge Left/Right coalition. On Afghanistan. On Wall Street reform. You know, this is not really the (INAUDIBLE) division that the media like to pretend.

ZAKARIA: All right. We are going to try and go beyond Left and Right in this sense, and when we come back, we're going to talk more about the Right than the Left. Right back.

(COMMERCIAL BREAK)

ZAKARIA: And we are back with our star-studded panel, Arianna Huffington, Ross Douthat, Katrina vanden Heuvel and Eliot Spitzer.

Arianna, Sarah Palin is - is the - is the Right's answer to Obama going to be, you know, what traditionally happens with parties in opposition. They go to their base and they find somebody who is true to the base but probably can't win the general election.

HUFFINGTON: Well, Sarah Palin is responding to something beyond the base. She is responding to the anger at the bailout and she's responding to a sense of unfairness among the American people, which goes to independence, which goes to a lot of middle class Americans who are feeling that the game is rigged, that the fix is in and that, therefore, they are in real trouble. And she's appealing to that.

If you really interview a lot of the people in the Tea Party Movement, no matter what their first explanation is, their second explanation for their anger is the bailout, and I think Republicans and Democrats have to come to terms with that, especially now that we're seeing this anemic Wall Street reform going through, which we all know is not going to prevent the next meltdown.

ZAKARIA: But - but you were in favor of the - the bailout, the recapitalization of the banks, as was I in the sense that we had -

SPITZER: Not the way they did it.

ZAKARIA: Right, but you had to stabilize the financial systems.

SPITZER: Absolutely.

ZAKARIA: In some sense, Obama did something that was politically very difficult and unpopular and knew it -

SPITZER: But here's where they failed (ph).

ZAKARIA: -- and he's getting punished for it.

SPITZER: Now, here's where they failed, and what I said back then have been consistent throughout, something needed to be done to stabilize the balance sheets of the banks and prevent a cataclysm. Having said that, nothing was asked of the banks in return.

ZAKARIA: Right. That's correct. That's correct.

SPITZER: They utterly failed, Tim Geithner in particular, and I will say this for years, utterly failed to say to the banks that we will give you the trillions of dollars you need, but, in return, you must embrace meaningful reform, whether it is in the mortgage context so we don't foreclose on people who are good people. Maybe they borrowed too much. So something sensible and reasonable.

They utterly failed in that regard.

ZAKARIA: But do you think that would have changed the - the -

SPITZER: Yes.

ZAKARIA: -- the optics of this? Because the optics of it are basically that rich bankers got a lot of money.

SPITZER: The president has failed to tap into what Arianna referred to, the anger in the populace at what has happened.

Sarah Palin has been the only political beneficiary of the anger that is out there in the public, and it's real and it's tangible. The Democratic Party has failed in that regard.

VANDEN HEUVEL: Arianna -

SPITZER: It's a shame (ph).

VANDEN HEUVEL: But Arianna and Eliot -

ZAKARIA: But - but the angle of the Tea Party is about, you know, too much government. It's a very Right Wing kind of anger.

VANDEN HEUVEL: Very Right Wing. I mean, I think both Arianna and Eliot are right. The president should have put demands on Wall Street. Talk about personal responsibility, and in defaulting there he has left a vacuum open for the Right to seize this "I'm on your side" mantel.

I think what he did with BP - there are two Obamas there. The speech wasn't very strong, but the next day, standing tough on the side of people against BP was strong.

But I do think the core question of our time, in my view, people may disagree, is the role of government. Really. And I think that debate is happening proxy-wise through that deficit versus investment debate right now, and unless we win that, we're going to see long-term unemployment in this country, joblessness, that I think will scar this country even worse than the Great Depression.

ZAKARIA: Ross, do you - do you - when you look at the Sarah Palin, the Tea Party, does this seem to you just generic populism or is there a shift to the Right?

DOUTHAT: I think that there's - well, there's absolutely a shift to the right. You can see it in basically every opinion poll you look at, and in - you can tell it's real because it isn't just on issues related to taxes and spending that are in the news. If you look, people have actually shifted to the right on gun control, for instance, since the last election, on abortion since the last election. So - so it's real.

I think what you see with the Tea Party is sort of there's an inner core and then an outer group of sympathizers, and the inner core is, as you say, pretty Right Wing, pretty partisan, pretty sort of doctrinaire Republicans, I would say, who happen - and some cases they aren't people who are involved in politics before, but they're people who would have always voted Republican.

But then you have a second ring of people who tend to sympathize with the Tea Party Movement, and you see this in opinion polls, people who say I'm not a Tea Partier but I like what they're up to. And there I think you have much more of a kind of - it's kind of the Perot vote. It's people who look at - and I don't think it's just the financial bailout on Wall Street and so on. I think it's everything from the GM bailout and the cash for clunkers to sort of the spending on, you know, people who may have lost homes.

(CROSSTALK)

DOUTHAT: It's the same sort of rewarding people - using public funds to reward people who made bad bets. Whether - but whether - but this is - this is true, what the -

(CROSSTALK)

DOUTHAT: No, no. This is true on Wall Street but it's also true of, you know, it's Right Wing because it's people who make bad debts on their homes.

SPITZER: This goes to what Arianna was saying, the sense of unfairness. There is no accountability and the asymmetry, as we have said over and over. We socialize risk, privatize gain.

But I think Katrina put her finger on it. The real debate under this is what is government all about? What should it be doing? And we give all this money to Wall Street but then ask nothing back and we're not investing adequately in schools, in high-speed rail, in R&D, in the sorts of things that will permit us to compete either with China or Vietnam or Brazil.

And I think that sense of underinvestment, however you do it, through a government program or the private sector, is what is gnawing at people.

ZAKARIA: Yes, except that he has done more than any - I mean, $36 billion in --

(CROSSTALK)

DOUTHAT: -- money for high-speed rail -

SPITZER: We - in the stimulus, $8 billion for high-speed rail will give us one high-speed rail line from Orlando to Disneyworld, which -

(CROSSTALK) SPITZER: The Chinese are investing in 43. We gave Goldman Sachs $12.9 billion -

DOUTHAT: But Eliot, China doesn't have Medicare. No, seriously, this is a big - it's a big -

ZAKARIA: Yes. Eliot, you get the last word. Are you prepared to do this every night?

SPITZER: If I can get the same crew to show up, I'd be thrilled to do it. You know, smart folks having a good conversation - how can you resist that?

ZAKARIA: Eliot Spitzer, Katrina vanden Heuvel, Ross Douthat, Arianna Huffington, thank you very much.

And we will be right back.

(BEGIN VIDEO CLIP)

GEORGE OSBORNE, U.K.'S CHANCELLOR OF THE EXCHEQUER: The years of debt and spending make this unavoidable.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

CANDY CROWLEY, CNN ANCHOR: Time for a check of today's top stories.

Tropical storm Alex has been downgraded to a depression. The first storm of the Atlantic hurricane season is currently moving along Mexico's Yucatan peninsula and so far isn't a threat to the spill area. Nonessential oil workers on the rigs in the southern part of the gulf are being evacuated.

But if Alex changes course, the storm could bring oil recovery and cleanup efforts to a standstill.

China's president has accepted an invitation from President Obama to visit the United States. The invitation was extended during a private meeting between the two leaders at the G-20 Summit in Toronto.

U.S. officials have been urging China to relax control over its currency to help boost the global economy. China says it will allow its currency to appreciate and is also working to increase imports from the United States.

Back with more FAREED ZAKARIA GPS after this, and then it's "RELIABLE SOURCES" with Howard Kurtz at the top of the hour.

(COMMERCIAL BREAK)

ZAKARIA: Now for our "What in the World" segment.

What got my attention this week was what was contained in this 150-year-old red box you see being held here by Britain's Chancellor of the Exchequer - that's Secretary of Treasury - George Osborne. It's called the budget box, and in that quirky British way, it is traditionally used to carry the budget to parliament.

This year's budget was extraordinary. It will go down in history either as a brilliant act of courage or a foolish mistake. The emergency budget "Taxed and Axed" as the London tabloids said, drastically raising taxes and slashing government spending.

On the cutting side, 25 percent cuts for almost all government departments over four years, $16 billion in cuts to the nation's welfare system, a two-year wage freeze for almost all public servants. Even the Queen's budget was frozen.

On the taxing side, higher sales taxes, higher capital gains taxes, and a new bank tax.

Sounds like Britain is getting its financial house in order. The British government argues that if they don't tax and ax now, they might soon find that they cannot borrow money, just like Greece.

Well, yes, say many economists, but they believe that on this one, timing is everything. The economy is still fragile, the recovery weak and private sector job growth small. If the government slows its own spending and raises taxes, which will slow down consumer spending, it could put the British economy into the dreaded double dip.

Martin Wolfe of the "Financial Times", a frequent guest on this program, sides with the Labor Party MPs who were shouting "shame" as the budget was presented to parliament. He says that the drastic tightening measures his government has imposed are coming too soon.

Paul Krugman of the "New York Times" says the current economic climate is a textbook case for government spending. Spend now, save later when the economy recovers. How difficult is that to understand, he asks?

One person who seems to agree with these economists is President Obama. Just days before Britain announced its bombshell budget, President Obama sent a letter addressed to his G-20 colleagues, asking them not to make drastic spending cuts.

In any event, this is a real life experiment of two economic ideas -- cut spending to satisfy the bond market or keep it going to get growth. And Britain is the guinea pig. We will watch the results and know soon.

You have to give David Cameron and George Osborne credit, though. They have not shied away from making a very hard choice.

By the way, that old red budget box, first used in 1860, was retired from service after carrying this week's emergency budget to parliament. Despite the budget cuts, Her Majesty's treasury will spring for a new one for Mr. Osborne for next year.

And we will be right back. (COMMERCIAL BREAK)

ZAKARIA: We'll get to the "Question of the Week" in just a moment. But first, as I do every week, I want to recommend a book.

This one is called "Winning in Emerging Markets: A Road Map for Strategy and Execution". It was written by Tarun Khanna and Krishna Palepu.

Now, most business books are somewhat banal, stating the obvious, and often quite boring. This book is neither. It is smart, thoughtful, is filled with good research. It actually is a very interesting set of observations about emerging markets, what makes them tick, what makes businesses do well in them. It's a first rate guide to emerging markets, really worth reading.

Don't forget, we now have both audio and video versions of the GPS podcast. Go to iTunes to subscribe. You can also find a link on our website, cnn.com/gps, and all of this is free.

Now for the last look.

While looking at the news this week, I almost skipped over an item announcing the death of the woman in this photo. But then, I looked at it again. The photo, of course, was taken by Alfred Eisenstaedt, the famous photographer. The date, August 14th, 1945. The place, Times Square. The occasion, V-J Day, the victory over Japan in World War II, which marked the formal end of World War II.

What gave me pause was that there will probably be no such day for Iraq or Afghanistan. I don't think we will be celebrating the victories in either country. There will be no decisive moment, no victory to capture on photographs. In both theaters, the best we can hope for is a slow drawdown of troops, stabilization of the situation and then perhaps it fades out of the news, if we're lucky.

This brings up the "Question of the Week". The U.S. role in combat operations in Iraq will end in just over two months. What do you think will be the iconic photograph of the Iraq War?

On our website, cnn.com/gps, you'll see a slide show of more striking photographs from the Iraq War. Tell us which one you think is the most iconic, or propose your own.

Thanks to all of you for being part of my program this week. I will see you next week.

Coming up, "RELIABLE SOURCES".