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Fareed Zakaria GPS

GPS Panel on Washington's Polarized Politics; Pentagon's Unprecedented Spending Increase; Interview With Sharif El-Gamal

Aired August 07, 2011 - 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 all our viewers in the United States and around the world. I'm Fareed Zakaria.

We have a terrific show for you today. First up, we have a star- studded panel, Arianna Huffington, Joe Klein and others to talk about the aftermath of the debt deal and the political landscape going forward.

Then, why in the world are we not taking an even larger chunk out of the defense budget? I'll explain.

Next up, remember last summer's controversy over the so-called Ground Zero mosque? Well, forget everything you thought you knew and listen to an exclusive. The man behind the mosque tells the whole story.

Finally, a novel solution to parking problems.

But first, here's my take.

We've downgraded ourselves. We've demonstrated to ourselves, the world, to global markets that our political system is broken and that we are incapable of implementing sensible public policy.

The actual cut to the 2012 budget, which is the only budget over which this Congress has any control, is $21 billion out of a total of $3 trillion in expenditures. Everything else can and will be changed by future Congresses. What the deal does is once again kick tough choices down the road, this time to a Congressional supercommission that will have to come up with a larger plan to reduce our debt. And it does nothing to spur growth, and, without growth, the debt and the deficit will expand well above current projections.

The manner in which the deal was produced has added poison to an already toxic atmosphere in Washington, making compromise even more difficult. Democrats now feel they need to mirror the Tea Party's tactics because they worked and they are becoming unyielding on any cuts to entitlement programs like Medicare. Republicans, emboldened by the success of their bullying, have closed ranks more solidly around a no-tax agenda, which is great, but the only solution to America's debt dilemma needs to involve both cuts to entitlement programs and higher tax revenues. Congress is more polarized than ever before, and that polarization has resulted in paralysis. More than two years into the Obama administration, hundreds of key positions in government remain vacant for lack of Senate confirmation. The Treasury Department, for example, had to handle the global financial crisis, recession, bank stress tests, the automaker bailouts, as well as its usual duties with about a dozen of its senior positions, almost its entire top management, vacant, nobody in there.

Senate rules have been used, abused and twisted to allow constant delay and blockage. The filibuster, which was historically employed about once a decade, is now a routine procedure that allows the minority to thwart the will of the majority. In 2009, Senate Republicans filibustered a stunning 80 percent of major legislation. Given how the chamber is composed, two senators per state no matter how thinly populated those states, people representing just 10 percent of the country can block all legislation.

Is that how a democracy should function?

These dysfunctions come at a bad time. The United States faces intense pressures from an aging population, technological change, globalization, new competitors. We need smart policies in every field. We need to pare back spending in areas like health care and pensions, but we need to expand it in others like research and development, infrastructure and education in order to boost economic growth.

In an age of budgetary limits, the money needs to be spent wisely and only on programs that are effective. But, in area after area - energy, immigration, infrastructure - government policy is suboptimal, a sad mixture of political payoffs, corruption and ideological positioning.

Countries from Canada to Australia to Singapore are implementing smart policies, copying best practices from around the world. We bicker and remain paralyzed.

If, as a result of these Congressional antics, interest rates on America's debt rise by one percent - in other words, if the world asks for just a little bit more interest in order to lend us money - the budget deficit will rise by $1.3 trillion over 10 years. That would more than wipe out the entire 10 years of cuts proposed in the debt deal.

That's the system at work these days.

For more on this, you can read my cover story in this week's "Time" magazine or Time.com.

Let's get started.

(BEGIN VIDEOTAPE)

ZAKARIA: Joining me now to discuss dysfunction in Washington - or maybe the system is working - Arianna Huffington, editor in chief of the AOL "Huffington Post" Media Group; Joe Klein, political columnist for "Time" magazine; Nicholas Wapshott, Reuters contributing columnist; and Reihan Salam, who writes the agenda blog on "National Review Online." Welcome.

Joe, you've been around a long time. Have you seen anything like what happened over the last month?

JOE KLEIN, COLUMNIST, TIME MAGAZINE: Well, in the several centuries that I've been reporting, I can say no. And, in fact, we're in a position now in this country that is the exact opposite of where we were when I began as a journalist 40 years ago.

In those days, there were real divisions in the country. We were still in the midst of the Civil Rights Movement. People were getting killed. There were huge riots in the country. The Anti-War Movement was - had turned - taken a turn toward the irrational. Weather men were blowing up college buildings on college campuses, but the political system worked.

No - there - you know, there were filibusters against the civil rights legislation, but they were defeated. The Democrats did not use the debt ceiling - and we had one at that point - to stop funding for the Vietnam War. Impeachment was bipartisan and only happened because Republicans, you know, thought that Richard Nixon had done violence to the constitution.

Now, we have the exact opposite. It seems that, the way I read the polls, 60 percent of the people were in favor of the kind of policies that President Obama and the Gang of Six wanted, to deal with this deficit, long-term deficit, through a mix of revenues and budget cutting. And yet, that national consensus was thwarted by the minority of a minority in the Congress.

And - and so, no, I've never seen anything like this before.

ZAKARIA: Now, you look at this and you say - I heard you somewhere say, if Obama thought he was playing for independence by being the grownup in the middle, it didn't work. Why?

ARIANNA HUFFINGTON, EDITOR-IN-CHIEF, AOL HUFFINGTON POST MEDIA GROUP: Right. Well, you see - in your own CNN poll, you see over 60 percent of independents are opposed to the deal. So if Obama thought that this was really his way of saying to independents, I'm the grownup in the room. I'm going to compromise. Go with me. It's not working.

So, on purely economic terms, this is not working. I mean, you had Larry Summers on your show, saying that without growth you're not ever going to be able to really deal with the deficit crisis. You had JPMorgan and - with their top clients this week saying that this deal is going to reduce growth by a point and a half.

So you had basically a pretty reasonable consensus among the economists, this is not the right policy long term to control the deficit. So if this is a political play from Obama, it failed because independents are turning on him and the deal. ZAKARIA: But Reihan, you see this very differently. You see this actually as a turning point in the growth of the American welfare state.

REIHAN SALAM, CO-AUTHOR, "GRAND NEW PARTY": Well, I do. And I think that you made a remark, an important remark, in your - in your opening statement. You were talking about how this year, this fiscal year, it's a cut of $20 million, about $22 billion.

Now, that is not really terribly dissimulative. We could complain about the fact that, well, perhaps we should have more stimulus, and, again, we could talk about that at length. But I think that actually this debt limit deal doesn't actually do all that much of consequence. In fact, the cuts in it are smaller than what you saw in Bowles-Simpson, granted Bowles-Simpson also created revenue increases. But I think that, actually, it's not really what people imagine it to be.

ZAKARIA: Couldn't you make the case though, Joe, that if - if - I mean, I'm - if you just play this out, and let's assume Congress remains as paralyzed as ever, the deadlock, the commission deadlock -

KLEIN: I don't think you can assume that.

ZAKARIA: But - but let's - the commission deadlocks, the guillotine falls, you get all these cuts, half in defense, half in discretionary non-entitlement -

SALAM: You'll have a patch, unfortunately.

ZAKARIA: And then - and then Obama says, fine. Now I'm going to - I'm going to let the Bush tax cuts expire. You effectively get Simpson-Bowles because you get about $2.5 billion in spending cuts and about $3 trillion of tax increases.

SALAM: And that's why some of the - if I may - hysteria around this conversation coming from some of our friends on the left or center is - is notable, because, again, this deal is part of a larger architecture. It's not just one decision and ergo everything is decided.

ZAKARIA: Right.

SALAM: The president has considerable leverage. And, also, you know, after a presidential election, were he to be re-elected, you know, it's -

(CROSSTALK)

SALAM: A return to the Clinton era tax rates might sound a lot more reasonable than sort of this presently (INAUDIBLE) -

NICHOLAS WAPSHOTT, REUTERS CONTRIBUTING COLUMNIST: But he's still - he's still got to be re-elected, and this makes - what happened last week has made it much more difficult for him -

(CROSSTALK)

WAPSHOTT: Because the political argument has now moved on to exactly the Tea Party territory. They've done terribly well. They might not consider themselves victorious because they haven't got all the bits and pieces that they're interested in, but many of those were conflicting in any case.

But what they have done is moved the national conversation on to the fact that you may not raise taxes in any circumstances and you may not do all of the measures that the president needs in order to get himself re-elected, which would boost the economy, which actually would allow the prosperity to allow people to pay off the - the debt.

SALAM: Or, rather, you're not going to get a bipartisan consensus around raising taxes. But I think that that's what you want.

(CROSSTALK)

ZAKARIA: Arianna, what - what happens to the left? Will you rent hundreds of buses for Obama's next rally the way you did for Jon Stewart's?

HUFFINGTON: Well, actually, I think that this right-left distinction has nothing to do with this debate because that - there is a real consensus, as Joe said, among the American people that we need both revenue increases and ways to encourage the creation of jobs.

I mean, there is a real consensus around big infrastructure projects, for example. Even if we have - we're at full employment, we would need big infrastructure projects because our infrastructure is crumbling. There is consensus around a national payroll tax holiday.

I mean, there are a lot of interesting proposals on the table, but they are not easily divisible as left or right.

(CROSSTALK)

SALAM: I'm not sure if there's a consensus around it -

KLEIN: The most - the most - and this goes back to what Nick was saying. The most important consensus among the American people is that this stuff that Washington is obsessed with isn't nearly as important as the economy. And - and I think that that is the -

ZAKARIA: What Arianna is talking about is ways to get the economy growing. You think they make - you think they don't make that connection?

KLEIN: No, no, no. I think that the - I think the American people believe that this whole debt - long-term deficit and debt debate is irrelevant to their lives. What's relevant is the fact that the economy is sagging. You mentioned that -

(CROSSTALK)

ZAKARIA: But then they would be in favor of Keynesian fixes, but they are not in favor as far - I mean, are they?

KLEIN: They are in favor of everything. The answer is yes. Yes -

ZAKARIA: Yes to everything.

KLEIN: Yes to tax cuts, yes to more benefits in Medicare and social security, yes to budget cuts, yes to more benefits.

SALAM: No to the (INAUDIBLE) increase.

KLEIN: Right. Right. But I - but -

WAPSHOTT: But there's no chance there's going to be a stimulus bill, is there? Which is actually the -

(CROSSTALK)

KLEIN: Well, I don't know what's - I don't know what's coming down the pike, but I - but there is one thing that you said at the beginning that I would quibble with, and it's this. In the days before the - the debt ceiling deal was made, U.S. - U.S. treasury bonds, especially the 10-year bond, were strengthening in value, not weakening. The interest rates were dropping.

There are two reasons for that. One is that our - our bonds are - are questionable except for every other country in the world, which is more questionable. But also, the most important thing is that the bond market senses that we're heading toward a double dip recession. And - and it's -

HUFFINGTON: You saw - you saw what happened to the markets (INAUDIBLE).

KLEIN: And it's predicting - and it's predicting that the value of bonds increases in recessions. Interest rates will go - continue to go down, believe it or not.

ZAKARIA: I would - I would agree with you, Joe. I just say - Robert Rubin says this often. He spent, you know, a lifetime in markets - the bond market is with you until the day it is against you. And you don't want to - you know, you don't want to be in a situation where your debt is so large that small changes in interest rates cause massive damage to your economy -

KLEIN: Of course -

ZAKARIA: Which is what's happening to Italy right now.

KLEIN: Of course, but -

(CROSSTALK)

ZAKARIA: We're going to have to take a break. And we will come right back.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

ZAKARIA: And we are back with Arianna Huffington, Nicholas Wapshott, Reihan Salam and Joe Klein.

I want to ask you. You wrote a book about Keynes and Hayek. You think that the Tea Party has taken the lead.

It strikes me as fascinating. This - this is a time for Keynesianism, if - if there ever was one. You are in a liquidity trap. You are in a period of deflation. Call it what you will, you're in a situation where it does seem as though there isn't much demand in the economy, for whatever reason, mostly because I think everyone has lots of debt.

That's when government steps in, but you're saying that that's the moment in which Keynes has been discredited?

WAPSHOTT: Absolutely. The - the Tea Party, they may not know it. I don't suppose they have ever read in (ph) Frederick Hyatt, but, in fact, they have been following what Frederick Hyatt wrote about at great length. But - and he was talking mostly about politics. His economics weren't as reliable.

But what politically he said is that there should be smaller government. There's no doubt that the Tea Party has put small government or smaller government on the table, and that's now the thing that dominates (INAUDIBLE) in the Republican Party.

ZAKARIA: Arianna, how do you explain this? That - that you have had the biggest financial crisis and recession, one would argue in some part caused by the irresponsibility of the private sector, and the response - not just in the United States, but across Europe - has been that the right has been strengthened and the left has been discredited?

HUFFINGTON: I think the reason is that the public mistrusts government because the government has bailed out major financial institutions that brought us to the brink of collapse, that basically government now is providing welfare for many entrenched interests. Government is not there any longer just to support the weakest among us or the most vulnerable.

I mean, you see that this sort of intersection of lobbyists, big corporations and Washington is really what people are turning against. If you - when somebody -

ZAKARIA: And they think of the left as the party of government?

HUFFINGTON: Exactly. While - even though, in truth, I mean, the government has bailed out many more powerful institutions. I mean, even now, even though - even Paul Ryan came out in one brief moment in favor of ending subsidies to the oil and gas industry. ZAKARIA: Joe, what do you think is on - is Obama's calculation? That, you know, go back to what Arianna was saying earlier, that if he was thinking that he's going to play the grownup and - and be - be the man in the middle, it's not working.

KLEIN: I think that - I don't - I'm not sure that that's true. I - I think that it is working. I think that people still, you know, in my interactions with the American people, they liked the guy a lot. They respect him a lot. They don't feel that he's in touch with their lives, and his calculation is this, that as this goes on - and - you know, he will be the least damaged of all the various parties.

And that's what we've seen. His standing in - standing in the polls have gone down, but the Republicans' standing in the polls has plummeted. And so, you know, he's got to be feeling not terrific at this point, but not too bad politically either, because sooner or later the Republicans have to choose some candidate to oppose him and that candidate is going to have to make a calculation about how close to the Tea Party - which does remain a minority of a minority - how close to the Tea Party does the Republican presidential nominee want to be?

And so, I think the president is bemused by all of this and kind of horrified by the nonsense he's - you know, that he's had to deal with. He's made concessions, unlike - as Arianna was saying - unlike anything we've ever seen a Democratic president make before. He proposed raising the age of eligibility for Medicare to 67.

I'm not sure I'm in favor of that, but -

ZAKARIA: But let -

HUFFINGTON: I'm speaking this week to the National Association of African-American Journalists, you know, as faithful a base for Obama as ever, and their concern around jobs is palpable. I'm not saying that I would vote for him, but are they going to vote for - for him in the large numbers who came out -

KLEIN: In droves.

HUFFINGTON: -- unprecedented numbers as in (INAUDIBLE) or some of them are -

(CROSSTALK)

SALAM: -- a fear-driven campaign. I think absolutely.

KLEIN: This is going to be an ugly - you're right. It's going to be an ugly campaign.

WAPSHOTT: (INAUDIBLE) the figures of unemployment is that African-Americans are 15 percent and plus, and the young people, the very -

HUFFINGTON: Forty-nine percent. WAPSHOTT: Exactly. The very people who put Obama in are the people who are out of jobs. And it's the unemployment, it's the economy stupor, that still, is that's what's going to kill him.

ZAKARIA: And I'm guessing that you're going to say even with high - with high unemployment, a second stimulus will be wasted.

SALAM: Well, what I will say is that when you look at the first stimulus, I think that what they needed to have understood is that after a financial crisis you're going to have a - a great contraction that's going to take a very long time, and that's why the patient application of infrastructure spending might have been sound, but they wound up discrediting the idea of that kind of sense of - now, that's not classic fiscal stimulus, rather it's thinking, well, if you can buy something cheap, that you ought to spend money on regardless, let's buy it at that time. And that's something that I think would have peeled off -

ZAKARIA: But the most ineffective part of the stimulus, though, was the part the Republicans insisted on, which was half of it, which was the tax cut.

SALAM: Well, first of all -

(CROSSTALK)

SALAM: We call it - I think that's fair to say, but the thing is, is it true - so - now, what they favored were permanent changes to the tax code, and I think that when you look a particular wrangling that's happening -

(CROSSTALK)

ZAKARIA: Well, that would be great for the budget deficit, have more permanent tax cuts.

SALAM: But it's not just permanent tax cuts, it's also restructuring. There is - we had a very narrow debate that happened very quickly, and I think that that was a big part of the danger of how that happened in (INAUDIBLE).

ZAKARIA: Are you going to be enthusiastically supporting Obama in 2012?

HUFFINGTON: Well, listen, first of all, editorially, you know, we have been very critical of many of Obama's policies and our reporters, our journalists, everybody, you know, has been puzzled by the fact that while - while you have, as Joe said, again, a national consensus about prioritizing growth and jobs, Obama has not stood up for that.

I mean, that's really the key position that we have been taking. And we have reporters dedicated to putting flesh and blood on the statistics, because they're incredibly tragic.

What you said about young people, you had a story this week about the fact that you now have hundreds of thousands - not thousands - of students who go online to find sugar daddies to pay for their college debts, 248,000 that registered on one site called SeekingArrangements. And our reporter talked to them. You know, you have over $1 trillion in college debts, and these kids are graduating from college and are not able to get jobs with which to start repaying their debt.

I mean, this is just one area of our economy that we need to sound the alarm about because it involves, at the heart of it, the American dream and the possibility of bettering your life through education.

ZAKARIA: Nicholas, last thought. How will history look at all this? You write - you write about these things.

WAPSHOTT: Yes. I think that they'll see it as a defeat for the president, and they might - may see that it was the moment at which he became guaranteed a one-term president. It might go terribly wrong for him because I can't see what he can do.

He could drastically cut taxes. It's not such a silly idea, and actually it would be a Keynesian idea, but you got to cut taxes for people who will spend the money, not save it, not spend - not pay off their credit card bills, not buy another house in the Bahamas. We've got to give it to people who can spend it.

So, in the big picture, this is, in terms of the Keynes-Hayek clash, it's the latest battleground. And Hayek, I think, it's one- nil, and it's only half time. We could have had 15 months to go before we find out what happens.

ZAKARIA: And we will be back to talk to all of you again. Thank you all very much.

And we will be back.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

ZAKARIA: Now for our "What in the World?" segment. Everyone in Washington this week is having a nightmare about a guillotine. I'm talking about the proposed cuts to the Defense Department.

If the Congressional supercommission cannot agree on ways to reduce the debt by about $1.5 trillion over 10 years, that pulls the trigger. And half those cuts automatically come from expenditures on national security.

I say, let the guillotine fall. It's about time.

The Defense Department's budget has risen now for 13 consecutive years, which is unprecedented in American history. In the last decade, overall defense spending has risen to about $700 billion, which is a 70 percent increase. If you include the spending on Iraq and Afghanistan, we now spend $250 billion more than average defense budgets during the Cold War. Now, that was a time when the Soviet, the Chinese and all East European militaries were arrayed against the United States and its allies.

Today, with no serious adversaries in the world, the United States spends more than all other countries on the planet combined. Even as a percentage of GDP, the number of countries that spend more than us is very small. Eritrea, Iraq, Saudi Arabia - so they're either war zones or oil states.

Cutting defense spending as we wind down military actions in Iraq and Afghanistan, should not be difficult. It's not unprecedented.

(BEGIN VIDEO CLIP)

DWIGHT EISENHOWER, FORMER PRESIDENT OF THE UNITED STATES: We now stand 10 years past the midpoint -

ZAKARIA (voice-over): After the Korean War, President Eisenhower cut defense spending by 27 percent. Nixon cut the budget by 29 percent after Vietnam. Even Ronald Reagan scaled back military spending in the 1980s as the Cold War was becoming less tense. And, of course, as it got over, that process was accelerated by Presidents George H.W. Bush and Clinton, all of it adding up to a 35 percent decrease in the defense budget by the mid '90s.

(END VIDEO CLIP)

ZAKARIA: Given the enormous run-up in spending under George W. Bush, even if Obama made comparable cuts today, defense spending would remain substantially above the levels under all those presidents. After all, remember, the Simpson-Bowles plan proposes $750 billion in defense cuts over 10 years.

A recent report by Lawrence Korb, who worked at the Pentagon for Ronald Reagan, posits that a $1 trillion cut over 10 to 12 years is feasible without compromising national security.

The Defense Department is the best example of waste, fraud and abuse by far in the American government. Even when the results are pretty impressive, the costs and the cost overruns are eye-popping. Take a look at these F-35 planes. They can take off the traditional way, as well as vertical. But the Joint Strike Fighter Program that commissioned the jets to service the Air Force, Marines and Navy, has been plagued by years of design flaws and massive cost overruns. The total cost for this fighter program is something like $300 billion and counting.

Robert Gates has called the new designs for its second engine extravagant and unnecessary. That could be said of large swaths of the defense budget, extravagant and unnecessary. Budgetary measures aside, perhaps this is a chance for us to rebalance American foreign policy.

For too long, Congress has fattened the Defense Department, while starving foreign policy agencies. Robert Gates himself once pointed out that there are more members of military marching bands than servicemen in the Foreign Service. The result is a warped American foreign policy. It conceives of problems entirely in military terms, tries to present a ready military solution.

As he came to the close of his presidency, Dwight Eisenhower said every dollar uselessly spent on military mechanisms decreases our total strength and, therefore, our security. It's time for a more balanced national security strategy. If the budget deficit forces that shift, so be it.

And we'll be right back.

(BEGIN VIDEO CLIP)

SHARIF EL-GAMAL, REAL ESTATE DEVELOPER, CHAIRMAN, PARK51: I'd never been discriminated against. I'd never seen that hate or that fear or - or that ignorance. And I've never seen anything like that before in my life, and I was - I was scared.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: I'm Candy Crowley. Here are today's top stories.

The U.S. continues to digest S&P's decision to lower the U.S. credit rating as many analysts are criticizing the downgrade. Earlier on "STATE OF THE UNION," I spoke with Forbes Chairman Steve Forbes and former Obama adviser Larry Summer, who despite differences both agree they see politics in S&P's move.

(BEGIN VIDEOTAPE)

STEVE FORBES, CHAIRMAN & EDITOR-IN-CHIEF, FORBES INC.: It is a political move and I think it's really - it will sound strange for me to say it an outrageous move. The government can pay its debts. It's legally obligated to do so. It's got the wherewithal to do it.

In a larger sense about the economy, I think the U.S. economy is in a perilous state. This recovery has been the worst from a severe recession since the great depression. But I'm surprised S&P would play politics -

LAWRENCE SUMMERS, FORMER DIRECTOR, W. H. NATIONAL ECONOMIC COUNCIL: The S&P's track record has been terrible. And as we've seen this weekend, its arithmetic is worse. So there's nothing good to say about what they've done. S&P said to sell. Warren Buffett said to buy. That should tell you something.

(END VIDEOTAPE)

CROWLEY: You can see my entire interview with Summers and Forbes at noon, Eastern here on CNN.

Syrian troops have reportedly targeted the city of Daraa (INAUDIBLE) in an escalating crackdown on anti-government protesters. The Arab League today urged the Syrian government to halt the violence. It followed U.N. Secretary General Ban Ki-Moon's call for Syrian President Bashar al-Assad to immediately halt the use of force in civilians.

Four NATO soldiers were killed in Eastern and Southern Afghanistan today in two separate insurgent attacks. Meanwhile, NATO recovery teams search the wreckage of a downed military helicopter that left 30 U.S. service members dead. Among those killed was Navy Seal Aaron Carson Vaughn. His grandmother says Vaughn was a great American who was willing to give his life for his family and his country.

Those are your top stories. Now back to FAREED ZAKARIA GPS.

(BEGIN VIDEOTAPE)

ZAKARIA: Last summer's big news story was the broiling controversy over the so-called Ground Zero mosque. It was on the front page of papers around the world. It led all the newscasts. And protests against the project were furious and frequent. But then the story seemingly died away. The man at the center of the media storm, Imam Feisal Rauf is no longer involved.

But the man who is truly at the center of the project who brought Rauf to it is still sticking with it. He is Sharif El-Gamal, the real estate developer, who came up with the idea in the first place. And he joins me now to tell the full story of the Ground Zero mosque.

Sharif, good to have you.

EL-GAMAL: Fareed, thank you so much for having me.

ZAKARIA: So let's start with the beginning. What made you think about doing something like this? You're a real estate developer.

EL-GAMAL: You know, I'm an American. I was born in Brooklyn to a Polish Catholic mother, to an Egyptian father. And I've lived around the world and I've moved back to New York when I was 18 years old. And when I moved back to the city, it became home. New York became home for me.

And after 9/11, I decided to reconnect with my faith. I did not grow up in - in a very religious home, but the seed of my identity and my faith was planted in me. And after 9/11, I decided to start praying in a mosque which was on Warren Street. And when I started praying there, there were several thousand people that were praying on - on the streets, on the stairwells of this building, and it was -

ZAKARIA: The mosque was - the rooms were filled.

EL-GAMAL: It was - it was over capacity. The place was just filled. And I made an intention, I made a decision that I wanted to help my community buy a building in Lower Manhattan. And after looking at dozens of buildings and bearing in mind that real estate in Manhattan, you know, Manhattan is one of the most competitive real estate market places in the world. It's not like you can just pick a building and say, I want to buy that building. There are so many sophisticated operators here trying to acquire assets. So after looking at dozens of buildings from - from 2002 to 2006 and buildings that we lost and we couldn't acquire, I finally stumbled upon 4551 Park Place. And when we finally acquired the real estate in July of 2009, in May of 2009, the mosque on Warren Street got evicted, and the building that they were in got sold, and several thousand Muslims got displaced. And there was a major crisis in Lower Manhattan, because there were thousands of people now literally praying on the street.

ZAKARIA: But then you decided at some point, well, maybe this should be more than a mosque. What made you think of that?

EL-GAMAL: In 2006, I - I met my wife-to-be, who was an American girl that I saw on the corner of 23rd and 6th then asked out to dinner. A couple of - eight months later we're married, and she's a Muslim. We have two beautiful daughters. And my daughter Sarah is about a year and a half at that point. And I'm thinking to myself, I want to teach her how to swim. We live on the Upper West Side and we joined the Jewish Community Center.

And every time that I would walk into the JCC, I would say to myself, why don't Muslims have a community center like this open to all people? And that's what Park51 is. Park51 is a - is a community center.

ZAKARIA: And designed where it is because that's what where the demand was, that was where the community was and they had been displaced.

EL-GAMAL: Yes. There were several different - several interesting coincidences that happened during this point of time. One, we never knew that Lower Manhattan was the fastest growing residential neighborhood in Manhattan and that there's close to 63,000 residents that live in Lower Manhattan today. And they don't have a true community center to serve them, to provide much-needed services, whether it's for children, adults or seniors.

ZAKARIA: This is all faiths?

EL-GAMAL: This is of all faiths. I mean, at the end of the day, you know, I'm a New Yorker. And there are JCCs and YMCAs all over the city, but there are no Muslim community centers. There is no Muslim- led project where we as Muslims are stepping up and building a community center giving back to the people. And it's open to all people. It doesn't judge you based on your religion, based on your faith. It's here to provide a service and - and to provide facilities and programs to the residents of the neighborhood.

ZAKARIA: So when you find this location, Park51, at that point do you focus on where it is in relation to Ground Zero?

EL-GAMAL: No. It never crossed our mind. We never - we never associated the two and we still don't. You know, when we - when we decided that we were going to start understanding this idea of building a community center, one of the first things that we did is we started with the Mayor's office. We started the outreach with the commissioners and the Mayor's office, and then we - and incredible, incredible receptiveness and approval, and it was incredible.

Meeting after meeting after meeting from - from September of '09 until April of '10 we met every single local elected official or person that mattered in Lower Manhattan.

ZAKARIA: All right. Hold on.

When we come back, we're going to talk about the crisis, how it erupted. Sharif's response to it and, of course, what his future plans are, when we get back.

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(BEGIN VIDEOTAPE)

ZAKARIA: And we are back with Sharif El-Gamal, the man who is truly behind the Ground Zero mosque from the beginning and still behind it now.

When did you realize that this was turning into a controversy? What was the first inkling?

EL-GAMAL: Well, in May of last year, we voluntarily at that point when we finished our road trip with all the local elected officials, decided voluntarily to go into the community board. And we went into the community board voluntarily and shared with them this idea of building a community center. And on that first meeting, 16 people voted unanimously in favor of this project and these are all non-Muslim people, and they were excited that Muslims were going to build a community center in Lower Manhattan to serve all - all New Yorkers and all of Lower Manhattan, which was the intention behind this project.

We then followed that up with another full board meeting of 50. And when we went into that room, you know, at that next community board meeting, I invited my wife down to come. And I got there a few minutes after her and she was just in tears. And when I saw her in tears, I said what happened? And she goes, Sharif, you're not going to believe what's going on in that room. The people thought that I came here to protest against the Muslims, because they didn't realize that she was a Muslim because we don't fit whatever stereotype people have of Muslims. And when -

ZAKARIA: What was going on in that room?

EL-GAMAL: When I walked into that room, there was close to 700 people that were protesting what we were doing, and for the first time in my life - I - I had never seen, I'd never been discriminated against. I'd never seen that hate or that fear or that ignorance. I mean, I've never seen anything like that before in my life, and I was - I was scared.

And at that point, we made a commitment - you know, personally, I made a commitment that I would do whatever it took as a - as a businessman, as a human being to make this project a reality.

And, you know, this past year for me has really been about listening, has really been about listening and - and going back to basics and trying to understand that - that there's so much work ahead of us, that there's so much misconceptions about who we are as Muslims, what our faith, what our practice, what our belief system is. Criminals have stolen our identity almost in a way, and they've defaced our - our faith.

ZAKARIA: So you got out - get out of that room with the 700 angry people. And at that point, it just snowballs and it gets latched on to by all kinds of political figures. Were you - were you prepared for that kind of an onslaught?

EL-GAMAL: No, no. I'm a New Yorker. This is my city, and all we wanted to do was we wanted to build a facility that is based on who we are as Muslims, as Americans to give back to our city, to create jobs, to create hundreds of construction jobs, to create hundreds of full-time jobs once the facility is open, to create over 500 part-time jobs. We were thinking of a way of revitalizing our neighborhood, creating, stimulating our economy, and providing services to our neighbors.

ZAKARIA: Did you get threatened?

EL-GAMAL: I did. A lot of scary things happened in - a lot of very, very scary things have happened. A lot of very scary things have happened.

ZAKARIA: Did it ever make you think to yourself why do I need this?

EL-GAMAL: Because every time that I would look in my two little daughters, I would say that I don't - I want the world to be a better place for them, and that we have a responsibility that we - we just got subjected into this, but we have a responsibility now to reclaim who we are. Because if people knew who we were and if people knew that every time a mosque or an Islamic facility is built, it cleans up a neighborhood.

This is statistically speaking across the 50 states that it becomes a beacon of light. And unfortunately, criminals have - have taken control of the narrative today. And that's what was the - that was the impact of what we had gotten.

ZAKARIA: Will you be able to build the project?

EL-GAMAL: That's going to be a function of the community. This project is going to be as small or as big as ultimately the community decides. We are committed right now to building - one of the buildings we're 100 percent committed to. And it's going to take a shape and a form dependent of what the community comes back to us with.

ZAKARIA: You're not backing down? EL-GAMAL: From doing the right thing? Backing down from doing the right thing, from providing first and foremost a place for people to pray, for Muslims to pray in Lower Manhattan after they've been displaced and then going a step further and trying to provide community facilities to a neighborhood that needs community facilities, backing down from doing the right thing?

ZAKARIA: Sharif El-Gamal, pleasure to have you.

EL-GAMAL: I'm so honored to be here. Thank you, Fareed.

ZAKARIA: And we will be right back

(END VIDEOTAPE)

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ZAKARIA: The trial of former Egyptian President Hosni Mubarak and other officials started this week, which brings us to our question from the "GPS Challenge." It is where in Cairo is Egypt's trial of the century being held? Is it A) the Egyptian Supreme Court; B) the Egyptian Parliament; C) a Cairo Convention Center or; D) a Cairo Police Academy?

Stay tuned and we'll tell you the correct answer. Make sure to go to CNN.com/GPS for 10 more questions. And while you're there, check out our website, the Global Public Square. You'll find some really smart interviews, takes, all kinds of other stuff by some of our favorite experts. You will also find all of our GPS shows on there. If you miss one, you can click and watch. And don't forget, follow us on Twitter and Facebook as well.

This week's "Book of the Week" is actually an article of the week. In case you missed it, it is the extraordinary reporting on the Bin Laden raid in this week's "New Yorker" Magazine. Nicholas Schmindle's "Getting Bin Laden" takes you inside the operation. The article is absolutely gripping. We have a link to it on our website. Just click and read.

And now, for "The Last Look." In the 1980s, New York's Mayor Ed Koch famously posted signs around New York City that said "Don't even think of parking here." Well, the mayor in Vilnius, Lithuania may have found an even better solution to deal with parking (INAUDIBLE). That's the mayor in the blazer getting into, yes, an armored personnel carrier. And he is a full-service mayor. Apparently, he cleans up his own mess.

The correct answer to our "GPS Challenge" question was D, the trial is being held at a Police Academy on the outskirts of Cairo. It was formerly called the Mubarak Police Academy, named of course after the man, who is now the chief defendant in the trial.

Thanks to all of you for being part of my program this week. I will see you next week. Stay tuned for "RELIABLE SOURCES."