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Fareed Zakaria GPS

Interview with Mahmoud Ahmadinejad; Interview with Steve Pagliuca

Aired September 30, 2012 - 10:00   ET

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

FAREED ZAKARIA, CNN HOST: This is GPS, the Global Public Square. Welcome to all of you in the United States and around the world. I'm Fareed Zakaria.

Today's main event, the man at the center of the storm, Mahmoud Ahmadinejad, the president of Iran, on why he doesn't fear an Israeli attack, why he's confident Iran would prevail in any war and his surprising apology to the people of New York.

Also on the show, Bain Capital, Mitt Romney's private equity firm, is no longer so private. It is in the headlines, on the campaign trail and on your TV screen. What it is really all about? Steve Pagliuca, one of the people who runs the firm, joins me.

And it's a source of innovation and ingenuity and America's share of it is shrinking just when we need it most. What is it? I'll explain. And, finally, candidate Barack Obama of Brazil?

But, first, here's my take. President Obama has surged in the polls in recent weeks and Republicans have been quick to identify the problem: Mitt Romney. The columnist Peggy Noonan eloquently voiced what many conservatives believe when she said that Romney's campaign has been a "rolling calamity."

And yet, shouldn't it puzzle us that Romney's campaign is so "incompetent", as Noonan calls it, given his deserved reputation for, well, competence? After all, he founded one of this country's most successful financial firms, turned around the flailing Salt Lake City Olympics and was a very successful governor. How did he get so clumsy so fast?

In fact, the problem is not Romney but the new Republican Party. Given the direction in which it has moved and the pressures from its most extreme, yet most powerful elements, any nominee would face the same challenge. Can you be a serious candidate for the general election while not outraging the Republican base?

Fox News anchor, Brit Hume, complained recently that Romney refused to dwell at any length on the economic policies that he would put in place. Well, why won't Romney, an intelligent man, fluent in economics, explain his economic policy? Because any sensible answer would cause a firestorm in his party.

It's obvious that, with a deficit of more than 7 percent of gross domestic product, any solution to our budgetary problems has to involve both spending cuts and tax increases. Ronald Reagan agreed to tax increases when the deficit hit 4 percent of GDP; George H.W. Bush did so when the deficit was 3 percent of GDP.

But today's Republican Party is organized around the proposition that, no matter the circumstances, there must never be a tax increase of any kind. The Simpson-Bowles proposal calls for $1 of tax increases for every $3 of spending cuts.

But every Republican presidential candidate during the primaries, including Romney, pledged that he or she would not accept $10 of spending cuts if that meant a dollar of tax increases.

So Romney could present a serious economic plan with numbers that add up and then face a revolt within his own party. So his solution has been to be utterly vague about how he would deal with the deficit.

When pressed for details recently, he said, "The devil's in the details." He's right. Were he to get specific, he would be committing ideological blasphemy. So instead he talks vaguely about freedom and capitalism.

The same pattern emerges on immigration. Romney says he wants to solve the immigration issue permanently, but he can't actually propose anything remotely practical because that would involve legalizing, in some form, the 12 million illegal immigrants in this country and that would trigger an internal revolt in the Republican Party so, as with the deficit, Romney has a plan, but it's secret.

The Republican Party has imposed a new kind of political correctness on its leaders. They cannot speak certain words, taxes, or speculate about certain ideas, a path to citizenship, because these are forbidden.

Romney has tried to run a campaign while not running afoul of his party's strictures. As a result, he has twisted himself into a pretzel, speaking vacuously, avoiding specifics and refusing to provide any serious plans for the most important issues of the day. That's a straitjacket even Peggy Noonan's eloquence cannot get him out of.

For move on this, read my Washington Post column this week. There's a link through on cnn.com/fareed. Let's get started.

For eight years, Mahmoud Ahmadinejad has come to the U.N. General Assembly and just about every time, he's caused controversy making accusations or veiled threats. This year was different.

His speech, while taking a few digs at Israel and the United States, was mostly banal with platitudes about world peace. But he had plenty of sharp comments in a series of interviews.

His conversation with me was his final one, perhaps his final one on the world stage. You see Iran's election law says he can't run again and elections are set for 2013.

So I asked him about Israeli strikes and Obama's warnings.

ZAKARIA: You have indicated that you think that the Israeli prime minister's threats toward Iran are ones you don't take very seriously. But I was wondering how seriously you take the rhetoric of the president of the United States.

President Obama said at the United Nations that he was determined to prevent Iran from acquiring nuclear weapons. Do you regard that as a bluff?

MAHMOUD AHMADINEJAD, PRESIDENT OF IRAN (through translator): You set forth two or three questions here. I have never used the word bluff. When we say we do not take it seriously, we mean that it impacts -- it does not impact our policies in the slightest.

Iran is a vast country. It's a great country. Let's assume a few terrorists come and assassinate some of our officials. Will the country be damaged? No. A couple of bombs will be set to explode. Will the country be destroyed? No.

We see the Zionist regime at the same level of the bombers and criminals and the terrorists. And even if they do something -- even if they do something, hypothetically, it will not affect us fundamentally.

But vis-a-vis the expression of the President of the United States because I do not wish to speak in any way about anything that may be interpreted as meddling or interference in America's domestic or electoral affairs.

But perhaps myself, compared to everyone else in the world, I am perhaps much more keen than anyone else not only that there will be no more productions of nuclear bombs around the world, that even those that exist today would be eliminated.

ZAKARIA: If there were an Israeli strike on Iran, there are other senior Iranians who have said things that are much more forceful about how Iran would respond and they seem to take it very seriously.

The head of the Revolutionary Guard, Mohammad Ali Jafari, said that in response to an Israeli strike, Iran would strike back with missiles and I think he says, "Nothing will remain of Israel. I don't think any spot would remain safe."

Is that also your view of what the nature of Iranian retaliation would be?

AHMADINEJAD (through translator): I -- understand this that Iranians never start a war unprovoked, never start a war period, but if they are attacked, they defend themselves very well, quite well.

And no one throughout her history has been able to gain and come out on top from an attack on Iran.

ZAKARIA: President Ahmadinejad, you said, in a couple of your interviews, that you don't really think much is going to happen on the negotiations on Iran's nuclear power until after the American elections.

What do you think will happen after the elections? Do you expect that, at that point, there will be a new proposal from the major powers or do you think Iran will present another proposal?

AHMADINEJAD (through translator): As you touched upon, yes, during a couple of interviews, yes, I did speak of this. I think, at the end of the day, that the decision-making, vis-a-vis Iran's nuclear issue, with 5 plus 1 is a very important decision.

And it is one of -- and one of the most important players in the five plus 1 equation is America, but we have seen, during many years, that as we approach the United States presidential elections, no important decisions are made.

Also, keep it in my mind that certainly following the elections, certainly the atmosphere will be much more stable and important decisions can be made and announced.

We have set forth proposals. We are holding dialogue and, as of late, Mr. Jalili and Ms. Ashton have had productive talks and we do hope to be able to make -- to take some steps forward.

ZAKARIA: When we come back, Syria. The death toll had reached 20,000. Will Iran finally see the light and end its support for the Assad regime? I'll ask President Ahmadinejad when we return.

(COMMERCIAL BREAK)

ZAKARIA: Bashar al-Assad's regime is running out of money and running out of arms. So how does the Syrian regime keep going? Many analysts point to Iran's assistance. Will Tehran change its course? Listen to what President Ahmadinejad says.

Mr. President, let me ask you a question about human life. You spoke a great deal, while you were here in New York about the value you place on human life. "Every life is important," you said.

The government of Syria has, by all accounts, killed about 20,000 people. About 250,000 Syrians, men, women and children have fled the country and 1.2 million Syrians have been displaced within the country.

Why will you not call on Bashar al-Assad to resign and leave the presidency of Syria?

AHMADINEJAD (through translator): Do you think that if we do such a thing the problem will be resolved?

ZAKARIA: Well, you say that you care about human life. You should take a moral stand.

AHMADINEJAD (through translator): Yes, but do you think that if we make the request that you asked of, the problem will be resolved? It's not so. The problem of Syria is very complicated and it requires a just and the right solution. And I'm truly sorry and saddened not only in Syria, but anywhere in the world from any side where there are people losing their lives. The opposition members, the Syrian Army, they're all from Syria. They're all the people of Syria. Why should they be killed?

There can be two proposals and solutions for Syria. One is that of warfare, but there is also a second way of thinking and national understanding.

And I do believe that if both sides sit and reach an understanding on a free election -- a national understanding on a free election and follow -- and become subservient to the choice of the people.

All sides should accept the wish of the Syrian people. Therefore, we are standing up a contact group and I doubt that they will have their first meeting and gathering here in New York City.

Thereby, we can succeed in bringing both sides closer together so they can reach an agreement for a political process. In my opinion, Syria has no military solution.

And I think it is amply clear -- I think my opinion is amply clear about Syria. I've said it 50 plus times thus far. We are on the side of the people. Everywhere, we're on the side of the people.

ZAKARIA: But the people are getting killed by their government and you keep saying you're on the side of the people and yet you support a government that is massacring its people.

AHMADINEJAD (through translator): You mean that we should then enter the scene and provide arms like other countries have in order to -- for the battling groups in order for the war to continue? Is that your opinion?

ZAKARIA: No, my opinion is you should ask for the government ...

AHMADINEJAD (through translator): We are against ...

ZAKARIA: For the president to step down since he is presiding over a mass massacre.

AHMADINEJAD (through translator): Well, we make all kinds of requests. We have announced it officially. Do you think with our request things will come to an end?

ZAKARIA: You mentioned the contact group that you believe could be a path to a negotiated or diplomatic solution. And this is a group that is meant to include Egypt, Turkey, Iran and Saudi Arabia.

But, at the first meeting of the group, Saudi Arabia refused to attend and let it be known that the reason they will not attend is that they would not sit down with Iran in the same room. How do you get over that obstacle?

AHMADINEJAD (through translator): This I hear from you for the first time.

ZAKARIA: I can tell you it's based on my reporting. It's true. You know that it is a fact they didn't attend the meeting.

AHMADINEJAD (through translator): This is something -- what they have announced officially is that they have said that our minister of foreign affairs is ill.

ZAKARIA: More with President Mahmoud Ahmadinejad. I quote the Koran to him to show him that he might be wrong about something.

But, first, one of America's secret weapons to stay competitive is falling apart. What in the World right after this.

(COMMERCIAL BREAK)

ZAKARIA: Now for our What in the World segment. Silicon Valley has been a key driver of U.S. growth in the last two decades. Just look at the rise of Apple, Google and Facebook, and all the jobs and opportunities and new companies they've created.

But the secret sauce behind the success might be running out. A new book caught my eye this week. It's called, "The Immigrant Exodus" by Vivek Wadhwa, a former tech entrepreneur who now studies and lectures on immigration.

He has some fascinating findings. Wadhwa says, "Between 1995 and 2005, more than half of all Silicon Valley tech companies were founded by immigrants."

But when Wadhwa updated his findings to 2012, he found the proportion of immigrant-funded companies had dropped by a sixth, from 52 percent to 44 percent.

Now, that might seem like a small drop, but it's actually a ratio that should be rising, not dropping. You see the tens of thousands of highly-skilled, immigrant engineers from the mid 1990s are now in prime position to found companies.

According to the 2012, Open for Business study, immigrants are twice as likely to start a business as native-born Americans. And, yet, Silicon Valley has seen a decline in immigrant-founded companies.

Silicon Valley tends to be a harbinger of things to come in the national economy. Immigrant-founding companies nationwide are counted for the creation of nearly half a million jobs between 1995 and 2005.

So why are we seeing a reverse brain drain? On the one hand, we're now seeing a tangible impact of what I call, "The rise of the rest."

The U.S. remains a preeminent power with the best institutions of higher learning and research in the world, but, increasingly, if you're an immigrant from India, China or Brazil, you can find competitive opportunities for growth at home, too. As these economies continue to develop, they will invest more in research and infrastructure, making businesses more attraction. But another development, one which we can control is even more worrying.

We're losing our huge advantage in immigration, especially in skill-based immigration. Our system is broken. Wadhwa points out that, "We allocate 140,000 green cards or permanently residency status, to people who are here on work Visas."

These green cards allow workers to jump ship from working for a company to starting something on their own, to being entrepreneurs who create jobs. But the law stipulates that no nationality can claim more than 7 percent of these cards.

Now, given that half of the applicants are Indian and Chinese, the same communities that are dominant in Silicon Valley, we have a problem. The irony is that, for once, both President Obama and Governor Romney seem to agree we need to fix the problem.

But, even then, our politics are failing us. A bill last week to expand the number of green cards allotted to foreign students in the STEM field, science, technology, engineering and mathematics, was voted down in Congress.

On a recent primetime special on CNN, "Fixing Immigration," I pointed out that both Canada and Australia now have larger foreign- born populations than the United States. Both those countries revamped their immigration systems to attract and keep the best and brightest foreigners.

But we're closing the door to many of the smartest, potential entrepreneurs in the world. If we want job creators, let's stop kicking them out of the country.

When we come back, Mahmoud Ahmadinejad apologizes to New Yorkers, more of my interview with the president of Iran.

(COMMERCIAL BREAK)

CANDY CROWLEY, CNN ANCHOR: I'm Candy Crowley in Washington with a check of the top stories. A U.S. service member was one of two people killed after a clash between Afghan army forces and international troops in eastern Afghanistan. The incident brings the U.S. death toll inside Afghanistan to more than 2,000 over the course of the 11-year war. The Saturday incident is the latest apparent attack by members of Afghanistan's security forces against NATO military members.

And on the campaign trail, President Obama heads to Nevada today where he'll hold a campaign rally this evening in Las Vegas. The president is staying in the state until Wednesday for debate preparations. He'll be joined by Senator John Kerry who is playing the role of Republican presidential nominee Mitt Romney.

There's trouble for Florida's Republican Party where a voter registration controversy is brewing. The state's Republican Party fired a private consulting firm it hired to help register voters after learning that it may have submitted fraudulent registration forms. Suspicious forms have been discovered in at least five Florida counties.

Those are your top stories. "Reliable Sources" is up at the top of the hour. Now back to "Fareed Zakaria GPS."

ZAKARIA: President Ahmadinejad has a history of making broad historical comments about Iran, U.S. foreign policy, Israel, and much else. So I talked to him about the history of the Jews. Listen to what he said.

(BEGIN VIDEOTAPE)

ZAKARIA: You're a student of history, and you said something that I was struck by in one of the gatherings that you were at. You spoke about Israel and you said it has no roots in history in the region. And I was wondering whether you really believe that because as you know, of course, Jews have lived there for thousands of years, and we know this, of course, because there are repeated references to the children of Israel in the Koran. There are 43 references to the children of Israel. In fact, one of them, chapter 17 Sura 104 says, we say onto the children of Israel, dwell in this land, live in this land, referring to the land that is now Israel. So do you dispute these facts or do you accept that there is some connection between the children of Israel and this land?

AHMADINEJAD (through translator): So we're trying to fabricate to make the roots a connection? So you do not draw any distinction between the Zionists and the Jews?

ZAKARIA: I'm asking you.

AHMADINEJAD: I am -- I have always maintained that the Zionist regime has no historical roots in the region. I -- why would I say that the Jews have no historical root? They were also in Iran, a great many of them. So that means that Iran belongs to the Jews? Iran belongs to Iranians, whether they're Jews, whether they're Muslims or Christians. Please pay close attention here, sir. The borderline is quite thin. Zionism is a doctrine, is a school of thought, is an aggressive school of thought. It has nothing to do with the Jewish people. At the same time, the majority of those who are there now have come from other lands. They're immigrants. Many of them recently converted to Judaism. So the way this regime took shape doesn't matter. Yes, for a long time, Jews, Christians and Muslims lived in Palestine with one another in peace and stability and they will continue to do so in the future. It is not a Jewish/Christian/Muslim fight. We're speaking of a group of Zionists who came and gained the reins of power.

ZAKARIA: Mr. President, let me ask this in a different way than many people have asked you. It relates to the comments that you have made about Israel in the past. I want to ask you if you recognize why people get so nervous by your comments about Israel because you're the president of a country, and presidents of countries do not speak like this. They do not speak about the elimination of another member state of the United Nations. They don't speak about wiping it off the map. And when you take that rhetoric and you add to it the fact that Iran is developing a nuclear program, it makes many people in the United States, outside the United States worry that the intention of Iran is to use that nuclear capacity to eliminate Israel, to wipe it off the map.

AHMADINEJAD: So really the people of the United States are concerned? They're shaking? Where do you -- what do you base this on? The rest of the nations are worried, preoccupied, and trembling at this thought? What for? We are friends with all nations. Yourself as a reporter, you must know, as a member of the media, you must know that Ahmadinejad is quite popular and is quite loved and loves everyone equally. Iran is loved and Iran loves everyone equally.

ZAKARIA: Mr. President ...

AHMADINEJAD: Most people are on the side of Iran. There are more fundamental issues to be discussed, perhaps.

ZAKARIA: But Ian is not ...

AHMADINEJAD: But it's become repetitive, Sir. For seven years I have been answering this for you.

ZAKARIA: I understand. But any -- every time you answer it in a way which raises more doubts. The problem the people have is that you talk about elimination, you talk about wiping off ...

AHMADINEJAD: Now, how do you -- do you -- how do you pretend to speak on behalf of the people? It raises doubts and it stirs doubts in whom? People have given your their vote of confidence in order to represent their all-encompassing view. You're representing a medial outlet and representing their views. Let's go to the streets of New York tonight right now ...

ZAKARIA: Mr. President ...

AHMADINEJAD: ... and let's interview the people and find out what they say. Let's find out what the people truly say.

ZAKARIA: Mr. President, you are -- you ...

AHMADINEJAD: What do the people have to do with this?

ZAKARIA: But Sir, your country is -- you say, Iran is loved.

AHMADINEJAD: These are fabricated.

ZAKARIA: But Iran is under the most crippling sanctions of any country in the world right now. You are being sanctioned. You're isolated. Your GDP is shrinking by some accounts. Your currency we know has dropped 50 percent or so. What I'm trying to explain to you is the reason you have this international pressure, these sanctions is in part because people doubt Iran's intentions. AHMADINEJAD: No. I'd like to ask you first of all, sir, not to speak on behalf of nations and the people. Were the people who put us under sanctions or a handful of western governments? Which people brought us under sanctions? Many of the European companies are currently as we speak conducting trade with us. Some of them do it in hiding, but they do, secretly but they do conduct that trade. You hear some news, and you believe that Iran's economy is no in chaos. It is not so. It is not so, let me reassure you. We -- we came from being the 22nd ranked economy in the world to being the 17th largest, and as we speak, this growth of capital and investment continues. Of course, we're not fans of sanctions, but if anyone thinks that sanctions will bring Iran to her knees, they are certainly mistaken. We have learned to live under these circumstances. We don't like to live like this, but at the end of the day a handful of European countries and the United States, of course, would like to have relations with them. It would benefit both sides. But without them, we have learned to live quite well. We have been living quite well. We have trade relations with over 180 countries throughout the world. America and her allies do not represent the entire world. Accept this. Let's come out of some of these thick shells and change our views and update our views of the world. The time of oppression is gone.

ZAKARIA: So, let me -- let me ask you a final question, Mr. President. You've been to New York many, many times, much more than any president of Iran. Your predecessor, Mr. Khatami, came twice. His predecessor Mr. Rafsanjani, I don't believe ever came. So you obviously like New York. Are you going to miss coming to New York.

AHMADINEJAD: Keep in mind, Sir, we didn't come to New York. We came to the U.N. General Assembly, which happens to be in New York City. And during these few days that I come, either I'm inside the U.N. General Assembly building or inside the hotel. I haven't gone anywhere else. It's a good city. It has great people. And there are good people everywhere.

ZAKARIA: OK, let me ask you one more.

AHMADINEJAD: But allow me in out of respect for you and through your camera to express my gratitude to the people of New York. Would you allow me? When we come -- we travel down the street to go to the United Nations building and come back, do we see limitations imposed on other vehicles, on pedestrians, so it creates disturbances for people and of course we're never happy to see such disturbances, but, of course, the police and the security forces to whom I'm very grateful worked extremely hard, but the people of New York were very patient. And if we caused any serious disruption and disturbances, I would like to hereby extend my sincerest apologies to them and thank them for their kindness.

ZAKARIA: Mr. President, pleasure to have you on.

AHMADINEJAD: God bless you, and may you have health and success.

(END VIDEOTAPE) ZAKARIA: It was as fascinating conversation as ever. President Ahmadinejad seemed to have recognized that he had caused, perhaps, too much controversy with some of his earlier remarks this week and was more careful to be less incendiary. But he was passionate in his attacks on American foreign policy and defiant as ever about Iran's response to any military action. In preparing for the interview I was struck by the conversation going on within Iran. The head of Iran's Expediency Council, a senior political figure gave an interview, in which he said that after the next election in Iran, Iran would move from radicalism to rationality. Ali Larijani, another powerful politician and potentially a presidential candidate said that the country would move from fundamentalism to moderation. We'll have to watch to see if that's true.

Up next, what do you think the folks at Bain Capital think of all the attack ads against them and what do they think of their founder's presidential chances? We'll ask one of the men who runs that company, Steve Pagliuca.

(COMMERCIAL BREAK)

ZAKARIA: All of a sudden everyone knows the name Bain Capital, the private equity firm that Mitt Romney founded and that has been discussed and attacked during the presidential campaign, but most of the top executives in the private equity industry have stayed silent through all of this campaign drama. I wanted to hear Bain's side of the story and Steve Pagliuca took me up on the offer. Pagliuca is managing director at Bain Capital, a managing director, but one of the people who actually runs the firm. He is a Democrat. He ran in the party's primary for the Massachusetts Senate seat last year, losing to Elizabeth Warren. He's also a managing partner of the Boston Celtics. Thanks for joining me, Steve.

STEVE PAGLIUCA: It's great to be here.

ZAKARIA: So, let me first show you some clip from the convention -- from the Democratic convection and get your reaction. You've seen this before.

(BEGIN VIDEO CLIP)

JOE BIDEN, VICE PRESIDENT OF THE UNITED STATES OF AMERICA: Folks, the Bain way may bring your firm the highest profits, but it's not the way to lead our country from the highest office.

(APPLAUSE)

(END VIDEO CLIP)

ZAKARIA: So what do you think when you listened to that?

STEVE PAGLIUCA, MANAGING DIRECTOR, BAIN CAPITAL: Well, look. hyperbole has been part of elections sense the days of John Adams and there's nobody better than Joe Biden to give us a little hyperbole as we all know. So, I think from Bain Capital's perspective, people discount that hyperbole. They know it's hyperbole. We really wake up every day trying to build businesses. That is the goal of private equity. It's a misnomer out there that private equity profits by shrinking companies. In fact, it's just the opposite. Private equity creates value by growing great companies.

ZAKARIA: S when people look at -- when there were attacks, the attack ads, that you take a company, a steel company, you send the jobs overseas because that cuts the costs which it undoubtedly does, in other cases, you load it up with debt and then you fine, you pay yourselves fees, and you find somebody to sell it too, you don't think that's an accurate picture.

PAGLIUCA: That's totally inaccurate. Absolutely totally inaccurate. In fact, we actually started a steel company from a cornfield in Indiana. It's called Steel Dynamics. It has 6,000 employees today, it's one of the largest steel companies in the country. So, what happens in these campaigns, is they need to use hyperbole to make these attacks. We have 350 investments, those companies over 28 years have grown twice as fast as the S&P 500. They've created $100 billion, $100 billion of new sales so that's extraordinary growth and that's given Bain Capital an extraordinary track record. When you have that kind of growth, that growth creates jobs, it creates jobs that help those companies. And so, it's great for the economy.

ZAKARIA: But you're not disputing the ones that we pointed out in the ads. You're saying that's a small minority of the companies you invest in.

PAGLIUCA: We've had 80 percent of the companies that we've invested into, which is extraordinary record, have grown revenues. But what happens in these deals is they time shift. So, for example, that steel company, we bought this company that was going to be closed down. We saved all those jobs. We invested $100 million in that plant. It grew. We had great sales, then six years later we took -- we took our dividends for our investors, just like all corporations do. Then six years later Japanese dumped steel, prices went down. Hundreds of steel companies went out of business in that type of steel, and we're a victim of that. So, you can't compress that time into an ad, to make it seem like one thing causes another.

ZAKARIA: Let me ask you about the tax issue that people think about. In private equity business, you get paid what's called carried interest, which is paid -- it's taxed as capital gains. So, lots of people who believe it should be taxed as ordinary income. Would you support moving the carried interest to -- so that it's taxed as ordinary income?

PAGLIUCA: The carried interest rule really came about as sweat equity. So, if a restaurateur said I'm going to come to you, Fareed, and I want to open a restaurant.

I want you to invest $50,000 and you know, you take 80 percent of the profits and I'll take 20 percent for my sweat equity, that's what carried interest is. It's what these firms, venture capital firms do and that's how people are compensated. It incents people to invest capital. Now, that being said, I think it should be looked at. The whole tax code should be looked at, all the way from farm subsidies to carried interest to -- to corporate loopholes, because we really need to raise more revenue.

ZAKARIA: What do you think of him as a man, as a leader? You've known this guy, he hired you, I assume.

PAGLIUCA: Yeah, he actually gave me my first job back at the Bain and company, back before the Bain Capital started, he's an incredible family man. He's got a good sense of humor. It sometimes gets him in trouble, but he's got a great sense of humor, and he's a very smart person. So, I'm really heartened by the fact that this is an election where we have two fantastic candidates. I worked with President Obama as well. They both have a high degree of education, they are both knowledgeable about the word. And I think we're lucky in America to have two great people running in this political election, especially given how rough these elections are.

ZAKARIA: You have an unusual perspective, you have all these investments, all these companies around America and increasingly, around the world. What is your sense of the American economy? There are some signs that the economy is actually beginning to recover. Housing is back. But yet the actual GDP numbers don't seem to move much. What do you think?

PAGLIUCA: Well, there are some good sighs. Housing is back a little bit. We've had a boom in energy. You know, that could be a real wild card for us, because low cost energy -- energy independence should be a goal. So -- and consumers have paid down a lot of debt. The bad side of the ledger is that there's an increasing government debt at the state and federal level. If you think back in 1982 there was a large outcry when the national debt passed 1 trillion. We're now adding 1 trillion per year. It's up to -- close to 16 trillion, adding 1 trillion per year. Soon the interest of the national debt could equal the whole amount of the national debt in 1982 when you and I were here. So, I think it's a real problem. I think it's a very solvent problem, though. Simpson-Bowles goes a long way to solving that, and I'm hopeful that when the government forms November, in November, the Congress won't address this problem.

We've had such a polarized Congress with nothing (inaudible), and that's the real heart of the problem. The president can only do so much. We've got to get the Congress together, to get the deficit down. You have a road map there, in Simpson-Bowles, that doesn't cut the deficit entirely, so it's going to be hard work. People have to work together. What I like about Bain Capital, is that we have Republicans, we have Democrats, we have independents, we are a diverse firm in terms of political views. But what we do is we sit down and we try to solve the problems. That's what our government has to do, it has to sit down and come to the middle and solve these issues. They are very solvable issues. America is the greatest country in the world. It has highest innovation, it has great educational institutions, now it has a lot of energy. We've got to capitalize on those and move forward.

ZAKARIA: When you look at your companies, do you see growth beginning across the board? Do you see it as patchy? PAGLIUCA: I would say we see it as patchy, but it's beginning. And, you know, one thing that we can emphasize in America, we (inaudible) in our companies, is we can bring innovation, you know, to the rest of the world. So we have not been, you know, an export- driven economy because we have had such a large market here. Countries that have been successful have really promoted free trade and fair trade. And I think if we do that in America, that another way to create jobs.

ZAKARIA: Steve, pleasure to have you on.

PAGLIUCA: It's been great to be here.

ZAKARIA: Thanks for joining us. Up next, why a number of Brazilian citizens are going vote for a candidate named Barack Obama. I'll explain.

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ZAKARIA: After years of rumors and speculation, China this week finally officially launched its first aircraft carrier, the Liaoning. That makes ten countries that have such vessels. Eight of them have one carrier each, and Italy has two. That brings me to my question of the week. How many aircraft carriers does the United States have, is it A, three, B, seven, C ,11, or D, 15. Stay tuned and we'll tell you the correct answer. Go to cnn.com/fareed for more of the "GPS Challenge" and lots of inside and analysis. You can also follow us on Twitter and Facebook. Also, you can now get GPS shows and specials on iTunes. You can get the audio podcast for free or you can buy the video version. Itunes.com/fareed.

This week's book of the week is by Jeffrey Toobin of "The New Yorker and CNN." It's his new book "The Oath: the Obama White House and the Supreme Court." It is a terrific inside account of what is arguably the most important branch of the U.S. government. No, not the executive branch. The judiciary.

And now for the last look. I think we all know there's a guy named Barack Obama running for president of the United States. But did you know that there's not one, not two, but five Barack Obamas running in Brazil and 11 more Obamas with different first names? Candidates and local elections across that country have adopted some surprising names to try to distinguish themselves to get attention. There are multiple Batmen and Robin, too, there's a bin Laden, Rambo, this elderly Superman, a Spider-Man, and a few Michael Jacksons. Some of the candidates had the good luck of being born with names that might give them a political edge, or might not. There are two Jimmy Carters, a couple of John Kennedies, Richard Nixon, Lyndon Johnson and even a Chiang Kai-Shek. With catchy tunes like this ...

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UNIDENTIFIED MALE: Barack Obama!

AUDIENCE: Hey!

UNIDENTIFIED MALE: Barack Obama!

AUDIENCE: Ho!

UNIDENTIFIED MALE: Barack Obama!

AUDIENCE: Hey!

UNIDENTIFIED MALE: Barack Obama!

AUDIENCE: Ho!

(END VIDEO CLIP)

ZAKARIA: The candidates are likely to be remembered. President Obama, if you need a new jingle, I know where you can find one. The correct answer to our "GPS Challenge" question was "C." The United States has 11 aircraft carriers. The rest of the world has a grand total of ten. Thanks to all of you for being part of my program this week. I will see you next week. Stay tuned for "Reliable Sources."