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In the Arena

Boehner's Budget Threat; Pakistani's Complicity; The End of Al Qaeda

Aired May 09, 2011 - 20:00   ET

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

ELIOT SPITZER, CNN ANCHOR: Good evening. I'm Eliot Spitzer. Thank you for joining us IN THE ARENA.

We start with breaking news. Just moments ago, Speaker of the House John Boehner threw down the gauntlet at a speech before the Economic Club of New York tonight. The top Republican issued a threat. Either Republicans get the budget cuts they want, or they will not raise the debt ceiling.

So, in other words, if they don't get their cuts, the American economy could face a real crisis. More on this in a moment.

But first, a look at the other stories we're drilling down on tonight.

(BEGIN VIDEOTAPE)

SPITZER (voice-over): $300 billion to wage war in Afghanistan since 9/11. $20 billion to Pakistan in foreign aid. It helped build a house to hide bin Laden. But has it built an ally or a nation? I'll ask the experts.

Then the rich get richer. Housing prices way down, unemployment too high. But at the top of the heap, profits and paydays have never been better.

And waterboarding. What does that feel like? E.D. Hill talks to a man who's been there, done that. He trains the good guys to think like the bad guys. He says the time to terminate al Qaeda is now.

(END VIDEOTAPE)

SPITZER: First tonight, let's go live now to the Economic Club of New York's event where House Speaker John Boehner just wrapped up that speech demanding trillions in cuts from President Obama if the president wants a higher debt ceiling.

CNN's chief business correspondent Ali Velshi is there.

Ali, it sounds like Speaker Boehner took a hard line. Tell us about it.

ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: Good evening, Eliot. Yes. He just finished his comments here. And he repeated what many people expected. He said everything but tax increases are on the table to get the budget under control. But he has finally said what it is actually going to take to get them to agree to increasing the debt ceiling.

Here's what he said.

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER (R), HOUSE SPEAKER: Let me be as clear as I can be. Without significant spending cuts and changes in the way we spend the American people's money, there will be no increase in the debt limit. And the cuts should be greater than the accompanying increase in the debt limit that the president has given.

We're not talking about billions here. We should be talking about cuts in trillions if we're serious about addressing America's fiscal problems.

(END OF VIDEO CLIP)

VELSHI: Eliot, let's talk about that. Not billions, but trillions. Now we think from the money we've been doing -- the study we've been doing at Money.com that the Treasury is going to ask for a debt ceiling increase in and around the range of $2 trillion.

John Boehner just said days he thinks the cuts that they need in order to agree to increasing that debt ceiling have to be more than that. So we're talking about achieving $2 trillion in promised cuts before the debt ceiling -- before we hit the debt ceiling in August.

Even people around here who are a generally supportive crowd at the Economic Club were saying that seems like a bit much -- Eliot.

SPITZER: You know, Ali, it seems to me there are two lines in the sand that Speaker Boehner drew tonight. One is the $2 trillion number saying the cuts need to be greater than the increase in the debt ceiling.

Just so folks understand, the increase in the debt ceiling they hope will be enough to carry us through November of 2012 because nobody wants to do this again before the presidential election.

So you're talking $2 trillion in additional borrowing the government needs because of the deficits. So they need to cut that much.

And two, he said, no tax increases. Those are pretty bright lines in the sand. I mean that's going to shock people, don't you think?

VELSHI: Yes. And then in fact, a number of people -- one of the questioners actually asked, he said that if you say no tax increases at all, then you've got to cut spending if you are not touching the entitlement programs by about 60 or 66 percent. Almost undoable. And if you don't agree to any cuts in spending, the amount of tax increases would have to be in excess of about 30 percent. So someone said, well -- I mean when you draw these kind of lines in the sand, how do you expect to get any compromise? And he said everything is on the table except tax increases. So it's -- they're definitely headed for a showdown.

The only advantage, Eliot, is that it's May, and not the end of July. So we don't have one of those last-minute discussions like we did with the extension of the budget. But the bottom line is this is not something the Democrats are going to accept. It's not something Democrats are going to swallow.

And I think frankly when the American public starts to carve out and see what $2 trillion in cuts is going to look like, it's going to be very, very painful -- Eliot.

SPITZER: Now, Ali, thank you for that report. The only thing I'd observe is that could be the $2 trillion in cuts he's talking about could be over a 10-year time horizon, not over the two-year horizon because that's usually the period of time they're talking about. But we'll have to figure that out.

All right, now, we're turning to Capitol Hill to our senior congressional correspondent, Dana Bash.

Dana, this has got to be a tough, bitter pill for the Democrats up on the Hill looking at this looming crisis. What has the response been this evening?

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: You know, our congressional producer Ted Barrett talked to Senator Dan Inouye of Hawaii. He is one of the Democrats who's been participating in these talks with Joe Biden on the debt ceiling and on debt reduction.

He called that -- this proposal farfetched, to cut spending by greater than the amount that the debt ceiling is raised. So that's the first reaction we're getting from a Democrat.

But you are absolutely right of what you just said to Ali right just now. We could be talking about the $2 trillion range. The Treasury Department isn't exactly -- isn't giving an exact amount to Congress. They're saying that Congress can do it on its own. But Republicans themselves have estimated that if you want to raise the debt ceiling and not touch it until November 2012, it's probably going to be about $2 trillion.

But as I was saying, what you said to Ali Velshi was very, very important because it could be over a 10-year window. It could be even over a longer window so there are various ways that they could play with this number to achieve the political goal that John Boehner just laid out.

SPITZER: Yes, but here's the interesting thing, Dana. It seems to me Speaker Boehner has kind of replayed the "read my lips" and "no new taxes" line. He has said this with such certitude that for him to walk back from it gets very difficult. And the one thing you don't want to do in a negotiation is put yourself into a position where backing off becomes impossible if you think you're going to have to do it.

So I'm not quite sure what his strategy is being so rigid on this, knowing that the Democrats are going to have to be equally rigid on the other side. It seems like an odd negotiating strategy.

BASH: It's very interesting that you say that. And here's why, Eliot. You remember when we were on night after night talking about the negotiations over keeping the government running. And those were over spending cuts. And it was specifically the whole question was whether or not Republicans were going to stick to their campaign pledge to cut about $61 billion in spending.

There was a huge fight internally in the Republican Party because the leadership had to compromise. They had to compromise. There's no way they were going to stick to that, and they did compromise.

So I've been told that the discussions that have been going on so far inside the Republican Party, especially the House, is urging House leaders not to draw a line in the sand for that reason because then they would have to pull back from it eventually, because that's the way negotiations are.

You have to compromise, especially with something like this where John Boehner on the other hand is saying we are going to cut spending, and he gave the marker and exactly what he means for the first time tonight, but he also said it's irresponsible not to increase the debt ceiling.

So he made clear to these people on Wall Street as he had here in Washington, as he had across the country, Congress is not going to let the United States default. But there's got to be some giving room there.

SPITZER: You know the other thing to remember, of course, is the Treasury Department. The president wanted a clean bill. In other words, just a simple increase in the debt ceiling without any preconditions at all. That's what they were hoping for, of course that is not likely.

BASH: Not going to happen.

SPITZER: Either yours or Speaker Boehner -- all right, Dana, we are out of time. Thank you, Dana.

As you just heard, Democrats aren't waste anything time firing back against Speaker Boehner's debt proposal.

Joining us with her reaction is Congresswoman Jan Schakowsky, a key member of the House Democratic leadership.

Congressman, thanks so much for coming in to join us tonight.

REP. JAN SCHAKOWSKY (D), ILLINOIS: Thank you. SPITZER: So it seems to me that Speaker Boehner is starting this negotiation with an awfully hard line saying the debt ceiling is not going to be lifted unless you can agree to trillions of dollars of cuts.

Is that feasible between now and the middle of August when this needs to get done?

SCHAKOWSKY: Well, you know, both the president and the Democrats in the House of Representatives have proposed a budget that reduces the deficit and the debt by $4 trillion.

The problem with the Republican plan is that they want to do it by abolishing Medicare and Medicaid as well, and doing it in a way that really impacts the -- further burdens the middle class.

What the president has said is that there are visions of the budget and budget deficit problems are totally different that we can accomplish our goals without further hurting people who have already sacrificed.

SPITZER: You know, Congresswoman, that's exactly right. I mean you have two positions that are really at either end of the poles right now. You've got the president and the Democrats in Congress saying no more cuts to the programs in that the middle class cares about. And the Republicans saying no tax increases and very significant cuts.

And that's why the question is, can this get done? Can this enormous yawning divide be closed between now and August when everybody acknowledges that if you don't raise the debt ceiling, there could be an economic cataclysm.

What at the process level is going to happen now?

SCHAKOWSKY: Well, actually, there's a third voice, and that's the voice of the American people. Eighty-one percent say that the best way to reduce the debt is to tax the millionaires and billionaires in our country. So when Boehner says, you know, we're broke, or the Republicans say we're broke, that's absolutely not true.

We can solve our problem. The president has laid out a blueprint. We're willing to make cuts. We are willing to do that. But you have to put revenue on the table as well. The American people have already shown at town hall meetings all over the country that they are not for ending Medicare. That they're not for cuts in Social Security or Medicaid.

Those are things that the Republicans seem willing to put on the table. You know, and it's also a big change for Boehner, who said just a few months ago that there was an adult moment coming, and that his -- new members of his caucus had to do some growing and understand, underline adult.

SPITZER: Look, Congressman, now if -- that if I then understand Speaker Boehner's speech this evening, he is saying there need to be cuts of at least $2 trillion. I presume he is talking over a decade of time. But getting agreement --

SCHAKOWSKY: That's right.

SPITZER: But getting agreement, now where would you begin to find agreement on the first trillion? Where do you think you could find common ground?

SCHAKOWSKY: You know, I think we could look at some of the tax expenditures. We are still giving tax breaks to the oil and gas company. At first the Republicans said yes, we think that's a bad idea. Now they're kind of retreating on that.

Imagine paying, you know, over $4 at the pump, at least here in Chicago, and still giving tax breaks to the oil companies.

SPITZER: Look, Congresswoman --

SCHAKOWSKY: There are over $1.1 trillion in those kinds of tax breaks.

SPITZER: Is there a tax loophole, tax expenditure, call it what you will, where you think in your conversations with the other side of the aisle there is agreement it should be closed? Everybody says let's close the loopholes. One person's loophole is another person's incentive, is the problem.

Is there one that counts in terms of size that you think you could get agreement on?

SCHAKOWSKY: You know I was on the fiscal commission along with Senator Coburn, who is certainly a conservative and a deficit and debt hawk. And he agreed that we needed to put those kinds of tax expenditures on the table. He also agreed that we ought to look at the defense budget, the military budget for some cuts.

I mean there are reasonable people that we can sit down with and work out a plan. But cutting Medicare and Medicaid is just not an option that the American people will accept. I think that the House Republicans are digging themselves into a very deep hole. And that the catastrophic effects of allowing the full faith and credit of the United States of America to disappear would -- is just unspeakable, unthinkable, really.

SPITZER: All right.

SCHAKOWSKY: And so I'm hoping that this pressure will bring them to the table with reasonable ideas.

SPITZER: All right. Well, Congresswoman, thank you for your thoughts on this. We are all waiting for that adult moment in Washington. It's like waiting for Godot.

SCHAKOWSKY: Yes.

SPITZER: Who knows if it ever shows up.

All right, Congresswoman, thank you so much.

SCHAKOWSKY: Thank you.

SPITZER: We'll be talking about this more in the weeks ahead, no doubt.

E.D. Hill has a conversation tonight with a man who has a plan for doing in al Qaeda all together.

E.D., how's that going to work?

E.D. HILL, CNN CONTRIBUTOR: Well, this guy is fascinating. He has been waterboarded himself. And we'll found out if he thinks we can get the information we need to kill off operatives that way. But more importantly, can we kill off the ideology? And he'll discuss that.

SPITZER: All right. Can't wait.

Coming up next, Pakistan's leaders issue a dramatic warning to America, don't do it again. It sounds like a lot of parents I know. More fallout on the Osama bin Laden raid. Stay tuned.

(COMMERCIAL BREAK)

SPITZER: Tonight troubling questions about what Pakistan knew of Osama bin Laden's so-called hiding place. He was of course living in a populous suburb right under the noses of the country's military elite.

Pakistan's prime minister says any accusations of complicity are absurd, and in a fiery address to parliament today, Prime Minister Yousaf Raza Gilani made this much clear to anyone else planning a middle-of-the-night helicopter raid, don't mess with Pakistan.

(BEGIN VIDEO CLIP)

YOUSAF RAZA GILLANI, PRIME MINISTER OF PAKISTAN: Any attack against Pakistan's strategic assets whether overt or covert will find a matching response. Pakistan reserves the right to retaliate in force. No one should underestimate the resolve and capability of a nation and armed forces to defend our sacred homeland.

(END OF VIDEO CLIP)

SPITZER: It all speaks to the growing tension between the two strategic allies.

Joining me now for more on this is "Wall Street Journal" foreign affairs columnist Bret Stevens and Princeton University's Anne-Marie Slaughter who was until recently the State Department's director of Policy Planning.

Welcome to you both.

Anne-Marie, let me start with you. It seems to me the question everybody has been asking is, did Pakistan know -- the ISI, the head of their intelligence agency? It sweeps a little too broadly. It seems clear some parts of the Pakistan government knew -- there are so many parts, so many different agencies and subcultures there.

The hard part for us is knowing who knew, and how do you work with their government without knowing with specificity who the good guys in the government are and who the bad guys are?

ANNE-MARIE SLAUGHTER, FORMER DIRECTOR OF POLICY PLANNING, STATE DEPARTMENT: Well, Eliot, I think you're exactly right. You can't talk about whether Pakistan knew or not. There are many different parts of the government. Indeed in our own government many parts of our government didn't know what J. Edgar Hoover did for a long time.

So there are -- it's a complex situation, and we have known for a long time that some parts of the Pakistani government may well have known where he was. In fact, Secretary Clinton said that last year.

The issue now is to actually continue working with the civilian government, with Prime Minister Gilani, with President Zardari, with the civilian forces who have every incentive to make sure to the extent they can that the ISI is not supporting either al Qaeda or Taliban groups.

SPITZER: All right, Bret, let me turn to you, then. If you take Anne-Marie saying as gospel -- not gospel, you take it as the truth, we want to work with the civilian government, we have common purpose, common cause, first, how do you define quickly that common purpose? What is our objective in building this relationship or rebuilding it with Pakistan?

BRET STEPHENS, WALL STREET JOURNAL: Well, I'm not sure we have a common purpose. I mean this is a government that is sometimes incompetent, sometimes complicit. And -- you know whether or not the Pakistanis knew where bin Laden was or the higher echelons knew where he was, there is a reason why we're so suspicious of that government.

Why? Because of its long-standing links to Lashkar-e-Tayyiba which perpetrates terrorist atrocities in India, because of its links to groups like the Haqqani network which is carrying out attacks on the United States.

So it becomes reasonable then to suspect that at least some elements of the ISI, some elements in the military must have wondered what this million-dollar compound was doing next to the gates of their West Point.

SPITZER: Accepting that as a premise, I want to throw to it back to you, Anne-Marie. Persuade Bret that we do have common purpose.

Look, it's always struck me that the purpose was, A, control the nukes, B, making sure that we didn't let al Qaeda and the Taliban get a bigger foothold in Pakistan, and C, keep us in our orbit, not China's.

Anne-Marie, are those the objectives? And if they are, how do we bring them closer to us?

SLAUGHTER: Well, those are three objectives but -- the most direct ones is the amount of information we've gotten from those parts of the Pakistani government who are working with us on terrorists and how to block terrorist attacks. And there are plenty of cases in which we have gotten critical information from Pakistan.

And it's worth remembering that 31,000 Pakistanis have been killed by terrorist attacks and insurgent attacks in their own country. So we have a direct incentive to work with the Pakistani government to protect Americans as well as all the other reasons you specified.

SPITZER: Look, Bret, isn't Anne-Marie right about that? I mean you're looking for purity in an area where there simply won't be? We need to understand the subtlety, the duality, the complexity. Don't we need to accept that?

STEPHENS: Anne-Marie is absolutely right. And we need to make it common to this Pakistani government which is a particularly weak government that their interests are better served working with us towards those common purposes, some of which you mentioned, than working at cross-purposes with us.

Now one of the way -- they have done some things. They're very helpful when we're going after -- the Pakistani Taliban. They're less helpful when they're going after -- we're trying to go after the Afghanistan Taliban. Same thing with al Qaeda.

So how do you communicate a message to them that it is not particularly helpful for them to react this way when we get the most wanted terrorist, the perpetrator of September 11th?

That political message has to be communicated both publicly by the president, but also by various government institutions. We can provide them with F-16s. We can strengthen their military. We can provide strategic economic cooperation or we can penalize them if they continue to obstruct basic vital American interests.

SPITZER: Of course, now Anne-Marie, I assume that's a fair statement of how we respond. Do you buy the notion that they intentionally outed the head of the CIA station chief in Pakistan today?

SLAUGHTER: Again, I have -- I think talking about they is very hard to know. It is quite possible that someone in some part of the Pakistani government released the name. But we really don't know. And I think we do have to remember that, you know, all politics are local.

We have put the Pakistani government in a really difficult position. The army either looks like it knew where Osama bin Laden was and was lying to one of its strategic allies, or it was -- it didn't know and then it looks incompetent to its domestic audience. So I think we do have to permit a certain amount of face-saving. SPITZER: Look, I think that's exactly right. I mean this is the collateral damage of what we absolutely had to do and we knew we were going to do it if we had the opportunity to do it.

Let me switch gears, go across the boarder there. Afghanistan. Does this fundamentally change -- in the two remaining minutes -- the complexion of what we should do and can do in Afghanistan?

Bret, take that first shot.

STEPHENS: Well, I think it ought to give us some -- a sense of momentum, of achievement. We've been fighting in Afghanistan for 10 years in part to defeat al Qaeda and to defeat their -- you know inhibit their ability to reemerge in Afghanistan.

So this is an opportunity right now to start taking the offensive against other senior leaders of the Taliban or related terrorist groups. I hope that's exactly what the administration does.

What worries me is you have an administration that is sending signals that now might be a time to open political negotiations with the Taliban, which are destined for failure.

SPITZER: Anne-Marie, you buy that? I mean it sounds to me like Bret is saying ramp up the military effort. Do you think it's more a military game right now or one where we could negotiate a good resolution?

SLAUGHTER: Well, I actually thought Bret and I were agreeing until we got to that last part.

No, I actually think this is a perfect, perfect pivot point to political negotiations. We have already said that we are going to be handing over security to the Afghans. And what the American people see is Osama bin Laden was in Pakistan. We've had -- you know Americans are dying in Afghanistan in an effort to try to clear, hold, and build.

It's very difficult. We're fighting the Taliban. At this point, the Taliban have a much greater incentive to negotiate. So too does the Karzai government and the Pakistani government.

I think we have to at least explore what are the options for a political settlement that will allow for stability and rapid draw-down of our forces.

SPITZER: All right, Bret. In 10 seconds, any evidence that we have military success in Afghanistan?

STEPHENS: Sure. We have a successful surge. It has its -- it's not as successful as it had been in Iraq, but there is no question there is real progress on the ground in Kandahar, Helmand, and you have a Taliban that is afraid. And we should take advantage.

SPITZER: All right. That's a conversation for another day. I'm not so sure. I hope you're right, but I don't think you are. Anne-Marie Slaughter, Bret Stephens, thanks for joining us.

Up next, E.D. with a man who's been training Americans to think like the bad guys. He says it's time to take on al Qaeda on a whole different battlefield. Stay with us.

(COMMERCIAL BREAK)

HILL: The end of al Qaeda. After all this time, it may sound like an impossible dream, but now with bin Laden gone, we have a great opportunity to take on al Qaeda in perhaps a new kind of battle, the battle of ideas.

My next guest says that is the only way that we can ensure victory. Malcolm Nance is a Navy veteran, counterterrorism expert, and the author of the book "An End to Al Qaeda." And he joins us from Washington.

Malcolm, it's good to talk to you. Thank you.

MALCOLM NANCE, COUNTERTERRORISM EXPERT: It's good to see you, E.D.

HILL: So after the death of bin Laden, do you think that we are beating al Qaeda?

NANCE: Well, I think at this point we're at a critical juncture in the entire global war on terrorism, if we want to use that euphemism. Al Qaeda has now been decapitated. We've killed the ideological creator of everything they believe, everything they stood for.

This is the man who actually created the glue that holds each of these individual operatives together, that brings them out to where they can swear allegiance and their lives to do the bidding that he tasked out to all his sub-lieutenants. So I think that we're at a critical point, and we have an opportunity here.

HILL: But I have the sense that from 9/11, al Qaeda has simply gotten bigger. It seems to reach further, have more different affiliates that it is associated with, and that while we may be killing off command and control, and certainly bin Laden's a big one, the ideology, I guess, the allure of what al Qaeda is preaching to people seems to be drawing more in. Is that correct?

NANCE: Well, I think it's what happened is that after 9/11, they created such a spectacular event that it created this allure of wanting to be one of the members who is part of what al Qaeda sees themselves at, which is a bunch of itinerant knights who go around from nation to nation and fight injustice from place to place.

This is the image that they've created for themselves. And what we have to do, and it has grown, you're right. It's gone, as people have gone into what we call the self-starting jihad.

What we have to do right now as we've -- now that we've gone kinetic, as we've done in kinetic warfare and we've killed their leader, we have to go after what they believe. And not just go after the people who believe that ideology, but to go after the rest of the Muslim world who are al Qaeda tends to say that they represent --

HILL: Yes.

NANCE: -- that world. We have to show the Muslim world what Al Qaeda really represented and how they in fact were a religious cult that had virtually nothing to do with Islam.

HILL: The idea of Al Qaeda sort of selling itself as the Robin Hood of the Middle East is interesting, but it sounds like what you're talking about is we have to go after the hearts and minds, it's such a trite phrase, but more the psychological message that Al Qaeda has been putting out, and perhaps show that to be the falsehood that it is.

NANCE: You're absolutely right. Al Qaeda for the last 20 years, and I'm sure Peter Bergen was a previous guest in the previous hour could have explained it a little better. They have been brilliant in the information war throughout their constituency.

Their constituency was never the west. They were never orienting their messages towards the western world and the democracies that they think that they were in warfare with. It had always been towards the pool of recruits in the Muslim world. But to do that, they had to get those Muslim recruits to actually separate themselves from traditional Islam. Al Qaeda's members actually hate and seek to dismantle traditional Islam as we see it today. But to do that, they would go on (INAUDIBLE) or emigrate out to these battlefield places like Afghanistan, Somalia and North Africa, and then join this cult and call it a brotherhood. And then fight in this suicidal battle as bin Laden saw.

HILL: Yes.

NANCE: Not as Islam ever put it.

HILL: You know, I look at the hypocrisy of it all, frankly, and I think how did this guy live in a mansion, having all these wives, have people catering for him? He doesn't go out and do, you know, a day's normal work, and yet he's sending, you know, person upon person out there, you know, go blow yourself up in the name of whatever. I'm going to sit here real nice and cozy. You just go kill yourself. And people bought into it. How do we -- and what tactics do we use to show people for the, you know, farce that we see this as?

NANCE: Well, that's a very good point, because we don't have to enjoin ourselves in using propaganda at all. You know, propaganda is when you're trying to perpetuate myths and stereotypes which may not be true. In this case, all we have to do is show bin Laden for what he was.

I had been to his residence in Afghanistan and Jalalabad. A very small, very austere. You can almost respect him. I've been to his caves up in Tora Bora. You know, this man wanted to give this image of a combat commander who can live in rough conditions and has been leading people to believe he has been living from a cave for the last 10 years.

HILL: Right, right.

NANCE: And great respect was gleaned from that for these young jihadists who wanted to come out there and give their lives to this cause which they didn't even understand.

HILL: Yes.

NANCE: Now we see him with a command post with television living outside of Islamabad. I think right now there's an opportunity to show what Al Qaeda truly is, using the facts of what they actually are and what their commander actually looked like.

HILL: And help me uncover. Before we let you go, I've got to ask you this, because I don't know anyone else who has been waterboarded, and you have. And that's a big thing people have been discussing. You know, was that the key to getting the first, you know, bit of information about the courier's code name and leading us to bin Laden eventually? From your experience being waterboarded, do you think that someone would give up good information?

NANCE: No. No, absolutely not. I mean, the reason that we taught this technique, which was a technique used by our enemies and brought to U.S. service members to show what totalitarian nations who had complete disregard for human life and who would violate international law, this is what they do.

Torture does not work. It has never worked. Despite what some noted people like Alan Dershowitz says, it doesn't work. You will say anything. Now if you spout out the name of 500 people after you've been tortured, what you've done is you've delayed our intelligence gathering process because we now have to fight this little intelligence battle with you by sorting through thousands and thousands of names and bits of data to see where those names all cross-correlate with real intelligence that's been gathered throughout the battlefield. Torture actually delays the intelligence process, and the enemy wins when we do it.

HILL: Malcolm Nance, thank you very much. Fascinating talking to you.

NANCE: It's good see you, E.D.

HILL: All right. Well, I haven't been waterboarded, no torture here. I'm telling you the truth.

Eliot has got a great interview coming up. You know, as you and I are sitting here counting our pennies in our pockets, the rich are getting richer, specifically CEOs. You won't believe the compensation last year. Eliot's got that story in a moment.

(COMMERCIAL BREAK) ELIOT SPITZER, HOST: Welcome back. The economic news has not been good recently for most folks. In fact, housing prices continue to tumble. Unemployment up to nine percent, even though a few signs of job creation out there. But if you're the CEO of a major company, not a bad year. This data all from "The Wall Street Journal." It is good to be the king. The CEOs of major companies last year saw their salaries up 11 percent to an average of $9.3 million. Not bad if you can get it.

Who is the big winner? The king of kings, Philippe Dauman of Viacom. He got 84.3 million. You're saying who is Viacom, and who is Philippe?

Well, I'll tell you, MTV, Comedy Central, Paramount Pictures, VH1, that's who Viacom is. A good year in that little corner of the economy and Philippe had a great year. Enjoy it, Philippe. It ain't coming back soon.

Those companies we bailed out? Remember those companies that were tittering? In fact, General Motors went into bankruptcy but we brought them back.

There we go. Dan Akerson got a mere $3 million. Pretty small compared to a lot of the other CEOs, but then again his company was bankrupt a few years ago.

Lloyd Blankfein, the famed Goldman Sachs. Remember the guys who make all the money in the world? He only got 16.7 million.

Jamie Dimon, 23 million. Jamie Dimon of Morgan Chase, one of the biggest banks in America. He said these things just happen, don't blame us. They don't, Jamie.

We're going to talk about that more over the weeks ahead.

Anyway, this is a story of the rich getting richer. That's what's been going on in our country. Let's take a look at this chart. This goes back to 1979.

You can see what's happened. Those in the top one percent seeing their incomes up 281 percent, three times what they earned back in '79. The middle income only up 25 percent. A yawning gap there. And the president told us this in a speech on the budget back on April 13, he said "In the last decade, the average income of the bottom 90 percent of all working Americans actually declined, saw their income go down."

Folks, this is a problem we've got to deal with. A crisis brewing in our society. We'll be talking about this in the days and weeks ahead. We'll be right back.

(COMMERCIAL BREAK)

SPITZER: Our next guest was at the Defense Department when America sent our troops into Afghanistan and Iraq as undersecretary of defense for Donald Rumsfeld. Douglas Feith was an architect of the Bush administration's strategy of what was then referred to as the global war on terror.

Doug, thanks so much for joining us. Look, you have been viewed as being part of the intellectual engine of the George Bush foreign policy, and in the past few years you have been very critical of President Obama's handling of foreign policy. And yet when I look at the two foreign policies, I see more continuity than change. So do you disagree with me about that? Isn't President Obama's foreign policy right now very close to President Bush's?

DOUGLAS FEITH, UNDERSECRETARY OF DEFENSE, BUSH ADMINISTRATION: I think in some key respects it is. And I think that it reflects President Obama coming around to accepting a number of positions that he had not only not accepted, but had pretty severely criticized when he was a senator and a presidential candidate. For example, the concept that the terrorism problem has to be dealt with as a war. And that's in some ways the most significant decision that President Bush made in the hours after 9/11. And it was something that senator and candidate Obama severely criticized but now has come around to.

SPITZER: If you would agree with me that President Obama is following essentially the outlines of President Bush's foreign policy, then the question is, is it working? Is it succeeding?

You know, let's take Afghanistan, where President Obama has embraced essentially the notion of the Iraq surge, applied it to Afghanistan. Is it working? Is this effort to win the hearts and minds of the Afghan population in any way successful either as a counterinsurgency effort or as a nation-building effort or in an effort to persuade the Taliban to come over to our side? I'm not sure I see it. How do you evaluate it?

FEITH: I think it's a mixed picture. And it contains a number of troubling elements. But I think that General Petraeus has reported that there has been a number of areas of progress on the ground in Afghanistan, and I think he has good basis for saying that. At the same time, what President Obama has emphasized is that we're trying to get the Afghan government to increase its capacity and take on additional responsibilities that the United States has been fulfilling. And in that area, I don't think it's -- there's as much progress that's been made as we hoped. And I think part of the problem is the emphasis that the Obama administration has been putting on the United States leaving Afghanistan. I think that the strong emphasis that we're going to get out rather than accomplish something in particular on the ground has led to -- has functioned as a push on the Afghans to hedge their bets.

SPITZER: Look, I agree with you saying we're leaving, undercut our underlying position. Having said that, I ask the fundamental question, what was our purpose there? And the purpose as I understood from the Bush administration through to the Obama administration, of course, was a, Al Qaeda, and b, find folks within the Taliban whom theoretically you could get some sort of enduring peace with. Al Qaeda is now, we believe, more in Pakistan than Afghanistan. Is that a factual statement we can agree on, do you think?

FEITH: Well, yes, but the issue is not just Al Qaeda and there's also the enormously important question of how what we do in Afghanistan affects Pakistan because Pakistan is of enormous strategic significance. It's a country that has nuclear weapons. That is a major element of the peace of South Asia. And the -- the danger of a nuclear war between Pakistan and India is something we have to take into account. The danger of Islamist extremists taking over Pakistan which has nuclear weapons is something that we have to take into account. Pakistan is enormously important. And what we do in Afghanistan affects security in Pakistan.

SPITZER: What is our fundamental objective when it comes to Pakistan right now? You state the nukes obviously. They're the fifth largest nuclear power in the world, over 100 weapons over there. Protecting them from an Al Qaeda-type capture is I guess mission number one. Is that fair to say?

FEITH: Keeping those nuclear weapons out of irresponsible hands is an enormously important interest of the United States and the whole world.

SPITZER: And so given that, while there are cries and one understands the visceral emotional level to completely disengage from Pakistan given what many people see as the duplicity of their relationship with us, would disengaging, cutting the aid, would that accomplish that purpose or do we not need some sort of continuity of engagement with them to try to pull them closer to us?

FEITH: I think the latter. I think that the United States has a strong interest in maintaining important relationships with, you know, key institutions in Pakistan like the military. We actually did cut off for years our military-to-military relations with Pakistan over their nuclear program. And the result was an entire generation of Pakistani officers developed who had no contact with, no friendships with, no understanding of or sympathy with Americans. And there was no sympathy and understanding, friendship going the other way. And we're actually to this day paying a price for that. And I think that it's not a great thing to use important relationships as a faucet where you simply turn them on or off based on whether you're happy with a given policy at a given moment.

SPITZER: Look, I want to end with a question. You got a memo from your then boss Donald Rumsfeld. I'm not sure what day of the week it was. But I'm going to read it. It says, "We need more coercive diplomacy respect to Syria and Libya. We need it fast. If they mess up Iraq, it will delay bringing our troops home. We also need to solve the Pakistan problem, and Korea doesn't seem to be going well. Are you coming up with proposals for me to send around?" Basically he said on a Friday, solve the world's problems by Monday. When you got this memo, what was your first thought?

FEITH: You know, he didn't say solve them by Monday. I mean, as anybody who has dealt with a top-level executive, whether it's in the government or in the corporate world knows top level executives deal with large problems and they identify the large problems, and then they -- that's broad guidance for what they want their staff to focus on.

SPITZER: All right.

FEITH: And that's what he did. It was a perfectly sensible approach.

SPITZER: No, I'm not saying it wasn't sensible.

FEITH: And we developed ideas for him in all of those areas.

SPITZER: All right, Doug. I want a yes or no answer to this question. You know, a truthful answer. When you first got this memo, wasn't your first thought come on, boss, I've done my work, you figure it out. I'm going home for the weekend. It's your problem.

FEITH: No. He talked that way all the time. And so it wasn't a big surprise. And we gave him ideas in all of those areas and many others.

SPITZER: All right. You're much too easy on your boss. All right, Doug. Thanks so much for joining us.

When we come back, betrayal, corruption and lies in Afghanistan. And those are the guys on our side. We'll talk to a man who saw it all firsthand. Stay with us.

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SPITZER: Now that Osama bin Laden is out of the picture, pressure is building for the U.S. to get out of Afghanistan as quickly as possible. After 10 years, billions of dollars and the loss of nearly 1,500 American lives, Al Qaeda and the Taliban are still launching attacks inside Afghanistan, and the U.S. is still trying to win the hearts and minds of ordinary Afghans.

In the "New Yorker" magazine this week, John Lee Anderson has written a dramatic account of just how hard it is fighting on both fronts. I spoke to him a short time ago via Skype.

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SPITZER: Mr. Anderson, thanks so much for joining us. You have an amazing article in this week's "New Yorker," and the title of it is "Force and Futility: Is it time to leave Afghanistan?" And so what is your answer? Is it time just to pick up and get out?

JOHN LEE ANDERSON, THE NEW YORKER MAGAZINE: Nothing is as simple as that anymore. Unfortunately, you know, we're too far into this to simply leave. I personally am of the opinion after having been there quite a bit in recent months that we should have a sort of leaner, meaner, smaller approach to the country. I don't think we're winning over any hearts and minds at this point. The Osama bin Laden death, of course, throws a new possibility into the equation. And I think it's early days to really call that. But I do think that we have a serious -- serious issue with the sheer numbers of people we have there.

SPITZER: Your article is powerful because of the stories it tells. I mean, there's a very granular on-the-ground recitation of what life there is like. I mean, you get the sense that the counterinsurgency effort simply isn't winning over the hearts and minds that we need to try to come over to our side. You tell the story of Lieutenant Colonel Lutsky and a tribal leader by the name of Pacha Khan, a story of deception and tribalism. Tell us about that because it recaptures I think the angles and then the multiple facets of these relationships.

ANDERSON: That's right. Well, you know, here we are 10 years later and we have, you know, good young lieutenant colonels like Lieutenant Colonel Steve Lutsky who had a year to make good on his time there. And he was a very, as they say in the military, kinetic guy, meaning he was a gung-ho soldier. He wanted to get things done. It was a matter of pride for him.

But, you know, the warlords and the locals see us coming, and they see a guy coming in. They know he's going to be there for 12 months, and then they're going to have to deal with someone else that's new. And so Pacha Khan is this extraordinary figure. He's the old school warlord and he -- you know, he's mostly been on our side in the last few years, but he went through a period where he wasn't and was a bandit.

And so Lutsky went to see him and took me along with him up in his lair up in the mountains there in Khost along the border with Pakistan. And essentially was asking Pacha Khan, who has this great turban and a big dyed mustache and eyebrows that meet in the middle, if he would set up what they call, what Petraeus calls a local police initiative, which is essentially a paramilitary effort aimed at bolstering the transition that we're hoping to get with this -- the Afghan national army, which is a pretty abysmal experiment so far. Essentially villagers who would arm themselves and provide a buffer between us and the Taliban. And he was asking Pacha Khan if he would do this. Pacha Khan countered with how about you arm and equip a group of my guys, and then we'll tell you where the bad people are. You take them in Apache helicopters and bomb them, OK? And how about that?

And so, it was this kind literally this kind of horse trading session went on. And Lutsky very diplomatic said, well, let's consider both options. But how about the other? And essentially what he wanted was Pacha Khan to arm up locals to go after the Haqqanis who are his rivals. So to a certain extent getting involved in tribal politics which, you know, 10 years in we're now seeing as a possible solution to the fact that we don't have an entirely reliable Afghan partner.

SPITZER: Can we go further than that and say not only do we not have a reliable partner, we are being used by them and being sucked into the quagmire or the swamp of their own local politics, and as you say, they see us as a transitory force and they know we'll be gone shortly. And therefore, all they do is use our assets, money, weaponry to reposition themselves for the ultimate fight down the road?

ANDERSON: You know, there would be people, and I spoke to them who would argue with that and point out lots of areas in which and certain personalities in which this is working better than others. And yet it comes down to the same old things that I was sitting in on 10 years ago, which was, you know, negotiating with a rustic local figure over cups of tea about setting up an honest, you know, dual relationship. And there seems to be just as much insecurity on our side about that now as there was then, if not more in some case.

SPITZER: Lieutenant Colonel Lutsky is now home, I gather, back in the States. Have you spoken to him recently?

ANDERSON: He's back in Fort Campbell, Kentucky, just outside of national, where in fact President Obama visited the other day. And he -- you know, he's -- look, he's a loyal officer. He's a patriot. He is not going to speak out of turn. He's still in uniform.

We had a conversation a few days ago. We were going back, mostly back over what, you know, what the experience had been when I've been with him recently. And he -- you know, he tried to put a brave face on things. He felt that he had done -- he had achieved some things. And I, you know, I couldn't quibble. Of course, you know you put your life on the line. You want to know that it was worth something. And no doubt he left some positive mark.

The one thing I would say is this is that I heard from no American the entire time I was in Afghanistan that they felt that we were winning there.

SPITZER: Right.

ANDERSON: It struck me afterwards actually. No one actually said to me, you know, we're going to prevail in the end. We're winning. And, you know, reading between the lines I would say that most people feel that we're not.

SPITZER: You know what? As you just said, it's often what isn't said that is most powerful.

All right. Mr. Anderson, amazing article. And as you say, we're stuck between force and futility. Thanks so much for joining us.

ANDERSON: Thank you. It's a pleasure.

SPITZER: Thanks for watching. "PIERS MORGAN TONIGHT" starts right now.