Return to Transcripts main page
Parker Spitzer
People Power; Obama's $3.7 Trillion Budget
Aired February 14, 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.
KATHLEEN PARKER, CNN ANCHOR: And I'm Kathleen Parker. Welcome to our program.
SPITZER: Tonight to the ink on President Barack Obama's new budget proposal is barely dry and criticism is rowing in from all sides. In just a few minutes, we'll talk to two of the smartest guys around, Dick Armey and Alan Simpson.
But first, it was the big question last week, we heard it over and over again. Could it spread? Could the rage that brought down Hosni Mubarak move into neighboring countries? The answer is you bet.
Revolution is spilling out of Egypt into the streets of Iran, Yemen, Algeria, Bahrain. Rebellion has become contagious, bringing protesters out to challenge autocratic rulers from northern Africa to the Persian Gulf.
In Iran, tens of thousands of demonstrators marched through Tehran, battling security forces and chanting death to the dictator. It was the largest rally against President Ahmadinejad since the presidential election in 2009.
Take a look at this dramatic video.
A man believed to be a member of the state militia attempts to rescue a poster of the Supreme Ayatollahs. He is quickly surrounded by angry protesters. One person was killed during the protests today.
Take a look at this angry confrontation.
Dozens more were injured. At least 40 were detained. Witnesses in Iran tonight describe the situation on the streets as very dangerous.
Next, Yemen. On the fourth straight day of protests thousands of demonstrators took to the streets. The protests became violent as pro-government groups attack young protesters beating them with sticks, broken bottles and daggers. At least 17 were injured in the fighting. Protesters are camping in the streets, vowing to stay until President Saleh steps down.
PARKER: In Bahrain, heavily armed police fired teargas and rubber bullets intro groups of protesters killing at least one, according to eye witnesses. Anti-government groups inspired by Egypt and Tunisia called today Bahrain's day of rage, even though the king has announced a $2700 payment to each family in order to calm tension.
And in Algeria, hundreds of young protesters clashed with police in the northern town of Akbou. Protests have been happening sporadically in Algeria since early January. One protester told the BBC that demonstrators were met with unreasonable force. Algeria's foreign minister announced plans to lift the country's nearly 20-year- old emergency law. Still the rage in the streets continues.
SPITZER: Now joining us from where this all started in Egypt where the situation is still very much in flux is CNN's senior international continue Nic Robertson.
Nic is in Sharm el-Sheikh where President Hosni Mubarak might now be -- nobody knows quite for sure.
Nic, first of all, tell us what is going on in Egypt today. What actions has the new military government taken to begin the process of transition?
NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: There have been more demonstrations today, ambulance workers, transport workers, bankers, even journalists have all been striking, demanding better pay, better condition.
They seem emboldened by the protests of the past couple of weeks that pushed Hosni Mubarak out of office. The Supreme Army Council that's now leading the country has issues its fifth communique and warned everyone who's been striking that these strikes essentially undermine national security, that they hurt the economy at a period when the country should be trying to recover from the last few weeks, that they should be working together to help stabilize the country.
Also warning that other people, other entities might try and exploit any unrest in Egypt for their own advantage. So what we're seeing the army do is to try and essentially appeal to Egyptians' better nature, and say look, as Egyptians, we've got to be better than this, we've got to pull together to pull the country out of the situation it's in right now.
No indication whether or not these bankers, ambulance workers, transport workers will heed these warning. But the army has got a very tough situation. Expectations have been raised, expectations that protests will bring results. The army has got to match that, at the same time not show that it's going to enforce draconian rules of some description -- Eliot.
SPITZER: Nic, it's been fascinating the tone of those communiques is almost plaintiff, begging. It's almost as though the military is saying, look, we heard you, we got rid of Mubarak, please now help us out, give us a chance.
And the question I have is, are they getting support from any of the voices of the revolution, from -- you know, Wael Ghonim, for instance. Has he weighed in to say yes, now it's time to go back to work? Has anybody who is a voice for the protesters taken up position on what should happen next?
ROBERTSON: Wael and a couple of others -- the sort of younger members of the protests, the inspiration, the sort of -- the sort of Internet side of the revolution, the guys who kind of drove that side, have met with the army in the last couple of days. And actually Wael came out and -- with another colleague, and blogged positively about the discussions with the army.
We heard the army in their communique before that say you -- essentially, you know, you the people have demanded that we move speedily to a civilian transition. We've suspended the constitution. But what we're going to do is a form a special group that will amend or suggest amendments to the constitution in the next 10 days which is pretty quick.
And then within two months there'll be a referendum on that. And then we'll move to elections. So they're really showing here and they're trying to move quickly and there does seem to be the support. But what it is, is everybody else is trying to jump in now with their own demands, their own frustrations.
And -- but there does seem to be a core of support. You have people like Mohamed ElBaradei who have been demanding the military do more. He seems to be sort of standing back a little at the moment and letting this protest happen. But I think the majority of the demonstrators do seem to be behind or giving time at least to the process the army is trying to put in place -- Eliot.
PARKER: Well, Nic, we've been hearing rumors all day about Hosni Mubarak and where he is, whether he's in the country. Whether he fell and was in a coma. There've been -- there's been lots of speculation on this side.
What do you hear and what's the attitude on the streets toward his whereabouts or his existence at this point?
ROBERTSON: I think the best guess here, and it really is a very well informed guess that has to be said here in Sharm el-Sheikh that he is here, that he is inside his former presidential complex, which is sort of in and around these hotels where we are right now.
It's fairly modest by some gulf state standards that you might find maybe in Saudi Arabia, the leaders there. But he's holed up there amidst very tight security. He hasn't been seen out on the streets. We did hear a report that when he got off his -- got off his plane coming in from Cairo, arriving here early Saturday morning, that he did trip, stumble and fall when we got off that plane.
It's been very hard to get a second source on that to confirm it. The man who told us didn't want to go on camera. So there are indications and a lot of rumors and speculation that he may be unwell. He had cancer surgery many people say last year but there's really no hard evidence that we have seen here to show that he is ill.
But at the same time, he hasn't come out to refute or his spokesman hasn't come out to refute any of these things either. So it is any -- it is anyone's guess, but the best guess, that is, he is here and he is in his presidential -- former presidential palace here.
PARKER: All right. Nic Robertson, thanks so much from Sharm el- Sheikh. We'll get back to you later in the program.
As calls for revolution ripple throughout the Middle East and northern Africa, what should America's diplomatic stance be?
Our guest tonight says the building blocks of democracy don't come in one-size-fits-all. Parag Khanna says reshaping life in the region requires a new approach to the Arab world.
SPITZER: Khanna outlines a call for mega diplomacy in his book, "How to Run the World," a very subtle small title.
Parag, welcome. Thank you for joining us. I saw the title on the book, I said, wow, it's a small topic to fight off. But I got to say you are one of the few people, and this book was written before these events -- obviously the book is now out -- who saw this coming, sort of a technologically driven welling up of opposition from people who were not otherwise organized, who are now driving diplomacy.
Explain where this takes us.
PARAG KHANNA, AUTHOR, "HOW TO RUN THE WORLD": Well, to go back to the origins, yes, people power is very important and that really was my starting point. Seeing this generation wide across the Arab world, when I have traveled with, studied with, you know, really spent a lot of time in many of these different countries across North Africa.
I have seen that groundswell of discontent and now we're seeing that manifest technology has most certainly been a very important stimulus for that and it's going to continue to be.
Where does it us now? It really shows that we have had to and failed to reach out to the different parties. We haven't had made connections to student groups, to minorities, to the Muslim Brotherhood, to secular opposition. We should have been doing it all along. Because if you want to encourage societies to democratize, you need to be friends with whomever is going to win. And you don't know who's going to win. That's what democracy is all about.
PARKER: You've said that the big lesson of Egypt is that this is the official end of our SOB policy, meaning of course that he's an SOB, but he's our SOB.
KHANNA: Yes.
PARKER: But of course these SOBs, these autocrats throughout the Middle East and other places that we have supported have been our allies in fighting the war on terror, in some cases in building alliances to protect Israel, et cetera.
So what -- how do we take that lesson and now incorporate it into this new approach, this as you call mega diplomacy as all these other countries are beginning to experience some of the same rumblings. KHANNA: It's important to remember not to put all your eggs in one basket. To have a policy that's premised on just one SOB is highly unstable to begin with, especially when they have one foot in the grave which many of them do.
So moving forward, mega diplomacy means, first of all, on the front end, we have friends across the country -- across all parts of the political spectrum. That's what -- that's what I've been advocating. Secondly it's not just about what statements we make, it's not just about what Barack Obama says or what Hillary Clinton says, where are our companies? Where are our universities? Where are our NGOs? That's very often what these people want the most in their country. It's not just the governmental side.
PARKER: So your point in talking about mega diplomacy is that state diplomacy is really not necessarily the most effective way of dealing with these countries and that we need to bring in philanthropists, NGOs, educational institutions --
KHANNA: Yes.
PARKER: -- and so on. So if you take that template and overlay it in Egypt today, what does it look like?
KHANNA: We both actually -- they both have to work in tandem. It's not either government or companies. The companies won't go in unless they have the certain kinds of risk guarantees, for example. Things that organizations, institutions like OPEC. The Overseas Private Investment Company as a U.S. government agency can provide that kind of guarantees.
SPITZER: How do you eliminate in the budget discussion --
(CROSSTALK)
KHANNA: Right. That's true. But there have be -- there are international agencies that do this as well. MIGA and the International Finance Corporation. There has to be public-private partnerships to get those resources into the country. American companies have been there, European companies are also there. We need to work together with all other allies if we are really going to get the economic development going there that's going to stabilize the country in the long run.
And by the way, one last point, the best thing about democracy in these countries is going to be there are going to be very self- absorbed. They need to sort out their own problems. We want Egypt quite frankly, very bluntly to look like Italy, not like Algeria, even if it's a mess, even if it's -- even if it's chaotic, at least it's democratic and it will be self-absorbed with their own problems not so much ranting about Israel or about the United States.
SPITZER: Well, probably more likely to look like Turkey than Italy. But we'll get to that in a second.
KHANNA: You could hope for that. Yes. SPITZER: We should hope for that as the best possible outcome. But the question I have, in your writings, which are fascinating, you kind of suggest that the notion of the nation state, the sovereignties, almost antiquated and out of date. There's a quote here, you say, "Where governments fail, great powers comes the problem of not to reinvent them."
As though necessarily the United States goes in to prop up, we can never get ahead of the curve. Is there an example in your sort of view of history where a status quo power like the United States did get ahead of the curve and understand what was going to come in the next revolution?
KHANNA: Well, you know, in that sense there really does show our lack of imagination traditionally because we do have that SOB policy. I'd like to think that we can move beyond that. It's not so much the case of where have we gotten ahead of the curve, but what societies are demonstrating a new model?
You'll notice that in your map of conflicts that are going on in places they're erupting, Saudi Arabia, the UAE, Qatar, they're relatively quiet. Yes, they're monarchies and emirates that really have a talked-down policy. And yet they use a lot of public-private partnerships in their governance. You've got a huge role for companies, state owned or otherwise, that are creating jobs, they are investing in society and so forth.
So they're relatively acquiescent by companies and they're going to stay that way. That's the model we need to advance. A new kind of hybrid governance that involves at the top level a strategic role for the private sector that's really going to get those companies -- countries going.
PARKER: Well, as you know, President Obama has been criticized for how he handled Egypt. So the question now, as we look at these countries, especially with Iran.
KHANNA: Yes.
PARKER: What should he do? What should be his stance? Does he support the protesters? Does he stand back? Hands off? What's the best?
KHANNA: When it comes to Iran as we know from 2009, there's a kiss of death problem. You can't be seen to be overtly publicly supporting the Iranian protesters or at least having a connection between those protesters and our governmental resources because that then damns them in the eyes of the government and so forth.
So that's problematic. But that said, there are many covert way to continue supporting them. There's something very fascinating, how many times here at CNN have people sat around and said, there's a sea of crescents spreading its influence into the Arab world. Now we're seeing a little bit of that being kicked back in the other direction.
And the Shia protesters in Bahrain which you highlighted which constitute the majority of the population, they have said explicitly, this is not a Sunni versus Shia thing. They are oppressed in the sense that they don't have access to housing and jobs and so forth. This is a very secular thing. You don't need religion to explain this.
And so President Obama should be emphasizing aspects of dignity, of jobs, the basic welfare elements that good governance means that regimes provide to their people. Emphasize that. Emphasize good governance. Don't talk so much about what kind of democracy should look like, or when or what timeline.
Emphasize these metrics of good governance such as rule of law, accountable government, public service delivery. These are things that all of these societies are going to need and we can measure based upon whether or not -- to turn whether or not they're going to stay stable.
SPITZER: You know your observation, and I certainly hope it is correct, that this is a domestically driven organic rising up where people are being driven by economics, not Islam, economics not any religion, should make it easier for us to relate as a nation. The United States should connect with the protesters because we can in fact provide a role model and some semblance of a theory for how to develop.
An Islamic revolution would have been more difficult, of course. So doesn't this mean we should jump that much more quickly to relate to and deal with the protesters and embrace them and say yes, we understand?
KHANNA: Absolutely. We should. And we should not be afraid of the fact that one of those major movements or parties is the Muslim Brotherhood. Not to mention that also we should encourage the formation of new parties. In Saudi Arabia, which just announced that a group of prominent businessmen actually is going to launch their own political party. The proliferation of political parties.
Again, the Italianization in a way. It's not necessarily that bad a thing because then all of them are going to have to compete in the realm of ideas. No one of them is necessarily going to dominate. We certainly don't want there to be an Iranian-style scenario where one theocratic element hijacks the entire state. But we know quite well that in Egypt that's not going to happen.
SPITZER: All right.
KHANNA: Yes.
SPITZER: The hope of secular revolution still lives and let's see what happens.
KHANNA: It does.
SPITZER: All right. Parag Khanna, thanks so much for being with us. Up next, the state of Wyoming is famous for Yellowstone Park, Buffalo Bill and former Senator Alan Simpson. No one knows more about America's budget. He's the real deal and he's with us when we come back.
(COMMERCIAL BREAK)
SPITZER: Nobody has a sharper mind or a sharper tongue when it comes to budget matters than the former senator from Wyoming Alan Simpson. Senator Simpson co-chaired the president's bipartisan Commission on Debt Reduction. He's the only guy that who look you in the eye and tell you the truth about just how bad the situation is and what we have to do about it.
PARKER: Senator Alan Simpson joins us now from his home, actually his den in Cody, Wyoming.
Welcome, Senator.
ALAN SIMPSON, DEBT COMMISSION CHAIRMAN: How are you? It's a beautiful 50-degree day out here in the wilds of Cody, Wyoming.
PARKER: Excellent. Well --
SIMPSON: What do you think of that?
PARKER: Well, wish we were there. And I'm just happy to have somebody who will speak the truth. So let me ask you --
SIMPSON: Well, anything.
PARKER: OK. Well, we have this $3.7 trillion budget proposal which includes almost nothing that you recommended in the debt commission. So are you surprised?
SIMPSON: No, not really. It's all incremental stuff. It's jumping over the cliff stuff, but I'll tell you, it ain't going away. This is a stink bomb in the garden party and it's going -- it's never going to go away. And for the first time in my memory, nobody's talking about how terrible to do a cut. It's how much do you cut? That's progress in itself.
SPITZER: But what you did was take on the big areas, what you call the big four, you know, Medicare, Medicaid, Social Security and defense. If you're not talking about them you're wasting time and everything we're hearing from the White House and the Republicans is so-called non-defense discretionary, which is only about so they're walking around in the part that doesn't really matter so much.
SIMPSON: The real zipper is coming when the debt limit extension comes up. Now that's going to come up sometime April and May. And at that point about 40 or 50 of these guys, many of the new ones, are going to say, I'm not voting to extend the debt limit.
Then they're going to say well, then the full faith and credit of the United States will be in peril. We might even have to shut the government. And about 40 or 50 of them are going to say, that's why I came here. The interest rates are going to go up and the bond market goes to hell. And the people who get hurt the worst, the little people that everybody always talks about are the ones that are going to get hammered flat.
PARKER: Well, you know, back to John Boehner again, he has said that the newcomers, the Tea Partiers have to understand that you have to raise the debt limit. Is this a game of chicken and do you think something good will come out of it? I mean will we eventually get those spending cuts that we desperately need?
SIMPSON: You're going to get them. And Boehner is a leader. He knows he's got some real problems. He's got 40 guys probably lined up in every caucus and just trying to throw dinner rolls at his head. You know? What are you doing? You got to do more, you got to triple this, you got to do quadruple this. But we'll see how much guts they have if they step up if they suddenly they get hammered by the AARP and everybody else.
SPITZER: Even if the Republican got it, the Republican Party got its $100 billion cut in this year's non-defense discretionary spending. That would be only 6 percent of the depths that we've got this year. The reality is what your -- what your report did, raising the retirement age by 2050 a year or two is not going to hurt people who can't plan for it. And something we've got to do.
SIMPSON: Well, I think if you separate and take Social Security and say you're doing that for a single purpose and that's to restore solvency in Social Security, we're not trying to balance the budget on the backs of poor old Social Security people. But if you can't get people who are average age to 77 now, if you can't get people to understand you want to raise the retirement age to 68 by the year 2050 and they can't plan for that?
SPITZER: What you did on defense is also a lot more audacious that what they have proposed and I've got to compliment you for doing what needs to be done on that one.
SIMPSON: Well, we couldn't even find out how many contracts they have. I mean this discretionary budget, 2/3 of is it defense. So we just said get rid of the 250,000 of contractors, do something with these weapons systems that don't work, watch out for procurement and we're not hurting the war efforts.
PARKER: Yes, Ron Paul, who as you know won the CPAC straw poll this past weekend for the second time in a row, he was talking about our discussion about defense cuts as an issue of semantics. That we need to stop talking about cutting defense, that he in fact wants more defense. We need to be stronger always, but that we need to cut our militarism.
Do you think he's right? Do we have a semantics issue here?
SIMPSON: You hate to say this because it's not politically correct, but I thought political correctness was like wearing duct tape over your mouth anyway. But the real -- the real issue, the real issue is that we can't be the policemen of the world. We cannot. And to pretend we are. And we can't run wars with no taxes.
We've never had a war in our history, including the revolution, where we didn't have a tax to support it. Now we're fighting two wars with no tax to support it. It's unheard of. It's impossible. It's unsustainable.
SPITZER: And so you put tax increases in your proposal. Again, I want to come back to the current climate. Who's going to take the first step, because what I see is cowardice on both sides of the aisle right now? Who's going to take the first step and say we got do this and do it in a sincere way?
SIMPSON: They'll do it in a way that which will be unseen by the American public. And the American public will say, what are they doing? But it's the only way to get anything done. You get them in a room. Crack knuckles, curse at each other and say now boys and girls, we're stuck. And that time will come and it will come in the next -- in the next few months. And no one will know who caved first.
PARKER: And who is the chief knuckle breaker?
SIMPSON: Well, the president. That's who's got to be the chief knuckle breaker.
SPITZER: Senator, I don't think people realized when the extension of the Bush tax cuts was enacted last December, the total revenue lost there over a decade was about 3.9 trillion, which matches almost identically what your entire proposal saves over a decade, which is about $3.885 trillion, if I'm correct.
And so, I mean here we were in December saying let's give all the money away and now two months later we're struggling to save it. There just seems to be a schizophrenia there and I don't think people in the public realizes how duplicitous this all has been.
SIMPSON: I never agreed with the first tax cuts. The American people are the least taxed right now since the Korean War. It's 15 percent of the GDP. In our recommendation, let's not -- let revenue ever get over 21 percent, hell, it's 15 now. We're the lowest taxed at this point since Korea in the '50s.
SPITZER: I want to come to health care for a minute because you guys on your report did something terribly important which is to say long-term we've got to change the way we pay doctors and basically move away from a fee-for-service system to a process of capitation (ph), whatever you call it. Pay people for keeping people healthy, not for every time they give you a Band-Aid. And that was so important.
Do you think that could become a reality over the next 10, 15 years?
SIMPSON: I don't know. And I'll tell you the worst thing -- we couldn't even wrap our arms around health care. It's a monster. At some point in time, you know what you do? You know what you have to do? You have to cut compensation to doctors, at least that comes out of the feds.
You have to make affluent people and other people make a co-pay that gets up to some kind of common sense and you have to tell hospitals to keep one set of books instead of two or three, and you have to watch the gimmickry of Medicaid back to the states because that's where it is.
SPITZER: You also on the other hand did something that is also important, and I -- as somebody who used to be partisan Democrat who'd say this, tort reform. Tort reform is equally important and that's on the other side of the equation. Doctors want to hear that, they don't want to hear some of the other stuff you said.
You put it all together, it begins to make sense and everybody can say yes, that's fair. And that has been unfortunately absent from proposals on the Democrat side.
SIMPSON: The American people in this situation are smarter than their politicians. They know what you have to do. They know. They're ready for this because they have children and grandchildren they love.
PARKER: All right. Senator Alan Simpson, thanks so much for a frank and honest conversation. Take care of yourself.
SIMPSON: Yes. Thank you.
SPITZER: When we return, the man who predicted the economic crisis has a new warning, this time for the president. You blew it. Starring Neil Ferguson. When we come back.
(COMMERCIAL BREAK)
SPITZER: In a world of economic and foreign policy, Niall Ferguson is one of the precious few experts who everyone wants to listen to. Ferguson is a Harvard professor, a "Newsweek" columnist. His cover story this week makes a bold statement, and I quote, "Obama Blew It." Earlier I asked Ferguson why and how the president blew it in Egypt.
(BEGIN VIDEOTAPE)
NIALL FERGUSON, "NEWSWEEK" COLUMNIST: Well, there was an extraordinary period of flipping and flopping which I think managed to alienate practically everybody concerned in this process -- the old guard, the military in Egypt, the young people in the streets, not to mention America's other allies in the region, Saudi Arabia, and importantly Israel, where I was last week.
And I have to say the mood there at the Herzlyia security conference was extremely negative. There was a strong feeling that the United States had no clue as to what was happening, what its policy was, and I think more importantly what its grand strategy is. And my main point is that there really doesn't seem to be a strategy right now Washington, D.C. for the Middle East. SPITZER: Well, Niall, I want to quote back to you. Really some brilliant foreign policy analyst I like to refer to a lot, Monty Python, who said nobody expects the Spanish inquisition. Did anybody get this right? Even the Israelis, and you were with them in Herzliya, they didn't see this coming, so did anybody see this coming?
FERGUSON: Well, that's not the case. I mean, if you take analysts like Schmul Berg (ph), whose scenario-building exercise last hearing included a scenario in which Mubarak was overthrown by a popular uprising. No, this is something that is far from unimaginable and indeed the really unimaginable thing was that Mubarak was going to stay in power for much longer given his age, his illness, and the obvious unpopularity of the idea that his son Gamal was going to simply take over.
What I find astonishing, really shocking is that the entire apparatus of the National Security Council and the State Department does not seem to have given any thought to this scenario until it happened. Now that is extraordinary. That is what these people are paid to do, to build scenarios, to have contingency plans, instead of which the president was left to have to make it up on the spot in a completely ad hoc way. And it showed.
Right now, there are two foreign policies in the United States. As the president and I think there is Secretary of State Clinton. The Secretary of State's policy was far more cautious and far more inclined to give Mubarak more time. Indeed just three days after Robert Gibbs said that now meant yesterday for Mubarak, three days later Frank Wisner was saying no, Mubarak had to be part of any process in Egypt. I mean, this just looked like complete shambles if you were in the Middle East at the time. And I must say I'm startled at what a smooth ride the president has been getting and indeed Secretary Clinton has been getting from the American press.
SPITZER: Yes, but let me play devil's advocated for just a moment. In the course of 2 1/2 weeks, you went from stability which before this began in Cairo and on the day of the first rites was a fair description of where things were at least to the world at large, to a complete revolution 18 days later. And so you had to navigate through that remarkable spectrum switch very, very quickly. So inevitably you had to calibrate and dance just a little bit. With all that, you know, quick decision making, was it really as dismal as you said? I mean, things look pretty good right now. We have a good relationship with the incumbent military forces. A good relationship it seems with the forces of the revolution. So how much damage has been done?
FERGUSON: Well, I think a good deal. As I mentioned already, America's allies in the region want to walk the planets. And remember, this isn't over. People are talking in the United States as if somehow it all happily ended. This is just the beginning.
Revolutions unfold over periods of months and even years and most revolutions do not end with a happy, clappy liberal democracy. It's much more likely that there will be increased radicalism. The most organized opposition force is the Muslim Brotherhood, which incredibly the director of National Intelligence described as a secular movement before he hastily corrected himself. The Muslim Brotherhood is likely to make gains as the chaos increases. The economic situation in Egypt is a total mess. The risks are very great.
SPITZER: Look, Professor, I'm with you in much of your critique, but I disagree with you when you say it's likely, in fact, more than that perhaps that the Muslim Brotherhood emerges as the most powerful force. Why do you jump to the conclusion that the Muslim Brotherhood will emerge as the centerpiece of power in Egypt?
FERGUSON: Because I'm a historian and I know what happens in revolutions. The Bolsheviks were not the dominant force in Russian politics in February of 1917, and the Jacobins were not the dominant force in French politics in 1789 but the radicals have a tendency to get the upper hand in revolutionary process and there are very good reasons for that.
First of all, revolutionary upheavals tend to dislocate economies and very quickly the people at the lower end of the social scale are even worse off than they were before. Food prices were already a problem. They're going to be a bigger problem. Strikes are going to be a bigger problem. I predict real difficulties for the Egyptian economy going ahead. And that is going to radicalize the situation. The other thing that always happens is that as the election date approaches, and remember, right now we've got six months of military rule, which is hardly a victory for the revolution. That is going to create an opportunity for radicals to bid for support in the street by saying, look, there are enemies at home and there are enemies abroad and the classic revolutionary path image that you displace the revolutionary energy from the street into some kind of foreign conflict.
Now Israel is right next door as the obvious target and, of course, the Muslim Brotherhood has been playing that card for many years. Don't underestimate the radicals in these situations. That is the mistake that America made in 1979. People in the western media initially thought it was great news that the shah of Iran had gone. It took them a while to realize that the main beneficiaries of this would not be secular Democrats, but radical Islamists. This would happen again.
SPITZER: Professor, again, so much of what you said is both fascinating and correct I think. But on the other hand as a historian, you know, history rarely repeats itself as somebody once wise. And I think while you can point to the Russian, the French revolutions, the reality is that Egyptian society is very different than what we faced in Iran and those were closest to us say this is going to be a much more secular revolt than what we have seen and the military continues as you just pointed out to be the most powerful force. And so their desire for stability and their fear, their fear of the Muslim Brotherhood almost ensures that what emerges here will be something other than the Muslim Brotherhood. I mean, how do you address that argument?
FERGUSON: I agree with that. In other words, if I rank the probable outcomes, the number one most likely outcome is what I'd call the 1848 outcome when the forces of order, in this case the military, ultimately prevailed. It's hard to keep the momentum going in Tahrir Square with the crowds. Gradually that is going to ebb away. And I think the most likely scenario is actually the restoration of the status quo with a new strong man in charge.
The second I think most likely outcome is that in the elections the Muslim Brotherhood does well and becomes part of the government and gradually begins to shift Egypt in the direction of a Sharia regime. The least likely, rather that the least likely of the three scenarios, is that we get something like we got in Europe, in Eastern Europe in 1989 where a secular liberal democracy prevails. And the reason I think that is not guess work. It's just that the foundations for a liberal democracy do not exist in Egypt today. There is very little in the way of what we would call civil society. There is not the secular organized parties and civil rights movements that existed in countries like Poland and Czechoslovakia. The only organized opposition as I say is the Muslim Brotherhood. And that's the big problem.
Look also at the social structure. This is a poor country. There are low standards of education. It is not Eastern Europe 1989 as many people seem to assume.
SPITZER: All right. Professor, thank you for joining us. Everybody should read your cover story in "Newsweek." It is fascinating.
FERGUSON: Thank you.
(END VIDEOTAPE)
SPITZER: When we return, one of the founding fathers of the Tea Party says President Obama's budget doesn't sound like savings at all.
(COMMERCIAL BREAK)
SPITZER: It's impossible for a budget to please everyone, but the budget proposed today by President Obama seems not to be pleasing anyone. This should make our next guest very happy, but does it? Dick Armey helped spearhead the Tea Party movement. His battle cry is for government to get small.
Welcome, Dick. Great for you to come back and join us.
DICK ARMEY, FMR. HOUSE MAJORITY LEADER: Thank you.
PARKER: Welcome back.
ARMEY: Thank you.
PARKER: A friend of the show, are you happy? Did this make you happy? Is this the budget you've been dreaming about?
ARMEY: What?
PARKER: This budget of President Obama's? ARMEY: No. No, you know, as -- you know, I've observed for a long time the biggest problem with the president he just doesn't get it. And what's kind of distressing us and an awful lot of grassroots activists across the country and has for a long time is the haunting fear that frankly may be nobody in either party gets it.
PARKER: Well, apparently not because nobody will talk about the big cuts that have to be made.
ARMEY: Right.
PARKER: The spending cuts, entitlements, defense.
ARMEY: Right.
PARKER: All this. And so what does that say to you that President Obama didn't even mention cutting entitlements in this budget?
ARMEY: Well, first of all, I think -- let me take you back to the defining phrase of this grassroots revolution we've just seen bring to maturity and we in representation in the Congress of the United States. The defining phrase is constitutionally limited government.
Now basically what they're saying, what we hear in -- we have many government programs, some of which ought to be trimmed back and some of which ought not to be trimmed back and some that are social security, we won't even talk about them. What the grassroots activist is saying, we need you to examine the constitution of the United States, look at the legitimate history of the United States government at work with the private sector, discern what in fact has been productive for the overall community and what has not and then begin the process of returning the government to its excellent job of performance and its legitimate and necessary duties and a restraint to stay out of things that are none of its damned business.
SPITZER: Can I ask you a question though, because first of all, I just got a, you know, footnote here describing the Tea Party as mature. I'm not sure I'd go with that one, but that's a separate issue.
ARMEY: The average age --
SPITZER: I'm not talking about age. I'm talking about it measuring it another way.
Here's the thing that bothers me. You've been on the show a lot. It's always good fun. Time and time again, you said wait until we win, we're going to come out with a budget. We the Republican side that shows you we are serious about it. Put aside my personal views on this, now your side is only talking at most about $100 billion which is six percent of this year's deficit.
ARMEY: No. SPITZER: Doesn't go anywhere near -- let me finish -- doesn't go anywhere near the entitlements, doesn't go near defense. I'm going to be bipartisan in my criticism here, I'm not seeing from your side of the aisle the integrity that you said we would see if you guys won.
ARMEY: No. Actually what the Republicans in the House are now saying primarily in response to the requirement that they make some kind of peace with their new members, is $106 billion reduction in the continuing resolution for the last, let's see, what is it?
SPITZER: It's $100 billion for the fiscal year.
ARMEY: Seven months of this year.
SPITZER: That's six percent -- six percent of the deficit.
ARMEY: But that's just for the continuing resolution. You also have Jeb Hensarling working on serious budget reform. You also have many, many members of Congress making a point very clear when it comes to that moment when indeed you feel like it is imperative that we raise the debt limit. Be prepared to show how serious budget reforms for the future and reforms that include the elimination of not only major programs but even full agencies of the government.
SPITZER: Look, I have here what was in the continuing resolution that was passed by the House Budget Committee. Paul Ryan, everybody acknowledges, extraordinarily smart, he is your budget whiz. None of it goes to what is the serious dollars. It all comes out of the nondefense discretionary budget which is only 12 percent of our total budget. So what I'm saying here is when will your side, and I'm quoting our side to the fire as well, stand up on social security, Medicaid, Medicare and defense with serious change in the trajectory of the budget?
ARMEY: I think they will do that. If it's going to happen, if will come out of the energy of the newly elected Republicans. But quite frankly there is so much work that has to be done, start with rolling back the new commitments that can't be fulfilled, which we did with the vote on Obamacare. But the fact of the matter is, on social security, just let it be voluntary on Medicare. I'll give you one, Eliot.
SPITZER: All right. OK.
ARMEY: A simple little thing.
SPITZER: It's not going to work, but that's --
ARMEY: Why can't the United States government allow Dick Armey, a 71-year-old fellow --
SPITZER: Right.
ARMEY: -- who makes a darn good living --
SPITZER: Right. ARMEY: -- opt out of Medicare without being punished? Just let Medicare be voluntary. I promise you there are a lot of wealthy old geezers and their wives in America --
PARKER: I don't think there are enough.
ARMEY: -- that would say to the federal government don't let us be a burden to you, we'll take care of our own health care. But this government is so devoted to the requirement that we be submitted to their dictatorship of our health care that they can't even let rich people out of Medicare. It's goofy.
SPITZER: You know what? Mitt Romney is going to answer that question for you because he, the conservative Republican understood the necessity of the individual mandate and why health insurance care won't work without it. Mitt Romney got that. We have embraced a very conservative concept when it comes to that. But anyway --
PARKER: Eric Cantor, the House majority leader, said today that they will be wading into the entitlements when the House Republicans put out their budget in the spring. But then Paul Ryan backed off of that a little bit and said, well, first we have to have a family conversation to decide where to go with these things.
I don't understand what they're talking about in the conversation because the Tea Party movement grew out of this understanding that we've got to have this.
ARMEY: I understand the Republican Party in the eyes of most grassroots activists including myself, fell into disrepute. I mean, they became careless, reckless and so forth and self-indulgent and shortsighted. They're frankly almost as bad as the Democrats. I mean, it was quite frightening because this movement is a movement that was born out of despair on both sides of the aisle. And to a large extent this movement was devoted to the proposition that if you wanted to ever once again get to constitutional limited government, you had to rehabilitate the Republican Party.
Now the rehabilitation of the Republican Party in office is just beginning and even people that within the context of the standards one might hold for the Republican Party in office, relative to their past performance of the last five, six, seven, eight years, Paul Ryan is a hero. Today, he's taking baby steps but we'll bring him along.
PARKER: All right. Coming up, Dick Armey. Thanks so much for joining us. I hate to interrupt but we have to go.
SPITZER: Coming up, Hosni Mubarak has left the stage, but the drama is far from over. We'll take a look behind the scenes at the final hours in the presidential palace. Stay with us.
(COMMERCIAL BREAK)
PARKER: Hosni Mubarak resigned on Friday, but Egypt's former president remains the central figure in a national drama. What were those last days in the palace like? Why didn't he resign on Thursday when everyone thought he would? And what made him abruptly leave office the next day like an actor exiting the stage in the dark?
SPITZER: This much we know. On Thursday still clinging to power, Mubarak was under tremendous pressure to resign. The Obama administration was sure he would step down. The crowds in Tahrir Square were ready to celebrate, but Mubarak's son, Gamal, had other ideas. According to Reuters, Gamal, Mubarak's heir apparent, convinced his father to fight on. Even rewrote his father's speech. We all know what happened next. Mubarak looked into the camera, refused to resign, catching our government by surprise and enraging the crowds in the street.
PARKER: There are reports that Mubarak's other son, Allah, got into an argument backstage with Gamal. Witnesses say that Allah blamed Gamal for years of corruption and cronyism that brought down their father's regime. There are even reports that senior officials had to separate the battling brothers.
The military had had enough. They allowed the protesters to gather outside the presidential palace. And by Friday morning, the man who ruled Egypt for 30 years had given up the fight and fled the city.
SPITZER: Some say he's gone to the seaside resort of Sharm el- Sheikh. Some say he's gravely ill. Still others say he's planning to go to Germany to a clinic in Heidelberg. And then, there's the money. The Swiss government announced that it would freeze any assets held by the Mubaraks. Is it $4 billion or $40 billion? Or did the Mubaraks manage to move it and there's nothing left for the Swiss to freeze. The drama continues with more questions than answers.
PARKER: We'll be right back.
(COMMERCIAL BREAK)
PARKER: Former Egyptian President Hosni Mubarak is believed to be hiding in the Egyptian coastal city of Sharm el-Sheikh. Nic Robertson is there and went looking for him.
Nic, what's the latest about Mubarak's whereabouts?
NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, he's still believed to be in the palace complex, three palaces by the side of a sort of large swimming pool right next to the beach, sort of nestled in between a lot of hotel complexes that run along the coastline here for about 12 or 15 miles. He spends a lot of time here. The city has seen him come and go on many occasions before. But right now, all they know is that he arrived in the airport in the middle of night, went to that compound and hasn't come out since. If he comes out, everyone here says he would travel around in a large motorcade and it will be really obvious in particular right now because there are so few tourists here. Most fled fearing the violence in the rest of the country. So he would be very obvious if he took to the streets. So pretty much everyone believes that he's holed up in that villa complex not far from here -- Kathleen.
SPITZER: Nic, here's the question. Is anybody in that city, or anybody in the resort going to protest if they found out he's there? I mean, is he a popular figure there if he brings money and he's helped to build it up as a resort? What was the mood about having him there?
ROBERTSON: You know, I've got to say this place seems to have completely avoided the disturbances in the rest of the country. When you drive down here across the Sinai desert, you see on some of the road signs, go Mubarak, the slogans that were painted over the past couple of weeks. As we got closer, you see more goats and sheep at the army and the police checkpoints than you actually do servicemen patrolling them. It is a relaxed place. The security here has really been designed to keep the tourists safe from the possibility of Al Qaeda attacks. You see here, still big pictures of Hosni Mubarak at the roadside hanging from street lampposts.
In other parts of the country, people tore those down. Here his face and images still around the place. Most people here are getting a decent life out of tourism and haven't really been sort of following the national anger. They want the tourists to come back. They want to keep this place clean and sort of well respected if you like, in the international image, so they don't lose the tourist, don't lose the tourist dollars. They say they're losing $20 million to $30 million a day here in lost hotel room, 2,000 hotel rooms.
SPITZER: All right, Nic. Thank you so much for that update. Hope you get some time in the beach. You deserve it.
That's it for us. Good night from New York.
PARKER: "PIERS MORGAN TONIGHT" starts right now.
