i'm candy crowlein washington. you can find today's interviews as well as analysis, web exclusiveives, and much more at our website, cnn.com/sotu. up next for our viewers here in the united states fareed zakaria "gps." >> this is "gps, the global public square." welcome to all of you around the world. i'm far evening zakaria. we have a great show for you today. we start with one of the wise men of american foreign policy. i'll ask him about iran, about syria, but we will also look at the bigger picture. just what is america's foreign policy today and how is president obama doing? later in the show the economy, budget, tax plans. we will talk with robert reich, david stockman, and others. also, we'll tell you who is behind the new anti-americanism in egypt. you'll be surprised.

finally, if you thought american debt was worthless, think again. i'll explain. first, here is my take. the american economy seems to have picked up. the dow jones industrial average is hovering around 13,000. the highest since the financial crisis began in may 2008. things do seem to be getting better. this is good news for president obama because there's a strong co-correlation between economic growth and a president's prospects for re-election. the unemployment numbers are still pretty high, but they are also falling. also, many models issing that unemployment is not the crucial statistic to determine whether a president will win re-election. most people after all are employed. it is the rise in per capita

gdp. the average person's income rise that determines whether they feel things are getting better and, thus, whether they will vote for the incumbent or seek a change. so does that mean that the economy and the president are in good shape? well, they're in better shape than they looked six months ago. many of the crisises that people worried about now seem unlikely to completely derail american growth. mario and the european central bank have insured that there will not be a total european financial collapse. there might be a recession in europe, but that will have a smaller affect on american growth. derek thompson of the atlantic points out one worrying prospect that the next debt ceiling renewal might actually have to take place before the elections, in which case expect another absurd and politicized drama since all the republican candidates have already noubsed that they will not raise it. let's hope that this is an unlikely scenario. what's more plausible is a slowdown due to high oil prices. oil has been creeping up now for months. it is up to $105 a barrel and

over $3.50 at the pump. why prices have moved so much so fast is something of a mystery. oil was at around $50 a barrel in early 2007 when all major economies were booming. today demand from america, china, india, europe are all somewhat weaker and yet prices are sky-high. the one obvious factor, of course, is the political instability in the middle east. worries about iran are probably the principle driver of these prices and the speculation surrounding it. ironically, president obama's foreign policy is having an impact economically that is not advantageous to him or the american economy. now, there isn't an easy economic path to lowering oil prices. drilling more, raising efficiency, none of this will have much impact in the short run. for now, as so often in the past, the geopolitics of the middle east, america, israel, iran, is the crucial driver of the fate of the american economy

and possibly the fate of this presidency. let's get started. long before he was national security advisor for president jimmy carter, he was a professor, a thinker, a theoryist. with his new book, strategic vision, america and the crisis of global power, he puts his professor cap on again taking a hard look at america's stand and offering up strategic solutions on how to approach this brave new world. welcome. >> fareed, it's good to be with you. >> okay. >> we'll get to the big picture in a moment, but, since i have you, i cannot but ask you, what do you their is going to happen with this crisis with iran. you have israel on the one hand threatening to act. you have the united states,

which has been putting a great deal of pressure on iran, but now trying to dial back a little bit of the rhetoric. what do you think? where is this going to end up? >> i think all of it depends on how clear-headed and expressive the united states is. if we drift, if we fuss, the words over, if we are ambiguous, it could end up very, very badly. if the united states is clear cut, it makes it very clear to the iranian that is they're not going to be a part of the global economy. if they persist in violating. but if at the same time we don't offer them only the choice of capitulation or strangulation, it would force them to lash out, and if we at the same time make it clear that if we continue with their investigations and research and perhaps in weapons development, we will, in any case, girn tee the security of the middle east, including that of israel the way we have done

it for japan and south korea. very effectively over the years. >> and we did it for europe. again. we can do it here too. we don't need to go to war. we have to make that very clear to our israeli friends. we're not going to go to war. they're not going to go to war by flying over our airspace over iraq. we're not going to support them. if they do it, they'll be on their own. the consequences will be theirs because the price will all pay if they start a massive war, which the iranians interpret as being done and it would be disastrous for us in afghanistan, in iraq, in terms of oil, stability in the middle east more generally. >> there is an interesting window here. the israelis talk about a window, which is closing in terms of the iran technical capacity, but the real window, i wonder, about is the israeli surely know that if they are going to attack, the best time

to attack is before -- >> it would be difficult for the president to oppose them. >> absolutely. absolutely right. my sense is right now they're essentially pushing to force us to give the iranians terms of a compromise solution, but formulated in such a way that they cannot accept it. >> the iranians cannot accept it brsh. >> yeah. prior to the electrics they'll be tempted to stripe, and that's why when the president talks on march 5th might take into account the fact that, first of all, he was humiliated the last time netanyahu was around, and the president was the united states shouldn't be so humiliated and that he represents the american national interest and has to speak unambiguously as to what it is. >> if you were advising president obama, what would you tell him to say to netanyahu? >> what i said a few seconds ago. namely, this is not compatible with our bz. this will be damaging to us. >> we would oppose it if -- >> the iranians will blame us

for it. they'll take action against us. we'll be paying the price. this is not acceptable, and we want you to know that. in different ways presidents eisenhower, carter, and bush i did that on other occasions. and israelis are realists. most israelis, we also have to remember -- most israelis don't support a war. much of the establishment of the military is against it. the american jewish imunit in the majority is not for it. it's just the top echelons, so when the president speaks, he speaks with some degree of political credibility. not only here, but also among the israelis. >> well, i had martin dempsey on the program last week, and he said when talking about syria, he said very different from libya really doesn't make sense at this point for the united states to arm the rebels. would you agree with that? >> well, it's not a question of whether i agree with that, but

my approach would be somewhat differently shaped or defined than the one we're pursuing right now. i would beg the position that we will support anything that the turks and the saudis jointly controoifd because they're our friends in the region. they're responsible. they're very interested, and they have the capacity to play a decisive role. we can then back them if they do it, but i certainly wouldn't do it out front. >> isn't what's happening in syria, though, a kind of proxy cold war with the iranian supporting the regime and the saudis increasingly supporting the opposition. >> yes, it's even more complicated because they have a sudden interest, and they certainly don't have an interest in the strong united syria again reemerging. although that's rather unlikely these days in view of what has happened. we shouldn't be careless in any comparisons between assad and gadhafi.

gadhafi was far more vulnerable than assad is. i think it's far from clear that assad can, in fact, be overthrown at this stage. >> really? you think that at the end of the day they're being -- the syrian government has been pretty brutal, and how will that brutality work? >> well, unfortunately, you know, brutality very often in history and throughout the world works, but i would be very much guided by the turbs and the saudis. the turks have a regional role to play. they're assuming that role. they have intelligent leadership. they have been trying. i think we should back them, but the choice of how to act and particularly if one is to be engaged in some fashion militarily, i think it has to be make first by them and also the saudis and not first by us. >> egypt, what would you do about an egyptian government still essentially a military government that is trying americans? would you cut aid to egypt? >> well, if we're going to start

cutting aid to governments that don't do our bidding, then we better be fair and across the board. we're a little too selective on that. i would think something along those lines that without excess. we have a fundamental stake in egyptian stability and egyptian-israeli peace, and we have been to be careful not to overdo our negative reactions in a fashion that there is a backfire adversely affecting our other interests. >> we have lots for to talk about when we come back. we'll ask him how president obama is doing in foreign policy overall and what his long-term strategy for the united states will be in this new world. >> i mean, look at those republican debates. i must say i am literally -- i literally feel embarrassed as an american when i see those people or ate. i tried weight loss pl. but their shakes aren't always made for people with diabetes. that's why there's new glucerna hunger smart shakes.

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national security advisor. you supported president obama. in some ways somewhat surprising because you have been traditionally seen as a sort of hawkish democrat, but -- you were quite enthusiastic about him. in the book i would say you give him a kind of micked grade. would that be fair? >> it's fair, but i don't really discuss his foreign policy too much in the book. i tried to look beyond the immediate, and i asked myself given the crisis in america, given the shift in the center of global power gravity from the west to the east, given the new reality of global political awakening, how should the united states perform on the world scene and how it has to overcome its domestic problems in order to be effective internally? in that context, i commented about it somewhat, but not explicitly. my view, however, is the following. one, he really understands the world better than any other politician.

i wouldn't even waste time comparing to what we hear from the republican candidates for presidency because that's so unrealistic and so primitive, it's embarrassing. the question i have is whether he understands the world well has enough of an inner self-confidence and essential historical conviction to use american power in a decisively effective fashion, which doesn't mean necessarily militarily, but which means with strategic wisdom and commitment. and, unfortunately, for example, in the middle east that these days is widely questioned. >> how do you do it differently? >> first of all, i would have pursued the iranian, israeli, palestinian peace process. >> he tried. >> no, not really. he talked about it. when push came to shove, he didn't try. he backed off. you know, i have been involved for 30 years. the fundamental lesson to me is

this. the palestinians are too weak and to divided to make concessions first. the israelis are too strong and to self-confident to make concessions first without something like the united states playing the role of assertive arbitor. there will never be peace. there is no peace knot short run. the palestinians will pay a high price. in the long run the israelis will be threatened and in between our interest would suffer. >> talking about this issue of political awakening that you have described in the book, and you have done it in a previous one because i think this is a really crucial part of this new world we're going into. >> absolutely. >> everywhere you see the stories that countries are more assertive, people are more assertive -- >> you are absolutely right. i think this is the new phenomenon of our time. for the first time in all of humanity, politically, conscious, and active, and staring unrestless and resentful. that's a new reality.

that means that domination by simple power worldwide is probably not impossible. >> so when you read mitt romney and his advisors saying, you know, america is number one, this is an american century, we should just assert our power. >> well, the last republican president said that god chose america and history commissioned america to be playing this kind of a role. that kind of rhetoric is just divorced from realities to the point of absurdity. actually to the point of danger for us. i think we have to pursue policies which you build larger coalitions and manage relationships with greater skill. i think we pursue patiently and persistly larger atlantic-european community which embraces turkey, which embraces russia, if it democratizes, and in the far east we play the role of great britain and the role that great britain played. we balance.

we maneuver. we don't get tied up in alliances. we don't get involved in wars. we tried to reconcile china with japan. we tried to mediate india and china. we pursue a stable partnership with china. that's a very complicated role that requires skill. >> now, i don't know if you are aware, but the chinese foreign minister has written a memo which really takes -- which attacks your foreign affairs article from which is based on this book. it's the chinese view what you are describing, this greater west as an instrument for the containment of china. >> that's wrong. that's a misinterpretation. i'm surprised sde it, because actually i know him well, and that's a misconsinges. balance is not the same thing as a coalition against. i think we do need a stronger west. otherwise, the values that the west represents will be dissipated. i think it's important for those values to be preserved and

increasingly the rest of the world be encouraged to emulate and to some extent. that is a very constructive role for the west to play. the west that is divided into a weak europe and they were oriented and divided america and a hostile and stagnating russia is a world that will be very unstable because of the rate of asia and the uncertainties among asian powers. we need a vital west and strong america in that context to be a partner and mediator towards the east. >> you say in this book and you also do in a few books back as you get -- i'm a consure of your books. you talked about how the internal strength of america was really at the heart of this, and that america you quite presently said this 20 years ago was becoming a society too much based on consumption and debt and a kind of self-indulgence. >> and greed. and greed. and social unfairness. i'm very worried about the fact that our society has become so

dramatically demarcated into the few very rich and many who are poor. >> you think all this makes it difficult for us to play a global role? >> absolutely. because in this politically awakened world, interactions are so close and intimate that people are intimately aware of what other societies are like, and this is why i have a chapter in my book on the waning american dream. i think the american dream can be re-awakened, but only if we very seriously tackle our domestic problems seriously across the board, and right now i don't see that being very likely in the near future, but i still am convinced that we have residual assets that would enable us to do it if we begin to seriously concentrate on these problems. >> in this election you still -- >> without a question. i mean, look at those republican debates. i must say i am literally -- i

literally feel embarrassed as an american when i see those people orate. one of them sounds like a midevil, and another one is trying to explain why he has some of his wealth located in the caymen islands, and someone else will go back to 1780 and then there's someone who is using his credentials as a repudiated speaker of the congress to be president. i mean, this is just embarrassing. >> pleasure to have you on. >> it's good to see you, as always wrrn. >> up next egypt one year on from the rel using. there is a rising anti-american sentiment, and who is behind it? not who you think. stay with us. your finances can't manage themselves. but that doesn't mean they won't try. bring all your finances together with the help of the one person who can.

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welcome back too the globaling public square. now for our what in the world segment. i want to show you a strange cartoon of egypt. you knowle sam looks sinister and mean. the implication, i suppose, is that the u.s. is spying on egyptians. another cartoon shows him with a pistol. he is pointing it at an egyptian man with a canon. the caption says "dignity." the mention is americans are

robbing egyptians of their dignity. what is going on? these cartoons were published recently in a state-run newspaper and they highlight a disturbing trend. egypt's transitional government is trying to whip up anti-american fervor. it's a high publicity trial set to begin today. this is a list of 43 people. nearly half of them u.s. citizens who stand accused of illegally receiving foreign funds to promote democracy. the government claims they didn't have a license to do their work. in reality these people had filed registration papers under the old regime of hosni mubarak. they were told their papers were in order. besides, it is a little rich for the egyptian government which receives $1.2 billion in aid from the united states every year to harass charities about getting funds from america, so what is going on? in a recent column the "new york times" tom friedman points out that the ongoing trial was the

brainchild of an old mubarak krony, pfizer abdul, egypt's minister of planning international corporation. her strategy friedman says is to unite egyptians by standing up to the foreigners. she plays this game by taking advantage of a fractured egyptian leadership. it seems she got the military on board by showing them how all these human rights workers from abroad are their most vocal critics. [ chanting ] >> rounding them up, the logic goes, would show how egypt's protests are really driven by external forces. in fact, egypt's uprising was entirely local. there were no evil foreign forces at work. america was caught unaware as were all foreign governments when the protest started. the real problem is that egypt's old regime is clinging on to power. >> people like abdul and the power behind her, the military.

remember, egypt's last four presidents, including hosni muck ran, came from the armed forces, and that group remains unwilling to cede control even to the newly elected parliament. they feel they're trying to shape a new constitution to its benefit. meanwhile, the armed forces have huge economic interests, and they have always been opposed to economic reforms, even the ones under muck ran because they took away their monopolies and privileges. last june the government refused an imf loan for more than $3 billion. last week had t had to cave in and accept that money. all this is happening as foreign reserves have plummeted from 36 billion to nearly 10 billion. foreign investment has almost entirely stopped. tourism has seen a 30% decline. now, think about the fears voiced in the western media about post-revolution egypt.

>> we have stoled stories about how they will become a sharia state. the real danger to egyptian democracy and to pro-american sentiment, the group has always been a danger to egyptian democracy. the military. until they actually cede power, the egyptian revolution remains stillborn and the country remains a military dictatorship. we'll be right back. up next, an all-star panel on the economy. stay with us. ow, because you be, you know, this is what you had been doing. you know, working, working, working, working, working, working. and now you're talking about, well you know, i won't be, and i get the chance to spend more time with my wife and my kids. it's my world. that's my world. ♪ that's my world. this was the gulf's best tourism season in years. all because so many people came to louisiana...

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>> fareed sflak ara gps will be back in 60 seconds. nelson mandela has been released from a south african hospital. the 93-year-old mandela had undergone surgery for abdomenal ailment. the trial of 16 u.s. aid workers charged with fraud in egypt has been adjourned until late april. the workers did not appear in court today, and they're accused of working without a license and fueling unrest in the country. secretary of state hillary clinton tells cnn there are intense negotiations underway to resolve the case. demolition of a compound where osama bin laden was killed last may is underway. pakistani forces began raising

the building in the town yesterday. pakistani authorities say they don't want the compoun to become a shrine for osama bin laden oped's followers. a suicide car bomber detonated explosives outside a church in central nigeria today. the attack killed four people. nigeria has suffered a series of attacks on churches and mosques in the past year. and those are your top stories. ""reliable sources" "is at the top of the hour. now back to fareed zakaria "gps." it was a week of mostly good news for the american economy. the dow jones industrial average flirted with 13,000. employers were hiring. a tax holiday for citizens became a reality. the president and candidates put forward plans to reform the tax code. are these plans smart, and will iran and gas prices produce a new crash? robert reich joins us from berkley where he is a professor of public policy. reich was, of course, secretary of lathe labor under president clinton. here in new york david stockman ran the office of management and

budget under president reagan and later worked in private equity. we have two of the finest journalists writing about economics, julian tett is the editor of "the financial times" and zani is the economics editor at "the economist." welcome. zani, is this recovery taking hold? >> it's taking hold. it's not taking off. let's not get too excited, but in contrast to the last couple of years when there was a lot of optimism, i think there are some reasons to think that a more solid recovery is beginning to go into place. >> i think we have another period of seasonally adjusted noise. in april and january. the warmest winter since 1868, as i understand it, so i don't think much is happening. we're bumping along the bottom. we're not recovering. rather than look at a month, we ought to look at a trend. we had 132.4 million jobs reported in january. nonfarm payroll. same numbers december 2000 when clinton was president and we were hanging by our chads.

when you have an economy that goes 12 years, two business cycles that has not generated over time one net job, that's an economy that's sick, and we need to look at the fundamental foundation of this and the sickness that underlies and not whether we're blipping up a little bit or by quarter. i think we're going to hit a brick wall in december. there's a freight rain coming down the track. it's called $7 trillion worth of deaf sim impact when all the tax cuts and the tax holiday and the dot fix and all the rest of it expires. you're going to have -- >> plus the payroll tax cuts. >> all the tax credits and all the business benis and 100% depreciation, and the 1.2 trillion automatic sec quester. when the congress is faced with that in a lame-duck session, it will be paralyzed, frozen.

>> that's absolutely right. there is a huge risk at the end of the year. a fiscal train wreck, as you put it. specifically, if the bush tax cuts expire, you have 3.5% of gdp fiscal tightening. it's a huge wallop to a fragile recovery. i'm looking for something to be optimistic about, and i think that -- >> one of the problems is we've now had three years or two years where we've had a recovery start did he beginning of the year, and it's been knocked off course by seemingly unexpected events like the euro zone, like the middle east, and you have a feeling that with every time this happens, business and consumers get just a bit more cynical, a bit more scared, a bit more uncertain about the future, and if you look at american companies, there's a fascinating thing that's happened in the latest earnings season, which is that four out of five companies are refusing to make any predictions for the future because they simply cannot work out where the world is going. you look at things like the budget problems coming along, the brick wall in december. you look at the euro zone. you look at oil prices right

now, and it's a pretty scary place. so, yes, zanny is right. the recovery is starting. it's whether it's going to continue that's a real worry. >> are you as pessimistic as david stockman? >> i'm not as pessimistic, but i am -- i do share a lot of his caution and a lot of the worry of the other panel members. we are seeing the beginning of recovery. there's no question about that. there are so many question marks, some of which have not been mentioned. american consumers are still under a huge debt load. much of that is mortgage debt. wages are going basically nowhere. adjusted for inflation. the median wage continues to drop. you have about 23 million americans who are still unemployed or underemployed, so you have a great number of americans who fear that they might be in this group sometimes in the future. confidence is returning, but confidence is not enough to

build a sustained recovery on. abroad, i am concerned about the european debt crisis. it is still very, very fragile. nobody has mentioned china. i think that china over the next year could slow considerably, which would be a tremendous problem for the global economy. again, i'm cautiously optimistic given the direction we're going in, but it is -- i want to underscore the word cautious. yes, in the short-term fareed. i think it is important. i think for the federal government to continue to stimulate the economy, i can't believe it's a polite word to

use any longer because republicans have condemned the economic stimuluses that have been used. i believe that they have helped -- it shows that the economic stimulus has already been applied. we would be in much worse shape. remember, the real issue with regard to the long-term deficit is the ratio of the debt to the entire economy. to the gdp. unless we get growth and get jobs back soon, that ratio is going to continue to deteriorate. >> you disagree with this statement, but i want to ask you a var vegas of this. >> you were once a congressman from michigan. >> a primary is taking place, and one of the problems that republicans had is -- wouldn't it be fair to say that that was a case where remedial action by the government had an impact that was positive or at least is perceived as positive. how do you make what i'm sure you're going to do -- how do you

make the case against the auto bailout politically not just economically. >> it's tough politically, but i voted against the chrysler bailout the first time in 1980, and we should have put it out of its misery then, and the next election, i got the highest vote that i have ever gotten in an auto district in michigan. i think it is not as simple politically as people think. a lot of main street businessmen than they're not going to benefit from one of these bailouts. secondly, i think the auto bailout was an abomination. if we had let gm meet its demise, which it should have, and chrysler go down the chute, which it should have, those were industrial dinosaurs that wrecked the industry anyways for years, destroying the suppliers. finally, they were the last two standing, and they went to washington hand in hat. they got bailed out. it's a bad time. >> i have to ask zanny because "the economist" is a pro free market magazine supported the

auto bailout, and i'm guessing you probably wrote that editorial. >> we did support it. we supported it with somewhat of a heavy heart, but let me explain why. with hindsight, i think we were right to support it. we were not in ordinary times. in ordinary times i completes agree with you. the government should not get involved in bailing out. the only reason to do it is there's a broad systemic -- beginning in 2009 global -- the global economy was sh red winging at its fastest pace since the 1930s. we were in the middle of the worst financial crisis in 80 years. what would have happened if these car companies had been pushed into bankruptcy? normally when credit markets are functioning normally, when you are in bankruptcy, you get fresh funds. you get fresh funds to help you restructure. the credit markets were completely closed. there was no way they were going to be able to get that money, unless it came from the government. so the alternative was liquidating chrysler, liquidating gm, having a ripple effect on the supply chains, and i see you shaking your head. having a huge ripple effect, at a time when the economy was

imploding. for us that was sufficient reason for the deposit to get involved. we can argue it wasn't perfect. there were bits that could have been done better, but basically the government went in, reorganized them, and got out again. as far as bail-outs go, this was a pretty well done one, and gin where the economy was, i think with hindsight, we have to say that it was the cost benefit analysis. it was better doing it than not. >> we are going to stop with the auto bailout. we're going to talk about i'll prices. could they derail the recovery and the new candidate plans as well as president obama's? when we come back. you ready? we wanna be our brother's keeper. what's number two we wanna do? bring it up to 90 decatherms. how bout ya, joe? let's go ahead and bring it online. attention on site, attention on site. now starting unit nine. some of the world's cleanest gas turbines are now powering some of america's biggest cities. siemens. answers. in absolute perfect physical condition and i had a heart attack right out of the clear blue...

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>> we are back with robert reich -- >> bob, let me ask you, if you were back in the administration, what would you be doing about high oil prices because it does strike me that this is something that has the ability to add to a slowdown in the united states. is there anything the administration can do? >> the irony here, the pair docks is that it's really very little in the short-term that any administration can do about oil prices and what really is the issue, and that is gas prices at the pump. that's what most voters react to very viscerally, and it's understandable, but an administration of what you have a strategic petroleum reserve. you can threaten to use the strategic petroleum reserve, and thereby essentially threaten speculators who are bidding up the price of crude oil around the world, and that's about it. that's all -- that's not

terribly useful thing to do under normal circumstances. now, you are going to almost inevitably have some sort of restriction on supply over the next two or three years. then maybe the administration to put that bubble does need to talk about the strategic petroleum reserve, but i would hold on. i just don't think that we are going to see an oil crisis. i think that when you look at -- when you look at all of these speculators who are -- you have almost no bears in this market at all. when they are all bidding up the price of crude oil, almost anything can tip the balance in the other direction and force crude oil suddenly downward. we've seen that before. in may of last year, for example. >> do you think that's -- what do you think will happen with oil? demand certainly doesn't justify $105 barrel oil. i mean, china is -- >> i think you can address this decisively by stop beating the war drums right now. obama could do that, and he

could say the neo cons are history. the policy that they're talking about right now is the same thing we heard in 201, 202, and 203. he needs to clearly say that we're not going to attack rain or permit israel to attack iran. they are not part of the access of evil. these are people that aren't going to threaten the western world, and we need to bet into a serious process of elimb nail. if we do that, the price of oil will drop $30 within a few months, and all the speculators who are on the wrong side of the ship would learn a good lesson. as long as the war drums continue to beat, as they are now, we're going to see this kind of speculative fraud. it's not supply and demand world today. >> it's worth remember that in terms of the euro, the oil prices right now are higher in europe than it is in the u.s., relatively speaking, and that's simply adding to the pressure on

the euro zone economy. it's a nasty cocktail of issues right now that's feeding off each other. >> before we go, i have to ask you. mitt romney has a new tax plan. what do you -- >> i think they're way off base. the fundamental problem is a deficit that's huge and being underestimated actually going forward for a decade. it's 10 trillion at minimum, and today an analysis was put out by the committee of the budget that i'm part of that basically shows each of these republicans would increase the deficit over the next ten years. yes, they're going to cut a little spending here and there, but there are tax cuts that eat up all of that change and leave us in the hole. so i don't know why the republicans can't understand that unless they're willing to dramatically cut defense, which they're not, unless they're willing to take on social security, which they exempted in their plan for ten years, unless they're willing to say medicare are better off -- recipients

will have to pay a whole lot more out of pocket. there is no way that we can avoid major tax increases across the board and none of these plans even are remotely realistic about taxes. unfortunately. so, therefore, we're going to be in a paralysis no matter who wins the election, and the congress and the next administration will, you know -- it's going to be chaotic. >> i can't really underestimate how difficult this is going to be and how destructive it's going to be. >> were you disappointed by romney's plan? private equity guy like you. >> it's just republican rhetoric. it's republican gospel. it's not a serious possibility. sure, it would be nice to have low taxes. everybody would love low tacks. we have to pay our bills in this country. we're going to have a day of reckoning here. it was very unpleasant. >> at least they're talking about tax rather than having phony arguments or theology. i mean, there needs to be a proper debate about the tax

issues, but precisely for the reasons you say and the fact that they're actually talking about the need to try to reform business tax is at least a positive element. >> well, there isn't a debate yet. on the republican side, it's the debate that involves how much are you going to cut. what are you going to do in term of raising revenue or cutting spending. then we'll start having the ingredients for real compromise. i don't see the republican body anywhere near that yet. >> on that note, david stockman, zanny, and bob reich, thank you so much. up next, another economics lesson. this time from the mafia. why they're bullish on bonds. i'll explain. i am loving this greek yogurt.

i like yoplait. it is yoplait. but you said it was greek. mmhmm. so is it greek or is it yoplait? exactly. okay...

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...we inspected his brakes for free. free is good. free is very good. my money. my choice. my meineke. the frempl government bowed to pressure from a powerful constituency this week against charges that it had long been discriminatory. that story is the basis for the question of the week. it is which group in france no longer has to out itself on official forms? is it, a, gays and lesbians, b, muslims, c, alcoholics, or, d, unmarried women? stay tuned. we'll tell you the correct answer. make sure you go to cnn.com/fareed for ten more questions, and while you're there, check out the rest of our

offerings on the global public square website. remember also, can you follow us on twitter and facebook and if you ever miss a show, you can now find full video episodes of "gps" on itunes. go dlektly there by typing itunes.com/fareed into your browser. this week's book of the week is behind the beautiful forevers by catherine, a superb and award-winning reporter for the new yorker. it's a riveting tale of the people we rarely think of in our day to day lives. the people who chronicles live in the mumbai slums whose centerpiece is a lake of raw sewage. the residents mostly earn their meager existence by picking garbage and reselling what they can. booth spent three and a half years there, and the picture she paints, the details she presents are truly compelling. now for the last look. for those who are worried last year that the s&p downgrade of america meant u.s. debted would be worthless, here is perhaps the ultimate proof that you were

wrong. no greater moneymaking institution than the mafia is bullish on american bonds. anti-mafia prosecutors in europe recently confiscated $6 trillion, yes, that's trillion, in u.s. bonds from safety deposit boxes in zurich. now, what was the problem? well, just one small one. they were fake. what fascinating fakes this were. some were in denominations of $1 billion each and record a date from 1934. the u.s. treasury says the bonds were obviously fake. the highest denomination they've ever printed with half a billion dollars, and those weren't printed until 1955. if they had been real, they could have paid off all the outstanding student loans and credit card debt in the united states and bought everybody in the world an ipad. don't wait by your mailbox. the correct answer to our gps challenge question was, d, mademoisell was for unmarried women, and it is