David Gergen's Blog, page 12

What is Obama's endgame in Libya?

What is Obama's endgame in Libya?By David Gergen, CNN Senior Political AnalystMarch 21, 2011 5:37 a.m. EDTSTORY HIGHLIGHTSDavid Gergen: Washington is pondering Obama's "head-snapping" shift on LibyaHe says Hillary Clinton, Susan Rice, Samantha Power pushed for the changeGergen: Can U.S. oppose Libya repression while going easy on Bahrain, Saudis?He says most observers feel that what Obama wants is still the big question mark in D.C.Editor's note: David Gergen is a senior political analyst for CNN and has been an adviser to four U.S. presidents. He is a professor of public service and director of the Center for Public Leadership at the Harvard Kennedy School.Cambridge, Massachusetts (CNN) -- After conversations with top players in Washington last week, mostly as I accompanied a group of Zuckerman Fellows from Harvard on a field trip, here are some brief reflections on the mood there toward events in the Middle East:• The head-snapping change in policy toward Libya has everyone guessing where the Mideast is heading, whether the U.S. has a good handle, and most of all, what President Obama is trying to achieve.• One irony, as a female friend put it, is that for years many of us believed that if only more women could gain power, the world would surely become more peaceful. Yet, we now see that the three people who talked Obama into using force against Libya's Moammar Gadhafi were all women -- Hillary Clinton, Susan Rice and Samantha Power. Leading male advisers were opposed. Perhaps we should be less surprised than we are. Remember Margaret Thatcher? And Golda Meir? And remember, too, that both were seen as successful leaders for most of their time in office.• There are divisions in Washington about the president's actions, but most -- including me -- believe Hillary & Co. had the better argument. If anything, the U.S. delayed too long, allowing Gadhafi to gain the upper hand on the ground.The head-snapping change in policy toward Libya has everyone guessing...what President Obama is trying to achieve. 
--David GergenGadhafi's compound attackedOfficial: Compound targeted, not GadhafiClinton's voice key on Libyan policyObama: No ground troops in LibyaRELATED TOPICSBarack ObamaHillary ClintonLibyaMoammar Gadhafi• But what is the president's endgame in Libya? And what is his strategy for the Middle East more generally? Who can say for sure?• Originally, the president kept saying we want Gadhafi out -- but now that we are using force, he says we only want to stop him from killing more civilians. Is this mission creep in reverse? And how tough would we be if, as seemed possible today, the Arab League begins to retreat from supporting force?• Meanwhile, the administration privately -- and rightly -- stresses that even as we hit Libya, we must keep a strategic focus on Egypt and Saudi Arabia, long seen as our most powerful Arab friends in the region. The preliminary returns from weekend voting in Egypt -- we are still waiting to hear from Cairo -- will bring some heartburn in Washington. How big a threat will the Muslim Brotherhood now become in elections a few months from now and what can Washington do about it?• Even bigger headaches are arising in the U.S.-Saudi relationship. Several top players from past administrations report that the Saudis are hugely angry about Obama's treatment of Egypt's ex-President Hosni Mubarak. "He was your best friend in the region for more than 30 years, doing everything you asked," the Saudi argument goes, "but a week after he got into trouble, you threw him under the bus rather than working out a graceful exit. How can we now trust you?"• The Obama administration is now working to rebuild Saudi ties, but will it have sufficient leverage to help usher in more democratic reforms in the kingdom and, crucially at the moment, in nearby Bahrain and Yemen? Or, as seems likely, will we be caught in increasing contradictions between our policy in Libya (crack down on an enemy government that kills demonstrators) vs. Bahrain and Yemen (go easy on a friendly government that kills demonstrators)?• Peering into the uncertainties of the future, most observers in Washington feel they understand Defense Secretary Gates as well as Secretary Clinton. Both command respect. The president's National Security Council adviser, Tom Donilon, is less well-known, but many from his past, including me, know him to be a smart, savvy player who is a quick learner and can make things happen.• The big question mark is the president himself. Rebounding from his electoral defeats last November, he seemed to be asserting a much firmer grasp on power, but in recent weeks, he appears to outsiders as someone who has slipped back into a haze of caution. The Economist this week is even questioning his political courage. As he sends U.S. troops into harm's way, many in Washington are now waiting to see which Obama now emerges. Much rides on the outcome.

ROTC is back at Harvard

By Natalie Sherman for Boston Herald.comFriday, March 4, 2011 -
The ROTC is being welcomed back to Harvard University in a decision being hailed by many on the Cambridge campus who say it was time to lift the Vietnam-era ban.
Harvard President Drew Gilpin Faust and Navy Secretary Ray Mabus are due to sign an agreement today to install Naval ROTC on campus.
"Our renewed relationship affirms the vital role . . . our Armed Forces play in serving the nation and securing our freedoms," Faust said in a statement, calling the military "an honorable and admirable calling."
"Wow," said Michael Segal of the Harvard Advocates for ROTC, an alumni group that has pushed for years to restore the program.
"This is so important because right now so much of America is completely disconnected from this war," said Seth Moulton, an Iraq war veteran and Harvard graduate. "It really does make a difference when you have personal connection with people in the military."
ROTC was kicked off campus in 1969, at the height of the Vietnam War protests. Harvard and other Ivy League schools maintained the ban due to the recently repealed "don't ask, don't tell" policy that barred gays from serving openly. The few Harvard students who joined ROTC had to commute to Massachusetts Institute of Technology and Boston University.
A director of Naval ROTC at Harvard will be appointed. While Harvard cadets will still train at MIT, Harvard will resume funding the programs.
"For the first time since Vietnam, you will regularly see people on campus in a military uniform," said David Gergen, the director of Harvard's Center for Public Leadership, who has supported efforts to restore ROTC on campus. "It has long been apparent that only a small proportion of the population is fighting our wars today, and it's essential that students from elite universities be among them."

A Brief Reflection about a Dear Friend

            The death of Reverend Peter Gomes, as a colleague told me today, is Harvard's loss and heaven's gain. Over three and a half decades, Peter became the embodiment of spirituality at the University, imparting to generations of students that their purpose was not to make a living but a life.             To Peter, the meaning of Easter is not about life after death but about the life you lead before death – that Jesus called upon his followers to live life "abundantly".  And that Peter did every day, inviting others to join him not only in serious talk but in hearty laughter. "The ultimate weapon," he wrote, "in the face of evil or sorrow, sadness or death, is not stoic virtue and the stiff upper lip but laughter, for where laughter is, God cannot be far away."            There is no laughter at Harvard today: sadness is everywhere.  We have lost a national treasure.  But in years to come, we will tell our grandchildren stories about Peter, his deep friendship and his twinkle, and we will smile again, knowing he cannot be far away.


           If you would like to listen to sermons of the late Rev Professor Peter J. Gomes visithttp://ow.ly/45Bv6/

Teach for America: Letting the cream rise By George F. Will

George F. Will  has just published a must read column. He captures extremely well the excitement and promise of Teach for America. Please take time to read it. Thanks. 



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 Discussion PolicyBy George F. WillSunday, February 27, 2011For Princetonians, the senior thesis is a high hurdle before graduation. For Wendy Kopp, class of 1989, it became a career devoted to transforming primary and secondary education. What began as an idea for a teacher corps for hard-to-staff schools, urban and rural, became Teach for America (TFA). At first it was merely a leavening ingredient in education; it has become a template for transformation.
THIS STORYHow teacher development could revolutionize our schoolsTeach for America: Letting the cream riseBack then, Kopp's generation was stigmatized by journalistic sociology as "the 'me' generation" composed of materialists eager to be recruited into careers of quick self-enrichment. She thought the problem was not her peers but the recruiters. So she became one.
This academic year, 16 percent of Princeton's seniors and 18 percent of Harvard's applied to join Teach for America, of which Kopp is CEO. TFA is the largest employer of recent graduates from the University of North Carolina, Chapel Hill. Eight percent of seniors at the University of Michigan (undergraduate enrollment: 26,830) applied last year for TFA's two-year commitments. More than 5 percent of graduating seniors at 130 colleges are applicants.
Kopp began by "meeting anyone who would meet with me," soliciting corporate executives for seed money. She believed something that bemused skeptics - that students from elite schools would volunteer to have their first experience out of college teaching in difficult-to-staff schools in areas of urban and rural poverty.
"I knew college students would do it - I had just been a college student." What was needed, she thought, was a high-status service organization with an aura of selectivity.
Raised in comfortable circumstances in Dallas, Kopp precociously understood not just the importance of education but the educational importance of where one is born. TFA's first recruiting was done by fliers shoved under dorm room doors. Her Yale recruiter had 170 messages on his answering machine in just three days. TFA's first cohort totaled 500 teachers. This year TFA will select 5,300 from 48,000 applicants, making it more selective than most colleges.
This school year, there are 8,000 TFA teachers. Of the 20,000 TFA alumni, two-thirds are still working full time in education. Of those, only one in six says that even without TFA he or she might have gone into K-12 teaching.
TFA has become a flourishing reproach to departments and schools of education. It pours talent into the educational system - 80 percent of its teachers are in traditional public schools - talent that flows around the barriers of the credentialing process. Hence TFA works against the homogenization that discourages innovation and prevents the cream from rising.
Kopp, whose new book ("A Chance to Make History") recounts her post-Princeton education, has learned, among much else, this: Of the 15 million children growing up in poverty, 50 percent will not graduate from high school, and the half that do will have eighth-grade skill levels compared to those from higher-income families and neighborhoods.
Until recently - until, among other things, TFA - it seemed that we simply did not know how to teach children handicapped by poverty and its accompaniments - family disintegration and destructive community cultures. Now we know exactly what to do.
In government, the axiom is: Personnel is policy. In education, Kopp believes, "people are everything" - good ones are (in military parlance) "force multipliers." Creating "islands of excellence" depends entirely on finding "transformational leaders deeply committed to changing the trajectories" of children's lives.
We do not, she insists, have to fix society or even families in order to fix education. It works the other way around. The movie "Waiting for Superman" dramatizes what TFA has demonstrated - that low-income parents leap at educational opportunities that can break the cycle of poverty. Teaching successfully in challenging schools is, Kopp says, "totally an act of leadership" by people passionately invested in the project.
Speaking of leadership, someone in Congress should invest some on TFA's behalf. Government funding - federal, state, local - is just 30 percent of TFA's budget. Last year's federal allocation, $21 million, would be a rounding error in the General Motors bailout. And Kopp says that every federal dollar leverages six non-federal dollars. All that money might, however, be lost because even when Washington does something right, it does it wrong.
It has obtusely defined "earmark" to include "any named program," so TFA has been declared an earmark and sentenced to death. If Congress cannot understand how nonsensical this is, it should be sent back to school for remedial instruction from some of TFA's exemplary young people.
georgewill@washpost.com

The Budget Smokescreen

How Can Congress Avoid a Shutdown?What do the Democrats and the Republicans stand to lose if they fail to reach a budget compromise?

IntroductionJ. Scott Applewhite/Associated PressA late session for Congress on Feb. 18.The House voted on Saturday to cut $60 billion from federal spending in nearly every areaof government over the next seven months. The Democratic-controlled Senate has signaled that it will not consider anything approaching that scale of cuts, setting up a standoff that could lead to a shutdown of the federal government if no deal on a continuing resolution is reached by March 4.

How will Congress avoid a government shutdown? What kind of deal is politically feasible? What do the parties each stand to lose?

The Budget SmokescreenUpdated February 22, 2011, 07:22 PM David Gergen , a former adviser to four presidents, is a senior political analyst for CNN. He is a professor of public service and the director of the Center for Public Leadership at the Harvard Kennedy School.The budget showdown shaping up in Washington is dramatic but depressing. What we are mostly seeing so far is a jockeying for political power rather than a serious attempt to rescue the nation's finances.

Here's the sad part: in the end, the amount of money being fought over is only a tiny fraction of the nation's budget deficit.

On the surface, of course, the immediate issue is that the federal government will begin shutting down services next Friday unless Congress and the White House can agree on a fresh spending resolution. Compromise talks are underway and there are whispers of a short-term agreement.But don't count on it because the real struggle is beneath the surface -- who can win over the public and potentially gain the upper hand for the political fights still ahead. And right now neither side knows for sure how public opinion will break.Democrats have long believed a shutdown will help them -- just as it did when President Clinton outfoxed the Republicans over a shutdown in 1995. But Republicans entered this year in a much stronger position than 16 years ago, as voters are alarmed about runaway spending and want discipline.The problem for both parties is that opinion now is unshaped and volatile. Neither side has gained much traction with the public this year because the nation's attention has been diverted -- first to Tuscon, then the Middle East. And now battles have erupted in the Midwest over public employee unions. How will the showdown in Wisconsin affect politics in Washington? Who knows for sure?

All of this has lent enormous uncertainty -- and a high degree of drama -- to the unfolding tale of a possible government shutdown. But here's the sad part: in the end, the amount of money being fought over is only a tiny fraction of the nation's budget deficit. In effect, this episode is a smokescreen, making it seem that lawmakers are really struggling over the deficits when, in truth, they are still dodging debates over the big five in government spending: Medicare, Medicaid, Social Security, defense and taxes. When they do -- if they ever do -- those will be fights worth having.
- David Gergen for NY Times February 22, 2011

President Obama's Budget Disappointing

Obama's Top Priorities: Jobs, Jobs, Jobs

YOUR MONEY  aired on February 12, 2011Obama's Top Priorities: Jobs, Jobs, Jobs; Bernanke: Employers Still Reluctant to Add to Payroll; Middle Class Not Feeling the Bounce Back; New Study Shows America Never Led the World in Education; Report: Saudi Arabia Oil Overestimated; The Question of Cutting Defense SpendingAired February 12, 2011 - 13:00   ET
CHRISTINE ROMANS, HOST: The recovery continues, but where are the jobs? 
I'm Christine Romans, welcome to YOUR MONEY. Ali Velshi is off this week.

If President Obama is going to keep his job, he is going to have to figure out a way to get Americans back to work.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Our measure of success has to be weather every American who wants a job can find a job. Whether this country is still the place where you can make it if you try.

(END VIDEO CLIP)

ROMANS: Michael Steele is the former chairman of the Republican National Committee.

Michael, we saw Republicans work with the administration to get tax cuts extended, and you know what it resulted in quite a bit of positive momentum for President Obama. What is the political incentive for Republicans to unite with him on job creation ahead of the November 2012 election?

MICHAEL STEELE, FORMER REPUBLICAN PARTY CHAIRMAN: Well, I think the incentive is that it gives the Republicans an opportunity to speak with clarity of their views on how jobs are created where we invest in the private sector, not in government institutions. That putting in place the very strategies, whether it is tax cuts or reduction in spending on various areas of the economy that will allow that growth to infest and grow, those types of conversations are important to have that.

But the interesting thing for me is that we are two years into this administration and that argument hasn't changed. It was the argument on day one. And so bringing in you know businessmen as chiefs of staff and all of that, that's great. It's the policy, the policy, the policy that will drive the job creation that the market is waiting to see and that they can feel that they can take the risk going forward.

ROMANS: Let me ask David Gergen about that. He's CNN's senior political analyst.

David, all the positive signs that show this recovery is here, but it's slow. Can the administration create enough jobs or at least the perception that it is creating jobs to run on an economic record?

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: As much as they may enjoy the company, they would disagree with them. They inherited a situation where jobs were collapsing. And it's very hard to create jobs the first two years. But I do think now that this is a year in which the president put forward an agenda in his State of the Union that was about being more competitive, investing more in the future, and there's sharp disagreements between what the president wants to do and what Republicans believe is best for the creation of jobs. Republicans believe in cutting taxes, cutting spending and the president wants to invest. The president has his budget committee coming up on Monday; this is going to be a hugely significant event.

ROMANS: Yes, it will. Harvard Professor Ken Rogoff is the former chief economist for the IMF. Ken welcome to the program. You know speaker of the house John Boehner reminded everyone this week of the impending crisis that is not going away. Listen.

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER, (R) HOUSE SPEAKER: We're broke. Let's be honest with ourselves. It's time for Washington to get serious, and that's exactly what the American people expect of us.

(END VIDEO CLIP)

ROMANS: Ken, President Obama says his budget request expected Monday is going to call the bluff of anyone who talks a good game on debt reduction but doesn't act. Both parties talk tough about a $14 trillion debit, both of them talk tough about the deficit, but neither party has been capable of tough choices to date.

Ken, what about now? Tough choices, are they ready for it?

KENNETH ROGOFF, FORMER CHIEF ECONOMIST, IMF: I doubt it. I'm really very skeptical. I think with the election coming up in two years it's going to be very hard to have the kind of dramatic change that we need. I think there's some good ideas on the table about improving our tax system, not just worrying about we are cutting it or raising it. But I don't see a lot of whole hearted momentum. Maybe after 2012.

ROMANS: Michael, nearly 7 to 10 Republicans say the finding a nominee who can beat Obama is more important than choosing a candidate who agrees with them on every major issue. The primaries are going to heat up; unseating Obama is going to be the goal. In that environment, can a split congress and a Democratic president actual tackle the issues so vital to the economy? STEELE: I don't think so. I agree with Ken there. I think that the hard choices that need to be made by this Republican congress and this Democratic administration will not be made. There's going to be a lot of fluff and blue smoke and mirrors. Look, we're having a problem right now within the Republican caucus on how to tackle the debt ceiling and whether or not we listen to what the grass roots activists out there who empowered this congress to act, to make the cuts necessary to move the economy forward. We can't even agree on that right now. So I just don't see the hard choices being made realistically. And it's going to take a nominee who is willing to risk it all to make that first step.

ROMANS: David, it looks like you want to jump in there, David.

GERGEN: I do. Look, I think the test for the president's budget and the seriousness of both Republicans and Democrats is whether they're prepared to reform the entitlement programs.

ROGOFF: Right.

GERGEN: Starting with Medicare and Medicaid, Social Security. Those make up well over half the budget. And what's being discouraging so far is that almost all of the controversy and all of the debate has centered on what is called the nondefense discretionary part of the budget, which is less than 15 percent of the total budget.

You can't squeeze all of the spending out of there. You have to take on entitlements, and frankly you have to take on defense. I think Bob Gates is trying to preparing the way for cuts and defense but they have to be smart cuts. You can't do it just out of the so- called nondiscretionary expense. It is not serious.

ROMANS: You know Ken even though this week, you know, we heard that perhaps the president was going to try to cut this low-income heating assistance program, and that was going to come under the knife on Monday. And immediately there were people were from the Northeast in particular who were very upset about that. I mean no matter what even if it's not defense, even that 15 percent of the budget, those are still going to be painful choices, too. I mean do people get it do you think that the way we live our life is going to be changing over the next 20 years as we have to pay for what we've already spent?

ROGOFF: Well, I think that's the problem for politicians are the voters don't get it. I mean, ever since Ronald Reagan, who is incredibly charismatic and effective convinced people budget deficits don't matter and as long as markets keep willing to lend us at really low interest rates, it's very hard to persuade people. I think in addition to what David said about the entitlements our tax system is just a really bad one. It's a mess, there's some good suggestions. The president appointed to Paul Simpson commission. They had good suggestion. But there doesn't seem to be any heart to implement them.

ROMANS: All right. Let's talk about - hold it there everybody. I want to talk about the tax choices we have, too. Stay right where you are. The Federal Reserve chairman says he knows when we'll see meaningful jobs creation and true recovery. When will that be? Next. (COMMERCIAL BREAK)

ROMANS: Federal Reserve Chairman Ben Bernanke delivered a reality check this week in Washington.

(BEGIN VIDEO CLIP)

BEN BERNANKE, CHAIRMAN, FEDERAL RESERVE: Employers still reluctant to add to payrolls. It will be several years before the unemployment rate has returned to a more normal level. Until we see a sustained period of stronger job creation, we cannot consider the recovery to be truly established.

(END VIDEO CLIP)

ROMANS: All right. The president himself, David, said that there's some $2 trillion in cash that corporate America is sitting on. What does it take to get employers to spend that money and hire?

GERGEN: Well, one aspect of it might be to go to what Ken Rogoff has been talking about, changes in the tax code. Particularly of that $2 trillion a big chunk of it is overseas. Corporations argue if you would let us bring that back and reinvest it and we don't have to pay these high rates when we come back, we're more likely to do that. I think that's worth exploring. You have to ensure somehow it just doesn't go into investment.

But then there are other questions about lowering the corporate tax rate. But overall, Christine, I think that there is a larger problem. And I would like Ken's wisdom on this. We seem to have a structural job problem in this country that hit us before this great recession. Back in the 1980s, I was looking back at this the other day. In the Reagan years, eight years, over 20 million jobs. In the Clinton years, eight years, over 20 million jobs. Since 1999 coming up to today, net new job creation in this country is zero. Zero.

ROMANS: Well Ken, why is that? I mean, you could argue that it's three successive administration that have pursued policies that have really sparked globalization, it's meant the companies don't necessarily, the interest of corporate America is not necessarily coupled precisely with the interest of the American workforce.

ROGOFF: It's certainly the case that in this huge recession we've had employers have been really relentlessly pruning jobs, and finding that their profits are bigger, that they're more efficient, and they're looking at investing overseas. I mean, some of it may be coming back. I think David is right that in President Obama's State of the Union speech he laid out the future.

Unfortunately, it's not going to happen overnight. We need to invest in our people. In education, not just primary but at all levels. Adults, of course, infrastructure, but especially we need to invest in our people, or we will not be able to compete.

ROMANS: And what about cutting the corporate tax rate? Right now at 35 percent, although we know with all those loopholes a lot of companies don't pay 35 percent. The president wants to. He said that he would consider lowering the corporate tax rate if he got rid of all those loopholes. Is that a good idea? Will it create jobs?

ROGOFF: Explaining the corporate tax rate is so complicated I'm afraid I'll bite my tongue explaining it. But basically we tax our profits over the whole world, and we're about the only country that does that. That's a problem. And we have a very high rate within the rich countries, and it needs to come down, but you've got to close the loop holes. It has to come to two things together, we'll give you a lower rate, but the loopholes go away.

ROMANS: Michael the president reaching out to business, it is interesting he spoke to the Chamber of Commerce; he said I'm going to make it up to you. He was sort of joking. Something said this is the president going in front of the international club of job outsourcers. How is this a solution? Is there something the Republicans understand about getting businesses going and having an agreement here between the president and business that maybe liberals don't get?

STEELE: I think so in that context. I think that comment is part of the poisonous environment that makes up an entrepreneur or job creator hesitate. But I would also say it's not just what we do on the tax side of the equation. It's also what we do on the regulatory side of the equation. That combination of taxes, whether they are too high or too low, the rates corporations are paying certainly impacts the ability to create job. But then the regulatory burden that comes with the various policies out there that combination when you look at something like health care for example and the hesitancy that the business community has with respect to their employees also weighs into this.

So I think its holistic approach to our economic environment that the administration and the congress need to be serious about. You just can't just fix one piece of it or think you are and that's going to take care of everything else. It's a comprehensive effort that the business community is looking for from both the White House and the congress.

ROMANS: But David, you know the optics still -- I mean a lot of those companies have off shored an awful lot of jobs. I mean we documented it over the years and the president is saying now look in almost a JFK moment; ask not what your country can do for you but what you can do for your country. It is 48 percent of their profits are from overseas.

GERGEN: I'm not sure that you can rely on the patriotism of American companies as a way to fix the job.

ROMANS: No, no. Yes you can!

GERGEN: Well, I mean I would love to think that but I've had conversations with people at Wal-Mart who have been very patriotic. They've made big efforts to keep their suppliers inside the United States, to have those jobs that supply things to Wal-Mart come from that. Over time the companies have just left and I think we have 6,000 suppliers in Wal-Mart, 5,000 are in Asia. ROMANS: We talked about the structural job change I mean and that is part of it that we see every day. So, Ken Rogoff, then, you know we talked about Ben Bernanke. It's going to be years before the jobs come back. What does it mean in the interim then politically and economically for people in the middle in this country who are worried about a debt crisis potentially down the road. Who are worried about getting a job, who are worried about the value of their home? Are we in this limbo here between financial crises between maybe a lower standard of living later?

ROGOFF: Christine, at least we're in limbo. I hope we don't have a lower standard of living later. People don't have jobs. People are nervous about their houses. They're anxious, they're tense, they're angry. I think it's a very volatile mix. I do not know how this is going to play out in the next two years. I certainly defer to David and Michael on that. But it strikes me there's a lot of room for populism to come in here amidst all this anger and uncertainty.

ROMANS: And I still don't know what the political impact David is going to be of those '99ers. You know those people who have been out of work for more than six months now; they are running out of 99 weeks of unemployment benefits. Whether they'll be, you know, whether they'll be a political force. That's something we just really don't know yet. Unfortunately the soccer moms of eight years ago have become the 99ers of this time around. It may be a subject to tackle another time. Michael Steele, David Gergen. Thank you very much. And Ken Rogoff I can't let you go without congratulating you on winning the Deutsche Bank prize.

ROGOFF: Thank you.

ROMANS: Just another reason why we always love to listen to you. Thank you so much.

A big business of the American middle class are going their separate ways. Next, what will it take to get them back together? And what happens to job growth if they don't?

(COMMERCIAL BREAK)

ROMANS: By all accounts we are in a recovery, but don't tell that to folks in the middle class who are feeling anything but a bounce back. President Obama addressed the problem in a speech to the Chamber of Commerce earlier this week.

(BEGIN VIDEO CLIP)

OBAMA: They see a widening chasm of wealth and opportunity in this country, and they wonder if the American dream is slipping away. They wonder if the middle class rather than expanding as it has through our lifetimes is in the midst of a contraction. We can't ignore these concerns.

(END VIDEO CLIP) Chrystia Freeland is the global editor at large for Reuters. She also wrote a piece for the Atlantic about the very topic. Chrystia, he's saying that they have these concerns. Are those concerns real?

CHRYSTIA FREELAND, GLOBAL EDITOR AT LARGE, REUTERS: Absolutely. It's not just perception. What is actually happening is not just in America but in most western industrialized countries is an increasing income gap, and what we're seeing is the people at the very, very top. The top 1 percent.

ROMANS: The super elite.

FREELAND: The 0.5 percent doing incredibly well from the globalization and technology revolution. But the middle class is getting squeezed. Middle class incomes are stagnating. Unemployment is real.

ROMANS: You know Robert Kuttner, is the coeditor of the "American Prospect." Robert there's this feeling, this sneaking suspicion that American workers have been delinked with success of corporate America and American business. Is that true and is it permanent?

ROBERT KUTTNER, CO-EDITOR, "THE AMERICAN PROSPECT:" Well, it's certainly true. And it's certainly the result of the business model that American business currently pursues and unfortunately that is abetted by the trade policy practice by both political parties, which is to say make whatever deals you can make with whatever countries are offering you subsidies, low-wage workers, a little bit of arm twisting as the Chinese do, and if you can prosper from that, god bless you.

I mean in the '50s engine Charlie Wilson, then the head of GM, was ridiculed for saying what's good for GM is good for America. There was some truth to that in those years. I'm not sure you can say what's good for GE is good for America because GE has been moving most of its high level as well as low level jobs overseas and making a separate peace with the Chinese.

ROMANS: But the CEO of GE is a man who the president is relying on quite heavily for advice about how to work with business to make sure that the American middle class isn't left out. Right?

KUTTNER: Yes, and isn't that unfortunate. I mean if anything, Jeff Immelt is the poster child for the wrong kind of business model.

ROMANS: Let's bring in Richard Quest, host of CNN International's "QUEST MEANS BUSINESS."

Richard, safeguarding middle class jobs. If president wants to do that, doesn't that mean protectionism, tariffs angering your trading partners, going backward away from free trade? I mean what can the president do?

RICHARD QUEST, HOST, "QUEST MEANS BUSINESS": Well the first thing to understand is that whatever the economic situation certainly in bad times, it's always the middle class that's going to get the downside, if you like. It's always the middle class that's going to get it. They will be the ones that will lose their benefits. They will be the ones that will feel tax rises the most. They will be the ones that will be clobbered first and hardest for one very simple reason, that's how you make the most money and the biggest savings, by removing their tax benefits and increasing their taxes. You don't do it at the bottom and you don't do it at the top, you do it by clobbering the middle classes because they are the large number.

The second point on the question of whether or not protectionism is the way forward, well, you don't believe that anymore than your guests do. The reality is President Obama has said America has to compete. You can whine and whine about unfair trading practices as long as like. But at the end of the day you have to compete. That means making the products at the prices in the markets where people will buy them.

ROMANS: OK, the markets where people will buy them. Those markets are somewhere else. Chrystia there's this nagging concern really that the global super elite and corporate interests have written off American workers that privately the conversation is about making as much as they can from rising middle classes in other places. Is that the conversation among the super elite who you write about?

FREELAND: Look, I think that's what you have to do right now to make money. You know, Jeff Immelt who actually I am a fan of his, I think that it's great that he's advising President Obama, but he gave a speech at Stanford Business School last year where he said for most of his career the growing markets were in the developed west. Since the 1980s and actually when I interviewed him recently he said the real turn was 2008. The real action has been in the emerging market economy that is where the growth is. That's where business has to go.

The paradox is you actually have to want American business to do that. Because if they don't go to the emerging markets, these companies will fail. I think the public policy problem, and this is what Obama has to address, is to find a way to get these super elites which are actually doing fantastically well, globalization is terrific for them. To get them to invest frankly with their tax dollars in the rebuilding of America.

ROMANS: But super elites don't vote for the president in 2012, and they don't vote for congress. Congress is where there is the real concern about what to do. Robert, what does Obama need to do to help the middle class whether this recovery and enjoy this recovery?

KUTTNER: Well super elites may not vote, but super elites fund campaigns and that is why they have so much disproportion influence. I have to take exception to the idea it's always the middle class that gets whacked. The middle class was getting whacked long before this recession. This is a 30-year process of income distribution becoming more unequal. We need to turn that around and we need to persuade congress to invest in America, to invest in the skills of workers and have a different trade policy. That is not protectionism.

Germany has the highest wage cost in the world. And it also has the highest export surplus in the world because German elites care whether they still make things in Germany. American elites don't seem to care whether we do. Now Obama needs to reach out to public opinion as well as to the Chamber of Commerce to change those perceptions and those policies and those national goals.

ROMANS: Last word to Richard Quest who is going to throw his pen into the camera at any moment.

QUEST: Well, he makes a very good point. Just look at the way Germany handled the great recession. It didn't lay off employees. It put them on short time. It did paid holidays or unpaid holidays. It did all sorts of things. It drove down the cost base so that when the recovery came German industry more than any other in Europe was ready to take advantage of the growth that was coming.

So Robert is quite right. But this question of infrastructure is fascinating. Look at the Victorians, look at the last century, they built bridges. They built tunnels. They built roads. They actually built something that we're still using today. In New York they can't even get the tunnels under the Hudson. You can't even -- you can't even get agreement on a fast rail network, and in Britain we're having exactly the same problem.

ROMANS: Two seconds to Chrystia, the one that is dying to get points.

FREELAND: Super quickly. I agree with Richard and Robert about infrastructure and investment. But someone has to pay taxes for that to happen. Americans across the political spectrum seem to not want to do that.

ROMANS: All right. Chrystia Freeland --

KUTTNER: How about the top 1 percent?

ROMANS: Global editor at large at Reuters. Robert Kuttner, co- editor of "The American Prospect." And Richard Quest is going to stick around where he can throw things and say Victorian as many times as possible because I love it when he does that. Thank you everyone.

The education of our children is it getting worse? Is it getting better? Was it ever any good? We are drilling down on educating American next.

But first, Stephanie Elam finds out how a St. Louis shop has stayed in business for nearly 100 years and found a sweet spot in a rough economy.

(BEGIN VIDEOTAPE)

STEPHANIE ELAM, CNN CORRESPONDENT (voice over): Despite wars, recessions and urban flight, Crown Candy has been an anchor in the old north neighborhood of St. Louis.

ANDY KARANDZIEFF, CO-OWNER, CROWN CANDY: We've on this corner in the same location for the last 98 years.

ELAM: The shop looks about the same as it did when it opened in 1913.

ROB GREITENS, CROWN CANDY CUSTOMER: When you come here it reminds you of an old fashioned soda shop.

ELAM: And it churns out an array of desserts.

KARANDZIEFF: We do all the solid chocolate figurines. I make the hot fudge, my brother and I make the chocolate syrup, the butterscotch, we make the ice cream. Food wise everybody talks about the BLT.

GREITENS: When you have a sandwich on bread this thick and you have it piled on with bacon and turkey and cheese, then that's it for me.

ELAM: In fact the sandwiches are so large you would doubt most people would finish them. Not the case, says Andy Karandzieff, the founder's grandson who runs the shop with his brothers.

KARANDZIEFF: Nothing is wasted around here.

ELAM: And the following is huge.

KARANDZIEFF: We have everybody, all ages, all demographics, three, four generations of customers that come in, it's a constant stream of diversity.

BECKY GREITENS, CROWN CANDY CUSTOMER: It's not just coming for a place to eat. It's an experience.

ELAM: But in the '70s the customers weren't coming.

KARANDZIEFF: My dad would tell me that some days we would have two or three people for lunch. That was the worst they ever saw it.

ELAM: Instead of closing shop, Crown Candy kept on cooking. What is the secret to Crown Candy's success?

KARANDZIEFF: My father said you give people a good quality product and you take care of your customers and they are going to come back.

ELAM: And they did. These days Crown is taking its nostalgia to the internet to beef up business.

KARANDZIEFF: Our Christmas sales have doubled. We get people from all over; we're learning how to kind of promote in whole new way.

ELAM: Andy is also up from competition.

KARANDZIEFF: Maybe we'll get some new customers, too.

ELAM: New customers that could become yet another generation of Crown Candy fans.

Stephanie Elam, CNN, St. Louis, Missouri. (END VIDEOTAPE)

(COMMERCIAL BREAK)

ROMANS: The U.S. used to lead the world in education and now it's dropping, right? It might be what you believe, but a new Brooking study says otherwise. It reports the U.S. never outscored the world in achievement tests in the first place.

Back in 1964, the U.S. ranked 11th out of 12 countries on the first international mathematic study. Since then, the studies says our country's performance has remained steady or even shown slight improvement.

Steve Perry is CNN's education contributor. Steve, there's a perception that our education system has gotten worse that we are slipping behind. Was it ever good in the first place? Or are the rankings meaningless?

DR. STEVE PERRY, CNN EDUCATION CONTRIBUTOR: I don't know the rankings are meaningless because they do give us an indication of what's happening in the economy. When we look around the country we see children are struggling academically, whether you look at domestic measures, the state examinations, or international measures. In very few examples -- there are very few examples of our students doing well. In fact, in our nation's report card 72 percent of our fourth graders are performing at basic in science.

That's our own national standards. So we know that our children are doing poorly now, whether they used to do well, I think sometimes nostalgia kicks in and parents think they're smarter than they really are.

ROMANS: Michelle Rhee is the founder and CEO of Students First in the former D.C. public School chancellor.

Michelle, let's talk about solutions. This Brookings study, it implies that we're not going to find solutions by looking at our education past. We have to turn to the future for answers and come up with new ideas.

MICHELLE RHEE, CEO, STUDENTS FIRST: That's absolutely right. I mean, if you look at any measure of the past in terms of how we've done in education in the U.S., I think what we're going to find is failed programs and failed strategies. And so what we need to do is figure out what we need to do to move forward in the right way. And I think the research is very clear. That the number one in-school factor that dictates whether or not student achievement is going to go up or not is teacher quality. That's really where the focus needs to be.

We also need to ensure though that parents have good information and they have choices so that we never have families who are trapped in failing schools. And we also need to take a hard look at where we're spending the dollars. Especially right now in these tight budget times. We have to make sure that the dollars are going to programs and strategies that work.

ROMANS: I want to ask both of you very quickly to tie it for me. I think that trying to compare our education system to the rest of the world in some cases it just doesn't make any sense. Because sometimes you can be the best in science and math, but if you don't have opportunities to innovate in an economy, it doesn't matter. In this country, even with some of the rankings we've seen it's been a leader in innovation. It's the leader of new ideas and new companies because of the political system and other things. Should we just be looking at ourselves and just comparing even more locally than that within states and within districts and within towns instead of comparing ourselves, Steve, to the rest of the world.

PERRY: No.

ROMANS: Go ahead, Steve.

PERRY: Sorry. No, I think we do have to take it into consideration. The fact is our children are competing for seats in college against children from other countries. Some 40 percent of Ivy League is Asian. In fact if you look even among African or black people who go to college many of them are not African-American. They're at least one descendent away from another country. We have to be honest with ourselves. And more simply, call tech support. Where are you going to speak to someone?

Right now in our economy, right now in our everyday lives the impact of failing schools is taking shape, and we need to own that. If you don't believe the tests, if you don't believe in anything else, look at what you see before you. Go to places in which there's high technology concentration and see who is working there. Go to places with high mass concentration and see who is working there. And then look at who we are sending out to the rest of the world.

ROMANS: Michelle, you get the last word.

RHEE: Well it's absolutely right. I mean look, part of what we need for a healthy economy is to have those ideas. We need to be innovating. We need to develop new patents. That's great and if America is good at that, that's part of the equation. But we also need people, engineers to actually build the machines that the patents are about. We need people to actually be implementing the innovations that people are coming up with.

We're going to have over 123 million high skill, high paid jobs in this country over the next 20 years. And American school children will only be able to fill 50 million of those 123 million jobs because our kids don't have the skills that they need. So we'll be exporting all of those jobs, and then if you look at our economy and how it's doing compared to those other countries, they're going to be kicking our tails.

ROMANS: Oh. Kicking our tails. We'll leave it on that. Steve Perry, CNN education contributor. Michelle Rhee, founder and CEO of Students First. Thank you so much for joining us. Still so much to talk about on the subject. We'll talk about it again soon and get to some more solutions.

Do we have enough oil? New concerns about how much oil is really out there. How credible this is and what it could mean for oil prices going forward.

(COMMERCIAL BREAK)

ROMANS: Saudi Arabia's oil reserves may be grossly overestimated, and that is according to a U.S. diplomatic cable obtained by WikiLeaks and published in a British newspaper this week.

Richard Quest is host of CNN International's "QUEST MEANS BUSINESS."

Welcome back, Richard.

The cable sites statements from a former head of a state-owned Saudi oil company claiming that Saudi reserves have been overstated by as much as 300 billion barrels of speculative resources, or by about 40 percent. Richard, it's the world's largest oil producer. We've seen oil prices increase as tensions grow in Egypt. Egypt is not even an oil producer, oil exporter.

How credible is this? What does it mean for oil prices and the whole situation?

QUEST: Hey, this report from WikiLeaks came out, and oil barely budged. The report and the diplomatic cable is all to do with the difference between proven oil reserves of several hundred million barrels versus this 900 that of course the report that Saudi always said they had.

And what the difference of course will make a huge spike in oil prices if it were true. But it is speculation. And if you read what the diplomat actually wrote, there's been an enormous amount of questioning about what Saudi reserves actually are, and frankly even the former Saudi oil minister believes that perhaps it's time to have a proper reckoning on what Saudi has under the ground.

ROMANS: Oh, yes. All right, I want to bring in Pete Dominick, host, Sirius XM's "Stand Up."

Pete, hundreds of Chipotle workers in Minnesota were let go after an immigration audit targeted that restaurant chain for hiring undocumented workers. Immigration and customs focused here on Chipotle's paperwork, the government focusing more now on paperwork audits than the very unpopular workplace raids. More than 2,000 of these so-called i9 audits as they are called conducted in 2010 that is opposed to just 500 back in 2008.

Pete, the company told me that these jobs were paid above minimum wage with benefits. There's no worker shortage for these jobs. It's interesting because this particular illegal immigration story doesn't seem to fit conveniently into conventional wisdom that these are low paying jobs that Americans won't do. Also, the company told me some of these jobs, all of these jobs, the workers had access to health care. They could buy health insurance. And they could contribute to the 401(k) if they signed up. It's really a wrinkle.

PETE DOMINICK, HOST, SIRIUS XM'S "STAND UP:" It's really hard to find out who we're supposed to be angry at and who we're supposed to demonize and make the villain in this story. I mean these people, you can imagine, some of them if they are making that kind of lower wage, that kind of job they're probably between the ages of say 16 and 25. Even if it is a little higher than minimum wage and even if they do get benefits, they're still probably hovering around the poverty line, especially if they have a family to support.

These people probably didn't come here on their own, maybe. We don't know about the people that may have been illegal. It's hard to demonize. What we learn here is the bottom line, Christine, is we need a pathway to citizenship. I think in this case, the dream act might have affected some of these people. Then you look at Chipotle it seems like they were doing most of their responsibilities. Most Americans agree we should go after the employer, rather than the employee in these cases. And when I did my research on Chipotle I think I found out what Chipotle should be doing is advertising that they treat the animals, the pigs and chickens pretty well. I'm going to eat there now more learning about this.

ROMANS: It's a company that prides itself on being socially responsible. And socially responsible investors like to invest in this.

DOMINICK: Food with integrity.

ROMANS: Food with integrity is what they say. And I will tell you this, a spokesman for the company said look these people; we're going to let them go. They're going to go down the street and they are going to get another job someplace else in Minnesota. This is the way it is. But there are now audits under way in Virginia and D.C. and they will likely have to let go workers there as well.

Richard, the bottom line here, though, is quite frankly in this country, even though you have jobs that are down and you don't have so much illegal immigration because the economy has been so weak, we do have 9 percent unemployment and you do have unemployment of Americans youth, 25 percent. So there are some people who say wait a minute, there is a lot of people out of work.

Shouldn't we be enforcing laws so that you are working legally in this country?

QUEST: Look, the reality and the unsavory part of all form of illegal immigration and all the form of illegal working is quite simply this. There are jobs that some people won't do. There are jobs that will not get done.

ROMANS: But Richard that is not the case in this case.

QUEST: Hang on.

ROMANS: That one doesn't work in this case.

QUEST: I don't agree with you. I don't agree with you.

ROMANS: You don't think Americans want to work at Chipotle and get health benefits and a 401(k).

DOMINICK: I want to ask about Richard's citizenship at this point. I'm wondering about you, sir.

QUEST: Because the fact of the matter is at the end of the day the restaurant chain went for those workers because they were the ones that were available to it.

DOMINICK: That's not true. Christine did the homework on this. Right?

ROMANS: I talked to the company.

DOMINICK: These people weren't necessarily -- there's a lot of people who wanted these jobs. It's hard to know.

ROMANS: There's no worker shortage. They are filled. They're fine. Hang on!

QUEST: They're the ones that were doing the job.

DOMINICK: They were verified. They used the system. They thought they were being above board at Chipotle management in this case. What more can they do?

ROMANS: They say they're going to continue to try to use the e- verify system which allows them from the get go. They went twice through the process Richard of verifying everyone's paperwork. And the paperwork was verified because it was the assumption is either stolen or it was, you know, there was a mismatch of Social Security.

DOMINICK: What do you have against burritos, sir? I think is really the question.

QUEST: When you have in any society, when you have unemployment at these sorts of rates, 9 or 10 percent, 8 or 7 percent in the European Union, and you have people like Ben Bernanke coming out and saying there's going to be no massive reduction in unemployment any time soon, I'm paraphrasing what the chairman of defense said. Every job in every case is going to become a fighting ground.

ROMANS: Yes you're right.

QUEST: And whoever ends up with it, whoever, under what circumstances and what a pay package, that's going to be controversial.

ROMANS: And whoever has the job is going to want to keep that job. Because someone has a family to feed at the other end of that. One thing we probably can all agree on is that the government focus from workplace raids to document audits is a little less intrusive to families. Although many people involved in this case say it was pretty intrusive to families anyway.

OK, Richard Quest, thank you so much. Thank you Richard always nice to see you. Pete Dominick, Sirius XM, "Stand Up," thank you so much.

Up next, is investing in the defense sector a good move despite calls for budget cuts?

(COMMERCIAL BREAK)

ROMANS: The cover of "Fortune" says it all. The headline: "The Bomb Biz." So a political term oil around the world makes you nervous you might want to keep an eye on and invest your money in the defense sector.

Ned Riley is the chairman and chief investment strategist at Riley Asset Management.

Let's get right to the point. You have two funds that you like in this sector, the first one, Fidelity Select Defense and Aerospace Portfolio. Why you do like it and what is in it, I know it is up 16 percent over the past year. It is up again just in January and the beginning of February?

NED RILEY, CHAIR & CHIEF INVESTMENT STRATEGIST, RILEY ASSET MGMT: Well Christine it is a very well-managed fund, it has a forced rating according to Morning Star. When you start to look at its holdings, it is extremely well diversified, which I think investors need in this kind of environment. And if you go beyond the last twelve months its long-term record is very, very solid, three, five, and ten years have looked very well versus the S&P 500.

And as I said I think for everybody in their portfolios, should be a little defense stocks and aerospace, simply because, they act like gold but they are much less volatile. The second fund I like is this ETF, PPA. It is what we call a passive fund in the fact that it invests in all of the securities, in the defense and aerospace sector.

ROMANS: And that one is PPA, it is Power Shares Aerospace and Defense Portfolio, it simulates the market, got a low expense ratio, that's the beauty of the ETF right and it includes all the companies in the category?

RILEY: Exactly, Christine. People just don't have to worry about if they like the aerospace and defense area, this is the place to play it without even worrying about individual stocks versus a whole group.

ROMANS: OK. There has been a lot of talk about discretionary spending cuts, including defense projects. Maybe this isn't a good time to invest in the sector if you are going to have budgets coming under the knife and maybe Pentagon budgets coming under the knife that means they would have less money to spend on some of these companies. RILEY: Yes you are right Christine. There is no question; the budget is getting additional scrutiny. I am a little more sanguine about the outlook for the budget. The fact that I think people are under estimating the potential of reducing unemployment in this country, and the fact that you can reduce unemployment one percentage point means about 60 to $100 billion back into the government in different ways. In terms of what's going to happen in the future, Obama says he has to look at these items and make sure that he can tighten up the budget. Defense, I think, is still going to scale away with it. I have heard this for several years now and I do think that they are going to continue to spend.

ROMANS: Thank you so much, Ned Riley, Riley Asset Management, coming to us from Orlando, where it is much nicer than it is here in this very wet and cold northeast.

RILEY: I agree with you, Christine. No question about it. Take care.

ROMANS: Talk to you again soon.

So many people say retraining is the answer to America's job crisis. But there is just one problem, retraining doesn't seem to be working. I'll tell you why next.

(COMMERCIAL BREAK)

ROMANS: A question for you -- Have the fortunes of American's middle class been delinked from the fortunes of corporate America?

No matter where you fall in this debate, yes the growing economy will help the middle class eventually or no way the middle class has been left out permanently. One thing is clear; people's skills do not match the jobs that are coming back. From the White House, from business leaders, from teachers, from journalists, you've heard it 100 times. To be relevant in a new global economy, retraining is essential. But how and to what?

The fact is, we don't do retraining all that well. The Government Accountability Office this week issued a stunning report detailing the overlap, administrative bloat and tangle of government retraining programs. The verdict, after $18 billion taxpayer dollars spent, the effectiveness of all these programs is unknown, 9 percent unemployment, and 6 million out of work for six months and longer, a youth unemployment rate of 25 percent, those are depression levels for anyone under 19.

Retrain to be relevant. Technology and global competition mean the world is changing faster than workers' skills and their families can keep up. That means in a global economy you are on your own.

That's my "XYZ."

Thanks for joining the conversation this week on YOUR MONEY.

Ali will be back next Saturday, 1:00 p.m. Eastern and Sunday at 3:00 p.m. I hope you join me and "YOUR BOTTOM LINE" Saturday mornings at 9:30 a.m. Eastern.

You can stay connected with us and talk about all these issues 24/7 on Twitter, @Ali Velshi and @Christine Romans. We read all of your comments.

Have a great weekend, everybody! 

Hard Line Pressure on Iran

BLITZER: The United States is invoking the revolution in Egypt to put new pressure on the hard-line government of Iran. Let's talk about this and more with our senior political analyst David Gergen.




On Friday, Joe Biden, the vice president, Robert Gibbs now the former White House press secretary and today, Tom Donilan, the National Security adviser to the president. They issued very tough statements saying what happened in Egypt, the Iranian government should let demonstrators flourish there too. It seems like it's a new strategy by the Obama administration to go after Iran.

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: They've had a strategy all along to undermine if they could this government. They really believe it's a repressive government.

BLITZER: But when the demonstrations occurred in 2009 in Iran they were very cautious. You didn't hear a lot of bluster statements coming out, but you're hearing a lot now.

GERGEN: Yes, and what we have is there's a lot of talking around about demonstrations on Monday and organizers are trying to get a big -- get that up and moving. One Facebook area apparently has some 30,000 Iranians who have pledged that they would come out on the streets on Monday. Very interestingly, this young man in Egypt, the man from Google wore a green wrist bands showing solidarity. I think Tom Donilan issued this very statement.

BLITZER: Well, let me read it to you because they put it out. The White House statement today from the National Security adviser by announcing that they will not allow opposition protests the Iranian government has declared illegal for Iranians what it claimed noble for the Egyptians.

We call on the government of Iran to allow the Iranian people the universal right to peacefully assemble, demonstrate and communicate that's being exercised in Cairo because the Iranian regime praised demonstrators in Cairo, but won't allow similar demonstration to take place in Tehran.

GERGEN: All politics is local. The United States has long believed is that this younger generation in Iran was the great hope for the long-term future for the U.S./Iranian relationship, but they're stepping up the pressure on both centrifuges.

We've heard about sabotaging the centrifuges working with Israel and they're stepping up pressure now on the regime through the demonstrations. They see this moment. They're seizing this moment. I think that what I see they're writing -- it's going to ride a hurricane here.

But it's also interesting to me, Wolf, that they're calling attention to Iran, but not to Yemen where they were -- the Yemen government really cracked down on demonstrators today. Yemen we're not quite so sure we want a democracy in Yemen --

BLITZER: Yemen, they have the issue of al Qaeda in the Arabian Peninsula group. The U.S. is very nervous about that.

GERGEN: Very nervous about that so they want to put the pressure on Iran. They want to put the pressure on Syria but not so much -- the White House is moving in very aggressive ways in this and other stories about the president himself.

BLITZER: It was interesting. There's a story that just moved on the "New York Times" web site about differences between the president, he was supposedly furious with his Secretary of State Hillary Clinton and -- for the way they were dealing with some of the sensitive moments of the Egyptian revolution.

GERGEN: There's been an intentional leak coming out. It must have come from the White House. They make it clear, by the way, he wasn't angry at her what she said, but not happy with the content of what she said --

BLITZER: Not happy with the statement from Frank Wizner.

GERGEN: Very unhappy with Frank Wizner, but not happy with actually what Hillary Clinton said and that the president called John Kerry, the senator, before he went on the Sunday talk show to say, I want you to counter what my only secretary of state has said along with Frank Wizner.

This is the first time I think we've seen this kind of riff between the Obama White House and the Clinton State Department. I can tell you. While they were careful, there will be a lot of unhappiness at the State Department about this story.

BLITZER: The point being that when Wizner came back, a former U.S. ambassador to Egypt, he told a group in Munich, well, Mubarak has to stay through September for stability. And it looked like Hillary Clinton, the secretary of state, sort of ratified that.

Then they put out John Kerry on the Sunday morning talk show saying they don't speak -- Wizner doesn't speak for the Obama administration.

GERGEN: Right, but clear what this "New York Times" leak is trying to do is make it clear that all along the president was with the protesters and he's not happy it got spun into being a caution -- remember we all interpreted Hillary Clinton's statement as being let's slow this down a little bit, we need orderly transition and seemed to be in response to other nations in the region saying don't push Mubarak out too fast.

BLITZER: They weren't happy with Hillary Clinton initial statement that Egypt was stable. They weren't happy with Joe Biden's statement that Mubarak was not a dictator. All of that moved very quickly and there's a lot of little friction going on.

GERGEN: From the State Department's point of view it's going to be you try to make Obama look good, but made our boss look bad. We're not appreciative of that. Thank you.

BLITZER: David, as usual thanks very much.

GERGEN: OK, thank you. BLITZER: David Gergen, our senior political analyst. Good stuff going on here in Washington as well. When I say good stuff, a little intrigue.


Transcript from the Situation Room aired on February 12, 2011.

ANDERSON COOPER AC360 : EGYPT IN CRISIS

Double Talk and Deceit In Egypt