arab emirates. we're really standing about 50 miles from iran, where u.s. officials called an escalating conflict with america urgent. an interesting word. iran claims it shot down an american drone in a looks a lot like the one you see on your screen. it's an rq 170 cen continual. it's a drone that's so secretive it's image can only be found on a few websites. it comes with the most sophisticated spytek nolg there is. it was used in the killing of osama bin ladin. if that's true, the technology could be in the hands of iran and other countries. this weekend leon panetta called iran an international pariah. we're hearing headlines left right and center here, the clock ticking on iran, getting a nuclear weapon. which is something nobody in this region looks it forward to. so far, recently we've had israel threatening to bomb iranian nuclear facilities. iranians attacking the british embassy. you had countries like british, france and the netherlands taking out their ambassadors on the heals of that. and have you american troops leaving a rack, which leaves a hole in the the region all of which is contributing to a mass arms race here. iran is defiant. prices at the pump surging. that's why iran has such a powerful hand. it trails only sought saudi ara resources for opec. we have two guests with me tonight in abu dhabi. thank you both for coming "outfront" tonight. why is iran doing this right now, this very quick and very rapid escalation. >> iran feels agitated by the ongoing situation around them. we have the situation in syria. syria right now the regime, an important member of the ariane axis is on the verge of collapse. if the regime collapses or changes over there, that's a major breach. >> is it going to get worse? and how much worse? i mean, there's people now saying america is going to be forced to intervene in some way militarily? >> on the military side, that remains to be seen. the big concern is the effect on oil prices, and how -- what effect any attack on iran would have there. we're already seeing prices rising in response to these tensions america has tried to make the point, pay, stop buying iranian oil. technically that's a difficult thing to do, even if it happened, might have an adverse effect. and that would be that there's less oil in the market, and that means the oil that's out there is worth more, that means pump prices in america go up. how much? >> this is a huge problem. if the sanctions are effective. you will have taken the second biggest exporter of opec off the market. prices might rise to $150 a barrel. where they are now is 100, to 110. the saudis could make up some of those vast exports. >> it's interesting, when you think about it what happened the last time, 2007, that was the peak of the economic crisis in the u.s. and maybe the straw that broke the camel's back. sheik mohammed, which is a complicated relationship, we sell them a lot of weapons, iran does a lot of business with dubai. he doesn't think that iran's going toe get a nuclear weapon. >> there are conflicting views on this over here. you'll hear differing views from officials. we heard today from the saudi foreign minister raising alarms about the iranian nuclear program as well. so and even -- the wide belief is even if iran goes nuclear, it's going to maintain an opec policy. how do you ever meet someone over here who really has any doubts that iran will eventually become a nuclear power. >> and the arms race then just continues? we're in the midst here, in this region. of maybe the biggest arms race this region has ever had. >> if iran goes nuclear, do some of the other arab states, sauddy arabia, for example, do they also try to go nuclear and intensify the arm's race, or put in place some backing with the u.s., some cold war style containment of iran and somehow deal with the worst consequences, prevent the worst consequences of obtaining a nuclear weapon. >> all of these issues depend on the stability in saudi arabia and the united arab emirates. right now i'm standing on 10% of the world's oil, 50 miles from iran. terrorism was also on the front burner here in the united arab emirates today. police chiefs were gathering right here in abu dhabi, at the lapd global symposium. there's 40 million tourists a year that come to las vegas, he's extremely concerned about terrorist attacks, here's what he said. >> the lone individual, the extremist is the one that concerns us the most. i think they've demonstrated in other places in the world, you don't necessarily need the sophisticated bomb and a variety of things to impact -- really hurt people, and accomplish what they want to. >> i asked him if if the u.s. and middle east police officials were actually sharing crucial information about extremists. >> we're not where we need to be. you know, i've been involved in policing for many years. we've made some significant strides, you know, since 9/11, but i don't think anyone would say we're where we need to be. >> well, a lot of people wonder why dubai, a place where burqas beer and extremely skimpy bathing wear mix in abundance has not been targeted by terrorists in the middle east. the sheikh believes people come here to make money. it's simple. an opportunity. people that might blow themselves up in other countries do it when they get here. here's the quiz, and please don't google it. how many countries use the euro. take a guess. >> guess what happened here in herman cain gets out of the race, and i've got a job offer for herman cain right here in abu dhabi. the story we couldn't believe from kentucky. a church banning interracial marriage. it's shocking and disturbing it could happen in america today. a big development and the bride comes back out front tonight. my doctor told me calcium is best absorbed in small continuous amounts. only one calcium supplement does that in one daily dose. citracal slow release... continuously releases calcium plus d for the efficient absorption my body needs. citracal. but sometimes i wonder... what's left behind? 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[ female announcer ] from neutrogena® naturals. so skin feels pure and healthy. fore! no matter what small business you are in, managing expenses seems to... get in the way. not anymore. ink, the small business card from chase introduces jot an on-the-go expense app made exclusively for ink customers. custom categorize your expenses anywhere. save time and get back to what you love. the latest innovation. only for ink customers. learn more at chase.com/ink all right. there's big news in europe. as europe is struggling to survive and stay together, the two people making all the decisions, angela merkel of germany and nicolas sarkozy of france. they're changing the rules and say we're going to get tough. no more easy money. herer are a couple automatic changes, automatic sanctions for member countries that fail to keep budget deficits at a certain level. that's 3% of gdp. that's a big, big problem frankly for all european countries. also requiring countries in the euro to pass laws that require a commitment to a balanced budget. that's interesting, considering that's something in the united states that is a huge battle right now, especially in a time of economic duress. but they're pushing in europe. the european bailout fund is permanent by the end of the next year. so, we'll see what all this means, but 134 of these are pretty stark and brings big changes for europe. which brings us to our number tonight, 27. that's the answer for those of you who didn't cheat or google or know the number of nations in the european union. merkel and sarkozy hope to get all of those countries to sign on to new rules. makes herding cats look like the easiest thing in the world. right now, we'll see. 17 is the other number of the night. that's the number of countries that use the actual euro. speaking of money and the deficits, let's talk about the united states and the big issue at home tonight is the payroll tax. talk heated up in washington, and the issue is pretty much everybody likes the payroll tax but don't agree on how to pay for it. democrats want to tax the wealthy, particularly millionaires and billionaires. republicans want to pay for it by maybe freezing federal salaries or something like that. here's what president obama said today. >> i know many republicans have sworn an oath never to raise taxes as long as they live. how can it be the only time there is a catch is when it comes to raising taxes on middle class families? how can you fight tooth and nail to protect high end tax breaks for the wealthiest americans and yet barely lift a finger to prevent taxes going up for 160 million americans who really need the help. it doesn't make sense. >> okay. of course, it's not that simple, as we've pointed out many times. if you let the bush tax cuts go away for people that make over $250,000, you raise $650 billion. there's a lot of tough choices to be made. gloria borger joins us now, along with paul begala. let me start with you, gloria. what's the outcome of the payroll tax because nobody wants to not have it extended by the end of year? >> i think in the end they're probably going to extend it. the president is on terra firma. at the goes out there and he wants to extend these tax cuts for the middle class. and 7 out of 10 americans, erin, are with him on that. also, the democrats came out with what they say is a compromise. they say, look, this surtax on millionaires, we're going to make it temporary. we're only going to have it for ten years. they also proposed some cuts on the spending side. so politically at least, erin, i think they're really on very solid ground. my question to dan would be, how do republicans, dan, argue they're for tax cuts except for this one? >> i think obama had a pretty good dig at them. republicans fight correctly in my view against higher tax rates in terms of the bush tax cuts, and yet they were a little bit reluctant to get out front and let the democrats actually outflank them to the right on middle class tax cuts. now republicans are back on the tax cut reservation, and instead we're fighting over how to, quote, pay for these tax cuts. the democrats want some class warfare tax hikes, and the republicans want to slightly reduce the growth rate of government spending. >> paul, why not more substantial spending cuts from the democrats, and then they can really claim the high ground here? >> first off, let me correct the record. 27 republicans, the majority of republicans in the senate voted against the republican way to pay for it. they voted against the salary freeze, which was an obama initiative. they want to extend that, the republicans did. and spending cuts. the majority of republicans in the senate don't want to pay for this tax cut the way the republican leadership does. they just don't want it. why? they supported every tax cut since 1776 under abraham lincoln, why this one? i think -- this is a mean thing to say. i believe that republicans are acting like they'd rather hurt the economy in order to hurt obama politically, but what they do is hurt themselves politically actually. if this obama middle class tax cut is killed by the republicans, it could cost a million jobs according to independent analysts. it could take 2% off the gdp according to the jpmorgan report. this is a big deal economically. i fear republicans are making the calculation saying, look, as one republican aide said, we can't afford to give obama a win. that's a different issue. but i think that's what's going on here. they're tanking the economy to hurt obama. >> erin, it seems to me the president's got himself a pretty good campaign issue here, doesn't he? >> he has a good campaign issue. >> i think you're absolutely right about that. especially when you get dan to admit that. let me ask each of you one more thing. i want to switch it over and talk about donald trump. the kissing of the ring, i can't resist. even here everyone is talking about. when is donald trump going to endorse, and how important is the endorsement, gloria? >> honestly, i think it's a side show. i think some may show up in the debate, but in a general election if you're a republican nominee, you don't want to be seen as being too close to donald trump, what after all is a birther, and that the doesn't work too well with independent voters. i think it's a reality show, right? >> i guess that's kind -- i guess that's kind of true. interesting to note, one final thing, dan. i always found it like, you get -- chris christie gets out of the race, makes his endorsement immediately for mitt romney. everybody thought it would matter so much. it didn't even move the needle. >> republicans are very hungry for someone to adopt the mantle of ronald raken, and so far it doesn't seem like there's a reagan in the race. they may have to wait until 2016 for rubio or ryan og something like that. >> all right. paul, bottom line, you think newt's got it in the polls now for the next three weeks, or will we see another swap? this is an over/under question. >> you're a financial expert. you know the volatility in the stock market, we need a political value timt index or something. it's an open question. can newt hold a lead for three weeks? that would be a long time in this race. it's amazing. >> and by the way, i was talking to republicans erin, the question they're saying to me is, will newt implode, and if he implodes, when is he going to implode? before he gets the nomination, if he gets it? or will he do it after he gets the nomination? there's a lot of fear on the republican side about newt gingrich. >> all right. well, i want you all to know that over here i found this great magazine in arabic, because i knew herman cain is looking to do something now, right? perfect timing. see if this shows on camera here. the magazine is called the "999." herman cain, editor and chief. >> outstanding, erin. >> i couldn't resist. >> be the headhunter there for mr. cain. >> thanks. >> sure. >> thanks so much to all three of you. i really appreciate you taking the time. all right. ahead, a lot of people say there's no arab spring in the united arab emirates. it's way to wealthy. that's not the case. amnesty international calls them the uea-5. five men who dared to speak up ended up spending some time in prison. we're going to have a frank conversation with the prime minister of the united arab emer its, sheik mohammad about that very issue. first here's mansour, i met with him, one of the uan-5. analysis. information. i trade on tradearchitect. this is web-based trading, re-visualized. streaming, real-time quotes. earnings analysis. probability analysis: that's what opportunity looks like. it's all visual. intuitive. and it's available free, wherever the web is. this is how trade strategies are built. tradearchitect. only from td ameritrade. welcome to better trade commission free for 60 days when you open an account. they won't be beat. oh, actually... then i'd be like, you rule! and my kids would be like, you rule! oh, load up the sleigh; this is going to be a great christmas. 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[ female announcer ] to nurses everywhere, thank you, from johnson & johnson. okay... uhh. the bad news, it's probably totaled. the good news is, you don't have to pay your deductible. with vanishing deductible from nationwide insurance, you got $100 off for every year of safe driving, so now your deductible is zero. the other good news ? i held on to your coffee. wow. ♪ nationwide is on your side ( laughing ) it's actually a pretty good day when you consider. that's great. in honor of its 40th anniversary, the united arab emirates has had a lot of cultural events over the past few takes including quite a few that have something to do with camels. since every day feels like a hump day when you haven't slept in a few days like our team, we think it's fair to do a camel report from abu dhabi. we found the director of the emirates heritage center and asked him three questions. how many words are there for camel in arabic? >> in arabic there are more than 100. >> wow. why is that? >> it's about the father and mother of the camel and the area that the camel was born. >> now, when you see a camel in the desert, is it wild? >> no. because every camel, every owner has a special mark on the camel. it's called alazid. >> a mark on the camel. third question. i know you're getting ready in abu dhabi for a beauty contest for camels. the winning camel can win $100? is she pretty enough? >> this is for the racing only. we use it for tourists and for the students also. a special camel is a black one. >> those are the most beautiful? >> yeah. >> thank you. >> thank you. >> all right. tufan might not be beautiful enough, but we'll introduce you to beautiful, black camels on another day. next, we talk to sheikh mohammed. he has a lot of camels and a horse collection in the country. he often races in the kentucky derby. he's the prime minister of the united arab emirates, ruler of dubai, protesters and all that is on the table after this. a possible 28,000 job cuts approximate if the postal service goes ahead with big cuts. do you still support it? that's now "outfront." 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[ male announcer ] we are insurance. ♪ we are farmers ♪ bum, ba-da-bum, bum, bum, bum ♪ welcome back to the second half of our show where we make the calls, do the reporting and find the out front five. number one tonight is iran. tensions are rising and escalating quickly. u.s. officials say it's an urgent situation in iran tonight. we're standing 50 miles away in there live in the united arab emirates, the capital, abu dh i dhabi. we'll show you a picture. it's supposedly one of the most advanced spy technologies that the americans have. now it's unclear exactly what happened to the drone and who may get ahold of the technology if indeed this happened. analysts we talked to tonight including robin mills say oil prices could go as high as $150 or $200 a barrel, if there is a disruption in iranian oil supply. syria agreed today to allow arab league observers into the country, but demanded sanctions be dropped in exchange. this is an interesting story because sources here say a lot of arab governments are going along with the sanctions because they think they have to, because the united states wants them to and the international community wants them to. on the side they call the assad regime and say we'll keep doing business as usual. it's going to be interesting to see how this all plays out. more than 4,000 have died in the protests. number three, it is post office. we could see massive job cuts, up to 28,000 in part due to cost-reducing measures which might include getting rid of next day delivery in some areas. dropping to five days is also on the table. 28,000 workers could lose their jobs. as i indicated 100,000 americans could lose their jobs by 2015. the national association of letter writers says degrading standards not only hurts the public and the businesses we serve, it's counter-productive for the postal service because it will drive more people away. number four, big meetings in europe, but today standard & poor's put the euro zone countries, 15 on a negative credit watch. that means there's a 50% chance they could get a downgrade in th