Transcripts For CNNW Fareed Zakaria GPS 20150419 : vimarsana

CNNW Fareed Zakaria GPS April 19, 2015

Also, a pope and a politician trading tough talk. Why is the president of turkey taking on the vicar of christ . And what does it say about turkey today . Then david brooks games out the 2016 president ial field. Nd avenue and jeffrey sacks tells us why 2015 is our last chance to act on Climate Change. But first, heres my take. The Obama Administrations Foreign Policy energies are now fully engaged in the middle east. Negotiating the iran deal, sending special forces into iraq, supporting saudi air strikes in yemen, working with the syrian rebels. Whatever happened to the pivot to asia . Remember the basic argument behind the pivot was that the United States was over invested in the middle east, a crisisprone region of dwindling importance to the American National interests. Asia, on the other hand, is the future. Of the worlds four largest economies, three are in asia if purchased by purchasing power parity. As singapores former leader often told me, america will remain the worlds dominant power in the 21st century only if it is the dominant pacific power. And yet, the United States is once more up to its neck in the middle eastern morass. President obama and john kerry spent little time in asia, few new initiatives have been announced. The transpacific partnership, a trade deal that was at the heart of the pivot, faces a tough road in Congress Despite the fasttrack agreement reached this week. The opposition comes mostly from the president s own party. The administration lobbied hard to get its closest allies to spurn chinas new Asian Infrastructure Investment Bank only to be rebuffed by everyone, including great britain. The future stability of the world will not rest on whether the houthis win or lose in yemen. Yemen has been in a state of almost constant civil war since 1962. Global stability will be shaped by how the worlds established power handles the new rising one, china. As harvards Graham Allison notes, since 1500, of the 15 cases where this transition of power has taken place, 11 times the result was a war. Most of the attention of the pivot has been focused on deterring china. Thats a necessary and important component of maintaining peace and stability, but an excellent new academic volume qings the next great war the roots of world war i and the risks of a United States china conflict, highlights in addition to deterrence, the United States also needs to work hard at cooperation, at integrating china into the global system. On this front, washington gets poor marks so far, something we touched on last week. China is now the worlds secondlargest economy. Actually the largest when measured by purchasing power parity. And yet, its voting shares in the imf is equivalent to that of the netherlands and belgium combined. The United States congress, mainly republicans, refuses to pass legislation that would change this, even though it wont affect americas voting share in this group at all. The Obama Administrations opposition to the Asian Infrastructure bank was, quite simply, dumb. The bank is just one more way to Fund Infrastructure projects in asia. If china cant set up a Regional Bank to finance bridge building, what influence is it legitimately allowed to have . Of course, having chosen to oppose the bank, the administration ended up with the worst of all worlds, being defeated in its illchosen fight. Washington has a strong hand. It remains the dominant rulesetting power in the world in a way that has never really existed in history. Its militarily in a league of its own. It has more than 50 treaty allies. China has north korea. But the Obama Administration needs to start believing in its own grand strategy. Let the iraqis and saudis feud. Let yemen continue its now 50yearlong civil war. Let iran squander resources in syria. Washington should turn its energies, attentions, and effort to asia. For more, go to cnn. Com fareed and read my Washington Post column this week, and lets get started. Take a look at these satellite photographs. They show something physically small but geopolitically huge. China is bulking up and building up many disputed islands in the south china sea. Here are some before and after photographs of chinas work released just this week. Admiral harry harris commander of the u. S. Pacific fleet, recently said that what china is doing in the area is, quote, creating a great wall of sand more than 1. 5 square miles worth so far. It raises questions about china, questions being asked more and more these days like, is china an enemy . Is it going to overtake america as a superpower . And what are the intentions of chinas new leader, xi jinping . To help us get to the bottom of all this, i have two of the sharpest people i know on the subject. Hank paulson was the 74th secretary of the treasury and is the author of a great new book dealing with china an insider unmasks the new economic super power. And evan osnos was the new yorkers china correspondent for years and author of age of ambition chasing fortune, truth, and faith in the new china. Hank, let me start with you. How would you answer that question . People say first you begin your book by saying china will likely overtake the United States has the Worlds Largest economy. Yes, fareed. As you well know, china is right now the second largest economy. It puts up more than half the buildings on earth. It consumes half the cement, half the coal, half the steel. This is a country thats a new china. Theyve emerged as a formidable competitor. We just cant let it disintegrate into debilitating or destructive competition. Its very, very important, its in the United States best interest that we look for ways to get important things done with china because we have many shared interests, and again, i think we need to be a bit more strategic as we think about the u. S. china relationship. Evan, what do you think of these Foreign Policy moves . A lot of people say Chinese Government needs growth, this is what the communist party has promised to deliver. They know growth is slowing, so they search for alternatives and nationalism is the alternative, which means they push, you know they bound their own boundaries and bump up against their neighbors. The economy for them is priority number one. They have to reenergize whats going on with the economy, knowing full well theyre not going to be able to count on 10 growth a year the way they have for a generation. How do you energize people . How do you keep them together . How do you get people thinking about the country as a power house in the world . One of the ways you do that is by what the naval strategists in the u. S. Are describing as facts on the water, building these reefs into islands in the south china sea, creating essentially the physical infrastructure for the day when china feels that its territorial claims can now be asserted. China believes it has the rightful claim to a vast portion of the south china sea, which is claimed by other countries. At the moment, china is not interested in provoking a conflict, a physical military kinetic war with the United States. It knows that would be a doomed proposition. But what it is interested in doing is letting the world know that its going to take a much more assertive posture in advancing its own interests not just economically but also in terms of its physical security. Hank, you part of the fascinating thing in the book is you have met with every one of these chinese leaders, including xi jinping before he was president. In conversations with them, i mean, a lot of it is formal, im sure, but what is the sense you get of them in terms of do they want to be number one . There is no doubt that xi jinping is going through a massive transformation of a country where reform is stalled. And its not just the economy. Its the urbanization process. Its the military. Its the Foreign Policy. You know, its the media. So he is hes not waiting for people to declare china a major power. He believes they already are a major power. Hes looking to influence on the global scene, you know, and its not surprising. Thats what every other great power has done, including the United States. Now, he also wants and needs a Good Relationship with the United States of america. So he wants you think he wants oh, absolutely. He has got multiple challenges on his hands. Some of the things hes trying to do are not only very important to china, theyre very important to us in the United States of america. Hank, i have to ask you, since i have you here. Around the world, everybody talks about the fact that the u. S. Economy at the end of the day is the strongest economy certainly among the Major Economies in the world. Its the one economy that seems to be once again the engine of the world. Whats your take on where we are today . Well, youre right. Thats the good news. The good news is were growing, were creating jobs, Property Values are rising. The bad news is were not growing quickly enough, and theres tremendous income disparity. To me, and i want top turn this around with china again, the greatest threat to our longterm preeminence is not china. Not at all. The greatest threat is our own political inability to deal with the sorts of things we need to deal with to strengthen and revitalize our economy, restore its competitiveness. So to me, what do we need to do to revitalize our economy . Its not just education and training. We need a tax system that will let our companies be competitive. We need a federal income tax system that will let us raise the money we need while creating jobs. We need to be aggressive in terms of trade policy. China is leading in the trade area. We need to be there. And the last thing i would say is for all those that are rooting against china, be careful what you root for because all of our Economic Issues become greater if we dont have china contributing to global growth. Hank paulson, evan osnos, terrific conversation. Thank you so much. Next on gps, another secretary of the treasury, this time from the other side of the aisle. He will give us his take on the u. S. Economy. Larry summers, when we come back. After all, healthier doesnt happen all by itself. It needs to be earned. Every day. Using wellness to keep away illness. And believing that a single life can be made better by millions of others. Healthier takes somebody who can power modern health care. 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Remember, while your medication is doing you good a dry mouth isnt biotene, for people who suffer from a dry mouth. Dont just visit orlando visit Tripadvisor Orlando tripadvisor not only has millions of real travelers reviews and opinions but checks hundreds of websites so people can get the best hotel prices to plan, compare and book the perfect trip visit tripadvisor. Com today we just heard from the 74th secretary of the United States treasury. Now let us hear from the 71st. Lawrence summers was treasury secretary under president clinton, director of the National Economic council under president obama, and was, of course a president of Harvard University as well. Welcome back to the show. Good to be with you, fareed. You have been writing a great deal and very concerned about something you call secular stagnation. And its important that people understand what this idea is. The idea is the economy is grow,ing but jobs are not being created, productivity is not rising anywhere near what it used to in the past because we have reached a point at which for some reason the economys basic growth rate is just not going to be very high. Is that fair . Thats right. And what ive emphasized that this is really a global phenomenon of the industrial world, and what its got to do with is we seem to have a lot of savings. More savings because theres more inequality. More savings because developing countries are accumulating reserves. More savings because people are paying down debt. And weve got much less demand to put that savings to use. Hardly any demand for investment, but all that saving, all that forgoing spending and no investment imparts a basic sluggishness. And so what youre saying is because this is a kind of deep structural problem, not just about this cycle, not just about the banks being overleveraged, that what we need is a kind of entirely new and aggressive government policy or maybe a return back to something that was done in the 30s, which is really significant fiscal stimulus government spending. I think its madness that at a moment when the Interest Rates are at a record low, when the nonemployment of men is at a near high, that we are doing less investment in infrastructure than in any time since the Second World War on a net basis. It is crazy that we dont take advantage of this moment to fix kennedy airport, to do something about 30,000 schools with chipping paint. But its also about private investment. We need to figure out how to stimulate both Public Investment and private investment. Thats really the priority for our children. People worry about the deficit. Yes, the deficit is a concern, but were borrowing money at 1 or less on average to finance the federal government. Thats not the real problem. The real problem is that were not making investments that could be paying off with very high rates of return for our children, that were deferring maintenance and leaving them with a large liability, and thats what i think we ought to be worried about as a country. I think if we worry about that, weve got the prospect of doing whats most central and important, which is delivering for the middle class. Delivering for the middle class is clearly going to be the centerpiece of Hillary Clintons campaign. People say the Democratic Party has moved to the left. What does it mean specifically, what can a new president do to deliver for the middle class . Investing heavily in infrastructure, take a burden off the future, put a lot of people to work, expand the economys capacity. Raise the minimum wage, give unions a chance to organize in a way that they havent really had a chance because the way the labor law has been enforced or not enforced for the last quarter century. These things would make a difference over time for the middle class. Move to a more progressive tax system where we close tax shelters and use the results of closing tax shelters to provide benefits to middleclass people. These are all elements of a strategy that would accelerate growth in overall incomes and make sure that a larger share would go to the middle class, and thats got to be the central priority for the country. My hope would be that the president ial campaign will be about different strategies for doing that, but to start with, we need to know what the fundamental objective is, and i believe that objective should be raising middleclass incomes. When you look at all these republican plans, economc plans, which focus very substantially on deficit reduction and also on tax reform, what do you think of them . I dont think the deficit is our biggest economic problem. Weve reduced the deficit from 11 of gdp to below 3 of gdp. Its lower now relative to the economy than its been on average over the last 40 years, certainly than it was when Ronald Reagan was president. Thats not the deficit i worry about. The deficit i worry about is a huge backlog of deferred maintenance that were leaving to our children. The deficit i worry about is an educational system thats not meeting the needs of more than half of the kids in American Public schools. The deficit i worry about is in equal opportunity, when the gap between rich kids and poor kids in terms of their ability to go to college has never been greater. I worry about providing enough demand to put everybody to work in our economy going forward. This is not the right moment for a lurch to austerity. This is not the right moment to cut the fbi or to cut further the irs, which is already losing the ability to keep the tax system honest by auditing tax cheaters. This is a moment of record low Interest Rates. That is a moment for us as a country to do what a business would do, which is to take advantage of low borrowing costs to invest in our future. And thats what i hope we will do increasingly in both the public and in the private sector. Larry summers, pleasure to have you on as always. Next up, a president versus a pope. Whom would you bet on . This week president erdogan of turkey condemned

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