Foreign Policy Begins at Home: The Case for Putting America's House in Order

GEORGE STEPHANOPOULOS: If Richard Haass needs an introduction here, we're all in a lot of trouble. (Laughter.) So I'm not going to -- I'm not going to waste any time; I'm going to get right to it. The title is "Foreign Policy Begins at Home," Richard Haass. And I guess -- hard for me to imagine that any previous president of the Council on Foreign Relations could have written a book of that title, even right in the first couple pages that it borders on heresy. So why take the risk?

(Laughter.)

RICHARD HAASS: If I say "good question," is that the end of the meeting? (Laughter.)

The reason to take the risk is, to put it bluntly, I'm worried. And I look at the world, and I look at what we're doing. And for the first time in my professional life, I am genuinely concerned about the trajectory of the United States and the trajectory of the world.

And so I came to this position for really two reasons. One is on necessity. The foundations of American strength and American power need to be repaired. I see Pete Peterson here. Pete has been sounding this bugle for years. Whether it's entitlements, whether it's infrastructure, which the president talked about in his press conference yesterday, whether it's immigration reform, whether it's K-through-12 schools, we all know that this country is underperforming at home. And one statistic to show it is we're growing at roughly half the average post-World War II rate.

But we've also over the last 10 or 15 years badly overreached abroad. I disagreed with the Iraq war, and I disagreed with the latter phases of the Afghan war, when the United States tripled its troop presence there. And then basically, in both countries, we tried to remake these societies.

So this combination of overreaching abroad and underperforming at home, I came to the conclusion that this country was really losing its way, that we were making big mistakes. And the good news, though, is that I thought we had an opportunity, almost a respite. We had a moment in history where we could afford to focus at home, to get things right.

STEPHANOPOULOS: Is that in 2000, when we had a huge surplus? Is that what you're talking about?

HAASS: No, even now. I actually think the world is a relatively forgiving place. It may seem odd, because, you know, we're bombarded with headlines from Syria, North Korea, Iran's nuclear program. But think about it. There is nothing out there now on the scale of a Nazi Germany or Imperial Japan that both is inclined to oppose and has the capacity to, nothing like the Soviet Union during the four decades of the Cold War. So we actually have a little bit of time and space. And again, we have the necessity, I would argue, of doing it.

Now, the reason I -- to finish the thing about why I wrote the book, though, is it's complicated. You've got this combination of we're short on resources, we don't have the cushion of fiscal surplus that we had 10 or 15 years ago. It's an awfully complicated world, a hell of a lot more complicated than the relatively fixed, predictable bipolarity of the Cold War. There's lots of stuff coming at us. Our inbox, if you will, is overflowing.

So part of it is, how do you sort through this? How is it that we as citizens or policymakers or members of this organization, what have you, how is it we figure out what to do, what not to do at home and abroad? How do we get the balance right? And that's why I wrote --

STEPHANOPOULOS: You say it's complicated. It's also subject to caricature. And you're upfront about that as well. I could neoconservatives saying this is a defeatist attitude. And as you talk about the other caricature you're subject to, maybe even previous presidents of CFR would say this, it's isolationist.

HAASS: I fully expect to get hammered on both. Let's take them both.

I'm not a declinist. But again, I do think we're underperforming, which is not a commentary on our potential, but it's a comment on what we've been doing. I mean, how could you say -- how could anyone be happy with economic growth rates of 1 1/2 or 1/7 percent? How could anyone -- you know, let's put it this way. Do you anyone who comes to the United States to go through our K-through-12 schools? They may come here to go to Stanford or Harvard. They sure as hell don't come to go to the average public school in the United States. Has anyone recently landed at Kennedy Airport? Does anyone think that is anything but Third World infrastructure? (Scattered laughter.)

And then our immigration system, we bring the most talented people around the world, we give them four years at Harvard, Stanford, Princeton, Yale, and then we say thank you, but now you've got to go? Does anybody think this makes sense? I don't think that makes you an isolationist. What it makes you is genuinely concerned about what we are doing and not doing here at home.

And to say there have to be limits to what we do abroad, again, I don't think that's isolation. I call that strategy. I call that priorities. Yes, we can continue to do if we want Iraqs and Afghanistans, but is there anyone who really thinks we're getting a return on investment? Does anyone really think that we're getting something that justifies the 6,500 lives we lost or the 40,000 casualties or the $1 1/2 trillion these two wars cost?

STEPHANOPOULOS: Now, what do you that of people who, perhaps in this particular political environment, say that it also sounds something like a partisan agenda? It lines up a lot more, at least from what you were just talking about there, with what President Obama and the Democrats are talking about than with what Republican leadership in the House and the Senate are talking about.

HAASS: I don't think it is, for a couple of reasons. I would expect that -- you know, as much as I'd like people at the White House to buy and read this book -- (laughter) -- I doubt they'll be, you know, stocking -- you know, putting it in their Christmas stockings.

I'm critical of the president for, as I said before, what he did in Afghanistan. I thought the tripling of U.S. forces and getting ambitious, if you will, in Afghanistan was strategically ill-advised.

I'm very critical of him in the book for what he didn't do on Simpson-Bowles, essentially bringing into existence this commission meant to fix the long-term fiscal challenge and then essentially, as soon as it got created, it also got orphaned. And indeed, I think ultimately, when historians write about his presidency, they're potentially going to be quite critical of what was not done there.

Now, there are some things I do like. I like, for example, the quote-unquote, pivot towards Asia. I think that makes sense strategically that the United States would spend so much more in the way of its calories towards trying to keep stability in Asia, where the great powers do coalesce. I do like the idea of putting some limits on what we're doing in the Middle East. I hope we put a greater emphasis on North America, this new market of 450 million people, Canada, the United States, Mexico, energy self-sufficient, extraordinary economic growth potential, really could become the engine for the world. So I hope there is a new emphasis on this part of the world.

So yeah, I don't think it lines up neatly as a, you know, pro-administration, anti-administration thing. And quite honestly, I don't think most of these issues do. I'm really hard-pressed, George, to say, here's a Democratic foreign policy; here's a Republican foreign policy. I actually think there's tendencies within each party. In the Republicans, you got everybody from John McCain, who, if -- is basically pro-interventionist in most -- and Rand Paul, who's anything but. And you got a lot of people in between. You've got the difference between Bush 41 and Bush 43. So you have tremendous tendencies within that party. You obviously have tendencies in the -- in the Democratic Party. So I don't think our parties reflect, if you will, ideological trends.

STEPHANOPOULOS: There's a lot of scrambling going on now.

HAASS: Absolutely. Absolutely.

STEPHANOPOULOS: And you try to come up with a doctrine for the times as well in the book. You call it restoration, and you boil it down to rebuilding at home, refocusing abroad. Lay that out a little more.

HAASS: Well, if I can characterize (you ?), restoration's about rebuilding at home and refocusing abroad. (Laughter.) The rebuilding at home -- we've talked about the -- basically restore the foundations of American power. And by the way, that's not -- while it will do good things for this society and the economy, that's not the only reason to do it. If we want to be able to lead in the world for decades to come, we've got to be strong, and we've got to be able to discourage the emergence of a peer competitors, deal with one if it happens. It takes -- it takes resources to be a world leader.

And just an aside, if we don't do it, no one else will. There's no alternative to an American-led world. It's not going to be China-led or India-led or Europe-led or Japan-led. It's going to be unled.

STEPHANOPOULOS: But it's first among equals.

HAASS: I'd say first among unequals. And -- (laughter) -- but it's not unilateralism. It's not something we do by -- it's led. Leadership implies followership. But again, it takes resources. You can't just talk; you've got to act. And action takes some resources.

STEPHANOPOULOS: So let's bring that then from theory down to practice and things that are --

HAASS: I -- could I just finish the answer? I apologize. On restoration, so part of it's that. The other two things abroad -- one is slightly less emphasis on the greater Middle East. I would argue that when history is written, the fact that in the -- in basically the post-Cold War era -- and we're only a year away, by the way, from celebrating -- from marking the quarter-century anniversary of the end of the Cold War -- comes up in November 2014. The idea that most of America's foreign policy and national security would have been spent in a country called Iraq and another called Afghanistan -- inconceivable that that is what our national security has so focused on. So I want to do less in that part of the world. I want to do more in Asia. I want to do more here in the Western Hemisphere.

And I also want to think about a rebalancing among tools, not necessarily have the military be the default option, look at diplomacy, look more at economic tools of American foreign policy.

STEPHANOPOULOS: That does bring me exactly where I want to go right now, because if you look at -- if you go from strategy to tactics and you're dealing right now -- you say you want less emphasis on the greater Middle East, yet you've seen Secretary of State Kerry sort of reinsert himself into the peace process between Israel and Palestine. Syria -- front burner right now. The administration has to make decisions right now. So if they were applying your theory to Syria, what would happen?

HAASS: If they were applying my theory to Syria, this is what would happen. But let me take 10 seconds back. Think of Syria not as the entire chessboard, but think of it as what it is, one piece of the -- of the global chessboard. And I would say we have to ask ourselves two questions.

What is it we can afford to commit there, given everything else we have to worry about around the world and here at home? And second of all, what is it we think we can accomplish there? The first is a global calculation. We've got to weigh the specific against everything else -- a question of priorities. The other's a local calculation. Given the nature of Syria, given the nature of that society, the sectarian divides, what is it we believe we can accomplish regardless of what it is we commit?

I look at those two things and I say Syria should not dominate our foreign policy, there's other things in the region and the world we have to be -- and at home we have to be concerned about. And I say, given the nature of Syria, I am not persuaded that even an enormous American commitment can really remake the place. Yeah, we can probably get rid of the Assad regime, but then, as we've learned in these other places, that's the easy part. Then we would have to deal with a population that the one thing they agreed on, getting rid of Assad, is over, and then essentially the second phase of the civil war begins. And then we would be in the position of trying to babysit that. And you can't successfully babysit civil wars. Sooner or later you're forced to become a protagonist, and then you become part of the problem, not the solution.

STEPHANOPOULOS: So this makes you very skeptical of any humanitarian intervention.

HAASS: Absolutely. It makes me skeptical of a large military role, certainly involving ground troops, in many cases involving air power, which is also a sizable commitment. We can help with our -- refugees. We can help try to prevent these things from beginning in the first place.

We may be able to use select military tools. For example, in Syria I would be in favor, in a very carefully vetted way, of providing lethal equipment to certain opposition figures; obviously in favor of helping Turkey and Jordan deal with the humanitarian burden, try to do some things with diplomacy. I'd even be in favor of select cruise missile strikes against chemical weapons targets or against the leadership if it came to that. But I also believe we've got to keep a ceiling on what it is we do there.

STEPHANOPOULOS: That's the -- and I want to stick mostly on the here and now, but let me throw out a hypothetical as well. If this were 1994 and the first reports from Rwanda were starting to come in and you were secretary of state, what would you be counseling, based on what you know now?

HAASS: Well, when the first reports came in, the issue with Rwanda, was there a chance to do something in a preventive way? In all of these situations you've got to say, to the extent there is any strategic warning, what is it you can do to try to prevent? And in the case of Rwanda, for example, there was an international force that could have been reinforced. There were conceivably options.

But once things reach a certain point, I actually believe it is extremely difficult. It's -- it's terrible. In Rwanda you lost nearly a million innocent people. In Syria now you've lost a hundred thousand. So I'm not going to sit here and say this is pleasant and so forth.

But I also believe that we, as a society, we've got to ask ourselves what is it that outsiders can realistically accomplish and what would be the cost? And then we've got to ask ourselves as a society, do we believe that we can accomplish things where, to put it bluntly, the outcome -- you know, the costs and the outcome are in a relationship that we're comfortable with, that we think is sustainable. In a lot of these situations you don't know.

I believe in the case of Rwanda there are some things that might have been done early on that could have made a difference to counter historical -- you never know. In the case of Syria, I'm not persuaded, given the nature of the society. When you have majority minority societies, and minorities have been ruling majorities for a long time, you store up an awful lot of animosity. And as soon as majorities get a chance, in my experience, they basically look to get back.

STEPHANOPOULOS: One of the factors that tips over people like John McCain and others into intervening on Syria, among other things, is the signal it would send to Iran, which has got to be the biggest complication to the kind of strategy you're laying out.

HAASS: Well, yes and no. Look, I think it's fair to make that statement. And in this world, you don't have the luxury of narrow casting. I mean, in the old days in politics, you could have the equivalent of a smoke-filled room. Well, you don't have that anymore. You know, to use one of my favorite line, the world is not Las Vegas. What happens somewhere doesn't stay there.

STEPHANOPOULOS: It's tweeted out immediately.

HAASS: It's tweeted out immediately. (Laughter.) And what you do and don't do in a particular situation has consequences. Tends to be a little bit exaggerated, by the way. If you look at all the things that were said when we left Vietnam and people predicted the future of Asia unraveling, it didn't quite work out that way. It turns actually we have more ability to bounce back from events. People said certain thing were going to happen in the Middle East after the problems in the early '80s with the Marines in Lebanon. Again, less than a decade later, we had amassed an extraordinary coalition that ousted Saddam Hussein from Kuwait.

So I think that's somewhat exaggerated, but I take the point. And the United States, when it puts down red lines or puts down -- uses words like "unacceptable" and things happen, then yes, we have to react or there's consequences to not acting. On the other hand, to say you have to act doesn't say exactly how it is you have to act. What --

STEPHANOPOULOS: And you'd make fewer -- you'd draw fewer red lines on the front end.

HAASS: I would draw fewer red lines on the front end, because words have consequences. I'd -- you can deter through certainty, but you can also deter through uncertainty. And one of the things I would recommend is the administration think more about deterrence through uncertainty rather than always practicing certainty, because then you constantly put yourself on the hook to acts in certain ways.

But even given what they've done, I would say what I've talked about -- lethal aid to the Afghan (sic; Syrian) opposition, which the president talked about yesterday, possibly select cruise missile strikes -- punitive actions still leave the control of, if you -- of escalation, if you will, in our hands. So I do believe we have options for acting and reacting, but still in a way that's limited. Again, I don't want to get so involved in Syria that this becomes, if you will, the successor to Iraq and Afghanistan.

STEPHANOPOULOS: But do have the option of keeping those kinds of limits with Iran if they continue to develop a nuclear program?

HAASS: Well, I actually argue in the book that Iran is for me the most difficult case for what I'm arguing, and the reason is because of the spread of nuclear weapons, because of Iran's bid for regional influence or primacy. I don't -- I don't much like the option of using military force against Iran, against its -- against its nuclear weapons program. On the other hand, I don't much like he idea of an Iran with nuclear weapons. It's the reason that I'm so -- I -- I'm so in favor of a focused diplomatic effort now, against the backdrop of sanctions, hoping it would work. If it doesn't work, and we reach a point where we do have to decide between acting against an Iran or living with it, in the book I set forth a number of specific criteria.

And you know, it's not a cop-out, but the answer it at that point, yeah, it depends. It depends upon your calculation of what you would accomplish and what would be the consequences. And bottom line is, it's hard, in some part because these are -- there are some unknowns here. We don't exactly know how -- what we would accomplish using military force. We don't exactly know how the Iranians would retaliate. And you're going to -- it's quite possible we're going to have make some extraordinarily difficult decisions.

STEPHANOPOULOS: And we may not have the option, given what the Israeli government would choose to do or want to do in that kind of situation. But do you believe we can live with an Iran that goes right up to the edge of a bomb?

HAASS: Well, that could well be the decision the administration has to make, and the answer is, of course we could. And the issue is then at what cost and could you put into place certain types of strategies -- for example, if the Iranians got to certain points, we would say, you should just know that if we pick up certain types of tactical warning, that were you to do X or Y or Z, we would consider this unacceptable, and that could -- that could trigger a certain kind of response. You know, deterrence is not an either/or situation. It -- it's dynamic, and you've got to decide what is it you're prepared to tolerate and what it is, ultimately, you deem to be intolerable. I think, as I look out at 2014, that is the most difficult strategic question on the -- on the horizon.

That said, I still think the basic thrust of what I'm saying is essential, and by that I mean if you think -- if you agree with what I just said, it reinforces the idea of keeping limits on Syria, keeping some of your powder dry for Iran. It means thinking very hard about whether and, if so, how you might use military force towards Iran or how -- or how you might make -- contain the situation if it were to -- if they were to stop short of a nuclear weapon, in ways that were acceptable, still how you do more in Asia and how you do more things at home.

STEPHANOPOULOS: That gets to my -- does Iranian determination to at least get close -- does that defeat the central sort of strategic thrust you want to point -- put out there that the Middle East is not at the center of our foreign policy?

HAASS: It's not. Countries like Iran can cause some disruption, they can cause difficulty, but the Middle East is not an area where the great powers come together. The history of the 21st century is not going to be written in the Middle East. The history of the 21st century is far more likely to be written out in Asia. That's where the major powers -- the Chinas, the Indias, the Japans, the Russias, the United States -- all interact. It's where the great economies of the world would be found.

What the Middle East can do is cause mayhem. The Middle East -- you know, oil is still important. Even if we're energy self-sufficient, we're not going to be energy-independent in the sense that we can't totally remove ourselves from the consequences of instability in the Middle East. But the -- you know, and the Middle East will have terrorists. It will have, potentially, various forms of proliferation. We're not sure how far. It will -- it will have conflict within and between countries. And I think the recommendation I make strategically is we try to do what we can in a way that keeps our involvement still limited and in ways where what we ask our foreign policy to accomplish is things that these tools are designed to accomplish. You get into a lot of trouble in foreign policy when you ask of your tools, particularly the military tool -- you ask it to accomplish things it cannot directly accomplish.

STEPHANOPOULOS: Given your desire to focus more on Asia, is there a way to use this current -- I don't even know the right word to call it -- crisis, for want of a better one, with North Korea -- is there a way to use that situation to create the kind of relationship with China that you think is essential?

HAASS: In principle, yes. In practice, it's been hard. I would love to see a more cooperative relationship with China. I certainly don't want to see an adversarial relationship with China.

China's been disappointing over the years on North Korea. The Chinese are right to say they don't have control over North Korea, but they're wrong to deny their influence. Anytime two-thirds of a country's trade transits your territory, you have influence. Any day you want to show it, all the people at the border can get the flu.

And suddenly, when things can't move across borders, people get a sense of your -- you know, let's -- I think it's probably the place -- there's, though, also -- what we can expect of the Chinese is limited because they've got trade-offs. Yes, they don't want to see North Korea start a war, but on the other hand, no, they don't want North Korea to collapse. They don't want a Korean Peninsula that's unified under the South in the American strategic orbit.

But this is the sort of thing we ought to be talking about with the Chinese. This is a real strategic dialogue about how do we manage the Korean Peninsula now and in the future, and we ought to have a much richer dialogue with China about regional security.

I mean, quite honestly, I'm worried about Asia. What we've seen in the last two or three years is the i plates have begun to move, and you see the emergence of nationalism in China, Japan. One of these days we're going to wake up, and there's going to be an incident. Some fighter pilot's going to do something really stupid, and there's going to be an incident, or some ship captain's going to get drunk, and there's going to be a collision. And then the question is can the Japanese and the Chinese or others manage a crisis? There's not a lot of -- there's nothing like there is in Europe there, in the sense of Franco-German reconciliation, the deep network of relationships. Asia's much thinner.

And that's why it's so important the United States stay involved there. We are critical there. And there it is a region where the kinds of tools we can bring to bear, diplomatic, military, economic, really can make a difference. In a funny sort of way, Asia's a theater much more suited to our national security actions than is the Middle East.

STEPHANOPOULOS: I want to open this up to questions from (over here ?). But let me put on my political hat for a second, and if I -- as I went through your book, I would think that most of the things you call for -- a lot of people would say it's common sense. Most of them would probably poll 60, 70 percent.

HAASS: Should I announce? (Laughter.)

STEPHANOPOULOS: You're ready to go, right? Well, that gets to the problem, through, (in it ?) for a general electorate. I'm not sure about any kind of a primary. And that gets to the question -- and you address it in the book. You say, you know, this is -- I think there's probably a consensus behind -- a broad consensus behind much of what you talk about in the book. But as you point out, you say the gap is widening between America's internal challenges and the capacity of the country's leaders and institutions to meet them, that the -- that the political system can't even get together on issues where there is broad agreement.

HAASS: That's true. And that's the reason -- if there's a single reason I wrote the book, that's it, because I'm worried. And you know, there's that great line of Churchill's that Americans can be counted on to do the right thing, but only after they've tried everything else. (Laughter.) Well, we're in the process of trying everything else.

And that is -- that is clear, and as recently as the vote on gun control, where you have 90 percent of the American people or 85 percent of the polls favoring background checks, and then you still can't get a limited piece of legislation through. You've got to worry about the politics in the United States or the inability to do much in the way of serious things on fiscal issues, and instead you get the sequester, which is -- you know, there's no other word for it but dumb in terms of the nature of the -- of the cuts.

I only have -- I don't think there's mechanical fixes. You know, I've looked a lot at it. I've read the literature. And yeah, you can do things like open primaries and having -- getting state legislators out of deciding where districts are. But at the end of the day, you can't fix using mechanics, if you will, what ails us politically.

So I come back to two things positive and one thing negative. But the negative one, just to get it out of the way, is a crisis, that we have a massive crisis that galvanizes action, and the problem is by the time you have massive crises, things have gotten really bad, and it's the worst possible way to fix things. And if anyone doubts me, just look at what some of these Southern European countries are going through.

The two positive ways -- it would take a combination of two things. One is, if you will, FDR. And by that, I mean a president who's really willing to go out there and stake his presidency on something and talk about it again and again and again and do the digital equivalent of a fireside chat again and again and again, but basically try to create a political context. And then the parallel to that is Lyndon Johnson. Then the president, after creating the political context, really goes in there and gets down and dirty and does retail politics and twists arms out of sockets if need be to get votes on critical issues.

STEPHANOPOULOS: He had pretty big majorities, though.

HAASS: Helps if you have big majorities. I'm saying -- I'm not saying it's easy. If it were easy, we wouldn't in the -- in some of the fixes we're in.

I've seen it, though, recently. I thought Bush 41 was in some ways -- you know, he was a president who you could have the Andrews Air Force Base meeting, getting a budget deal that went across party lines. You -- Bill Clinton, you had agreements where you ended up with a fiscal surplus. And this is not ancient history, you know. This is not, you know, Thucydides. This is only decades ago, if that.

So I do think it's -- (inaudible) -- I think it's -- you know, it's crazy to give up on American politics, but it's not going to fix at that -- fix itself -- fix -- get fixed by itself. And some of the trends are in the wrong direction. You know, things are getting more (pause ?). What you then need is pushback. So you need presidential leadership at that level. But it'll be very interesting -- (inaudible) -- what happens to these Democrats who voted against the gun control legislation? Is there now beginning to -- are you beginning to see focus pushback?

The most basic law of politics is the law intensity. And intensity essentially means that small minorities that act in the political space with great intensity -- whether it's giving money or high levels of percentages of voting or making a lot of noise, what have you -- that small minorities with great intensity can overcome large majorities with no intensity, with little or no intensity. And it's basically saying people who will -- their entire political action will depend upon one issue. It can overwhelm people who say, yeah, I care about that, but I care about 26 others things, and that's going to affect how it is I vote or contributed, whatever.

So only when we begin to get pushback on some of these issues. So to put it bluntly, when there's a real counter to the AARP on entitlement reform, yeah, we'll see some action. And when there is some real -- when there is a real counter to the NRA on some of the gun control issues, yeah, then we'll see -- then we'll see background checks and maybe more. But until there is equal intensity on -- in the political space, things will not change.

STEPHANOPOULOS: OK. There's a question.

HAASS: We should -- we have microphones here, and -- yes, we do. (Inaudible) -- microphone --

STEPHANOPOULOS: Right there.

HAASS: Or here.

QUESTIONER: Evelyn Leopold, journalist at the United Nations. To pick up on what you said, do you think the political division has gotten worse since Obama was re-elected because so many conservatives did not expect him to win a second term, and whatever he says, they'll say the opposite?

HAASS: Look, you know, partisan politics were not invented several months ago. They're bad, and I don't know if they're measurably worse. I've seen certain statistical representations of American voting patterns suggesting that they are some worse.

I do -- I'd make a larger point -- (coughs) -- excuse me -- which is I simply believe -- and George is more an expert on this than I am -- I actually believing governing has gotten more difficult. You know, when I grew up, you had three broadcast networks, and then -- there was an element, therefore, of common experience. Now you've got infinite variety of, you know, cable. You've got people increasingly selecting websites and the rest that reinforce what it is they already believe. And the way we fund our politics weakens parties. Parties were to some extent a moderating and compromising mechanism.

So it's almost what's happening in the world, because what's happening in the world, I call nonpolarity, this great diffusion of power -- so, you know, nation-states no longer have the monopoly, and you've got thousands of entities benign and malign around the world that can make a difference. Same thing is now happening domestically. We're seeing the diffusion of power, and the diffusion, if you will, therefore, of the ability to make a difference politically. And my hunch is all the direction of Supreme Court decisions will reinforce that. We're probably going to see even fewer limits on the ability to spend in the -- in the political arena.

So I think this is an environment where it's harder than ever before to build coalitions and strengthen the middle. People are -- they're vulnerable. So I think it's going to be difficult. But I do think it transcends, the -- you know, the moment, if you will, what people think about this or any other president.

And I also think it's usually a mistake to draw large conclusions from a short amount of time. Let's see what the situation is over the next couple of years, see what the candidates are. It's quite possible you could have people coming -- representing both parties who are somewhat more -- who are somewhat centrist and you don't have quite the edge to American politics than you have now.

Thank you. We're not reacting here.

QUESTIONER: Lev Trubkovich, Russian Television International. Dr. Haass, you were just discussing your strategic worldview. Where is Russia in all of that? And do you see Russia's relationship with the United States trending positively or negatively in the coming years?

HAASS: Russia is, you know, one of these -- one of the medium-size powers in the -- in this post-Cold War world. It's a country of 143 million people. It's obviously got a sizable nuclear arsenal, a seat on the U.N. Security Council.

You know, like a lot of other countries, it's one of the reasons that foreign policy is so hard and one of the reasons I think we do need more -- a framework for it. Russia's neither friend nor foe. On some issues, Russia's been extraordinarily helpful for the United States, in certain things against terrorism, certain things in Afghanistan. On other issues, Russia's been extraordinarily unhelpful vis-a-vis American foreign policy aims. And I actually think that's typical of a lot of countries. It's harder and harder to categorize countries in the way they were. I think Russia's got its hands full internally, in terms of its own political trajectory at home. Indeed I think that's the biggest challenge facing Russia, along with developing an economy that's not so reliant on oil and gas.

But no, I don't see Russia as being one of the principal partners of the United States. It's not an anti-Russian comment; it's simply a commentary on Russia's -- again, its internal challenges and its place in the world.

And I think the real issue for Russia will be political. I think this leadership has consolidated power and so it's an oligopoly economically and politically. And at some point I expect it will be challenged domestically and we'll see how that plays out.

But I think for the United States and Russia, the goal is to figure out a way of cooperating where we can and not letting the areas where we can't cooperate spill over and undermining the relationship.

STEPHANOPOULOS: Let me follow up on that. When you look at the challenges that Russia's putting up to our current foreign policy -- in Syria, in Iran, perhaps in even North Korea -- is that about their specific interests in those countries, in that region, or is that about countering the United States?

HAASS: Bit of both. I think Russia has a little bit of a spoiler mentality; that the way it gets attention in the world is it's always standing up to the United States. I think this leadership at times in Russia defines itself in those terms. Nationalism is one of the ways the Russian leadership derives popular support.

I also think there is something of the politics of resentment. I mean, to be perfectly blunt, or at the same level even understanding of the Russians, this has been a very rough year of history. The last 25 years have been extraordinarily difficult for Russia. The Soviet Union lost, you know, an enormous part of its territory. You now have NATO enlarged up against it. You've seen the population go down significantly. So -- and I think the leadership of Russia to some extent has tapped into this resentment and unhappiness.

So I think some of the reactions to what the United States does is simply reflexive. This is kind of how Russia defines itself. To some extent you find specific economic or strategic rationales for what Russia does. It's probably a mixture of the two.

QUESTIONER: Warren Hoge, International Peace Institute. Richard, when you think about U.S. leadership in the 21st century, I want to ask you about alliances and coalitions abroad. Do you imagine us cooperating with a different set of countries now, and particularly emerging powers? Do you see possibilities there?

HAASS: One of the many reasons this book may get me thrown out of the foreign policy establishment is I actually believe that formal alliances will play less of a role in the 21st century than they've played in the 20th century. And it's the flip side of what we were just talking about. The reason that certain countries won't always be adversaries -- which is welcome -- China, Russia, others, that will cooperate selectively -- is also that allies, in many cases, can't be predicted or expected to always cooperate with us. In such a flexible world, where you have this multitude of challenges, increasingly you'll have, again, relationships that are much more situational. I don't know any better word for it.

You've then got the added problem, particularly in Europe, that a lot of our traditional allies are having real issues of capacity, and I think political culture is turning them inward. And you're seeing that throughout Western Europe.

Where you could see something of, though, an increase in the robustness of our alliances is in Asia, because that looks like a more classical diplomatic theater. And in particular, to the extent countries are worried about China, then you could see the United States potentially moving closer to Japan and some others. What will, though, complicate that is the United States has no desire to get into a confrontational relationship with China. I think it would be bad for both countries, be bad for the 21st century. So we have to figure out a way of still working with China and working with our traditional allies. And I would just simply say that's the recipe for complicated, challenging diplomacy.

More often than not, though, coming back to Warren's point, we will be forming coalitions. The one thing you're not going to see a lot of -- and I apologize for those of you who loved a building a few miles from here -- you're not going to see U.N. General Assembly-based global multilateralism, the idea that 190-plus countries are going to come together for a global climate change accord or a global trade accord. Ain't going to happen.

What you're going to see much more is narrow forms of multilateralism -- formal, informal -- built around groups of countries or slicing off parts of issues, and it's -- could be coalitions of the willing, it could be more formal agreements, what have you. But this is -- this is the multilateralism of the future. You're seeing it in the trade realm -- regional, bilateral agreements. You're seeing it in certain functional areas. And I think this -- this is still multilateralism. It's just, again, a much more tailored sort of approach, which I think is much more consistent with the -- with the nature of this era of history.

QUESTIONER: David -- (off mic). (Laughter.) So -- (chuckles) -- but you talked about the Middle East and why we should move away from the centrality of the Middle East for U.S. foreign policy.

HAASS: Yeah.

QUESTIONER: And you talked about China and how important it is. I'd like you to connect the two, if they do connect, through energy.

HAASS: Yeah.

QUESTIONER: If trends continue and the United States goes to and past energy independence, and China's economy continues to grow and has a greater and greater need for energy, what are the prospects that this becomes less of our problem and more of China's problem in the 21st century?

HAASS: It's really interesting, because those are -- the underlying trends are exactly as David suggested, where the United States is moving towards self-sufficiency. Again, our "dependence," quote-unquote, on Middle Eastern-produced oil is really indirect, that this oil is essential to the economic vitality of our economic partners, but if you add up what we get ourselves from our own oil and gas -- Canada, Mexico and the rest -- we don't, quote-unquote, "need" it ourselves.

China, however -- particularly as its middle class grows, its thirst for oil is going up tremendously. So we just reached a 25-year low in imports. China every year reaches a new -- a new high, so that we're -- you know, we're -- very different trajectories.

Now you would think, as a result, that if we dialed down somewhat our role in maintaining stability in the greater Middle East, China would dial up. They so far haven't seen it that way. And I've had many conversations, both in government and outside of government, with Chinese officials about that. Part is that China still has this self-image of itself as a, quote-unquote, "developing" country and it's not yet willing to take on certain kinds of roles. It has a narrow "you've got to focus at home first" mantra.

Secondly, their policy around the world and in the Middle East is essentially to cut deals with the status quo. China has in that case something of an amoral foreign policy. Some may say it's so amoral it's immoral, but it's amoral; that they'll basically -- they'll do business, and they don't much care. And it's often -- and there's a bias there for -- towards the status quo. It's quite funny for country that if you -- had its roots in revolution, its foreign policy, if you will, is quite nonrevolutionary. And so they stick by regime. So my hunch is they will find ways -- they will hope to enter into economic -- long-term economic accords.

But no, I don't think they're going to be strategic partners in that way any time soon, but it'll be interesting to see what happens. I mean, imagine five years from now or three years from now or seven years from now we wake up, and there's a major crisis in Saudi Arabia, and the signs of turbulence we see in some other -- and in Egypt comes to a Saudi Arabia, and the ruling family is ousted, and some more radical group takes power, and t there's interruption in fuel, or there's a crisis with Iran. You know, how will the Chinese react? And my hunch is that will trigger a major strategic debate there. But so far, at least, they've not been prepared to step up to what might be considered a larger global assumption of responsibility.

STEPHANOPOULOS: How much do you buy the argument that technology might solve the problem? We've seen, you know, the mining of natural gas here in the United States contribute to our energy independence, and now that I know -- I don't know a lot about it, but this idea that maybe mining methane under sea will help China and Japan in the future solve their problems.

HAASS: Well, the short answer is, nobody knows, and maybe. I mean, three years ago, if we'd been having this conversation, no one -- well, I wouldn't say no one -- no one I know would have predicted -- there really is transformation in American energy. I mean, last year alone we produced something like what -- I think it was 800,000 more barrels of oil. The natural gas production is off the charts. Our reserves are extraordinary because of these new technologies, and it shows the power of innovation. And it's quite remarkable. So it forces you to rethink a lot.

So it's one of the reasons that extending lines -- you know, Malthus was wrong for a point, and we all ought to learn from Malthus' mistakes, and extrapolation is a dangerous business. So it's quite possible there could be tomorrow some breakthrough in battery technology or something else.

So I just think, as a strategist, you can't count on it. And you'd say, great, if it happens. It's always nice when problems get -- you know, it's like -- it's like the movie "Sleeper," and Woody Allen wakes up in 2(00) or 300 years, and he finds out that ice cream and bacon were good for you. (Laughter.) You know, fantastic. But in the meantime, you probably don't want to live on an ice cream and bacon diet. And so I think, you know, there may be breakthroughs out there in technology that will solve the energy thing. But in the -- but in the meantime, you've probably got to run our national security on the assumption it doesn't happen.

QUESTIONER: I'm Diana Palk (ph), independent business consultant. I'm struck, the name of the book is "The Case for Putting America's House in Order." And you --

HAASS: It's the subtitle.

QUESTIONER: It's the subtitle, but I think it's a great title. I love the title.

You started off talking about some bad decisions that our legislators are currently engaged and the feuds that going on, education being critical. If you look at any immigrant family, education is the key to success. This country's greatest intellectual capability is education. What should we be doing? Why aren't we doing something about this? And I'm struck, in the city of New York, I've been bombarded about monies to keep our libraries open. I am shocked.

HAASS: I'd say three things about education, and -- because education is another word for human capital. And it's one of the reasons that I don't like things like the sequester but sequesters, by not distinguishing between investment and other forms of spending, do -- we don't do ourselves any favors. And education, it can be -- usually is a form of investment.

So I would just say three things. One is while we have the world's greatest elite universities, a lot of our institutions of higher education are suffering right now, particularly those in the -- state-supported. And it's one of the way -- it's one of the areas where what's happening at the federal level and at the state level is really hurting. So we're paying a price there already. That's what I think.

Secondly, K-through-12, I mentioned it before. It's a major problem. And charter schools are not the answer because they can't scale sufficiently. The answer is in the public school system. That's where the 95 percent or whatever of our kids go. And every single study I read tells me the single biggest variable is teacher quality. Now, there's other variables as well -- length of school year and so forth. But teacher quality is the biggest one, and so you have to figure out ways of improving teacher quality, and that's a difficult issue, as Joel Klein and others would say, because of resources, unions, what have you. But that is the -- you're not going to make us -- an appreciable difference in the quality of K-through-12 education without dealing with teacher quality.

Third and perhaps most radical -- and it's interesting; today at lunch we had -- well, I'm still not sure it was on the record or not -- we had a -- (laughter) -- an individual from the technology sector and who, unlike me, understands, technology. And he was making a point, which I make in the book, coincidentally, which is we don't have an education system that is geared for the lives we live. We have what you would describe as a front-loaded education system. We go to school through high school, maybe, or through college. OK, so that means you're 22. Even graduate school, you're 25. Now, the average life expectancy and work expectancy probably means you've got at least then four, fives decades of labor after that point, unless you were born with a big trust fund. So let's assume you've got five labors -- five decades of labor after that. Does anyone in this room seriously think that what we learned in high school or college is going to be enough to see us through? Inconceivable.

What we do not have is an educational system that essentially deals with the dynamism of the economy, globalization and the challenges it's throwing our way. We've got to really revamp our education system. We've got to move away from a front-loaded, fixed curriculum early on to something that's much more dynamic and flexible. And maybe five or 10 times in the course of your life, you're going to have to check in to some educational filling station and get something to help you for the next step in your career.

That's very different than the model we have. We have a really inflexible model. We're going to have to think about how we provide it, how we pay for it, how we structure people's lives so they're -- they can take advantage of it. So I actually think lifelong learning is not just now a kind of metaphor. It's the reality, and there's a tremendous gap in our education system between what I think is already the existential need and what it is we're able to deliver.

Byron.

QUESTIONER: Byron Wien, Blackstone.

Richard, I want to stay on this domestic thing. I can tell you that I've seen studies, and I'm sure you've seen them too, that the polarity of Congress is greater than it's ever been, the tendency of Democrats to vote in line and Republicans to do the same. The crossover is minimal at best. To do the kinds of things you're talking about in education and in infrastructure would require considerable expenditure of money. You can't even get the Republicans to agree to spend more money on anything. They're very focused on cutting the budget deficit. And the Democrats are more concerned about preserving entitlements than they are on any of the creative initiatives you're talking about. So how can you have any hope that any of the things that you think we need to do are going to get done?

HAASS: Here's how. (Laughter.) Byron, I'm going to make an optimist.

And certainly on infrastructure -- I take your point, and you can't have massive federal or state outlays in infrastructure, but you can have all sorts of public-private partnerships. You can have all -- some versions of infrastructure banks, either at the city, state or federal level. And if you have ratios in which the role of government is relatively modest but there's a -- but because they're involved, it then gives a degree of confidence to the private sector, whether -- and the money could also come from abroad. There's no reason it has to be domestic. I flippantly said on TV this morning that if it came to it - someone said, well, would you agree to having Chinese money? And I said, yeah, and I'll pay my toll -- my tolls in yuan. (Laughter.) But if we could have public-private partnerships, it would not require massive outlays of funds.

So I actually think it's doable. And you're beginning to see it grow up in certain cities, in states around the country. It's somewhat -- and look, it'll mean higher -- potentially -- user fees, congestion pricing, if we're talking about thing -- maybe slightly -- a dollar or two more on your ticket when you take a -- (inaudible) -- but you know, I don't know who wouldn't pay an extra couple of bucks to land in a serious airport -- (laughter) -- as opposed to Kennedy or LaGuardia. (Laughter.) And so I think that actually is affordable.

Education's trickier. It -- but we're spending a lot on our schools. Indeed, you know, let me challenge you in this way. On almost every issue I've ever studied in my life, whether it's education -- and I'm not an expert, but I studied it a bit -- health care, defense, which I know something about, there's surprisingly low correlation between how much you spend and what you get.

Look at the health care outcomes. We spend nearly twice the OECD average, yet we don't have health care outcomes that are better -- so clearly something that's at work other than economic inputs.

On defense, I can cut the defense budget 5, 10, 15 percent and give you better defense than what we have now if you let me -- you let me do the cutting. If you tell me, however, this is off-limits, this is off-limits, and that's off-limits, then I'm in trouble.

So -- with educational reform, if you said we could, you know, get more people in classrooms and do this with training and retire -- and hire the best or promote the best, and seniority wasn't going to be the only determining factor -- which means, by the way, you have to keep your people who are most expensive on, and who were trained longest ago -- if you give us some flexibility, I actually think you can get better schools, for no more -- for no more resources.

So in most cases it's more a question of reform of how -- of how we got about spending than the level of spending.

But I take your basic point there will be major, major, major political obstacles to doing what I'm saying. So again, in virtually every one of these -- to give you an analogy, when I used to be a diplomat and I used to run around Northern Ireland or Cyprus or the Middle East, I very quickly learned that the least difficult part of any negotiation was coming up with the details of the agreement, of the compromise, and the hardest part of any negotiation was putting into place incentives so the various parties would do it. I actually wrote a book many years ago about ripeness, about how you did just that.

And I think the same thing's true of politics, because it's the same thing. It's a negotiation.

The least difficult part in many cases, I find, is saying what needs to be done, and the hardest thing is figuring how you get the political system -- and George here is an expert on it, much more than I am -- how you get the politics to be more responsive. And I actually think that's the challenge.

I don't think at the end of the day it's a resource challenge. I actually think we can, to use my word, restore the foundations of American power without spending more, fundamentally, without taxing more -- we have to tax differently -- and I think we can do things in the world that we need to do and make the 21st century a far more stable century without, again, the sorts of involvements or investments that would demand things that we should not be willing to do.

And again, it's not how much we do, it's what we do. And I think it's as true abroad as it is at home. And the real question then is whether we can generate, given our -- the political realities, the consensus we need to do just that. I don't know the answer to that. There --

STEPHANOPOULOS: Yeah, I think the problem is that no one right now is an expert in how to make this political system work.

HAASS: Right. Right.

STEPHANOPOULOS: And you've seen it building up for more -- for more than a decade.

HAASS: Yeah. And I -- and that's why I've written this, because, you know, I'm old-fashioned enough to believe that ideas matter, and you put out ideas -- you know, that -- you know, I don't produce widgets here. I don't produce automobiles or, you know, steam engines or whatever. We produce ideas. So this is an attempt to produce a book of ideas, put it out there in the political marketplace, and hopefully, you know, some people -- enough people will read it and say, hey, this makes sense; this makes sense as a different approach to the world, this makes sense as a different approach to our domestic challenges. And, you know, I'm naive enough to think that, you know, again, ideas can move things. But it's not automatic that it's going to work. And if it doesn't, then we're back to your -- then we're back to the idea of a crisis. And if we get to the point where we have a massive crisis, be it over our fiscal challenge or something -- or a social crisis, something else, the costs of digging out of that crisis will be enormous, and far greater than anything that we've mentioned in this room up to now.

STEPHANOPOULOS: We're heading past the hour. Let's take one more.

QUESTIONER: Thank you very much. Garrick Utley, SUNY Levin Institute. We haven't talked about the economy, which may be the underlying issue that faces us. We're in a world today, an industrialized world, where our growth, as we know what it is, only marginally better than Europe if you use a magnifying glass, and Japan is there, too, so not just the industrialized world, but the United States. How do we create the wealth, given the fact you're not going to be able to cut the Pentagon budget the way you want to and all the -- the political situation -- in a minimal growth environment which is likely to go on for years and years?

HAASS: Well, I'm not willing to accept that. And by the way, you can't cut your way to growth. Austerity is not a path to growth. And the debate over austerity is much too narrow. Indeed, I'd actually be willing to spend more now if we locked in reductions in entitlements down the road. I think we've probably got it exactly wrong. We're spending too little now, and we're not cutting spending enough then. And so we've got it exactly reversed.

But look, there's lots of things we could do for growth. Some things we -- one good thing has happened, which is the energy transformation. Suddenly American manufacturing has gotten a lot more competitive. That's exciting. Natural gas has -- you know, has made an amazing difference. Some of the new technologies have made an amazing difference. So that's a good thing.

The housing market to some extent has come back in this country. That's a little bit. Get rid -- I would like to ultimately get rid of the sequester. That would -- that would stimulate things. Trade. We've got two major trade agreements now being negotiated across the Atlantic and in the Pacific. Trade is a major engine of growth.

Immigration reform. If we can -- as is talked about, doubling the number of H1-B visas, increasing the number of green cards we grant, suddenly we'll find a way to take advantage of some of our best talent. The statistics are amazing on the percentages of American businesses that have their roots in people who came here as immigrants. They are the engine, in many ways, of American economic success.

Tax reform. Why should American corporations have this nominal tax rate of 35 percent that discourages many of them from bringing their profits back home, building factories abroad rather than building them back home? That's something that's easily changed.

And above all, this fiscal situation -- predictability. I think if people know the rules and they have some sense of the context, they're more willing to make long-term investments. We talked about schools.

I actually think growth is quite possible, and I think it could easily be above 3 percent. And if we can grow above 3 percent, it would be extraordinary for this country, for individuals, but also be extraordinary for the world.

Again, my whole argument is to get it right here not so we can sit in some splendid gated community, which doesn't exist, but so we can do things in the world not as a form of philanthropy but as a form of self-interest. If we are strong enough to act in the world in a concerted way, it will set in motion trends and conditions which will not just be good for others, the 7 billion out there, but it will be good for the 300 million here. And if we don't get our -- if we don't put our house in order, so to speak, we won't be in a position and then we won't be able to insulate ourselves from the effects out there.

So at the end of the day, there really is precious little divide between the domestic and the international, and we've got to get those right.

STEPHANOPOULOS: And buying the book is a little economic stimulus. (Laughter.) Richard Haass. Thank you.

HAASS: Thank you. (Applause.)

(C) COPYRIGHT 2013, FEDERAL NEWS SERVICE, INC., 1120 G STREET NW; SUITE 990; WASHINGTON, DC - 20005, USA. ALL RIGHTS RESERVED. ANY REPRODUCTION, REDISTRIBUTION OR RETRANSMISSION IS EXPRESSLY PROHIBITED.

UNAUTHORIZED REPRODUCTION, REDISTRIBUTION OR RETRANSMISSION CONSTITUTES A MISAPPROPRIATION UNDER APPLICABLE UNFAIR COMPETITION LAW, AND FEDERAL NEWS SERVICE, INC. RESERVES THE RIGHT TO PURSUE ALL REMEDIES AVAILABLE TO IT IN RESPECT TO SUCH MISAPPROPRIATION.

FEDERAL NEWS SERVICE, INC. IS A PRIVATE FIRM AND IS NOT AFFILIATED WITH THE FEDERAL GOVERNMENT. NO COPYRIGHT IS CLAIMED AS TO ANY PART OF THE ORIGINAL WORK PREPARED BY A UNITED STATES GOVERNMENT OFFICER OR EMPLOYEE AS PART OF THAT PERSON'S OFFICIAL DUTIES.

FOR INFORMATION ON SUBSCRIBING TO FNS, PLEASE CALL 202-347-1400 OR EMAIL [email protected].

THIS IS A RUSH TRANSCRIPT.

GEORGE STEPHANOPOULOS: If Richard Haass needs an introduction here, we're all in a lot of trouble. (Laughter.) So I'm not going to -- I'm not going to waste any time; I'm going to get right to it. The title is "Foreign Policy Begins at Home," Richard Haass. And I guess -- hard for me to imagine that any previous president of the Council on Foreign Relations could have written a book of that title, even right in the first couple pages that it borders on heresy. So why take the risk?

(Laughter.)

RICHARD HAASS: If I say "good question," is that the end of the meeting? (Laughter.)

The reason to take the risk is, to put it bluntly, I'm worried. And I look at the world, and I look at what we're doing. And for the first time in my professional life, I am genuinely concerned about the trajectory of the United States and the trajectory of the world.

And so I came to this position for really two reasons. One is on necessity. The foundations of American strength and American power need to be repaired. I see Pete Peterson here. Pete has been sounding this bugle for years. Whether it's entitlements, whether it's infrastructure, which the president talked about in his press conference yesterday, whether it's immigration reform, whether it's K-through-12 schools, we all know that this country is underperforming at home. And one statistic to show it is we're growing at roughly half the average post-World War II rate.

But we've also over the last 10 or 15 years badly overreached abroad. I disagreed with the Iraq war, and I disagreed with the latter phases of the Afghan war, when the United States tripled its troop presence there. And then basically, in both countries, we tried to remake these societies.

So this combination of overreaching abroad and underperforming at home, I came to the conclusion that this country was really losing its way, that we were making big mistakes. And the good news, though, is that I thought we had an opportunity, almost a respite. We had a moment in history where we could afford to focus at home, to get things right.

STEPHANOPOULOS: Is that in 2000, when we had a huge surplus? Is that what you're talking about?

HAASS: No, even now. I actually think the world is a relatively forgiving place. It may seem odd, because, you know, we're bombarded with headlines from Syria, North Korea, Iran's nuclear program. But think about it. There is nothing out there now on the scale of a Nazi Germany or Imperial Japan that both is inclined to oppose and has the capacity to, nothing like the Soviet Union during the four decades of the Cold War. So we actually have a little bit of time and space. And again, we have the necessity, I would argue, of doing it.

Now, the reason I -- to finish the thing about why I wrote the book, though, is it's complicated. You've got this combination of we're short on resources, we don't have the cushion of fiscal surplus that we had 10 or 15 years ago. It's an awfully complicated world, a hell of a lot more complicated than the relatively fixed, predictable bipolarity of the Cold War. There's lots of stuff coming at us. Our inbox, if you will, is overflowing.

So part of it is, how do you sort through this? How is it that we as citizens or policymakers or members of this organization, what have you, how is it we figure out what to do, what not to do at home and abroad? How do we get the balance right? And that's why I wrote --

STEPHANOPOULOS: You say it's complicated. It's also subject to caricature. And you're upfront about that as well. I could neoconservatives saying this is a defeatist attitude. And as you talk about the other caricature you're subject to, maybe even previous presidents of CFR would say this, it's isolationist.

HAASS: I fully expect to get hammered on both. Let's take them both.

I'm not a declinist. But again, I do think we're underperforming, which is not a commentary on our potential, but it's a comment on what we've been doing. I mean, how could you say -- how could anyone be happy with economic growth rates of 1 1/2 or 1/7 percent? How could anyone -- you know, let's put it this way. Do you anyone who comes to the United States to go through our K-through-12 schools? They may come here to go to Stanford or Harvard. They sure as hell don't come to go to the average public school in the United States. Has anyone recently landed at Kennedy Airport? Does anyone think that is anything but Third World infrastructure? (Scattered laughter.)

And then our immigration system, we bring the most talented people around the world, we give them four years at Harvard, Stanford, Princeton, Yale, and then we say thank you, but now you've got to go? Does anybody think this makes sense? I don't think that makes you an isolationist. What it makes you is genuinely concerned about what we are doing and not doing here at home.

And to say there have to be limits to what we do abroad, again, I don't think that's isolation. I call that strategy. I call that priorities. Yes, we can continue to do if we want Iraqs and Afghanistans, but is there anyone who really thinks we're getting a return on investment? Does anyone really think that we're getting something that justifies the 6,500 lives we lost or the 40,000 casualties or the $1 1/2 trillion these two wars cost?

STEPHANOPOULOS: Now, what do you that of people who, perhaps in this particular political environment, say that it also sounds something like a partisan agenda? It lines up a lot more, at least from what you were just talking about there, with what President Obama and the Democrats are talking about than with what Republican leadership in the House and the Senate are talking about.

HAASS: I don't think it is, for a couple of reasons. I would expect that -- you know, as much as I'd like people at the White House to buy and read this book -- (laughter) -- I doubt they'll be, you know, stocking -- you know, putting it in their Christmas stockings.

I'm critical of the president for, as I said before, what he did in Afghanistan. I thought the tripling of U.S. forces and getting ambitious, if you will, in Afghanistan was strategically ill-advised.

I'm very critical of him in the book for what he didn't do on Simpson-Bowles, essentially bringing into existence this commission meant to fix the long-term fiscal challenge and then essentially, as soon as it got created, it also got orphaned. And indeed, I think ultimately, when historians write about his presidency, they're potentially going to be quite critical of what was not done there.

Now, there are some things I do like. I like, for example, the quote-unquote, pivot towards Asia. I think that makes sense strategically that the United States would spend so much more in the way of its calories towards trying to keep stability in Asia, where the great powers do coalesce. I do like the idea of putting some limits on what we're doing in the Middle East. I hope we put a greater emphasis on North America, this new market of 450 million people, Canada, the United States, Mexico, energy self-sufficient, extraordinary economic growth potential, really could become the engine for the world. So I hope there is a new emphasis on this part of the world.

So yeah, I don't think it lines up neatly as a, you know, pro-administration, anti-administration thing. And quite honestly, I don't think most of these issues do. I'm really hard-pressed, George, to say, here's a Democratic foreign policy; here's a Republican foreign policy. I actually think there's tendencies within each party. In the Republicans, you got everybody from John McCain, who, if -- is basically pro-interventionist in most -- and Rand Paul, who's anything but. And you got a lot of people in between. You've got the difference between Bush 41 and Bush 43. So you have tremendous tendencies within that party. You obviously have tendencies in the -- in the Democratic Party. So I don't think our parties reflect, if you will, ideological trends.

STEPHANOPOULOS: There's a lot of scrambling going on now.

HAASS: Absolutely. Absolutely.

STEPHANOPOULOS: And you try to come up with a doctrine for the times as well in the book. You call it restoration, and you boil it down to rebuilding at home, refocusing abroad. Lay that out a little more.

HAASS: Well, if I can characterize (you ?), restoration's about rebuilding at home and refocusing abroad. (Laughter.) The rebuilding at home -- we've talked about the -- basically restore the foundations of American power. And by the way, that's not -- while it will do good things for this society and the economy, that's not the only reason to do it. If we want to be able to lead in the world for decades to come, we've got to be strong, and we've got to be able to discourage the emergence of a peer competitors, deal with one if it happens. It takes -- it takes resources to be a world leader.

And just an aside, if we don't do it, no one else will. There's no alternative to an American-led world. It's not going to be China-led or India-led or Europe-led or Japan-led. It's going to be unled.

STEPHANOPOULOS: But it's first among equals.

HAASS: I'd say first among unequals. And -- (laughter) -- but it's not unilateralism. It's not something we do by -- it's led. Leadership implies followership. But again, it takes resources. You can't just talk; you've got to act. And action takes some resources.

STEPHANOPOULOS: So let's bring that then from theory down to practice and things that are --

HAASS: I -- could I just finish the answer? I apologize. On restoration, so part of it's that. The other two things abroad -- one is slightly less emphasis on the greater Middle East. I would argue that when history is written, the fact that in the -- in basically the post-Cold War era -- and we're only a year away, by the way, from celebrating -- from marking the quarter-century anniversary of the end of the Cold War -- comes up in November 2014. The idea that most of America's foreign policy and national security would have been spent in a country called Iraq and another called Afghanistan -- inconceivable that that is what our national security has so focused on. So I want to do less in that part of the world. I want to do more in Asia. I want to do more here in the Western Hemisphere.

And I also want to think about a rebalancing among tools, not necessarily have the military be the default option, look at diplomacy, look more at economic tools of American foreign policy.

STEPHANOPOULOS: That does bring me exactly where I want to go right now, because if you look at -- if you go from strategy to tactics and you're dealing right now -- you say you want less emphasis on the greater Middle East, yet you've seen Secretary of State Kerry sort of reinsert himself into the peace process between Israel and Palestine. Syria -- front burner right now. The administration has to make decisions right now. So if they were applying your theory to Syria, what would happen?

HAASS: If they were applying my theory to Syria, this is what would happen. But let me take 10 seconds back. Think of Syria not as the entire chessboard, but think of it as what it is, one piece of the -- of the global chessboard. And I would say we have to ask ourselves two questions.

What is it we can afford to commit there, given everything else we have to worry about around the world and here at home? And second of all, what is it we think we can accomplish there? The first is a global calculation. We've got to weigh the specific against everything else -- a question of priorities. The other's a local calculation. Given the nature of Syria, given the nature of that society, the sectarian divides, what is it we believe we can accomplish regardless of what it is we commit?

I look at those two things and I say Syria should not dominate our foreign policy, there's other things in the region and the world we have to be -- and at home we have to be concerned about. And I say, given the nature of Syria, I am not persuaded that even an enormous American commitment can really remake the place. Yeah, we can probably get rid of the Assad regime, but then, as we've learned in these other places, that's the easy part. Then we would have to deal with a population that the one thing they agreed on, getting rid of Assad, is over, and then essentially the second phase of the civil war begins. And then we would be in the position of trying to babysit that. And you can't successfully babysit civil wars. Sooner or later you're forced to become a protagonist, and then you become part of the problem, not the solution.

STEPHANOPOULOS: So this makes you very skeptical of any humanitarian intervention.

HAASS: Absolutely. It makes me skeptical of a large military role, certainly involving ground troops, in many cases involving air power, which is also a sizable commitment. We can help with our -- refugees. We can help try to prevent these things from beginning in the first place.

We may be able to use select military tools. For example, in Syria I would be in favor, in a very carefully vetted way, of providing lethal equipment to certain opposition figures; obviously in favor of helping Turkey and Jordan deal with the humanitarian burden, try to do some things with diplomacy. I'd even be in favor of select cruise missile strikes against chemical weapons targets or against the leadership if it came to that. But I also believe we've got to keep a ceiling on what it is we do there.

STEPHANOPOULOS: That's the -- and I want to stick mostly on the here and now, but let me throw out a hypothetical as well. If this were 1994 and the first reports from Rwanda were starting to come in and you were secretary of state, what would you be counseling, based on what you know now?

HAASS: Well, when the first reports came in, the issue with Rwanda, was there a chance to do something in a preventive way? In all of these situations you've got to say, to the extent there is any strategic warning, what is it you can do to try to prevent? And in the case of Rwanda, for example, there was an international force that could have been reinforced. There were conceivably options.

But once things reach a certain point, I actually believe it is extremely difficult. It's -- it's terrible. In Rwanda you lost nearly a million innocent people. In Syria now you've lost a hundred thousand. So I'm not going to sit here and say this is pleasant and so forth.

But I also believe that we, as a society, we've got to ask ourselves what is it that outsiders can realistically accomplish and what would be the cost? And then we've got to ask ourselves as a society, do we believe that we can accomplish things where, to put it bluntly, the outcome -- you know, the costs and the outcome are in a relationship that we're comfortable with, that we think is sustainable. In a lot of these situations you don't know.

I believe in the case of Rwanda there are some things that might have been done early on that could have made a difference to counter historical -- you never know. In the case of Syria, I'm not persuaded, given the nature of the society. When you have majority minority societies, and minorities have been ruling majorities for a long time, you store up an awful lot of animosity. And as soon as majorities get a chance, in my experience, they basically look to get back.

STEPHANOPOULOS: One of the factors that tips over people like John McCain and others into intervening on Syria, among other things, is the signal it would send to Iran, which has got to be the biggest complication to the kind of strategy you're laying out.

HAASS: Well, yes and no. Look, I think it's fair to make that statement. And in this world, you don't have the luxury of narrow casting. I mean, in the old days in politics, you could have the equivalent of a smoke-filled room. Well, you don't have that anymore. You know, to use one of my favorite line, the world is not Las Vegas. What happens somewhere doesn't stay there.

STEPHANOPOULOS: It's tweeted out immediately.

HAASS: It's tweeted out immediately. (Laughter.) And what you do and don't do in a particular situation has consequences. Tends to be a little bit exaggerated, by the way. If you look at all the things that were said when we left Vietnam and people predicted the future of Asia unraveling, it didn't quite work out that way. It turns actually we have more ability to bounce back from events. People said certain thing were going to happen in the Middle East after the problems in the early '80s with the Marines in Lebanon. Again, less than a decade later, we had amassed an extraordinary coalition that ousted Saddam Hussein from Kuwait.

So I think that's somewhat exaggerated, but I take the point. And the United States, when it puts down red lines or puts down -- uses words like "unacceptable" and things happen, then yes, we have to react or there's consequences to not acting. On the other hand, to say you have to act doesn't say exactly how it is you have to act. What --

STEPHANOPOULOS: And you'd make fewer -- you'd draw fewer red lines on the front end.

HAASS: I would draw fewer red lines on the front end, because words have consequences. I'd -- you can deter through certainty, but you can also deter through uncertainty. And one of the things I would recommend is the administration think more about deterrence through uncertainty rather than always practicing certainty, because then you constantly put yourself on the hook to acts in certain ways.

But even given what they've done, I would say what I've talked about -- lethal aid to the Afghan (sic; Syrian) opposition, which the president talked about yesterday, possibly select cruise missile strikes -- punitive actions still leave the control of, if you -- of escalation, if you will, in our hands. So I do believe we have options for acting and reacting, but still in a way that's limited. Again, I don't want to get so involved in Syria that this becomes, if you will, the successor to Iraq and Afghanistan.

STEPHANOPOULOS: But do have the option of keeping those kinds of limits with Iran if they continue to develop a nuclear program?

HAASS: Well, I actually argue in the book that Iran is for me the most difficult case for what I'm arguing, and the reason is because of the spread of nuclear weapons, because of Iran's bid for regional influence or primacy. I don't -- I don't much like the option of using military force against Iran, against its -- against its nuclear weapons program. On the other hand, I don't much like he idea of an Iran with nuclear weapons. It's the reason that I'm so -- I -- I'm so in favor of a focused diplomatic effort now, against the backdrop of sanctions, hoping it would work. If it doesn't work, and we reach a point where we do have to decide between acting against an Iran or living with it, in the book I set forth a number of specific criteria.

And you know, it's not a cop-out, but the answer it at that point, yeah, it depends. It depends upon your calculation of what you would accomplish and what would be the consequences. And bottom line is, it's hard, in some part because these are -- there are some unknowns here. We don't exactly know how -- what we would accomplish using military force. We don't exactly know how the Iranians would retaliate. And you're going to -- it's quite possible we're going to have make some extraordinarily difficult decisions.

STEPHANOPOULOS: And we may not have the option, given what the Israeli government would choose to do or want to do in that kind of situation. But do you believe we can live with an Iran that goes right up to the edge of a bomb?

HAASS: Well, that could well be the decision the administration has to make, and the answer is, of course we could. And the issue is then at what cost and could you put into place certain types of strategies -- for example, if the Iranians got to certain points, we would say, you should just know that if we pick up certain types of tactical warning, that were you to do X or Y or Z, we would consider this unacceptable, and that could -- that could trigger a certain kind of response. You know, deterrence is not an either/or situation. It -- it's dynamic, and you've got to decide what is it you're prepared to tolerate and what it is, ultimately, you deem to be intolerable. I think, as I look out at 2014, that is the most difficult strategic question on the -- on the horizon.

That said, I still think the basic thrust of what I'm saying is essential, and by that I mean if you think -- if you agree with what I just said, it reinforces the idea of keeping limits on Syria, keeping some of your powder dry for Iran. It means thinking very hard about whether and, if so, how you might use military force towards Iran or how -- or how you might make -- contain the situation if it were to -- if they were to stop short of a nuclear weapon, in ways that were acceptable, still how you do more in Asia and how you do more things at home.

STEPHANOPOULOS: That gets to my -- does Iranian determination to at least get close -- does that defeat the central sort of strategic thrust you want to point -- put out there that the Middle East is not at the center of our foreign policy?

HAASS: It's not. Countries like Iran can cause some disruption, they can cause difficulty, but the Middle East is not an area where the great powers come together. The history of the 21st century is not going to be written in the Middle East. The history of the 21st century is far more likely to be written out in Asia. That's where the major powers -- the Chinas, the Indias, the Japans, the Russias, the United States -- all interact. It's where the great economies of the world would be found.

What the Middle East can do is cause mayhem. The Middle East -- you know, oil is still important. Even if we're energy self-sufficient, we're not going to be energy-independent in the sense that we can't totally remove ourselves from the consequences of instability in the Middle East. But the -- you know, and the Middle East will have terrorists. It will have, potentially, various forms of proliferation. We're not sure how far. It will -- it will have conflict within and between countries. And I think the recommendation I make strategically is we try to do what we can in a way that keeps our involvement still limited and in ways where what we ask our foreign policy to accomplish is things that these tools are designed to accomplish. You get into a lot of trouble in foreign policy when you ask of your tools, particularly the military tool -- you ask it to accomplish things it cannot directly accomplish.

STEPHANOPOULOS: Given your desire to focus more on Asia, is there a way to use this current -- I don't even know the right word to call it -- crisis, for want of a better one, with North Korea -- is there a way to use that situation to create the kind of relationship with China that you think is essential?

HAASS: In principle, yes. In practice, it's been hard. I would love to see a more cooperative relationship with China. I certainly don't want to see an adversarial relationship with China.

China's been disappointing over the years on North Korea. The Chinese are right to say they don't have control over North Korea, but they're wrong to deny their influence. Anytime two-thirds of a country's trade transits your territory, you have influence. Any day you want to show it, all the people at the border can get the flu.

And suddenly, when things can't move across borders, people get a sense of your -- you know, let's -- I think it's probably the place -- there's, though, also -- what we can expect of the Chinese is limited because they've got trade-offs. Yes, they don't want to see North Korea start a war, but on the other hand, no, they don't want North Korea to collapse. They don't want a Korean Peninsula that's unified under the South in the American strategic orbit.

But this is the sort of thing we ought to be talking about with the Chinese. This is a real strategic dialogue about how do we manage the Korean Peninsula now and in the future, and we ought to have a much richer dialogue with China about regional security.

I mean, quite honestly, I'm worried about Asia. What we've seen in the last two or three years is the i plates have begun to move, and you see the emergence of nationalism in China, Japan. One of these days we're going to wake up, and there's going to be an incident. Some fighter pilot's going to do something really stupid, and there's going to be an incident, or some ship captain's going to get drunk, and there's going to be a collision. And then the question is can the Japanese and the Chinese or others manage a crisis? There's not a lot of -- there's nothing like there is in Europe there, in the sense of Franco-German reconciliation, the deep network of relationships. Asia's much thinner.

And that's why it's so important the United States stay involved there. We are critical there. And there it is a region where the kinds of tools we can bring to bear, diplomatic, military, economic, really can make a difference. In a funny sort of way, Asia's a theater much more suited to our national security actions than is the Middle East.

STEPHANOPOULOS: I want to open this up to questions from (over here ?). But let me put on my political hat for a second, and if I -- as I went through your book, I would think that most of the things you call for -- a lot of people would say it's common sense. Most of them would probably poll 60, 70 percent.

HAASS: Should I announce? (Laughter.)

STEPHANOPOULOS: You're ready to go, right? Well, that gets to the problem, through, (in it ?) for a general electorate. I'm not sure about any kind of a primary. And that gets to the question -- and you address it in the book. You say, you know, this is -- I think there's probably a consensus behind -- a broad consensus behind much of what you talk about in the book. But as you point out, you say the gap is widening between America's internal challenges and the capacity of the country's leaders and institutions to meet them, that the -- that the political system can't even get together on issues where there is broad agreement.

HAASS: That's true. And that's the reason -- if there's a single reason I wrote the book, that's it, because I'm worried. And you know, there's that great line of Churchill's that Americans can be counted on to do the right thing, but only after they've tried everything else. (Laughter.) Well, we're in the process of trying everything else.

And that is -- that is clear, and as recently as the vote on gun control, where you have 90 percent of the American people or 85 percent of the polls favoring background checks, and then you still can't get a limited piece of legislation through. You've got to worry about the politics in the United States or the inability to do much in the way of serious things on fiscal issues, and instead you get the sequester, which is -- you know, there's no other word for it but dumb in terms of the nature of the -- of the cuts.

I only have -- I don't think there's mechanical fixes. You know, I've looked a lot at it. I've read the literature. And yeah, you can do things like open primaries and having -- getting state legislators out of deciding where districts are. But at the end of the day, you can't fix using mechanics, if you will, what ails us politically.

So I come back to two things positive and one thing negative. But the negative one, just to get it out of the way, is a crisis, that we have a massive crisis that galvanizes action, and the problem is by the time you have massive crises, things have gotten really bad, and it's the worst possible way to fix things. And if anyone doubts me, just look at what some of these Southern European countries are going through.

The two positive ways -- it would take a combination of two things. One is, if you will, FDR. And by that, I mean a president who's really willing to go out there and stake his presidency on something and talk about it again and again and again and do the digital equivalent of a fireside chat again and again and again, but basically try to create a political context. And then the parallel to that is Lyndon Johnson. Then the president, after creating the political context, really goes in there and gets down and dirty and does retail politics and twists arms out of sockets if need be to get votes on critical issues.

STEPHANOPOULOS: He had pretty big majorities, though.

HAASS: Helps if you have big majorities. I'm saying -- I'm not saying it's easy. If it were easy, we wouldn't in the -- in some of the fixes we're in.

I've seen it, though, recently. I thought Bush 41 was in some ways -- you know, he was a president who you could have the Andrews Air Force Base meeting, getting a budget deal that went across party lines. You -- Bill Clinton, you had agreements where you ended up with a fiscal surplus. And this is not ancient history, you know. This is not, you know, Thucydides. This is only decades ago, if that.

So I do think it's -- (inaudible) -- I think it's -- you know, it's crazy to give up on American politics, but it's not going to fix at that -- fix itself -- fix -- get fixed by itself. And some of the trends are in the wrong direction. You know, things are getting more (pause ?). What you then need is pushback. So you need presidential leadership at that level. But it'll be very interesting -- (inaudible) -- what happens to these Democrats who voted against the gun control legislation? Is there now beginning to -- are you beginning to see focus pushback?

The most basic law of politics is the law intensity. And intensity essentially means that small minorities that act in the political space with great intensity -- whether it's giving money or high levels of percentages of voting or making a lot of noise, what have you -- that small minorities with great intensity can overcome large majorities with no intensity, with little or no intensity. And it's basically saying people who will -- their entire political action will depend upon one issue. It can overwhelm people who say, yeah, I care about that, but I care about 26 others things, and that's going to affect how it is I vote or contributed, whatever.

So only when we begin to get pushback on some of these issues. So to put it bluntly, when there's a real counter to the AARP on entitlement reform, yeah, we'll see some action. And when there is some real -- when there is a real counter to the NRA on some of the gun control issues, yeah, then we'll see -- then we'll see background checks and maybe more. But until there is equal intensity on -- in the political space, things will not change.

STEPHANOPOULOS: OK. There's a question.

HAASS: We should -- we have microphones here, and -- yes, we do. (Inaudible) -- microphone --

STEPHANOPOULOS: Right there.

HAASS: Or here.

QUESTIONER: Evelyn Leopold, journalist at the United Nations. To pick up on what you said, do you think the political division has gotten worse since Obama was re-elected because so many conservatives did not expect him to win a second term, and whatever he says, they'll say the opposite?

HAASS: Look, you know, partisan politics were not invented several months ago. They're bad, and I don't know if they're measurably worse. I've seen certain statistical representations of American voting patterns suggesting that they are some worse.

I do -- I'd make a larger point -- (coughs) -- excuse me -- which is I simply believe -- and George is more an expert on this than I am -- I actually believing governing has gotten more difficult. You know, when I grew up, you had three broadcast networks, and then -- there was an element, therefore, of common experience. Now you've got infinite variety of, you know, cable. You've got people increasingly selecting websites and the rest that reinforce what it is they already believe. And the way we fund our politics weakens parties. Parties were to some extent a moderating and compromising mechanism.

So it's almost what's happening in the world, because what's happening in the world, I call nonpolarity, this great diffusion of power -- so, you know, nation-states no longer have the monopoly, and you've got thousands of entities benign and malign around the world that can make a difference. Same thing is now happening domestically. We're seeing the diffusion of power, and the diffusion, if you will, therefore, of the ability to make a difference politically. And my hunch is all the direction of Supreme Court decisions will reinforce that. We're probably going to see even fewer limits on the ability to spend in the -- in the political arena.

So I think this is an environment where it's harder than ever before to build coalitions and strengthen the middle. People are -- they're vulnerable. So I think it's going to be difficult. But I do think it transcends, the -- you know, the moment, if you will, what people think about this or any other president.

And I also think it's usually a mistake to draw large conclusions from a short amount of time. Let's see what the situation is over the next couple of years, see what the candidates are. It's quite possible you could have people coming -- representing both parties who are somewhat more -- who are somewhat centrist and you don't have quite the edge to American politics than you have now.

Thank you. We're not reacting here.

QUESTIONER: Lev Trubkovich, Russian Television International. Dr. Haass, you were just discussing your strategic worldview. Where is Russia in all of that? And do you see Russia's relationship with the United States trending positively or negatively in the coming years?

HAASS: Russia is, you know, one of these -- one of the medium-size powers in the -- in this post-Cold War world. It's a country of 143 million people. It's obviously got a sizable nuclear arsenal, a seat on the U.N. Security Council.

You know, like a lot of other countries, it's one of the reasons that foreign policy is so hard and one of the reasons I think we do need more -- a framework for it. Russia's neither friend nor foe. On some issues, Russia's been extraordinarily helpful for the United States, in certain things against terrorism, certain things in Afghanistan. On other issues, Russia's been extraordinarily unhelpful vis-a-vis American foreign policy aims. And I actually think that's typical of a lot of countries. It's harder and harder to categorize countries in the way they were. I think Russia's got its hands full internally, in terms of its own political trajectory at home. Indeed I think that's the biggest challenge facing Russia, along with developing an economy that's not so reliant on oil and gas.

But no, I don't see Russia as being one of the principal partners of the United States. It's not an anti-Russian comment; it's simply a commentary on Russia's -- again, its internal challenges and its place in the world.

And I think the real issue for Russia will be political. I think this leadership has consolidated power and so it's an oligopoly economically and politically. And at some point I expect it will be challenged domestically and we'll see how that plays out.

But I think for the United States and Russia, the goal is to figure out a way of cooperating where we can and not letting the areas where we can't cooperate spill over and undermining the relationship.

STEPHANOPOULOS: Let me follow up on that. When you look at the challenges that Russia's putting up to our current foreign policy -- in Syria, in Iran, perhaps in even North Korea -- is that about their specific interests in those countries, in that region, or is that about countering the United States?

HAASS: Bit of both. I think Russia has a little bit of a spoiler mentality; that the way it gets attention in the world is it's always standing up to the United States. I think this leadership at times in Russia defines itself in those terms. Nationalism is one of the ways the Russian leadership derives popular support.

I also think there is something of the politics of resentment. I mean, to be perfectly blunt, or at the same level even understanding of the Russians, this has been a very rough year of history. The last 25 years have been extraordinarily difficult for Russia. The Soviet Union lost, you know, an enormous part of its territory. You now have NATO enlarged up against it. You've seen the population go down significantly. So -- and I think the leadership of Russia to some extent has tapped into this resentment and unhappiness.

So I think some of the reactions to what the United States does is simply reflexive. This is kind of how Russia defines itself. To some extent you find specific economic or strategic rationales for what Russia does. It's probably a mixture of the two.

QUESTIONER: Warren Hoge, International Peace Institute. Richard, when you think about U.S. leadership in the 21st century, I want to ask you about alliances and coalitions abroad. Do you imagine us cooperating with a different set of countries now, and particularly emerging powers? Do you see possibilities there?

HAASS: One of the many reasons this book may get me thrown out of the foreign policy establishment is I actually believe that formal alliances will play less of a role in the 21st century than they've played in the 20th century. And it's the flip side of what we were just talking about. The reason that certain countries won't always be adversaries -- which is welcome -- China, Russia, others, that will cooperate selectively -- is also that allies, in many cases, can't be predicted or expected to always cooperate with us. In such a flexible world, where you have this multitude of challenges, increasingly you'll have, again, relationships that are much more situational. I don't know any better word for it.

You've then got the added problem, particularly in Europe, that a lot of our traditional allies are having real issues of capacity, and I think political culture is turning them inward. And you're seeing that throughout Western Europe.

Where you could see something of, though, an increase in the robustness of our alliances is in Asia, because that looks like a more classical diplomatic theater. And in particular, to the extent countries are worried about China, then you could see the United States potentially moving closer to Japan and some others. What will, though, complicate that is the United States has no desire to get into a confrontational relationship with China. I think it would be bad for both countries, be bad for the 21st century. So we have to figure out a way of still working with China and working with our traditional allies. And I would just simply say that's the recipe for complicated, challenging diplomacy.

More often than not, though, coming back to Warren's point, we will be forming coalitions. The one thing you're not going to see a lot of -- and I apologize for those of you who loved a building a few miles from here -- you're not going to see U.N. General Assembly-based global multilateralism, the idea that 190-plus countries are going to come together for a global climate change accord or a global trade accord. Ain't going to happen.

What you're going to see much more is narrow forms of multilateralism -- formal, informal -- built around groups of countries or slicing off parts of issues, and it's -- could be coalitions of the willing, it could be more formal agreements, what have you. But this is -- this is the multilateralism of the future. You're seeing it in the trade realm -- regional, bilateral agreements. You're seeing it in certain functional areas. And I think this -- this is still multilateralism. It's just, again, a much more tailored sort of approach, which I think is much more consistent with the -- with the nature of this era of history.

QUESTIONER: David -- (off mic). (Laughter.) So -- (chuckles) -- but you talked about the Middle East and why we should move away from the centrality of the Middle East for U.S. foreign policy.

HAASS: Yeah.

QUESTIONER: And you talked about China and how important it is. I'd like you to connect the two, if they do connect, through energy.

HAASS: Yeah.

QUESTIONER: If trends continue and the United States goes to and past energy independence, and China's economy continues to grow and has a greater and greater need for energy, what are the prospects that this becomes less of our problem and more of China's problem in the 21st century?

HAASS: It's really interesting, because those are -- the underlying trends are exactly as David suggested, where the United States is moving towards self-sufficiency. Again, our "dependence," quote-unquote, on Middle Eastern-produced oil is really indirect, that this oil is essential to the economic vitality of our economic partners, but if you add up what we get ourselves from our own oil and gas -- Canada, Mexico and the rest -- we don't, quote-unquote, "need" it ourselves.

China, however -- particularly as its middle class grows, its thirst for oil is going up tremendously. So we just reached a 25-year low in imports. China every year reaches a new -- a new high, so that we're -- you know, we're -- very different trajectories.

Now you would think, as a result, that if we dialed down somewhat our role in maintaining stability in the greater Middle East, China would dial up. They so far haven't seen it that way. And I've had many conversations, both in government and outside of government, with Chinese officials about that. Part is that China still has this self-image of itself as a, quote-unquote, "developing" country and it's not yet willing to take on certain kinds of roles. It has a narrow "you've got to focus at home first" mantra.

Secondly, their policy around the world and in the Middle East is essentially to cut deals with the status quo. China has in that case something of an amoral foreign policy. Some may say it's so amoral it's immoral, but it's amoral; that they'll basically -- they'll do business, and they don't much care. And it's often -- and there's a bias there for -- towards the status quo. It's quite funny for country that if you -- had its roots in revolution, its foreign policy, if you will, is quite nonrevolutionary. And so they stick by regime. So my hunch is they will find ways -- they will hope to enter into economic -- long-term economic accords.

But no, I don't think they're going to be strategic partners in that way any time soon, but it'll be interesting to see what happens. I mean, imagine five years from now or three years from now or seven years from now we wake up, and there's a major crisis in Saudi Arabia, and the signs of turbulence we see in some other -- and in Egypt comes to a Saudi Arabia, and the ruling family is ousted, and some more radical group takes power, and t there's interruption in fuel, or there's a crisis with Iran. You know, how will the Chinese react? And my hunch is that will trigger a major strategic debate there. But so far, at least, they've not been prepared to step up to what might be considered a larger global assumption of responsibility.

STEPHANOPOULOS: How much do you buy the argument that technology might solve the problem? We've seen, you know, the mining of natural gas here in the United States contribute to our energy independence, and now that I know -- I don't know a lot about it, but this idea that maybe mining methane under sea will help China and Japan in the future solve their problems.

HAASS: Well, the short answer is, nobody knows, and maybe. I mean, three years ago, if we'd been having this conversation, no one -- well, I wouldn't say no one -- no one I know would have predicted -- there really is transformation in American energy. I mean, last year alone we produced something like what -- I think it was 800,000 more barrels of oil. The natural gas production is off the charts. Our reserves are extraordinary because of these new technologies, and it shows the power of innovation. And it's quite remarkable. So it forces you to rethink a lot.

So it's one of the reasons that extending lines -- you know, Malthus was wrong for a point, and we all ought to learn from Malthus' mistakes, and extrapolation is a dangerous business. So it's quite possible there could be tomorrow some breakthrough in battery technology or something else.

So I just think, as a strategist, you can't count on it. And you'd say, great, if it happens. It's always nice when problems get -- you know, it's like -- it's like the movie "Sleeper," and Woody Allen wakes up in 2(00) or 300 years, and he finds out that ice cream and bacon were good for you. (Laughter.) You know, fantastic. But in the meantime, you probably don't want to live on an ice cream and bacon diet. And so I think, you know, there may be breakthroughs out there in technology that will solve the energy thing. But in the -- but in the meantime, you've probably got to run our national security on the assumption it doesn't happen.

QUESTIONER: I'm Diana Palk (ph), independent business consultant. I'm struck, the name of the book is "The Case for Putting America's House in Order." And you --

HAASS: It's the subtitle.

QUESTIONER: It's the subtitle, but I think it's a great title. I love the title.

You started off talking about some bad decisions that our legislators are currently engaged and the feuds that going on, education being critical. If you look at any immigrant family, education is the key to success. This country's greatest intellectual capability is education. What should we be doing? Why aren't we doing something about this? And I'm struck, in the city of New York, I've been bombarded about monies to keep our libraries open. I am shocked.

HAASS: I'd say three things about education, and -- because education is another word for human capital. And it's one of the reasons that I don't like things like the sequester but sequesters, by not distinguishing between investment and other forms of spending, do -- we don't do ourselves any favors. And education, it can be -- usually is a form of investment.

So I would just say three things. One is while we have the world's greatest elite universities, a lot of our institutions of higher education are suffering right now, particularly those in the -- state-supported. And it's one of the way -- it's one of the areas where what's happening at the federal level and at the state level is really hurting. So we're paying a price there already. That's what I think.

Secondly, K-through-12, I mentioned it before. It's a major problem. And charter schools are not the answer because they can't scale sufficiently. The answer is in the public school system. That's where the 95 percent or whatever of our kids go. And every single study I read tells me the single biggest variable is teacher quality. Now, there's other variables as well -- length of school year and so forth. But teacher quality is the biggest one, and so you have to figure out ways of improving teacher quality, and that's a difficult issue, as Joel Klein and others would say, because of resources, unions, what have you. But that is the -- you're not going to make us -- an appreciable difference in the quality of K-through-12 education without dealing with teacher quality.

Third and perhaps most radical -- and it's interesting; today at lunch we had -- well, I'm still not sure it was on the record or not -- we had a -- (laughter) -- an individual from the technology sector and who, unlike me, understands, technology. And he was making a point, which I make in the book, coincidentally, which is we don't have an education system that is geared for the lives we live. We have what you would describe as a front-loaded education system. We go to school through high school, maybe, or through college. OK, so that means you're 22. Even graduate school, you're 25. Now, the average life expectancy and work expectancy probably means you've got at least then four, fives decades of labor after that point, unless you were born with a big trust fund. So let's assume you've got five labors -- five decades of labor after that. Does anyone in this room seriously think that what we learned in high school or college is going to be enough to see us through? Inconceivable.

What we do not have is an educational system that essentially deals with the dynamism of the economy, globalization and the challenges it's throwing our way. We've got to really revamp our education system. We've got to move away from a front-loaded, fixed curriculum early on to something that's much more dynamic and flexible. And maybe five or 10 times in the course of your life, you're going to have to check in to some educational filling station and get something to help you for the next step in your career.

That's very different than the model we have. We have a really inflexible model. We're going to have to think about how we provide it, how we pay for it, how we structure people's lives so they're -- they can take advantage of it. So I actually think lifelong learning is not just now a kind of metaphor. It's the reality, and there's a tremendous gap in our education system between what I think is already the existential need and what it is we're able to deliver.

Byron.

QUESTIONER: Byron Wien, Blackstone.

Richard, I want to stay on this domestic thing. I can tell you that I've seen studies, and I'm sure you've seen them too, that the polarity of Congress is greater than it's ever been, the tendency of Democrats to vote in line and Republicans to do the same. The crossover is minimal at best. To do the kinds of things you're talking about in education and in infrastructure would require considerable expenditure of money. You can't even get the Republicans to agree to spend more money on anything. They're very focused on cutting the budget deficit. And the Democrats are more concerned about preserving entitlements than they are on any of the creative initiatives you're talking about. So how can you have any hope that any of the things that you think we need to do are going to get done?

HAASS: Here's how. (Laughter.) Byron, I'm going to make an optimist.

And certainly on infrastructure -- I take your point, and you can't have massive federal or state outlays in infrastructure, but you can have all sorts of public-private partnerships. You can have all -- some versions of infrastructure banks, either at the city, state or federal level. And if you have ratios in which the role of government is relatively modest but there's a -- but because they're involved, it then gives a degree of confidence to the private sector, whether -- and the money could also come from abroad. There's no reason it has to be domestic. I flippantly said on TV this morning that if it came to it - someone said, well, would you agree to having Chinese money? And I said, yeah, and I'll pay my toll -- my tolls in yuan. (Laughter.) But if we could have public-private partnerships, it would not require massive outlays of funds.

So I actually think it's doable. And you're beginning to see it grow up in certain cities, in states around the country. It's somewhat -- and look, it'll mean higher -- potentially -- user fees, congestion pricing, if we're talking about thing -- maybe slightly -- a dollar or two more on your ticket when you take a -- (inaudible) -- but you know, I don't know who wouldn't pay an extra couple of bucks to land in a serious airport -- (laughter) -- as opposed to Kennedy or LaGuardia. (Laughter.) And so I think that actually is affordable.

Education's trickier. It -- but we're spending a lot on our schools. Indeed, you know, let me challenge you in this way. On almost every issue I've ever studied in my life, whether it's education -- and I'm not an expert, but I studied it a bit -- health care, defense, which I know something about, there's surprisingly low correlation between how much you spend and what you get.

Look at the health care outcomes. We spend nearly twice the OECD average, yet we don't have health care outcomes that are better -- so clearly something that's at work other than economic inputs.

On defense, I can cut the defense budget 5, 10, 15 percent and give you better defense than what we have now if you let me -- you let me do the cutting. If you tell me, however, this is off-limits, this is off-limits, and that's off-limits, then I'm in trouble.

So -- with educational reform, if you said we could, you know, get more people in classrooms and do this with training and retire -- and hire the best or promote the best, and seniority wasn't going to be the only determining factor -- which means, by the way, you have to keep your people who are most expensive on, and who were trained longest ago -- if you give us some flexibility, I actually think you can get better schools, for no more -- for no more resources.

So in most cases it's more a question of reform of how -- of how we got about spending than the level of spending.

But I take your basic point there will be major, major, major political obstacles to doing what I'm saying. So again, in virtually every one of these -- to give you an analogy, when I used to be a diplomat and I used to run around Northern Ireland or Cyprus or the Middle East, I very quickly learned that the least difficult part of any negotiation was coming up with the details of the agreement, of the compromise, and the hardest part of any negotiation was putting into place incentives so the various parties would do it. I actually wrote a book many years ago about ripeness, about how you did just that.

And I think the same thing's true of politics, because it's the same thing. It's a negotiation.

The least difficult part in many cases, I find, is saying what needs to be done, and the hardest thing is figuring how you get the political system -- and George here is an expert on it, much more than I am -- how you get the politics to be more responsive. And I actually think that's the challenge.

I don't think at the end of the day it's a resource challenge. I actually think we can, to use my word, restore the foundations of American power without spending more, fundamentally, without taxing more -- we have to tax differently -- and I think we can do things in the world that we need to do and make the 21st century a far more stable century without, again, the sorts of involvements or investments that would demand things that we should not be willing to do.

And again, it's not how much we do, it's what we do. And I think it's as true abroad as it is at home. And the real question then is whether we can generate, given our -- the political realities, the consensus we need to do just that. I don't know the answer to that. There --

STEPHANOPOULOS: Yeah, I think the problem is that no one right now is an expert in how to make this political system work.

HAASS: Right. Right.

STEPHANOPOULOS: And you've seen it building up for more -- for more than a decade.

HAASS: Yeah. And I -- and that's why I've written this, because, you know, I'm old-fashioned enough to believe that ideas matter, and you put out ideas -- you know, that -- you know, I don't produce widgets here. I don't produce automobiles or, you know, steam engines or whatever. We produce ideas. So this is an attempt to produce a book of ideas, put it out there in the political marketplace, and hopefully, you know, some people -- enough people will read it and say, hey, this makes sense; this makes sense as a different approach to the world, this makes sense as a different approach to our domestic challenges. And, you know, I'm naive enough to think that, you know, again, ideas can move things. But it's not automatic that it's going to work. And if it doesn't, then we're back to your -- then we're back to the idea of a crisis. And if we get to the point where we have a massive crisis, be it over our fiscal challenge or something -- or a social crisis, something else, the costs of digging out of that crisis will be enormous, and far greater than anything that we've mentioned in this room up to now.

STEPHANOPOULOS: We're heading past the hour. Let's take one more.

QUESTIONER: Thank you very much. Garrick Utley, SUNY Levin Institute. We haven't talked about the economy, which may be the underlying issue that faces us. We're in a world today, an industrialized world, where our growth, as we know what it is, only marginally better than Europe if you use a magnifying glass, and Japan is there, too, so not just the industrialized world, but the United States. How do we create the wealth, given the fact you're not going to be able to cut the Pentagon budget the way you want to and all the -- the political situation -- in a minimal growth environment which is likely to go on for years and years?

HAASS: Well, I'm not willing to accept that. And by the way, you can't cut your way to growth. Austerity is not a path to growth. And the debate over austerity is much too narrow. Indeed, I'd actually be willing to spend more now if we locked in reductions in entitlements down the road. I think we've probably got it exactly wrong. We're spending too little now, and we're not cutting spending enough then. And so we've got it exactly reversed.

But look, there's lots of things we could do for growth. Some things we -- one good thing has happened, which is the energy transformation. Suddenly American manufacturing has gotten a lot more competitive. That's exciting. Natural gas has -- you know, has made an amazing difference. Some of the new technologies have made an amazing difference. So that's a good thing.

The housing market to some extent has come back in this country. That's a little bit. Get rid -- I would like to ultimately get rid of the sequester. That would -- that would stimulate things. Trade. We've got two major trade agreements now being negotiated across the Atlantic and in the Pacific. Trade is a major engine of growth.

Immigration reform. If we can -- as is talked about, doubling the number of H1-B visas, increasing the number of green cards we grant, suddenly we'll find a way to take advantage of some of our best talent. The statistics are amazing on the percentages of American businesses that have their roots in people who came here as immigrants. They are the engine, in many ways, of American economic success.

Tax reform. Why should American corporations have this nominal tax rate of 35 percent that discourages many of them from bringing their profits back home, building factories abroad rather than building them back home? That's something that's easily changed.

And above all, this fiscal situation -- predictability. I think if people know the rules and they have some sense of the context, they're more willing to make long-term investments. We talked about schools.

I actually think growth is quite possible, and I think it could easily be above 3 percent. And if we can grow above 3 percent, it would be extraordinary for this country, for individuals, but also be extraordinary for the world.

Again, my whole argument is to get it right here not so we can sit in some splendid gated community, which doesn't exist, but so we can do things in the world not as a form of philanthropy but as a form of self-interest. If we are strong enough to act in the world in a concerted way, it will set in motion trends and conditions which will not just be good for others, the 7 billion out there, but it will be good for the 300 million here. And if we don't get our -- if we don't put our house in order, so to speak, we won't be in a position and then we won't be able to insulate ourselves from the effects out there.

So at the end of the day, there really is precious little divide between the domestic and the international, and we've got to get those right.

STEPHANOPOULOS: And buying the book is a little economic stimulus. (Laughter.) Richard Haass. Thank you.

HAASS: Thank you. (Applause.)

(C) COPYRIGHT 2013, FEDERAL NEWS SERVICE, INC., 1120 G STREET NW; SUITE 990; WASHINGTON, DC - 20005, USA. ALL RIGHTS RESERVED. ANY REPRODUCTION, REDISTRIBUTION OR RETRANSMISSION IS EXPRESSLY PROHIBITED.

UNAUTHORIZED REPRODUCTION, REDISTRIBUTION OR RETRANSMISSION CONSTITUTES A MISAPPROPRIATION UNDER APPLICABLE UNFAIR COMPETITION LAW, AND FEDERAL NEWS SERVICE, INC. RESERVES THE RIGHT TO PURSUE ALL REMEDIES AVAILABLE TO IT IN RESPECT TO SUCH MISAPPROPRIATION.

FEDERAL NEWS SERVICE, INC. IS A PRIVATE FIRM AND IS NOT AFFILIATED WITH THE FEDERAL GOVERNMENT. NO COPYRIGHT IS CLAIMED AS TO ANY PART OF THE ORIGINAL WORK PREPARED BY A UNITED STATES GOVERNMENT OFFICER OR EMPLOYEE AS PART OF THAT PERSON'S OFFICIAL DUTIES.

FOR INFORMATION ON SUBSCRIBING TO FNS, PLEASE CALL 202-347-1400 OR EMAIL [email protected].

THIS IS A RUSH TRANSCRIPT.

GEORGE STEPHANOPOULOS: If Richard Haass needs an introduction here, we're all in a lot of trouble. (Laughter.) So I'm not going to -- I'm not going to waste any time; I'm going to get right to it. The title is "Foreign Policy Begins at Home," Richard Haass. And I guess -- hard for me to imagine that any previous president of the Council on Foreign Relations could have written a book of that title, even right in the first couple pages that it borders on heresy. So why take the risk?

(Laughter.)

RICHARD HAASS: If I say "good question," is that the end of the meeting? (Laughter.)

The reason to take the risk is, to put it bluntly, I'm worried. And I look at the world, and I look at what we're doing. And for the first time in my professional life, I am genuinely concerned about the trajectory of the United States and the trajectory of the world.

And so I came to this position for really two reasons. One is on necessity. The foundations of American strength and American power need to be repaired. I see Pete Peterson here. Pete has been sounding this bugle for years. Whether it's entitlements, whether it's infrastructure, which the president talked about in his press conference yesterday, whether it's immigration reform, whether it's K-through-12 schools, we all know that this country is underperforming at home. And one statistic to show it is we're growing at roughly half the average post-World War II rate.

But we've also over the last 10 or 15 years badly overreached abroad. I disagreed with the Iraq war, and I disagreed with the latter phases of the Afghan war, when the United States tripled its troop presence there. And then basically, in both countries, we tried to remake these societies.

So this combination of overreaching abroad and underperforming at home, I came to the conclusion that this country was really losing its way, that we were making big mistakes. And the good news, though, is that I thought we had an opportunity, almost a respite. We had a moment in history where we could afford to focus at home, to get things right.

STEPHANOPOULOS: Is that in 2000, when we had a huge surplus? Is that what you're talking about?

HAASS: No, even now. I actually think the world is a relatively forgiving place. It may seem odd, because, you know, we're bombarded with headlines from Syria, North Korea, Iran's nuclear program. But think about it. There is nothing out there now on the scale of a Nazi Germany or Imperial Japan that both is inclined to oppose and has the capacity to, nothing like the Soviet Union during the four decades of the Cold War. So we actually have a little bit of time and space. And again, we have the necessity, I would argue, of doing it.

Now, the reason I -- to finish the thing about why I wrote the book, though, is it's complicated. You've got this combination of we're short on resources, we don't have the cushion of fiscal surplus that we had 10 or 15 years ago. It's an awfully complicated world, a hell of a lot more complicated than the relatively fixed, predictable bipolarity of the Cold War. There's lots of stuff coming at us. Our inbox, if you will, is overflowing.

So part of it is, how do you sort through this? How is it that we as citizens or policymakers or members of this organization, what have you, how is it we figure out what to do, what not to do at home and abroad? How do we get the balance right? And that's why I wrote --

STEPHANOPOULOS: You say it's complicated. It's also subject to caricature. And you're upfront about that as well. I could neoconservatives saying this is a defeatist attitude. And as you talk about the other caricature you're subject to, maybe even previous presidents of CFR would say this, it's isolationist.

HAASS: I fully expect to get hammered on both. Let's take them both.

I'm not a declinist. But again, I do think we're underperforming, which is not a commentary on our potential, but it's a comment on what we've been doing. I mean, how could you say -- how could anyone be happy with economic growth rates of 1 1/2 or 1/7 percent? How could anyone -- you know, let's put it this way. Do you anyone who comes to the United States to go through our K-through-12 schools? They may come here to go to Stanford or Harvard. They sure as hell don't come to go to the average public school in the United States. Has anyone recently landed at Kennedy Airport? Does anyone think that is anything but Third World infrastructure? (Scattered laughter.)

And then our immigration system, we bring the most talented people around the world, we give them four years at Harvard, Stanford, Princeton, Yale, and then we say thank you, but now you've got to go? Does anybody think this makes sense? I don't think that makes you an isolationist. What it makes you is genuinely concerned about what we are doing and not doing here at home.

And to say there have to be limits to what we do abroad, again, I don't think that's isolation. I call that strategy. I call that priorities. Yes, we can continue to do if we want Iraqs and Afghanistans, but is there anyone who really thinks we're getting a return on investment? Does anyone really think that we're getting something that justifies the 6,500 lives we lost or the 40,000 casualties or the $1 1/2 trillion these two wars cost?

STEPHANOPOULOS: Now, what do you that of people who, perhaps in this particular political environment, say that it also sounds something like a partisan agenda? It lines up a lot more, at least from what you were just talking about there, with what President Obama and the Democrats are talking about than with what Republican leadership in the House and the Senate are talking about.

HAASS: I don't think it is, for a couple of reasons. I would expect that -- you know, as much as I'd like people at the White House to buy and read this book -- (laughter) -- I doubt they'll be, you know, stocking -- you know, putting it in their Christmas stockings.

I'm critical of the president for, as I said before, what he did in Afghanistan. I thought the tripling of U.S. forces and getting ambitious, if you will, in Afghanistan was strategically ill-advised.

I'm very critical of him in the book for what he didn't do on Simpson-Bowles, essentially bringing into existence this commission meant to fix the long-term fiscal challenge and then essentially, as soon as it got created, it also got orphaned. And indeed, I think ultimately, when historians write about his presidency, they're potentially going to be quite critical of what was not done there.

Now, there are some things I do like. I like, for example, the quote-unquote, pivot towards Asia. I think that makes sense strategically that the United States would spend so much more in the way of its calories towards trying to keep stability in Asia, where the great powers do coalesce. I do like the idea of putting some limits on what we're doing in the Middle East. I hope we put a greater emphasis on North America, this new market of 450 million people, Canada, the United States, Mexico, energy self-sufficient, extraordinary economic growth potential, really could become the engine for the world. So I hope there is a new emphasis on this part of the world.

So yeah, I don't think it lines up neatly as a, you know, pro-administration, anti-administration thing. And quite honestly, I don't think most of these issues do. I'm really hard-pressed, George, to say, here's a Democratic foreign policy; here's a Republican foreign policy. I actually think there's tendencies within each party. In the Republicans, you got everybody from John McCain, who, if -- is basically pro-interventionist in most -- and Rand Paul, who's anything but. And you got a lot of people in between. You've got the difference between Bush 41 and Bush 43. So you have tremendous tendencies within that party. You obviously have tendencies in the -- in the Democratic Party. So I don't think our parties reflect, if you will, ideological trends.

STEPHANOPOULOS: There's a lot of scrambling going on now.

HAASS: Absolutely. Absolutely.

STEPHANOPOULOS: And you try to come up with a doctrine for the times as well in the book. You call it restoration, and you boil it down to rebuilding at home, refocusing abroad. Lay that out a little more.

HAASS: Well, if I can characterize (you ?), restoration's about rebuilding at home and refocusing abroad. (Laughter.) The rebuilding at home -- we've talked about the -- basically restore the foundations of American power. And by the way, that's not -- while it will do good things for this society and the economy, that's not the only reason to do it. If we want to be able to lead in the world for decades to come, we've got to be strong, and we've got to be able to discourage the emergence of a peer competitors, deal with one if it happens. It takes -- it takes resources to be a world leader.

And just an aside, if we don't do it, no one else will. There's no alternative to an American-led world. It's not going to be China-led or India-led or Europe-led or Japan-led. It's going to be unled.

STEPHANOPOULOS: But it's first among equals.

HAASS: I'd say first among unequals. And -- (laughter) -- but it's not unilateralism. It's not something we do by -- it's led. Leadership implies followership. But again, it takes resources. You can't just talk; you've got to act. And action takes some resources.

STEPHANOPOULOS: So let's bring that then from theory down to practice and things that are --

HAASS: I -- could I just finish the answer? I apologize. On restoration, so part of it's that. The other two things abroad -- one is slightly less emphasis on the greater Middle East. I would argue that when history is written, the fact that in the -- in basically the post-Cold War era -- and we're only a year away, by the way, from celebrating -- from marking the quarter-century anniversary of the end of the Cold War -- comes up in November 2014. The idea that most of America's foreign policy and national security would have been spent in a country called Iraq and another called Afghanistan -- inconceivable that that is what our national security has so focused on. So I want to do less in that part of the world. I want to do more in Asia. I want to do more here in the Western Hemisphere.

And I also want to think about a rebalancing among tools, not necessarily have the military be the default option, look at diplomacy, look more at economic tools of American foreign policy.

STEPHANOPOULOS: That does bring me exactly where I want to go right now, because if you look at -- if you go from strategy to tactics and you're dealing right now -- you say you want less emphasis on the greater Middle East, yet you've seen Secretary of State Kerry sort of reinsert himself into the peace process between Israel and Palestine. Syria -- front burner right now. The administration has to make decisions right now. So if they were applying your theory to Syria, what would happen?

HAASS: If they were applying my theory to Syria, this is what would happen. But let me take 10 seconds back. Think of Syria not as the entire chessboard, but think of it as what it is, one piece of the -- of the global chessboard. And I would say we have to ask ourselves two questions.

What is it we can afford to commit there, given everything else we have to worry about around the world and here at home? And second of all, what is it we think we can accomplish there? The first is a global calculation. We've got to weigh the specific against everything else -- a question of priorities. The other's a local calculation. Given the nature of Syria, given the nature of that society, the sectarian divides, what is it we believe we can accomplish regardless of what it is we commit?

I look at those two things and I say Syria should not dominate our foreign policy, there's other things in the region and the world we have to be -- and at home we have to be concerned about. And I say, given the nature of Syria, I am not persuaded that even an enormous American commitment can really remake the place. Yeah, we can probably get rid of the Assad regime, but then, as we've learned in these other places, that's the easy part. Then we would have to deal with a population that the one thing they agreed on, getting rid of Assad, is over, and then essentially the second phase of the civil war begins. And then we would be in the position of trying to babysit that. And you can't successfully babysit civil wars. Sooner or later you're forced to become a protagonist, and then you become part of the problem, not the solution.

STEPHANOPOULOS: So this makes you very skeptical of any humanitarian intervention.

HAASS: Absolutely. It makes me skeptical of a large military role, certainly involving ground troops, in many cases involving air power, which is also a sizable commitment. We can help with our -- refugees. We can help try to prevent these things from beginning in the first place.

We may be able to use select military tools. For example, in Syria I would be in favor, in a very carefully vetted way, of providing lethal equipment to certain opposition figures; obviously in favor of helping Turkey and Jordan deal with the humanitarian burden, try to do some things with diplomacy. I'd even be in favor of select cruise missile strikes against chemical weapons targets or against the leadership if it came to that. But I also believe we've got to keep a ceiling on what it is we do there.

STEPHANOPOULOS: That's the -- and I want to stick mostly on the here and now, but let me throw out a hypothetical as well. If this were 1994 and the first reports from Rwanda were starting to come in and you were secretary of state, what would you be counseling, based on what you know now?

HAASS: Well, when the first reports came in, the issue with Rwanda, was there a chance to do something in a preventive way? In all of these situations you've got to say, to the extent there is any strategic warning, what is it you can do to try to prevent? And in the case of Rwanda, for example, there was an international force that could have been reinforced. There were conceivably options.

But once things reach a certain point, I actually believe it is extremely difficult. It's -- it's terrible. In Rwanda you lost nearly a million innocent people. In Syria now you've lost a hundred thousand. So I'm not going to sit here and say this is pleasant and so forth.

But I also believe that we, as a society, we've got to ask ourselves what is it that outsiders can realistically accomplish and what would be the cost? And then we've got to ask ourselves as a society, do we believe that we can accomplish things where, to put it bluntly, the outcome -- you know, the costs and the outcome are in a relationship that we're comfortable with, that we think is sustainable. In a lot of these situations you don't know.

I believe in the case of Rwanda there are some things that might have been done early on that could have made a difference to counter historical -- you never know. In the case of Syria, I'm not persuaded, given the nature of the society. When you have majority minority societies, and minorities have been ruling majorities for a long time, you store up an awful lot of animosity. And as soon as majorities get a chance, in my experience, they basically look to get back.

STEPHANOPOULOS: One of the factors that tips over people like John McCain and others into intervening on Syria, among other things, is the signal it would send to Iran, which has got to be the biggest complication to the kind of strategy you're laying out.

HAASS: Well, yes and no. Look, I think it's fair to make that statement. And in this world, you don't have the luxury of narrow casting. I mean, in the old days in politics, you could have the equivalent of a smoke-filled room. Well, you don't have that anymore. You know, to use one of my favorite line, the world is not Las Vegas. What happens somewhere doesn't stay there.

STEPHANOPOULOS: It's tweeted out immediately.

HAASS: It's tweeted out immediately. (Laughter.) And what you do and don't do in a particular situation has consequences. Tends to be a little bit exaggerated, by the way. If you look at all the things that were said when we left Vietnam and people predicted the future of Asia unraveling, it didn't quite work out that way. It turns actually we have more ability to bounce back from events. People said certain thing were going to happen in the Middle East after the problems in the early '80s with the Marines in Lebanon. Again, less than a decade later, we had amassed an extraordinary coalition that ousted Saddam Hussein from Kuwait.

So I think that's somewhat exaggerated, but I take the point. And the United States, when it puts down red lines or puts down -- uses words like "unacceptable" and things happen, then yes, we have to react or there's consequences to not acting. On the other hand, to say you have to act doesn't say exactly how it is you have to act. What --

STEPHANOPOULOS: And you'd make fewer -- you'd draw fewer red lines on the front end.

HAASS: I would draw fewer red lines on the front end, because words have consequences. I'd -- you can deter through certainty, but you can also deter through uncertainty. And one of the things I would recommend is the administration think more about deterrence through uncertainty rather than always practicing certainty, because then you constantly put yourself on the hook to acts in certain ways.

But even given what they've done, I would say what I've talked about -- lethal aid to the Afghan (sic; Syrian) opposition, which the president talked about yesterday, possibly select cruise missile strikes -- punitive actions still leave the control of, if you -- of escalation, if you will, in our hands. So I do believe we have options for acting and reacting, but still in a way that's limited. Again, I don't want to get so involved in Syria that this becomes, if you will, the successor to Iraq and Afghanistan.

STEPHANOPOULOS: But do have the option of keeping those kinds of limits with Iran if they continue to develop a nuclear program?

HAASS: Well, I actually argue in the book that Iran is for me the most difficult case for what I'm arguing, and the reason is because of the spread of nuclear weapons, because of Iran's bid for regional influence or primacy. I don't -- I don't much like the option of using military force against Iran, against its -- against its nuclear weapons program. On the other hand, I don't much like he idea of an Iran with nuclear weapons. It's the reason that I'm so -- I -- I'm so in favor of a focused diplomatic effort now, against the backdrop of sanctions, hoping it would work. If it doesn't work, and we reach a point where we do have to decide between acting against an Iran or living with it, in the book I set forth a number of specific criteria.

And you know, it's not a cop-out, but the answer it at that point, yeah, it depends. It depends upon your calculation of what you would accomplish and what would be the consequences. And bottom line is, it's hard, in some part because these are -- there are some unknowns here. We don't exactly know how -- what we would accomplish using military force. We don't exactly know how the Iranians would retaliate. And you're going to -- it's quite possible we're going to have make some extraordinarily difficult decisions.

STEPHANOPOULOS: And we may not have the option, given what the Israeli government would choose to do or want to do in that kind of situation. But do you believe we can live with an Iran that goes right up to the edge of a bomb?

HAASS: Well, that could well be the decision the administration has to make, and the answer is, of course we could. And the issue is then at what cost and could you put into place certain types of strategies -- for example, if the Iranians got to certain points, we would say, you should just know that if we pick up certain types of tactical warning, that were you to do X or Y or Z, we would consider this unacceptable, and that could -- that could trigger a certain kind of response. You know, deterrence is not an either/or situation. It -- it's dynamic, and you've got to decide what is it you're prepared to tolerate and what it is, ultimately, you deem to be intolerable. I think, as I look out at 2014, that is the most difficult strategic question on the -- on the horizon.

That said, I still think the basic thrust of what I'm saying is essential, and by that I mean if you think -- if you agree with what I just said, it reinforces the idea of keeping limits on Syria, keeping some of your powder dry for Iran. It means thinking very hard about whether and, if so, how you might use military force towards Iran or how -- or how you might make -- contain the situation if it were to -- if they were to stop short of a nuclear weapon, in ways that were acceptable, still how you do more in Asia and how you do more things at home.

STEPHANOPOULOS: That gets to my -- does Iranian determination to at least get close -- does that defeat the central sort of strategic thrust you want to point -- put out there that the Middle East is not at the center of our foreign policy?

HAASS: It's not. Countries like Iran can cause some disruption, they can cause difficulty, but the Middle East is not an area where the great powers come together. The history of the 21st century is not going to be written in the Middle East. The history of the 21st century is far more likely to be written out in Asia. That's where the major powers -- the Chinas, the Indias, the Japans, the Russias, the United States -- all interact. It's where the great economies of the world would be found.

What the Middle East can do is cause mayhem. The Middle East -- you know, oil is still important. Even if we're energy self-sufficient, we're not going to be energy-independent in the sense that we can't totally remove ourselves from the consequences of instability in the Middle East. But the -- you know, and the Middle East will have terrorists. It will have, potentially, various forms of proliferation. We're not sure how far. It will -- it will have conflict within and between countries. And I think the recommendation I make strategically is we try to do what we can in a way that keeps our involvement still limited and in ways where what we ask our foreign policy to accomplish is things that these tools are designed to accomplish. You get into a lot of trouble in foreign policy when you ask of your tools, particularly the military tool -- you ask it to accomplish things it cannot directly accomplish.

STEPHANOPOULOS: Given your desire to focus more on Asia, is there a way to use this current -- I don't even know the right word to call it -- crisis, for want of a better one, with North Korea -- is there a way to use that situation to create the kind of relationship with China that you think is essential?

HAASS: In principle, yes. In practice, it's been hard. I would love to see a more cooperative relationship with China. I certainly don't want to see an adversarial relationship with China.

China's been disappointing over the years on North Korea. The Chinese are right to say they don't have control over North Korea, but they're wrong to deny their influence. Anytime two-thirds of a country's trade transits your territory, you have influence. Any day you want to show it, all the people at the border can get the flu.

And suddenly, when things can't move across borders, people get a sense of your -- you know, let's -- I think it's probably the place -- there's, though, also -- what we can expect of the Chinese is limited because they've got trade-offs. Yes, they don't want to see North Korea start a war, but on the other hand, no, they don't want North Korea to collapse. They don't want a Korean Peninsula that's unified under the South in the American strategic orbit.

But this is the sort of thing we ought to be talking about with the Chinese. This is a real strategic dialogue about how do we manage the Korean Peninsula now and in the future, and we ought to have a much richer dialogue with China about regional security.

I mean, quite honestly, I'm worried about Asia. What we've seen in the last two or three years is the i plates have begun to move, and you see the emergence of nationalism in China, Japan. One of these days we're going to wake up, and there's going to be an incident. Some fighter pilot's going to do something really stupid, and there's going to be an incident, or some ship captain's going to get drunk, and there's going to be a collision. And then the question is can the Japanese and the Chinese or others manage a crisis? There's not a lot of -- there's nothing like there is in Europe there, in the sense of Franco-German reconciliation, the deep network of relationships. Asia's much thinner.

And that's why it's so important the United States stay involved there. We are critical there. And there it is a region where the kinds of tools we can bring to bear, diplomatic, military, economic, really can make a difference. In a funny sort of way, Asia's a theater much more suited to our national security actions than is the Middle East.

STEPHANOPOULOS: I want to open this up to questions from (over here ?). But let me put on my political hat for a second, and if I -- as I went through your book, I would think that most of the things you call for -- a lot of people would say it's common sense. Most of them would probably poll 60, 70 percent.

HAASS: Should I announce? (Laughter.)

STEPHANOPOULOS: You're ready to go, right? Well, that gets to the problem, through, (in it ?) for a general electorate. I'm not sure about any kind of a primary. And that gets to the question -- and you address it in the book. You say, you know, this is -- I think there's probably a consensus behind -- a broad consensus behind much of what you talk about in the book. But as you point out, you say the gap is widening between America's internal challenges and the capacity of the country's leaders and institutions to meet them, that the -- that the political system can't even get together on issues where there is broad agreement.

HAASS: That's true. And that's the reason -- if there's a single reason I wrote the book, that's it, because I'm worried. And you know, there's that great line of Churchill's that Americans can be counted on to do the right thing, but only after they've tried everything else. (Laughter.) Well, we're in the process of trying everything else.

And that is -- that is clear, and as recently as the vote on gun control, where you have 90 percent of the American people or 85 percent of the polls favoring background checks, and then you still can't get a limited piece of legislation through. You've got to worry about the politics in the United States or the inability to do much in the way of serious things on fiscal issues, and instead you get the sequester, which is -- you know, there's no other word for it but dumb in terms of the nature of the -- of the cuts.

I only have -- I don't think there's mechanical fixes. You know, I've looked a lot at it. I've read the literature. And yeah, you can do things like open primaries and having -- getting state legislators out of deciding where districts are. But at the end of the day, you can't fix using mechanics, if you will, what ails us politically.

So I come back to two things positive and one thing negative. But the negative one, just to get it out of the way, is a crisis, that we have a massive crisis that galvanizes action, and the problem is by the time you have massive crises, things have gotten really bad, and it's the worst possible way to fix things. And if anyone doubts me, just look at what some of these Southern European countries are going through.

The two positive ways -- it would take a combination of two things. One is, if you will, FDR. And by that, I mean a president who's really willing to go out there and stake his presidency on something and talk about it again and again and again and do the digital equivalent of a fireside chat again and again and again, but basically try to create a political context. And then the parallel to that is Lyndon Johnson. Then the president, after creating the political context, really goes in there and gets down and dirty and does retail politics and twists arms out of sockets if need be to get votes on critical issues.

STEPHANOPOULOS: He had pretty big majorities, though.

HAASS: Helps if you have big majorities. I'm saying -- I'm not saying it's easy. If it were easy, we wouldn't in the -- in some of the fixes we're in.

I've seen it, though, recently. I thought Bush 41 was in some ways -- you know, he was a president who you could have the Andrews Air Force Base meeting, getting a budget deal that went across party lines. You -- Bill Clinton, you had agreements where you ended up with a fiscal surplus. And this is not ancient history, you know. This is not, you know, Thucydides. This is only decades ago, if that.

So I do think it's -- (inaudible) -- I think it's -- you know, it's crazy to give up on American politics, but it's not going to fix at that -- fix itself -- fix -- get fixed by itself. And some of the trends are in the wrong direction. You know, things are getting more (pause ?). What you then need is pushback. So you need presidential leadership at that level. But it'll be very interesting -- (inaudible) -- what happens to these Democrats who voted against the gun control legislation? Is there now beginning to -- are you beginning to see focus pushback?

The most basic law of politics is the law intensity. And intensity essentially means that small minorities that act in the political space with great intensity -- whether it's giving money or high levels of percentages of voting or making a lot of noise, what have you -- that small minorities with great intensity can overcome large majorities with no intensity, with little or no intensity. And it's basically saying people who will -- their entire political action will depend upon one issue. It can overwhelm people who say, yeah, I care about that, but I care about 26 others things, and that's going to affect how it is I vote or contributed, whatever.

So only when we begin to get pushback on some of these issues. So to put it bluntly, when there's a real counter to the AARP on entitlement reform, yeah, we'll see some action. And when there is some real -- when there is a real counter to the NRA on some of the gun control issues, yeah, then we'll see -- then we'll see background checks and maybe more. But until there is equal intensity on -- in the political space, things will not change.

STEPHANOPOULOS: OK. There's a question.

HAASS: We should -- we have microphones here, and -- yes, we do. (Inaudible) -- microphone --

STEPHANOPOULOS: Right there.

HAASS: Or here.

QUESTIONER: Evelyn Leopold, journalist at the United Nations. To pick up on what you said, do you think the political division has gotten worse since Obama was re-elected because so many conservatives did not expect him to win a second term, and whatever he says, they'll say the opposite?

HAASS: Look, you know, partisan politics were not invented several months ago. They're bad, and I don't know if they're measurably worse. I've seen certain statistical representations of American voting patterns suggesting that they are some worse.

I do -- I'd make a larger point -- (coughs) -- excuse me -- which is I simply believe -- and George is more an expert on this than I am -- I actually believing governing has gotten more difficult. You know, when I grew up, you had three broadcast networks, and then -- there was an element, therefore, of common experience. Now you've got infinite variety of, you know, cable. You've got people increasingly selecting websites and the rest that reinforce what it is they already believe. And the way we fund our politics weakens parties. Parties were to some extent a moderating and compromising mechanism.

So it's almost what's happening in the world, because what's happening in the world, I call nonpolarity, this great diffusion of power -- so, you know, nation-states no longer have the monopoly, and you've got thousands of entities benign and malign around the world that can make a difference. Same thing is now happening domestically. We're seeing the diffusion of power, and the diffusion, if you will, therefore, of the ability to make a difference politically. And my hunch is all the direction of Supreme Court decisions will reinforce that. We're probably going to see even fewer limits on the ability to spend in the -- in the political arena.

So I think this is an environment where it's harder than ever before to build coalitions and strengthen the middle. People are -- they're vulnerable. So I think it's going to be difficult. But I do think it transcends, the -- you know, the moment, if you will, what people think about this or any other president.

And I also think it's usually a mistake to draw large conclusions from a short amount of time. Let's see what the situation is over the next couple of years, see what the candidates are. It's quite possible you could have people coming -- representing both parties who are somewhat more -- who are somewhat centrist and you don't have quite the edge to American politics than you have now.

Thank you. We're not reacting here.

QUESTIONER: Lev Trubkovich, Russian Television International. Dr. Haass, you were just discussing your strategic worldview. Where is Russia in all of that? And do you see Russia's relationship with the United States trending positively or negatively in the coming years?

HAASS: Russia is, you know, one of these -- one of the medium-size powers in the -- in this post-Cold War world. It's a country of 143 million people. It's obviously got a sizable nuclear arsenal, a seat on the U.N. Security Council.

You know, like a lot of other countries, it's one of the reasons that foreign policy is so hard and one of the reasons I think we do need more -- a framework for it. Russia's neither friend nor foe. On some issues, Russia's been extraordinarily helpful for the United States, in certain things against terrorism, certain things in Afghanistan. On other issues, Russia's been extraordinarily unhelpful vis-a-vis American foreign policy aims. And I actually think that's typical of a lot of countries. It's harder and harder to categorize countries in the way they were. I think Russia's got its hands full internally, in terms of its own political trajectory at home. Indeed I think that's the biggest challenge facing Russia, along with developing an economy that's not so reliant on oil and gas.

But no, I don't see Russia as being one of the principal partners of the United States. It's not an anti-Russian comment; it's simply a commentary on Russia's -- again, its internal challenges and its place in the world.

And I think the real issue for Russia will be political. I think this leadership has consolidated power and so it's an oligopoly economically and politically. And at some point I expect it will be challenged domestically and we'll see how that plays out.

But I think for the United States and Russia, the goal is to figure out a way of cooperating where we can and not letting the areas where we can't cooperate spill over and undermining the relationship.

STEPHANOPOULOS: Let me follow up on that. When you look at the challenges that Russia's putting up to our current foreign policy -- in Syria, in Iran, perhaps in even North Korea -- is that about their specific interests in those countries, in that region, or is that about countering the United States?

HAASS: Bit of both. I think Russia has a little bit of a spoiler mentality; that the way it gets attention in the world is it's always standing up to the United States. I think this leadership at times in Russia defines itself in those terms. Nationalism is one of the ways the Russian leadership derives popular support.

I also think there is something of the politics of resentment. I mean, to be perfectly blunt, or at the same level even understanding of the Russians, this has been a very rough year of history. The last 25 years have been extraordinarily difficult for Russia. The Soviet Union lost, you know, an enormous part of its territory. You now have NATO enlarged up against it. You've seen the population go down significantly. So -- and I think the leadership of Russia to some extent has tapped into this resentment and unhappiness.

So I think some of the reactions to what the United States does is simply reflexive. This is kind of how Russia defines itself. To some extent you find specific economic or strategic rationales for what Russia does. It's probably a mixture of the two.

QUESTIONER: Warren Hoge, International Peace Institute. Richard, when you think about U.S. leadership in the 21st century, I want to ask you about alliances and coalitions abroad. Do you imagine us cooperating with a different set of countries now, and particularly emerging powers? Do you see possibilities there?

HAASS: One of the many reasons this book may get me thrown out of the foreign policy establishment is I actually believe that formal alliances will play less of a role in the 21st century than they've played in the 20th century. And it's the flip side of what we were just talking about. The reason that certain countries won't always be adversaries -- which is welcome -- China, Russia, others, that will cooperate selectively -- is also that allies, in many cases, can't be predicted or expected to always cooperate with us. In such a flexible world, where you have this multitude of challenges, increasingly you'll have, again, relationships that are much more situational. I don't know any better word for it.

You've then got the added problem, particularly in Europe, that a lot of our traditional allies are having real issues of capacity, and I think political culture is turning them inward. And you're seeing that throughout Western Europe.

Where you could see something of, though, an increase in the robustness of our alliances is in Asia, because that looks like a more classical diplomatic theater. And in particular, to the extent countries are worried about China, then you could see the United States potentially moving closer to Japan and some others. What will, though, complicate that is the United States has no desire to get into a confrontational relationship with China. I think it would be bad for both countries, be bad for the 21st century. So we have to figure out a way of still working with China and working with our traditional allies. And I would just simply say that's the recipe for complicated, challenging diplomacy.

More often than not, though, coming back to Warren's point, we will be forming coalitions. The one thing you're not going to see a lot of -- and I apologize for those of you who loved a building a few miles from here -- you're not going to see U.N. General Assembly-based global multilateralism, the idea that 190-plus countries are going to come together for a global climate change accord or a global trade accord. Ain't going to happen.

What you're going to see much more is narrow forms of multilateralism -- formal, informal -- built around groups of countries or slicing off parts of issues, and it's -- could be coalitions of the willing, it could be more formal agreements, what have you. But this is -- this is the multilateralism of the future. You're seeing it in the trade realm -- regional, bilateral agreements. You're seeing it in certain functional areas. And I think this -- this is still multilateralism. It's just, again, a much more tailored sort of approach, which I think is much more consistent with the -- with the nature of this era of history.

QUESTIONER: David -- (off mic). (Laughter.) So -- (chuckles) -- but you talked about the Middle East and why we should move away from the centrality of the Middle East for U.S. foreign policy.

HAASS: Yeah.

QUESTIONER: And you talked about China and how important it is. I'd like you to connect the two, if they do connect, through energy.

HAASS: Yeah.

QUESTIONER: If trends continue and the United States goes to and past energy independence, and China's economy continues to grow and has a greater and greater need for energy, what are the prospects that this becomes less of our problem and more of China's problem in the 21st century?

HAASS: It's really interesting, because those are -- the underlying trends are exactly as David suggested, where the United States is moving towards self-sufficiency. Again, our "dependence," quote-unquote, on Middle Eastern-produced oil is really indirect, that this oil is essential to the economic vitality of our economic partners, but if you add up what we get ourselves from our own oil and gas -- Canada, Mexico and the rest -- we don't, quote-unquote, "need" it ourselves.

China, however -- particularly as its middle class grows, its thirst for oil is going up tremendously. So we just reached a 25-year low in imports. China every year reaches a new -- a new high, so that we're -- you know, we're -- very different trajectories.

Now you would think, as a result, that if we dialed down somewhat our role in maintaining stability in the greater Middle East, China would dial up. They so far haven't seen it that way. And I've had many conversations, both in government and outside of government, with Chinese officials about that. Part is that China still has this self-image of itself as a, quote-unquote, "developing" country and it's not yet willing to take on certain kinds of roles. It has a narrow "you've got to focus at home first" mantra.

Secondly, their policy around the world and in the Middle East is essentially to cut deals with the status quo. China has in that case something of an amoral foreign policy. Some may say it's so amoral it's immoral, but it's amoral; that they'll basically -- they'll do business, and they don't much care. And it's often -- and there's a bias there for -- towards the status quo. It's quite funny for country that if you -- had its roots in revolution, its foreign policy, if you will, is quite nonrevolutionary. And so they stick by regime. So my hunch is they will find ways -- they will hope to enter into economic -- long-term economic accords.

But no, I don't think they're going to be strategic partners in that way any time soon, but it'll be interesting to see what happens. I mean, imagine five years from now or three years from now or seven years from now we wake up, and there's a major crisis in Saudi Arabia, and the signs of turbulence we see in some other -- and in Egypt comes to a Saudi Arabia, and the ruling family is ousted, and some more radical group takes power, and t there's interruption in fuel, or there's a crisis with Iran. You know, how will the Chinese react? And my hunch is that will trigger a major strategic debate there. But so far, at least, they've not been prepared to step up to what might be considered a larger global assumption of responsibility.

STEPHANOPOULOS: How much do you buy the argument that technology might solve the problem? We've seen, you know, the mining of natural gas here in the United States contribute to our energy independence, and now that I know -- I don't know a lot about it, but this idea that maybe mining methane under sea will help China and Japan in the future solve their problems.

HAASS: Well, the short answer is, nobody knows, and maybe. I mean, three years ago, if we'd been having this conversation, no one -- well, I wouldn't say no one -- no one I know would have predicted -- there really is transformation in American energy. I mean, last year alone we produced something like what -- I think it was 800,000 more barrels of oil. The natural gas production is off the charts. Our reserves are extraordinary because of these new technologies, and it shows the power of innovation. And it's quite remarkable. So it forces you to rethink a lot.

So it's one of the reasons that extending lines -- you know, Malthus was wrong for a point, and we all ought to learn from Malthus' mistakes, and extrapolation is a dangerous business. So it's quite possible there could be tomorrow some breakthrough in battery technology or something else.

So I just think, as a strategist, you can't count on it. And you'd say, great, if it happens. It's always nice when problems get -- you know, it's like -- it's like the movie "Sleeper," and Woody Allen wakes up in 2(00) or 300 years, and he finds out that ice cream and bacon were good for you. (Laughter.) You know, fantastic. But in the meantime, you probably don't want to live on an ice cream and bacon diet. And so I think, you know, there may be breakthroughs out there in technology that will solve the energy thing. But in the -- but in the meantime, you've probably got to run our national security on the assumption it doesn't happen.

QUESTIONER: I'm Diana Palk (ph), independent business consultant. I'm struck, the name of the book is "The Case for Putting America's House in Order." And you --

HAASS: It's the subtitle.

QUESTIONER: It's the subtitle, but I think it's a great title. I love the title.

You started off talking about some bad decisions that our legislators are currently engaged and the feuds that going on, education being critical. If you look at any immigrant family, education is the key to success. This country's greatest intellectual capability is education. What should we be doing? Why aren't we doing something about this? And I'm struck, in the city of New York, I've been bombarded about monies to keep our libraries open. I am shocked.

HAASS: I'd say three things about education, and -- because education is another word for human capital. And it's one of the reasons that I don't like things like the sequester but sequesters, by not distinguishing between investment and other forms of spending, do -- we don't do ourselves any favors. And education, it can be -- usually is a form of investment.

So I would just say three things. One is while we have the world's greatest elite universities, a lot of our institutions of higher education are suffering right now, particularly those in the -- state-supported. And it's one of the way -- it's one of the areas where what's happening at the federal level and at the state level is really hurting. So we're paying a price there already. That's what I think.

Secondly, K-through-12, I mentioned it before. It's a major problem. And charter schools are not the answer because they can't scale sufficiently. The answer is in the public school system. That's where the 95 percent or whatever of our kids go. And every single study I read tells me the single biggest variable is teacher quality. Now, there's other variables as well -- length of school year and so forth. But teacher quality is the biggest one, and so you have to figure out ways of improving teacher quality, and that's a difficult issue, as Joel Klein and others would say, because of resources, unions, what have you. But that is the -- you're not going to make us -- an appreciable difference in the quality of K-through-12 education without dealing with teacher quality.

Third and perhaps most radical -- and it's interesting; today at lunch we had -- well, I'm still not sure it was on the record or not -- we had a -- (laughter) -- an individual from the technology sector and who, unlike me, understands, technology. And he was making a point, which I make in the book, coincidentally, which is we don't have an education system that is geared for the lives we live. We have what you would describe as a front-loaded education system. We go to school through high school, maybe, or through college. OK, so that means you're 22. Even graduate school, you're 25. Now, the average life expectancy and work expectancy probably means you've got at least then four, fives decades of labor after that point, unless you were born with a big trust fund. So let's assume you've got five labors -- five decades of labor after that. Does anyone in this room seriously think that what we learned in high school or college is going to be enough to see us through? Inconceivable.

What we do not have is an educational system that essentially deals with the dynamism of the economy, globalization and the challenges it's throwing our way. We've got to really revamp our education system. We've got to move away from a front-loaded, fixed curriculum early on to something that's much more dynamic and flexible. And maybe five or 10 times in the course of your life, you're going to have to check in to some educational filling station and get something to help you for the next step in your career.

That's very different than the model we have. We have a really inflexible model. We're going to have to think about how we provide it, how we pay for it, how we structure people's lives so they're -- they can take advantage of it. So I actually think lifelong learning is not just now a kind of metaphor. It's the reality, and there's a tremendous gap in our education system between what I think is already the existential need and what it is we're able to deliver.

Byron.

QUESTIONER: Byron Wien, Blackstone.

Richard, I want to stay on this domestic thing. I can tell you that I've seen studies, and I'm sure you've seen them too, that the polarity of Congress is greater than it's ever been, the tendency of Democrats to vote in line and Republicans to do the same. The crossover is minimal at best. To do the kinds of things you're talking about in education and in infrastructure would require considerable expenditure of money. You can't even get the Republicans to agree to spend more money on anything. They're very focused on cutting the budget deficit. And the Democrats are more concerned about preserving entitlements than they are on any of the creative initiatives you're talking about. So how can you have any hope that any of the things that you think we need to do are going to get done?

HAASS: Here's how. (Laughter.) Byron, I'm going to make an optimist.

And certainly on infrastructure -- I take your point, and you can't have massive federal or state outlays in infrastructure, but you can have all sorts of public-private partnerships. You can have all -- some versions of infrastructure banks, either at the city, state or federal level. And if you have ratios in which the role of government is relatively modest but there's a -- but because they're involved, it then gives a degree of confidence to the private sector, whether -- and the money could also come from abroad. There's no reason it has to be domestic. I flippantly said on TV this morning that if it came to it - someone said, well, would you agree to having Chinese money? And I said, yeah, and I'll pay my toll -- my tolls in yuan. (Laughter.) But if we could have public-private partnerships, it would not require massive outlays of funds.

So I actually think it's doable. And you're beginning to see it grow up in certain cities, in states around the country. It's somewhat -- and look, it'll mean higher -- potentially -- user fees, congestion pricing, if we're talking about thing -- maybe slightly -- a dollar or two more on your ticket when you take a -- (inaudible) -- but you know, I don't know who wouldn't pay an extra couple of bucks to land in a serious airport -- (laughter) -- as opposed to Kennedy or LaGuardia. (Laughter.) And so I think that actually is affordable.

Education's trickier. It -- but we're spending a lot on our schools. Indeed, you know, let me challenge you in this way. On almost every issue I've ever studied in my life, whether it's education -- and I'm not an expert, but I studied it a bit -- health care, defense, which I know something about, there's surprisingly low correlation between how much you spend and what you get.

Look at the health care outcomes. We spend nearly twice the OECD average, yet we don't have health care outcomes that are better -- so clearly something that's at work other than economic inputs.

On defense, I can cut the defense budget 5, 10, 15 percent and give you better defense than what we have now if you let me -- you let me do the cutting. If you tell me, however, this is off-limits, this is off-limits, and that's off-limits, then I'm in trouble.

So -- with educational reform, if you said we could, you know, get more people in classrooms and do this with training and retire -- and hire the best or promote the best, and seniority wasn't going to be the only determining factor -- which means, by the way, you have to keep your people who are most expensive on, and who were trained longest ago -- if you give us some flexibility, I actually think you can get better schools, for no more -- for no more resources.

So in most cases it's more a question of reform of how -- of how we got about spending than the level of spending.

But I take your basic point there will be major, major, major political obstacles to doing what I'm saying. So again, in virtually every one of these -- to give you an analogy, when I used to be a diplomat and I used to run around Northern Ireland or Cyprus or the Middle East, I very quickly learned that the least difficult part of any negotiation was coming up with the details of the agreement, of the compromise, and the hardest part of any negotiation was putting into place incentives so the various parties would do it. I actually wrote a book many years ago about ripeness, about how you did just that.

And I think the same thing's true of politics, because it's the same thing. It's a negotiation.

The least difficult part in many cases, I find, is saying what needs to be done, and the hardest thing is figuring how you get the political system -- and George here is an expert on it, much more than I am -- how you get the politics to be more responsive. And I actually think that's the challenge.

I don't think at the end of the day it's a resource challenge. I actually think we can, to use my word, restore the foundations of American power without spending more, fundamentally, without taxing more -- we have to tax differently -- and I think we can do things in the world that we need to do and make the 21st century a far more stable century without, again, the sorts of involvements or investments that would demand things that we should not be willing to do.

And again, it's not how much we do, it's what we do. And I think it's as true abroad as it is at home. And the real question then is whether we can generate, given our -- the political realities, the consensus we need to do just that. I don't know the answer to that. There --

STEPHANOPOULOS: Yeah, I think the problem is that no one right now is an expert in how to make this political system work.

HAASS: Right. Right.

STEPHANOPOULOS: And you've seen it building up for more -- for more than a decade.

HAASS: Yeah. And I -- and that's why I've written this, because, you know, I'm old-fashioned enough to believe that ideas matter, and you put out ideas -- you know, that -- you know, I don't produce widgets here. I don't produce automobiles or, you know, steam engines or whatever. We produce ideas. So this is an attempt to produce a book of ideas, put it out there in the political marketplace, and hopefully, you know, some people -- enough people will read it and say, hey, this makes sense; this makes sense as a different approach to the world, this makes sense as a different approach to our domestic challenges. And, you know, I'm naive enough to think that, you know, again, ideas can move things. But it's not automatic that it's going to work. And if it doesn't, then we're back to your -- then we're back to the idea of a crisis. And if we get to the point where we have a massive crisis, be it over our fiscal challenge or something -- or a social crisis, something else, the costs of digging out of that crisis will be enormous, and far greater than anything that we've mentioned in this room up to now.

STEPHANOPOULOS: We're heading past the hour. Let's take one more.

QUESTIONER: Thank you very much. Garrick Utley, SUNY Levin Institute. We haven't talked about the economy, which may be the underlying issue that faces us. We're in a world today, an industrialized world, where our growth, as we know what it is, only marginally better than Europe if you use a magnifying glass, and Japan is there, too, so not just the industrialized world, but the United States. How do we create the wealth, given the fact you're not going to be able to cut the Pentagon budget the way you want to and all the -- the political situation -- in a minimal growth environment which is likely to go on for years and years?

HAASS: Well, I'm not willing to accept that. And by the way, you can't cut your way to growth. Austerity is not a path to growth. And the debate over austerity is much too narrow. Indeed, I'd actually be willing to spend more now if we locked in reductions in entitlements down the road. I think we've probably got it exactly wrong. We're spending too little now, and we're not cutting spending enough then. And so we've got it exactly reversed.

But look, there's lots of things we could do for growth. Some things we -- one good thing has happened, which is the energy transformation. Suddenly American manufacturing has gotten a lot more competitive. That's exciting. Natural gas has -- you know, has made an amazing difference. Some of the new technologies have made an amazing difference. So that's a good thing.

The housing market to some extent has come back in this country. That's a little bit. Get rid -- I would like to ultimately get rid of the sequester. That would -- that would stimulate things. Trade. We've got two major trade agreements now being negotiated across the Atlantic and in the Pacific. Trade is a major engine of growth.

Immigration reform. If we can -- as is talked about, doubling the number of H1-B visas, increasing the number of green cards we grant, suddenly we'll find a way to take advantage of some of our best talent. The statistics are amazing on the percentages of American businesses that have their roots in people who came here as immigrants. They are the engine, in many ways, of American economic success.

Tax reform. Why should American corporations have this nominal tax rate of 35 percent that discourages many of them from bringing their profits back home, building factories abroad rather than building them back home? That's something that's easily changed.

And above all, this fiscal situation -- predictability. I think if people know the rules and they have some sense of the context, they're more willing to make long-term investments. We talked about schools.

I actually think growth is quite possible, and I think it could easily be above 3 percent. And if we can grow above 3 percent, it would be extraordinary for this country, for individuals, but also be extraordinary for the world.

Again, my whole argument is to get it right here not so we can sit in some splendid gated community, which doesn't exist, but so we can do things in the world not as a form of philanthropy but as a form of self-interest. If we are strong enough to act in the world in a concerted way, it will set in motion trends and conditions which will not just be good for others, the 7 billion out there, but it will be good for the 300 million here. And if we don't get our -- if we don't put our house in order, so to speak, we won't be in a position and then we won't be able to insulate ourselves from the effects out there.

So at the end of the day, there really is precious little divide between the domestic and the international, and we've got to get those right.

STEPHANOPOULOS: And buying the book is a little economic stimulus. (Laughter.) Richard Haass. Thank you.

HAASS: Thank you. (Applause.)

(C) COPYRIGHT 2013, FEDERAL NEWS SERVICE, INC., 1120 G STREET NW; SUITE 990; WASHINGTON, DC - 20005, USA. ALL RIGHTS RESERVED. ANY REPRODUCTION, REDISTRIBUTION OR RETRANSMISSION IS EXPRESSLY PROHIBITED.

UNAUTHORIZED REPRODUCTION, REDISTRIBUTION OR RETRANSMISSION CONSTITUTES A MISAPPROPRIATION UNDER APPLICABLE UNFAIR COMPETITION LAW, AND FEDERAL NEWS SERVICE, INC. RESERVES THE RIGHT TO PURSUE ALL REMEDIES AVAILABLE TO IT IN RESPECT TO SUCH MISAPPROPRIATION.

FEDERAL NEWS SERVICE, INC. IS A PRIVATE FIRM AND IS NOT AFFILIATED WITH THE FEDERAL GOVERNMENT. NO COPYRIGHT IS CLAIMED AS TO ANY PART OF THE ORIGINAL WORK PREPARED BY A UNITED STATES GOVERNMENT OFFICER OR EMPLOYEE AS PART OF THAT PERSON'S OFFICIAL DUTIES.

FOR INFORMATION ON SUBSCRIBING TO FNS, PLEASE CALL 202-347-1400 OR EMAIL [email protected].

THIS IS A RUSH TRANSCRIPT.

GEORGE STEPHANOPOULOS: If Richard Haass needs an introduction here, we're all in a lot of trouble. (Laughter.) So I'm not going to -- I'm not going to waste any time; I'm going to get right to it. The title is "Foreign Policy Begins at Home," Richard Haass. And I guess -- hard for me to imagine that any previous president of the Council on Foreign Relations could have written a book of that title, even right in the first couple pages that it borders on heresy. So why take the risk?

(Laughter.)

RICHARD HAASS: If I say "good question," is that the end of the meeting? (Laughter.)

The reason to take the risk is, to put it bluntly, I'm worried. And I look at the world, and I look at what we're doing. And for the first time in my professional life, I am genuinely concerned about the trajectory of the United States and the trajectory of the world.

And so I came to this position for really two reasons. One is on necessity. The foundations of American strength and American power need to be repaired. I see Pete Peterson here. Pete has been sounding this bugle for years. Whether it's entitlements, whether it's infrastructure, which the president talked about in his press conference yesterday, whether it's immigration reform, whether it's K-through-12 schools, we all know that this country is underperforming at home. And one statistic to show it is we're growing at roughly half the average post-World War II rate.

But we've also over the last 10 or 15 years badly overreached abroad. I disagreed with the Iraq war, and I disagreed with the latter phases of the Afghan war, when the United States tripled its troop presence there. And then basically, in both countries, we tried to remake these societies.

So this combination of overreaching abroad and underperforming at home, I came to the conclusion that this country was really losing its way, that we were making big mistakes. And the good news, though, is that I thought we had an opportunity, almost a respite. We had a moment in history where we could afford to focus at home, to get things right.

STEPHANOPOULOS: Is that in 2000, when we had a huge surplus? Is that what you're talking about?

HAASS: No, even now. I actually think the world is a relatively forgiving place. It may seem odd, because, you know, we're bombarded with headlines from Syria, North Korea, Iran's nuclear program. But think about it. There is nothing out there now on the scale of a Nazi Germany or Imperial Japan that both is inclined to oppose and has the capacity to, nothing like the Soviet Union during the four decades of the Cold War. So we actually have a little bit of time and space. And again, we have the necessity, I would argue, of doing it.

Now, the reason I -- to finish the thing about why I wrote the book, though, is it's complicated. You've got this combination of we're short on resources, we don't have the cushion of fiscal surplus that we had 10 or 15 years ago. It's an awfully complicated world, a hell of a lot more complicated than the relatively fixed, predictable bipolarity of the Cold War. There's lots of stuff coming at us. Our inbox, if you will, is overflowing.

So part of it is, how do you sort through this? How is it that we as citizens or policymakers or members of this organization, what have you, how is it we figure out what to do, what not to do at home and abroad? How do we get the balance right? And that's why I wrote --

STEPHANOPOULOS: You say it's complicated. It's also subject to caricature. And you're upfront about that as well. I could neoconservatives saying this is a defeatist attitude. And as you talk about the other caricature you're subject to, maybe even previous presidents of CFR would say this, it's isolationist.

HAASS: I fully expect to get hammered on both. Let's take them both.

I'm not a declinist. But again, I do think we're underperforming, which is not a commentary on our potential, but it's a comment on what we've been doing. I mean, how could you say -- how could anyone be happy with economic growth rates of 1 1/2 or 1/7 percent? How could anyone -- you know, let's put it this way. Do you anyone who comes to the United States to go through our K-through-12 schools? They may come here to go to Stanford or Harvard. They sure as hell don't come to go to the average public school in the United States. Has anyone recently landed at Kennedy Airport? Does anyone think that is anything but Third World infrastructure? (Scattered laughter.)

And then our immigration system, we bring the most talented people around the world, we give them four years at Harvard, Stanford, Princeton, Yale, and then we say thank you, but now you've got to go? Does anybody think this makes sense? I don't think that makes you an isolationist. What it makes you is genuinely concerned about what we are doing and not doing here at home.

And to say there have to be limits to what we do abroad, again, I don't think that's isolation. I call that strategy. I call that priorities. Yes, we can continue to do if we want Iraqs and Afghanistans, but is there anyone who really thinks we're getting a return on investment? Does anyone really think that we're getting something that justifies the 6,500 lives we lost or the 40,000 casualties or the $1 1/2 trillion these two wars cost?

STEPHANOPOULOS: Now, what do you that of people who, perhaps in this particular political environment, say that it also sounds something like a partisan agenda? It lines up a lot more, at least from what you were just talking about there, with what President Obama and the Democrats are talking about than with what Republican leadership in the House and the Senate are talking about.

HAASS: I don't think it is, for a couple of reasons. I would expect that -- you know, as much as I'd like people at the White House to buy and read this book -- (laughter) -- I doubt they'll be, you know, stocking -- you know, putting it in their Christmas stockings.

I'm critical of the president for, as I said before, what he did in Afghanistan. I thought the tripling of U.S. forces and getting ambitious, if you will, in Afghanistan was strategically ill-advised.

I'm very critical of him in the book for what he didn't do on Simpson-Bowles, essentially bringing into existence this commission meant to fix the long-term fiscal challenge and then essentially, as soon as it got created, it also got orphaned. And indeed, I think ultimately, when historians write about his presidency, they're potentially going to be quite critical of what was not done there.

Now, there are some things I do like. I like, for example, the quote-unquote, pivot towards Asia. I think that makes sense strategically that the United States would spend so much more in the way of its calories towards trying to keep stability in Asia, where the great powers do coalesce. I do like the idea of putting some limits on what we're doing in the Middle East. I hope we put a greater emphasis on North America, this new market of 450 million people, Canada, the United States, Mexico, energy self-sufficient, extraordinary economic growth potential, really could become the engine for the world. So I hope there is a new emphasis on this part of the world.

So yeah, I don't think it lines up neatly as a, you know, pro-administration, anti-administration thing. And quite honestly, I don't think most of these issues do. I'm really hard-pressed, George, to say, here's a Democratic foreign policy; here's a Republican foreign policy. I actually think there's tendencies within each party. In the Republicans, you got everybody from John McCain, who, if -- is basically pro-interventionist in most -- and Rand Paul, who's anything but. And you got a lot of people in between. You've got the difference between Bush 41 and Bush 43. So you have tremendous tendencies within that party. You obviously have tendencies in the -- in the Democratic Party. So I don't think our parties reflect, if you will, ideological trends.

STEPHANOPOULOS: There's a lot of scrambling going on now.

HAASS: Absolutely. Absolutely.

STEPHANOPOULOS: And you try to come up with a doctrine for the times as well in the book. You call it restoration, and you boil it down to rebuilding at home, refocusing abroad. Lay that out a little more.

HAASS: Well, if I can characterize (you ?), restoration's about rebuilding at home and refocusing abroad. (Laughter.) The rebuilding at home -- we've talked about the -- basically restore the foundations of American power. And by the way, that's not -- while it will do good things for this society and the economy, that's not the only reason to do it. If we want to be able to lead in the world for decades to come, we've got to be strong, and we've got to be able to discourage the emergence of a peer competitors, deal with one if it happens. It takes -- it takes resources to be a world leader.

And just an aside, if we don't do it, no one else will. There's no alternative to an American-led world. It's not going to be China-led or India-led or Europe-led or Japan-led. It's going to be unled.

STEPHANOPOULOS: But it's first among equals.

HAASS: I'd say first among unequals. And -- (laughter) -- but it's not unilateralism. It's not something we do by -- it's led. Leadership implies followership. But again, it takes resources. You can't just talk; you've got to act. And action takes some resources.

STEPHANOPOULOS: So let's bring that then from theory down to practice and things that are --

HAASS: I -- could I just finish the answer? I apologize. On restoration, so part of it's that. The other two things abroad -- one is slightly less emphasis on the greater Middle East. I would argue that when history is written, the fact that in the -- in basically the post-Cold War era -- and we're only a year away, by the way, from celebrating -- from marking the quarter-century anniversary of the end of the Cold War -- comes up in November 2014. The idea that most of America's foreign policy and national security would have been spent in a country called Iraq and another called Afghanistan -- inconceivable that that is what our national security has so focused on. So I want to do less in that part of the world. I want to do more in Asia. I want to do more here in the Western Hemisphere.

And I also want to think about a rebalancing among tools, not necessarily have the military be the default option, look at diplomacy, look more at economic tools of American foreign policy.

STEPHANOPOULOS: That does bring me exactly where I want to go right now, because if you look at -- if you go from strategy to tactics and you're dealing right now -- you say you want less emphasis on the greater Middle East, yet you've seen Secretary of State Kerry sort of reinsert himself into the peace process between Israel and Palestine. Syria -- front burner right now. The administration has to make decisions right now. So if they were applying your theory to Syria, what would happen?

HAASS: If they were applying my theory to Syria, this is what would happen. But let me take 10 seconds back. Think of Syria not as the entire chessboard, but think of it as what it is, one piece of the -- of the global chessboard. And I would say we have to ask ourselves two questions.

What is it we can afford to commit there, given everything else we have to worry about around the world and here at home? And second of all, what is it we think we can accomplish there? The first is a global calculation. We've got to weigh the specific against everything else -- a question of priorities. The other's a local calculation. Given the nature of Syria, given the nature of that society, the sectarian divides, what is it we believe we can accomplish regardless of what it is we commit?

I look at those two things and I say Syria should not dominate our foreign policy, there's other things in the region and the world we have to be -- and at home we have to be concerned about. And I say, given the nature of Syria, I am not persuaded that even an enormous American commitment can really remake the place. Yeah, we can probably get rid of the Assad regime, but then, as we've learned in these other places, that's the easy part. Then we would have to deal with a population that the one thing they agreed on, getting rid of Assad, is over, and then essentially the second phase of the civil war begins. And then we would be in the position of trying to babysit that. And you can't successfully babysit civil wars. Sooner or later you're forced to become a protagonist, and then you become part of the problem, not the solution.

STEPHANOPOULOS: So this makes you very skeptical of any humanitarian intervention.

HAASS: Absolutely. It makes me skeptical of a large military role, certainly involving ground troops, in many cases involving air power, which is also a sizable commitment. We can help with our -- refugees. We can help try to prevent these things from beginning in the first place.

We may be able to use select military tools. For example, in Syria I would be in favor, in a very carefully vetted way, of providing lethal equipment to certain opposition figures; obviously in favor of helping Turkey and Jordan deal with the humanitarian burden, try to do some things with diplomacy. I'd even be in favor of select cruise missile strikes against chemical weapons targets or against the leadership if it came to that. But I also believe we've got to keep a ceiling on what it is we do there.

STEPHANOPOULOS: That's the -- and I want to stick mostly on the here and now, but let me throw out a hypothetical as well. If this were 1994 and the first reports from Rwanda were starting to come in and you were secretary of state, what would you be counseling, based on what you know now?

HAASS: Well, when the first reports came in, the issue with Rwanda, was there a chance to do something in a preventive way? In all of these situations you've got to say, to the extent there is any strategic warning, what is it you can do to try to prevent? And in the case of Rwanda, for example, there was an international force that could have been reinforced. There were conceivably options.

But once things reach a certain point, I actually believe it is extremely difficult. It's -- it's terrible. In Rwanda you lost nearly a million innocent people. In Syria now you've lost a hundred thousand. So I'm not going to sit here and say this is pleasant and so forth.

But I also believe that we, as a society, we've got to ask ourselves what is it that outsiders can realistically accomplish and what would be the cost? And then we've got to ask ourselves as a society, do we believe that we can accomplish things where, to put it bluntly, the outcome -- you know, the costs and the outcome are in a relationship that we're comfortable with, that we think is sustainable. In a lot of these situations you don't know.

I believe in the case of Rwanda there are some things that might have been done early on that could have made a difference to counter historical -- you never know. In the case of Syria, I'm not persuaded, given the nature of the society. When you have majority minority societies, and minorities have been ruling majorities for a long time, you store up an awful lot of animosity. And as soon as majorities get a chance, in my experience, they basically look to get back.

STEPHANOPOULOS: One of the factors that tips over people like John McCain and others into intervening on Syria, among other things, is the signal it would send to Iran, which has got to be the biggest complication to the kind of strategy you're laying out.

HAASS: Well, yes and no. Look, I think it's fair to make that statement. And in this world, you don't have the luxury of narrow casting. I mean, in the old days in politics, you could have the equivalent of a smoke-filled room. Well, you don't have that anymore. You know, to use one of my favorite line, the world is not Las Vegas. What happens somewhere doesn't stay there.

STEPHANOPOULOS: It's tweeted out immediately.

HAASS: It's tweeted out immediately. (Laughter.) And what you do and don't do in a particular situation has consequences. Tends to be a little bit exaggerated, by the way. If you look at all the things that were said when we left Vietnam and people predicted the future of Asia unraveling, it didn't quite work out that way. It turns actually we have more ability to bounce back from events. People said certain thing were going to happen in the Middle East after the problems in the early '80s with the Marines in Lebanon. Again, less than a decade later, we had amassed an extraordinary coalition that ousted Saddam Hussein from Kuwait.

So I think that's somewhat exaggerated, but I take the point. And the United States, when it puts down red lines or puts down -- uses words like "unacceptable" and things happen, then yes, we have to react or there's consequences to not acting. On the other hand, to say you have to act doesn't say exactly how it is you have to act. What --

STEPHANOPOULOS: And you'd make fewer -- you'd draw fewer red lines on the front end.

HAASS: I would draw fewer red lines on the front end, because words have consequences. I'd -- you can deter through certainty, but you can also deter through uncertainty. And one of the things I would recommend is the administration think more about deterrence through uncertainty rather than always practicing certainty, because then you constantly put yourself on the hook to acts in certain ways.

But even given what they've done, I would say what I've talked about -- lethal aid to the Afghan (sic; Syrian) opposition, which the president talked about yesterday, possibly select cruise missile strikes -- punitive actions still leave the control of, if you -- of escalation, if you will, in our hands. So I do believe we have options for acting and reacting, but still in a way that's limited. Again, I don't want to get so involved in Syria that this becomes, if you will, the successor to Iraq and Afghanistan.

STEPHANOPOULOS: But do have the option of keeping those kinds of limits with Iran if they continue to develop a nuclear program?

HAASS: Well, I actually argue in the book that Iran is for me the most difficult case for what I'm arguing, and the reason is because of the spread of nuclear weapons, because of Iran's bid for regional influence or primacy. I don't -- I don't much like the option of using military force against Iran, against its -- against its nuclear weapons program. On the other hand, I don't much like he idea of an Iran with nuclear weapons. It's the reason that I'm so -- I -- I'm so in favor of a focused diplomatic effort now, against the backdrop of sanctions, hoping it would work. If it doesn't work, and we reach a point where we do have to decide between acting against an Iran or living with it, in the book I set forth a number of specific criteria.

And you know, it's not a cop-out, but the answer it at that point, yeah, it depends. It depends upon your calculation of what you would accomplish and what would be the consequences. And bottom line is, it's hard, in some part because these are -- there are some unknowns here. We don't exactly know how -- what we would accomplish using military force. We don't exactly know how the Iranians would retaliate. And you're going to -- it's quite possible we're going to have make some extraordinarily difficult decisions.

STEPHANOPOULOS: And we may not have the option, given what the Israeli government would choose to do or want to do in that kind of situation. But do you believe we can live with an Iran that goes right up to the edge of a bomb?

HAASS: Well, that could well be the decision the administration has to make, and the answer is, of course we could. And the issue is then at what cost and could you put into place certain types of strategies -- for example, if the Iranians got to certain points, we would say, you should just know that if we pick up certain types of tactical warning, that were you to do X or Y or Z, we would consider this unacceptable, and that could -- that could trigger a certain kind of response. You know, deterrence is not an either/or situation. It -- it's dynamic, and you've got to decide what is it you're prepared to tolerate and what it is, ultimately, you deem to be intolerable. I think, as I look out at 2014, that is the most difficult strategic question on the -- on the horizon.

That said, I still think the basic thrust of what I'm saying is essential, and by that I mean if you think -- if you agree with what I just said, it reinforces the idea of keeping limits on Syria, keeping some of your powder dry for Iran. It means thinking very hard about whether and, if so, how you might use military force towards Iran or how -- or how you might make -- contain the situation if it were to -- if they were to stop short of a nuclear weapon, in ways that were acceptable, still how you do more in Asia and how you do more things at home.

STEPHANOPOULOS: That gets to my -- does Iranian determination to at least get close -- does that defeat the central sort of strategic thrust you want to point -- put out there that the Middle East is not at the center of our foreign policy?

HAASS: It's not. Countries like Iran can cause some disruption, they can cause difficulty, but the Middle East is not an area where the great powers come together. The history of the 21st century is not going to be written in the Middle East. The history of the 21st century is far more likely to be written out in Asia. That's where the major powers -- the Chinas, the Indias, the Japans, the Russias, the United States -- all interact. It's where the great economies of the world would be found.

What the Middle East can do is cause mayhem. The Middle East -- you know, oil is still important. Even if we're energy self-sufficient, we're not going to be energy-independent in the sense that we can't totally remove ourselves from the consequences of instability in the Middle East. But the -- you know, and the Middle East will have terrorists. It will have, potentially, various forms of proliferation. We're not sure how far. It will -- it will have conflict within and between countries. And I think the recommendation I make strategically is we try to do what we can in a way that keeps our involvement still limited and in ways where what we ask our foreign policy to accomplish is things that these tools are designed to accomplish. You get into a lot of trouble in foreign policy when you ask of your tools, particularly the military tool -- you ask it to accomplish things it cannot directly accomplish.

STEPHANOPOULOS: Given your desire to focus more on Asia, is there a way to use this current -- I don't even know the right word to call it -- crisis, for want of a better one, with North Korea -- is there a way to use that situation to create the kind of relationship with China that you think is essential?

HAASS: In principle, yes. In practice, it's been hard. I would love to see a more cooperative relationship with China. I certainly don't want to see an adversarial relationship with China.

China's been disappointing over the years on North Korea. The Chinese are right to say they don't have control over North Korea, but they're wrong to deny their influence. Anytime two-thirds of a country's trade transits your territory, you have influence. Any day you want to show it, all the people at the border can get the flu.

And suddenly, when things can't move across borders, people get a sense of your -- you know, let's -- I think it's probably the place -- there's, though, also -- what we can expect of the Chinese is limited because they've got trade-offs. Yes, they don't want to see North Korea start a war, but on the other hand, no, they don't want North Korea to collapse. They don't want a Korean Peninsula that's unified under the South in the American strategic orbit.

But this is the sort of thing we ought to be talking about with the Chinese. This is a real strategic dialogue about how do we manage the Korean Peninsula now and in the future, and we ought to have a much richer dialogue with China about regional security.

I mean, quite honestly, I'm worried about Asia. What we've seen in the last two or three years is the i plates have begun to move, and you see the emergence of nationalism in China, Japan. One of these days we're going to wake up, and there's going to be an incident. Some fighter pilot's going to do something really stupid, and there's going to be an incident, or some ship captain's going to get drunk, and there's going to be a collision. And then the question is can the Japanese and the Chinese or others manage a crisis? There's not a lot of -- there's nothing like there is in Europe there, in the sense of Franco-German reconciliation, the deep network of relationships. Asia's much thinner.

And that's why it's so important the United States stay involved there. We are critical there. And there it is a region where the kinds of tools we can bring to bear, diplomatic, military, economic, really can make a difference. In a funny sort of way, Asia's a theater much more suited to our national security actions than is the Middle East.

STEPHANOPOULOS: I want to open this up to questions from (over here ?). But let me put on my political hat for a second, and if I -- as I went through your book, I would think that most of the things you call for -- a lot of people would say it's common sense. Most of them would probably poll 60, 70 percent.

HAASS: Should I announce? (Laughter.)

STEPHANOPOULOS: You're ready to go, right? Well, that gets to the problem, through, (in it ?) for a general electorate. I'm not sure about any kind of a primary. And that gets to the question -- and you address it in the book. You say, you know, this is -- I think there's probably a consensus behind -- a broad consensus behind much of what you talk about in the book. But as you point out, you say the gap is widening between America's internal challenges and the capacity of the country's leaders and institutions to meet them, that the -- that the political system can't even get together on issues where there is broad agreement.

HAASS: That's true. And that's the reason -- if there's a single reason I wrote the book, that's it, because I'm worried. And you know, there's that great line of Churchill's that Americans can be counted on to do the right thing, but only after they've tried everything else. (Laughter.) Well, we're in the process of trying everything else.

And that is -- that is clear, and as recently as the vote on gun control, where you have 90 percent of the American people or 85 percent of the polls favoring background checks, and then you still can't get a limited piece of legislation through. You've got to worry about the politics in the United States or the inability to do much in the way of serious things on fiscal issues, and instead you get the sequester, which is -- you know, there's no other word for it but dumb in terms of the nature of the -- of the cuts.

I only have -- I don't think there's mechanical fixes. You know, I've looked a lot at it. I've read the literature. And yeah, you can do things like open primaries and having -- getting state legislators out of deciding where districts are. But at the end of the day, you can't fix using mechanics, if you will, what ails us politically.

So I come back to two things positive and one thing negative. But the negative one, just to get it out of the way, is a crisis, that we have a massive crisis that galvanizes action, and the problem is by the time you have massive crises, things have gotten really bad, and it's the worst possible way to fix things. And if anyone doubts me, just look at what some of these Southern European countries are going through.

The two positive ways -- it would take a combination of two things. One is, if you will, FDR. And by that, I mean a president who's really willing to go out there and stake his presidency on something and talk about it again and again and again and do the digital equivalent of a fireside chat again and again and again, but basically try to create a political context. And then the parallel to that is Lyndon Johnson. Then the president, after creating the political context, really goes in there and gets down and dirty and does retail politics and twists arms out of sockets if need be to get votes on critical issues.

STEPHANOPOULOS: He had pretty big majorities, though.

HAASS: Helps if you have big majorities. I'm saying -- I'm not saying it's easy. If it were easy, we wouldn't in the -- in some of the fixes we're in.

I've seen it, though, recently. I thought Bush 41 was in some ways -- you know, he was a president who you could have the Andrews Air Force Base meeting, getting a budget deal that went across party lines. You -- Bill Clinton, you had agreements where you ended up with a fiscal surplus. And this is not ancient history, you know. This is not, you know, Thucydides. This is only decades ago, if that.

So I do think it's -- (inaudible) -- I think it's -- you know, it's crazy to give up on American politics, but it's not going to fix at that -- fix itself -- fix -- get fixed by itself. And some of the trends are in the wrong direction. You know, things are getting more (pause ?). What you then need is pushback. So you need presidential leadership at that level. But it'll be very interesting -- (inaudible) -- what happens to these Democrats who voted against the gun control legislation? Is there now beginning to -- are you beginning to see focus pushback?

The most basic law of politics is the law intensity. And intensity essentially means that small minorities that act in the political space with great intensity -- whether it's giving money or high levels of percentages of voting or making a lot of noise, what have you -- that small minorities with great intensity can overcome large majorities with no intensity, with little or no intensity. And it's basically saying people who will -- their entire political action will depend upon one issue. It can overwhelm people who say, yeah, I care about that, but I care about 26 others things, and that's going to affect how it is I vote or contributed, whatever.

So only when we begin to get pushback on some of these issues. So to put it bluntly, when there's a real counter to the AARP on entitlement reform, yeah, we'll see some action. And when there is some real -- when there is a real counter to the NRA on some of the gun control issues, yeah, then we'll see -- then we'll see background checks and maybe more. But until there is equal intensity on -- in the political space, things will not change.

STEPHANOPOULOS: OK. There's a question.

HAASS: We should -- we have microphones here, and -- yes, we do. (Inaudible) -- microphone --

STEPHANOPOULOS: Right there.

HAASS: Or here.

QUESTIONER: Evelyn Leopold, journalist at the United Nations. To pick up on what you said, do you think the political division has gotten worse since Obama was re-elected because so many conservatives did not expect him to win a second term, and whatever he says, they'll say the opposite?

HAASS: Look, you know, partisan politics were not invented several months ago. They're bad, and I don't know if they're measurably worse. I've seen certain statistical representations of American voting patterns suggesting that they are some worse.

I do -- I'd make a larger point -- (coughs) -- excuse me -- which is I simply believe -- and George is more an expert on this than I am -- I actually believing governing has gotten more difficult. You know, when I grew up, you had three broadcast networks, and then -- there was an element, therefore, of common experience. Now you've got infinite variety of, you know, cable. You've got people increasingly selecting websites and the rest that reinforce what it is they already believe. And the way we fund our politics weakens parties. Parties were to some extent a moderating and compromising mechanism.

So it's almost what's happening in the world, because what's happening in the world, I call nonpolarity, this great diffusion of power -- so, you know, nation-states no longer have the monopoly, and you've got thousands of entities benign and malign around the world that can make a difference. Same thing is now happening domestically. We're seeing the diffusion of power, and the diffusion, if you will, therefore, of the ability to make a difference politically. And my hunch is all the direction of Supreme Court decisions will reinforce that. We're probably going to see even fewer limits on the ability to spend in the -- in the political arena.

So I think this is an environment where it's harder than ever before to build coalitions and strengthen the middle. People are -- they're vulnerable. So I think it's going to be difficult. But I do think it transcends, the -- you know, the moment, if you will, what people think about this or any other president.

And I also think it's usually a mistake to draw large conclusions from a short amount of time. Let's see what the situation is over the next couple of years, see what the candidates are. It's quite possible you could have people coming -- representing both parties who are somewhat more -- who are somewhat centrist and you don't have quite the edge to American politics than you have now.

Thank you. We're not reacting here.

QUESTIONER: Lev Trubkovich, Russian Television International. Dr. Haass, you were just discussing your strategic worldview. Where is Russia in all of that? And do you see Russia's relationship with the United States trending positively or negatively in the coming years?

HAASS: Russia is, you know, one of these -- one of the medium-size powers in the -- in this post-Cold War world. It's a country of 143 million people. It's obviously got a sizable nuclear arsenal, a seat on the U.N. Security Council.

You know, like a lot of other countries, it's one of the reasons that foreign policy is so hard and one of the reasons I think we do need more -- a framework for it. Russia's neither friend nor foe. On some issues, Russia's been extraordinarily helpful for the United States, in certain things against terrorism, certain things in Afghanistan. On other issues, Russia's been extraordinarily unhelpful vis-a-vis American foreign policy aims. And I actually think that's typical of a lot of countries. It's harder and harder to categorize countries in the way they were. I think Russia's got its hands full internally, in terms of its own political trajectory at home. Indeed I think that's the biggest challenge facing Russia, along with developing an economy that's not so reliant on oil and gas.

But no, I don't see Russia as being one of the principal partners of the United States. It's not an anti-Russian comment; it's simply a commentary on Russia's -- again, its internal challenges and its place in the world.

And I think the real issue for Russia will be political. I think this leadership has consolidated power and so it's an oligopoly economically and politically. And at some point I expect it will be challenged domestically and we'll see how that plays out.

But I think for the United States and Russia, the goal is to figure out a way of cooperating where we can and not letting the areas where we can't cooperate spill over and undermining the relationship.

STEPHANOPOULOS: Let me follow up on that. When you look at the challenges that Russia's putting up to our current foreign policy -- in Syria, in Iran, perhaps in even North Korea -- is that about their specific interests in those countries, in that region, or is that about countering the United States?

HAASS: Bit of both. I think Russia has a little bit of a spoiler mentality; that the way it gets attention in the world is it's always standing up to the United States. I think this leadership at times in Russia defines itself in those terms. Nationalism is one of the ways the Russian leadership derives popular support.

I also think there is something of the politics of resentment. I mean, to be perfectly blunt, or at the same level even understanding of the Russians, this has been a very rough year of history. The last 25 years have been extraordinarily difficult for Russia. The Soviet Union lost, you know, an enormous part of its territory. You now have NATO enlarged up against it. You've seen the population go down significantly. So -- and I think the leadership of Russia to some extent has tapped into this resentment and unhappiness.

So I think some of the reactions to what the United States does is simply reflexive. This is kind of how Russia defines itself. To some extent you find specific economic or strategic rationales for what Russia does. It's probably a mixture of the two.

QUESTIONER: Warren Hoge, International Peace Institute. Richard, when you think about U.S. leadership in the 21st century, I want to ask you about alliances and coalitions abroad. Do you imagine us cooperating with a different set of countries now, and particularly emerging powers? Do you see possibilities there?

HAASS: One of the many reasons this book may get me thrown out of the foreign policy establishment is I actually believe that formal alliances will play less of a role in the 21st century than they've played in the 20th century. And it's the flip side of what we were just talking about. The reason that certain countries won't always be adversaries -- which is welcome -- China, Russia, others, that will cooperate selectively -- is also that allies, in many cases, can't be predicted or expected to always cooperate with us. In such a flexible world, where you have this multitude of challenges, increasingly you'll have, again, relationships that are much more situational. I don't know any better word for it.

You've then got the added problem, particularly in Europe, that a lot of our traditional allies are having real issues of capacity, and I think political culture is turning them inward. And you're seeing that throughout Western Europe.

Where you could see something of, though, an increase in the robustness of our alliances is in Asia, because that looks like a more classical diplomatic theater. And in particular, to the extent countries are worried about China, then you could see the United States potentially moving closer to Japan and some others. What will, though, complicate that is the United States has no desire to get into a confrontational relationship with China. I think it would be bad for both countries, be bad for the 21st century. So we have to figure out a way of still working with China and working with our traditional allies. And I would just simply say that's the recipe for complicated, challenging diplomacy.

More often than not, though, coming back to Warren's point, we will be forming coalitions. The one thing you're not going to see a lot of -- and I apologize for those of you who loved a building a few miles from here -- you're not going to see U.N. General Assembly-based global multilateralism, the idea that 190-plus countries are going to come together for a global climate change accord or a global trade accord. Ain't going to happen.

What you're going to see much more is narrow forms of multilateralism -- formal, informal -- built around groups of countries or slicing off parts of issues, and it's -- could be coalitions of the willing, it could be more formal agreements, what have you. But this is -- this is the multilateralism of the future. You're seeing it in the trade realm -- regional, bilateral agreements. You're seeing it in certain functional areas. And I think this -- this is still multilateralism. It's just, again, a much more tailored sort of approach, which I think is much more consistent with the -- with the nature of this era of history.

QUESTIONER: David -- (off mic). (Laughter.) So -- (chuckles) -- but you talked about the Middle East and why we should move away from the centrality of the Middle East for U.S. foreign policy.

HAASS: Yeah.

QUESTIONER: And you talked about China and how important it is. I'd like you to connect the two, if they do connect, through energy.

HAASS: Yeah.

QUESTIONER: If trends continue and the United States goes to and past energy independence, and China's economy continues to grow and has a greater and greater need for energy, what are the prospects that this becomes less of our problem and more of China's problem in the 21st century?

HAASS: It's really interesting, because those are -- the underlying trends are exactly as David suggested, where the United States is moving towards self-sufficiency. Again, our "dependence," quote-unquote, on Middle Eastern-produced oil is really indirect, that this oil is essential to the economic vitality of our economic partners, but if you add up what we get ourselves from our own oil and gas -- Canada, Mexico and the rest -- we don't, quote-unquote, "need" it ourselves.

China, however -- particularly as its middle class grows, its thirst for oil is going up tremendously. So we just reached a 25-year low in imports. China every year reaches a new -- a new high, so that we're -- you know, we're -- very different trajectories.

Now you would think, as a result, that if we dialed down somewhat our role in maintaining stability in the greater Middle East, China would dial up. They so far haven't seen it that way. And I've had many conversations, both in government and outside of government, with Chinese officials about that. Part is that China still has this self-image of itself as a, quote-unquote, "developing" country and it's not yet willing to take on certain kinds of roles. It has a narrow "you've got to focus at home first" mantra.

Secondly, their policy around the world and in the Middle East is essentially to cut deals with the status quo. China has in that case something of an amoral foreign policy. Some may say it's so amoral it's immoral, but it's amoral; that they'll basically -- they'll do business, and they don't much care. And it's often -- and there's a bias there for -- towards the status quo. It's quite funny for country that if you -- had its roots in revolution, its foreign policy, if you will, is quite nonrevolutionary. And so they stick by regime. So my hunch is they will find ways -- they will hope to enter into economic -- long-term economic accords.

But no, I don't think they're going to be strategic partners in that way any time soon, but it'll be interesting to see what happens. I mean, imagine five years from now or three years from now or seven years from now we wake up, and there's a major crisis in Saudi Arabia, and the signs of turbulence we see in some other -- and in Egypt comes to a Saudi Arabia, and the ruling family is ousted, and some more radical group takes power, and t there's interruption in fuel, or there's a crisis with Iran. You know, how will the Chinese react? And my hunch is that will trigger a major strategic debate there. But so far, at least, they've not been prepared to step up to what might be considered a larger global assumption of responsibility.

STEPHANOPOULOS: How much do you buy the argument that technology might solve the problem? We've seen, you know, the mining of natural gas here in the United States contribute to our energy independence, and now that I know -- I don't know a lot about it, but this idea that maybe mining methane under sea will help China and Japan in the future solve their problems.

HAASS: Well, the short answer is, nobody knows, and maybe. I mean, three years ago, if we'd been having this conversation, no one -- well, I wouldn't say no one -- no one I know would have predicted -- there really is transformation in American energy. I mean, last year alone we produced something like what -- I think it was 800,000 more barrels of oil. The natural gas production is off the charts. Our reserves are extraordinary because of these new technologies, and it shows the power of innovation. And it's quite remarkable. So it forces you to rethink a lot.

So it's one of the reasons that extending lines -- you know, Malthus was wrong for a point, and we all ought to learn from Malthus' mistakes, and extrapolation is a dangerous business. So it's quite possible there could be tomorrow some breakthrough in battery technology or something else.

So I just think, as a strategist, you can't count on it. And you'd say, great, if it happens. It's always nice when problems get -- you know, it's like -- it's like the movie "Sleeper," and Woody Allen wakes up in 2(00) or 300 years, and he finds out that ice cream and bacon were good for you. (Laughter.) You know, fantastic. But in the meantime, you probably don't want to live on an ice cream and bacon diet. And so I think, you know, there may be breakthroughs out there in technology that will solve the energy thing. But in the -- but in the meantime, you've probably got to run our national security on the assumption it doesn't happen.

QUESTIONER: I'm Diana Palk (ph), independent business consultant. I'm struck, the name of the book is "The Case for Putting America's House in Order." And you --

HAASS: It's the subtitle.

QUESTIONER: It's the subtitle, but I think it's a great title. I love the title.

You started off talking about some bad decisions that our legislators are currently engaged and the feuds that going on, education being critical. If you look at any immigrant family, education is the key to success. This country's greatest intellectual capability is education. What should we be doing? Why aren't we doing something about this? And I'm struck, in the city of New York, I've been bombarded about monies to keep our libraries open. I am shocked.

HAASS: I'd say three things about education, and -- because education is another word for human capital. And it's one of the reasons that I don't like things like the sequester but sequesters, by not distinguishing between investment and other forms of spending, do -- we don't do ourselves any favors. And education, it can be -- usually is a form of investment.

So I would just say three things. One is while we have the world's greatest elite universities, a lot of our institutions of higher education are suffering right now, particularly those in the -- state-supported. And it's one of the way -- it's one of the areas where what's happening at the federal level and at the state level is really hurting. So we're paying a price there already. That's what I think.

Secondly, K-through-12, I mentioned it before. It's a major problem. And charter schools are not the answer because they can't scale sufficiently. The answer is in the public school system. That's where the 95 percent or whatever of our kids go. And every single study I read tells me the single biggest variable is teacher quality. Now, there's other variables as well -- length of school year and so forth. But teacher quality is the biggest one, and so you have to figure out ways of improving teacher quality, and that's a difficult issue, as Joel Klein and others would say, because of resources, unions, what have you. But that is the -- you're not going to make us -- an appreciable difference in the quality of K-through-12 education without dealing with teacher quality.

Third and perhaps most radical -- and it's interesting; today at lunch we had -- well, I'm still not sure it was on the record or not -- we had a -- (laughter) -- an individual from the technology sector and who, unlike me, understands, technology. And he was making a point, which I make in the book, coincidentally, which is we don't have an education system that is geared for the lives we live. We have what you would describe as a front-loaded education system. We go to school through high school, maybe, or through college. OK, so that means you're 22. Even graduate school, you're 25. Now, the average life expectancy and work expectancy probably means you've got at least then four, fives decades of labor after that point, unless you were born with a big trust fund. So let's assume you've got five labors -- five decades of labor after that. Does anyone in this room seriously think that what we learned in high school or college is going to be enough to see us through? Inconceivable.

What we do not have is an educational system that essentially deals with the dynamism of the economy, globalization and the challenges it's throwing our way. We've got to really revamp our education system. We've got to move away from a front-loaded, fixed curriculum early on to something that's much more dynamic and flexible. And maybe five or 10 times in the course of your life, you're going to have to check in to some educational filling station and get something to help you for the next step in your career.

That's very different than the model we have. We have a really inflexible model. We're going to have to think about how we provide it, how we pay for it, how we structure people's lives so they're -- they can take advantage of it. So I actually think lifelong learning is not just now a kind of metaphor. It's the reality, and there's a tremendous gap in our education system between what I think is already the existential need and what it is we're able to deliver.

Byron.

QUESTIONER: Byron Wien, Blackstone.

Richard, I want to stay on this domestic thing. I can tell you that I've seen studies, and I'm sure you've seen them too, that the polarity of Congress is greater than it's ever been, the tendency of Democrats to vote in line and Republicans to do the same. The crossover is minimal at best. To do the kinds of things you're talking about in education and in infrastructure would require considerable expenditure of money. You can't even get the Republicans to agree to spend more money on anything. They're very focused on cutting the budget deficit. And the Democrats are more concerned about preserving entitlements than they are on any of the creative initiatives you're talking about. So how can you have any hope that any of the things that you think we need to do are going to get done?

HAASS: Here's how. (Laughter.) Byron, I'm going to make an optimist.

And certainly on infrastructure -- I take your point, and you can't have massive federal or state outlays in infrastructure, but you can have all sorts of public-private partnerships. You can have all -- some versions of infrastructure banks, either at the city, state or federal level. And if you have ratios in which the role of government is relatively modest but there's a -- but because they're involved, it then gives a degree of confidence to the private sector, whether -- and the money could also come from abroad. There's no reason it has to be domestic. I flippantly said on TV this morning that if it came to it - someone said, well, would you agree to having Chinese money? And I said, yeah, and I'll pay my toll -- my tolls in yuan. (Laughter.) But if we could have public-private partnerships, it would not require massive outlays of funds.

So I actually think it's doable. And you're beginning to see it grow up in certain cities, in states around the country. It's somewhat -- and look, it'll mean higher -- potentially -- user fees, congestion pricing, if we're talking about thing -- maybe slightly -- a dollar or two more on your ticket when you take a -- (inaudible) -- but you know, I don't know who wouldn't pay an extra couple of bucks to land in a serious airport -- (laughter) -- as opposed to Kennedy or LaGuardia. (Laughter.) And so I think that actually is affordable.

Education's trickier. It -- but we're spending a lot on our schools. Indeed, you know, let me challenge you in this way. On almost every issue I've ever studied in my life, whether it's education -- and I'm not an expert, but I studied it a bit -- health care, defense, which I know something about, there's surprisingly low correlation between how much you spend and what you get.

Look at the health care outcomes. We spend nearly twice the OECD average, yet we don't have health care outcomes that are better -- so clearly something that's at work other than economic inputs.

On defense, I can cut the defense budget 5, 10, 15 percent and give you better defense than what we have now if you let me -- you let me do the cutting. If you tell me, however, this is off-limits, this is off-limits, and that's off-limits, then I'm in trouble.

So -- with educational reform, if you said we could, you know, get more people in classrooms and do this with training and retire -- and hire the best or promote the best, and seniority wasn't going to be the only determining factor -- which means, by the way, you have to keep your people who are most expensive on, and who were trained longest ago -- if you give us some flexibility, I actually think you can get better schools, for no more -- for no more resources.

So in most cases it's more a question of reform of how -- of how we got about spending than the level of spending.

But I take your basic point there will be major, major, major political obstacles to doing what I'm saying. So again, in virtually every one of these -- to give you an analogy, when I used to be a diplomat and I used to run around Northern Ireland or Cyprus or the Middle East, I very quickly learned that the least difficult part of any negotiation was coming up with the details of the agreement, of the compromise, and the hardest part of any negotiation was putting into place incentives so the various parties would do it. I actually wrote a book many years ago about ripeness, about how you did just that.

And I think the same thing's true of politics, because it's the same thing. It's a negotiation.

The least difficult part in many cases, I find, is saying what needs to be done, and the hardest thing is figuring how you get the political system -- and George here is an expert on it, much more than I am -- how you get the politics to be more responsive. And I actually think that's the challenge.

I don't think at the end of the day it's a resource challenge. I actually think we can, to use my word, restore the foundations of American power without spending more, fundamentally, without taxing more -- we have to tax differently -- and I think we can do things in the world that we need to do and make the 21st century a far more stable century without, again, the sorts of involvements or investments that would demand things that we should not be willing to do.

And again, it's not how much we do, it's what we do. And I think it's as true abroad as it is at home. And the real question then is whether we can generate, given our -- the political realities, the consensus we need to do just that. I don't know the answer to that. There --

STEPHANOPOULOS: Yeah, I think the problem is that no one right now is an expert in how to make this political system work.

HAASS: Right. Right.

STEPHANOPOULOS: And you've seen it building up for more -- for more than a decade.

HAASS: Yeah. And I -- and that's why I've written this, because, you know, I'm old-fashioned enough to believe that ideas matter, and you put out ideas -- you know, that -- you know, I don't produce widgets here. I don't produce automobiles or, you know, steam engines or whatever. We produce ideas. So this is an attempt to produce a book of ideas, put it out there in the political marketplace, and hopefully, you know, some people -- enough people will read it and say, hey, this makes sense; this makes sense as a different approach to the world, this makes sense as a different approach to our domestic challenges. And, you know, I'm naive enough to think that, you know, again, ideas can move things. But it's not automatic that it's going to work. And if it doesn't, then we're back to your -- then we're back to the idea of a crisis. And if we get to the point where we have a massive crisis, be it over our fiscal challenge or something -- or a social crisis, something else, the costs of digging out of that crisis will be enormous, and far greater than anything that we've mentioned in this room up to now.

STEPHANOPOULOS: We're heading past the hour. Let's take one more.

QUESTIONER: Thank you very much. Garrick Utley, SUNY Levin Institute. We haven't talked about the economy, which may be the underlying issue that faces us. We're in a world today, an industrialized world, where our growth, as we know what it is, only marginally better than Europe if you use a magnifying glass, and Japan is there, too, so not just the industrialized world, but the United States. How do we create the wealth, given the fact you're not going to be able to cut the Pentagon budget the way you want to and all the -- the political situation -- in a minimal growth environment which is likely to go on for years and years?

HAASS: Well, I'm not willing to accept that. And by the way, you can't cut your way to growth. Austerity is not a path to growth. And the debate over austerity is much too narrow. Indeed, I'd actually be willing to spend more now if we locked in reductions in entitlements down the road. I think we've probably got it exactly wrong. We're spending too little now, and we're not cutting spending enough then. And so we've got it exactly reversed.

But look, there's lots of things we could do for growth. Some things we -- one good thing has happened, which is the energy transformation. Suddenly American manufacturing has gotten a lot more competitive. That's exciting. Natural gas has -- you know, has made an amazing difference. Some of the new technologies have made an amazing difference. So that's a good thing.

The housing market to some extent has come back in this country. That's a little bit. Get rid -- I would like to ultimately get rid of the sequester. That would -- that would stimulate things. Trade. We've got two major trade agreements now being negotiated across the Atlantic and in the Pacific. Trade is a major engine of growth.

Immigration reform. If we can -- as is talked about, doubling the number of H1-B visas, increasing the number of green cards we grant, suddenly we'll find a way to take advantage of some of our best talent. The statistics are amazing on the percentages of American businesses that have their roots in people who came here as immigrants. They are the engine, in many ways, of American economic success.

Tax reform. Why should American corporations have this nominal tax rate of 35 percent that discourages many of them from bringing their profits back home, building factories abroad rather than building them back home? That's something that's easily changed.

And above all, this fiscal situation -- predictability. I think if people know the rules and they have some sense of the context, they're more willing to make long-term investments. We talked about schools.

I actually think growth is quite possible, and I think it could easily be above 3 percent. And if we can grow above 3 percent, it would be extraordinary for this country, for individuals, but also be extraordinary for the world.

Again, my whole argument is to get it right here not so we can sit in some splendid gated community, which doesn't exist, but so we can do things in the world not as a form of philanthropy but as a form of self-interest. If we are strong enough to act in the world in a concerted way, it will set in motion trends and conditions which will not just be good for others, the 7 billion out there, but it will be good for the 300 million here. And if we don't get our -- if we don't put our house in order, so to speak, we won't be in a position and then we won't be able to insulate ourselves from the effects out there.

So at the end of the day, there really is precious little divide between the domestic and the international, and we've got to get those right.

STEPHANOPOULOS: And buying the book is a little economic stimulus. (Laughter.) Richard Haass. Thank you.

HAASS: Thank you. (Applause.)

(C) COPYRIGHT 2013, FEDERAL NEWS SERVICE, INC., 1120 G STREET NW; SUITE 990; WASHINGTON, DC - 20005, USA. ALL RIGHTS RESERVED. ANY REPRODUCTION, REDISTRIBUTION OR RETRANSMISSION IS EXPRESSLY PROHIBITED.

UNAUTHORIZED REPRODUCTION, REDISTRIBUTION OR RETRANSMISSION CONSTITUTES A MISAPPROPRIATION UNDER APPLICABLE UNFAIR COMPETITION LAW, AND FEDERAL NEWS SERVICE, INC. RESERVES THE RIGHT TO PURSUE ALL REMEDIES AVAILABLE TO IT IN RESPECT TO SUCH MISAPPROPRIATION.

FEDERAL NEWS SERVICE, INC. IS A PRIVATE FIRM AND IS NOT AFFILIATED WITH THE FEDERAL GOVERNMENT. NO COPYRIGHT IS CLAIMED AS TO ANY PART OF THE ORIGINAL WORK PREPARED BY A UNITED STATES GOVERNMENT OFFICER OR EMPLOYEE AS PART OF THAT PERSON'S OFFICIAL DUTIES.

FOR INFORMATION ON SUBSCRIBING TO FNS, PLEASE CALL 202-347-1400 OR EMAIL [email protected].

THIS IS A RUSH TRANSCRIPT.