STATE OF THE UNION WITH CANDY CROWLEY

Interview with Benjamin Netanyahu; Interview with Susan Rice; Interview with Nancy Pelosi; Interview with Rudy Giuliani

Aired September 16, 2012 - 09:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

CANDY CROWLEY, CNN ANCHOR: Is it really about an obscure promotion on YouTube, or is there a bigger picture?

Today as anti-American protests hit the Arab world a challenge of a different sort in the prickly relationship between president Obama and Israeli Prime Minister Benjamin Netanyahu.

(BEGIN VIDEO CLIP)

BENJAMIN NETANYAHU, ISRAELI PRIME MINISTER: What's guiding me contrary to what I've read in the United States, it's not the American political calendar, it's the Iranian nuclear calendar.

(END VIDEO CLIP)

CROWLEY: And the future of the president's outreach to the Muslim world with U.S. ambassador of the United Nations Susan Rice.

Then democratic leader Nancy Pelosi, bullish on winning back the house.

(BEGIN VIDEO CLIP)

REP. NANCY PELOSI, (D) CALIFORNIA: That was the pivotal day.

(END VIDEO CLIP)

CROWLEY: Plus, foreign policy and poll numbers with Romney supporter and former New York City mayor Rudy Giuliani.

I'm Candy Crowley. And this is State of the Union.

Another Middle East problem area flamed anew this week: certain that Iran is pursuing nuclear weapons, but pressured not to take military action right now, the prime minister of Israel is pushing back. Benjamin Netanyahu argues the U.S. must set specific limits for Iran. He suggested otherwise Israel will move forward on its own.

(BEGIN VIDEO CLIP)

NETANYAHU: Those in the international community will refuse to put red lines before Iran don't have a moral right to place a red light before Israel.

(END VIDEO CLIP)

CROWLEY: Netanyahu's call for red lines to restrain Iran was presumably the main topic in a private one-hour phone conversation with President Obama this week. But Secretary of State Clinton said publicly the U.S. will not set any deadlines after which Netanyahu told an Israeli paper, "I hear all those people who say we should wait until the very last minute, but what if the U.S. doesn't intervene? That is the question we have to ask."

Joining me now Israeli Prime Minister Benjamin Netanyahu. Thank you so much for joining us, Mr. Prime Minister. There has been all this talk about red lines put before Iran which you have talked about. Can you tell me what you would like that red line to be in the best of all possible worlds for you and for Israel, what would you like the U.S. to commit to in terms of a red line?

NETANYAHU: I think the issue is how to prevent Iran from completing its nuclear weapons program. They're moving very rapidly, completing the enrichment of the uranium they need to produce a nuclear bomb. In six months or so they'll be 90 percent of the way there. I think it's important to place a red line before Iran. And I think that actually reduces the chance of military conflict because if they know there's a point, a stage in the enrichment or other nuclear activities that they cannot cross because they'll face consequences, I think they'll actually not cross it. And that's been proved time and again.

President Kennedy put a red line before the Soviets in the Cuban Missile Crisis. He was criticized for it, but it actually pushed back the world from conflict and maybe purchase decades of peace. There wasn't such a red line before Saddam Hussein, before -- on the eve of the Gulf War when he invaded Kuwait. Maybe that war could have been avoided. And I think Iran, too, has received some clear red lines on a number of issues, and they backed off from them.

So I think as Iran gets closer and closer to the completion of its nuclear program, I think it's important to place a red line before them. And that's something I think we should discuss with the United States.

CROWLEY: And let me read you something I know you're probably quite familiar with. But for our viewers, something the president has said repeatedly. This he said at the beginning of the year. "As president of the United States I don't bluff. I think both the Iranian and the Israeli governments recognize that when the United States says it is unacceptable for Iran to have a nuclear weapon, we mean what we say."

Do you disagree with that?

NETANYAHU: I think that when he says that implicit in that is that he will stop them before they get to a nuclear weapon, which means they'll draw red line somewhere. I think it's important to communicate it to them.

I wouldn't bet -- I wouldn't bet the security of the world and my own country's future from a country that threatens our annihilation, murders civilians en masse in Syria and brutalizes its own people. I wouldn't bet the future on intelligence for simple reasons.

American intelligence and Israeli intelligence that cooperate together had had wonderful successes in saving lives and alerting our people, but we've also had our failures, both of us. You know, you've just marked 9/11. That wasn't seen. None of us, neither Israel or the United States, saw Iran building this massive nuclear bunker under a mountain. For two years they proceed without or knowledge. So I think the one thing we do know is what they're doing right now. We know that they're enriching this material. We know that in the six, seven months they'll have got to covered 90 percent of the way for an atomic bomb material. And I think that we should count on the things that we do know in setting the red line.

CROWLEY: And what we know is, of course, that Iran is allowed under agreements, international agreements to go ahead and do what it's doing because there are legitimate peaceful purposes for enriching this uranium.

NETANYAHU: Do you think so? You think so, Candy? That's like -- well, let me interrupt -- it's not legitimate. This is a country that talks about -- denies the holocaust, promises to wipe out Israel, is engaged in terror throughout the world. It's like Timothy McVeigh walking into a shop in Oklahoma City and saying I like to tend my garden. I would like to buy some fertilizer.

How much do you want?

Oh, I don't know, 20,000 pounds.

Come on. We know that they're working towards a weapon. They're not -- we know that. It's not something that we surmise. We have absolutely certainty about that. And they're advancing towards that nuclear program.

CROWLEY: Do you mean you and the U.S. know that, because I don't from what I read, from what I hear, I don't get the sense that the U.S. has the certainty that you do or the urgency that you seem to have. Is there a disconnect there?

NETANYAHU: First of all, I talked about the certainty of their enrichment program, and I didn't talk about the other elements. And I spoke about the difficulty of knowing other things, but we have no difficulty as the IAEA report just tells us what they're doing in their enrichment program. That we know for sure. That's the only thing we know for sure that is verifiable and accessible. We know that.

As far as the U.S. and Israel, obviously we have different capability. You're a big country. You're several thousand miles away. You have stronger military capabilities. We're a smaller country. We are more vulnerable. They threaten our very annihilation, so obviously we have different capabilities and different clocks. But in terms of what is happening as Iran is getting closer and closer to completing its work for the first atomic bomb, the differences between us in our capabilities are becoming less and less important because Iran is fast approaching a point where it could disappear from our capability of stopping and our capability means not only Israel.

CROWLEY: I get the sense that your hour-long phone conversation with President Obama did not get you where you wanted to go insofar as U.S. willingness to set this red line. Is that correct?

NETANYAHU: Look, we had a good conversation. I'm not going to get into the details. I respect the president. I respect also the confidence of our conversation. But I think that -- I think this is a matter of urgency and people should understand it, that's what's guiding it.

What's guiding me, contrary to what I have read in the United States, is not the American political calendar, it's the Iranian nuclear calendar. And the Iranian centrifuges that are charging ahead simply do not take time out for the American elections. I wish the Iranians would shut down the centrifuges and then we won't have to talk about it, but they don't. And in fact, they do the very opposite. That's what's driving the urgency of this. And again, we have close consultations with the United States on this issue.

CROWLEY: Is the answer then, that no, you don't have the red line that you would like to have from the U.S.? Can you tell me at least that?

NETANYAHU: I think you should have a red line communicated to Iran, that's what I would say. And I think it's vital. I know that people value flexibility. I think that's important. But I think at this late stage of the game, I think Iran needs to see clarity. I'm not sure I would have said this three years ago, two years ago, one year ago, but as we get closer and closer and closer to the end game, I think we have to establish that.

That's becoming important, because you have to just think about it. You know, you see the Middle East. You see these fanatics storming your embassies, and I want to send my condolences to the American people for the loss of that extraordinary ambassador and his extraordinary colleagues. We sympathize as no other people does with the United States.

And yet, you know that as we face the possibility of a regime that is guided by the same fanaticism would have nuclear weapons, it's become something urgent for all of us to make sure they don't get there, and if you want to make sure that they don't get there. And if you want to make sure that they don't get there, make sure that they know that there is a line they shouldn't cross. Because otherwise, they'll cross it, and they'll get there.

CROWLEY: There's also people in your own country who have said that this is more aimed at President Obama and your friend Mitt Romney than it is about any new urgency. And I know you have heard this.

CROWLEY: And I wanted to ask you as a wrap-up question, do you see any major differences between the U.S. position vis-a-vis the relationship with Israel when you look at President Obama's position and when you look at former Governor Romney's position? Is there any difference in their policies towards Israel that you can detect?

NETANYAHU: Look, I know that people, Candy, are trying to draw me into the American election, and I'm not going to do that. But I will say that we value, we cherish the bipartisan support for Israel in the United States, and we're supported by Democrats and Republicans alike.

You know, this is not an electoral issue. It is not based on any electoral consideration. I think that there's a common interest of all Americans over all political persuasions to stop Iran.

This is a regime that is giving vent to the worst impulses that you see right now in the Middle East. They deny the rights of women, deny democracy, brutalize their own people, don't give freedom of religion.

All the things that you see now in these mobs storming the American embassies is what you will see with a regime that would have atomic bombs. You can't have such people have atomic bombs. And I believe that's as important for Republicans as it is for Democrats, important for Democrats as it is for Republicans. It's as important for President Obama as it is for Mitt Romney. It's important for the future of our world.

CROWLEY: Prime Minister Benjamin Netanyahu, that's a good place for us to end it. I appreciate your time this morning.

NETANYAHU: Thank you.

CROWLEY: The Arab Spring's unintended consequences, that's next.

(COMMERCIAL BREAK)

CROWLEY: In his second inaugural address, President Bush said the U.S. would seek out and promote democracy around the globe.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, 43RD PRESIDENT OF THE UNITED STATES: The survival of liberty in our land increasingly depends on the success of liberty in other lands. (APPLAUSE)

BUSH: The best hope for peace in our world is the expansion of freedom in all the world.

(END VIDEO CLIP)

CROWLEY: In Cairo, four years later, President Obama reached out the Muslim world with a new version of the same idea.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I know there has been controversy about the promotion of democracy in recent years. And much of this controversy is connected to the war in Iraq. So let me be clear, no system of government can or should be imposed by one nation, by any other.

That does not lessen my commitment, however, to governments that reflect the will of the people.

(END VIDEO CLIP)

CROWLEY: And then early last year uprisings on the Arab streets toppled longstanding autocratic regimes in Tunisia, Egypt, and Libya with the explicit yet sometimes delayed support of the West.

This week in at least 23 countries around the world the people returned to the streets to protest, sometimes violently, sometimes not, outside U.S. embassies. How, why, and what turned the Arab Spring into this autumn rage against the West. U.S. Ambassador to the U.N. Susan Rice is next.

(COMMERCIAL BREAK)

CROWLEY: Joining me is the U.S. ambassador to the United Nations, Susan Rice.

Madam Ambassador, thank you for joining us.

RICE: Good to be with you, Candy.

CROWLEY: One of the things when I spoke with the Israeli prime minister that struck me was the conviction that he has that for certain Iran is building -- on its way to building a nuclear weapon, and his sense of urgency that at this moment the U.S. needs to set what he calls a "red line" for the U.S.

Does the U.S. share the conviction that Iran is, indeed, building a nuclear weapon? And, B, what about the concept of a red line?

RICE: Well, Candy, the United States is in constant communication with Israel and Israeli intelligence, Israeli policy makers, the military. We're sharing our assessments every day. And our assessments, our intelligence assessments are very similar. Obviously, we share a grave concern about Iran pursuing a nuclear weapon. We are determined to prevent that from happening. President Obama has been absolutely clear, and on this there's absolutely no daylight between the United States and Israel that we will do what it takes to prevent Iran from acquiring a nuclear weapon.

We are not at that stage yet. They do not have a nuclear weapon. Our shared intelligence assessments is that there is still a considerable time and space before they will have a nuclear weapon should they make the decision to go for that. But we've been very clear. The United States is not interested and is not pursuing a policy of containment. President Obama has been very plain. We will keep all option on the table, including the military option, as necessary, to prevent Iran from acquiring a nuclear weapon.

But, Candy, the fact is we have just seen the imposition of another layer of the toughest sanctions that have ever been impose odd a country. In this case, Iran. Their economy is beginning to buckle. Their oil production is down 40 percent. Their currency has plummeted 40 percent in the last year. Their economy is now shrinking. And this is only going to intensify.

So we think that there's still considerable time for this pressure to work. But this is not an infinite window. And we've made very clear that the president's bottom line is Iran will not have a nuclear weapon.

CROWLEY: Let me move you to what's gone on in the Middle East in Arab countries and elsewhere. There is a "New York Times" story this morning that suggests that the administration thinks this is a foreshadowing of a fall that will see sustained instability. Does the administration expect to see these sorts of protests outside U.S. embassies and elsewhere throughout the fall?

RICE: Well, Candy, first of all, let's recall what has happened in the last several days. There was a hateful video that was disseminated on the internet. It had nothing to do with the United States government and it's one that we find disgusting and reprehensible. It's been offensive to many, many people around the world.

That sparked violence in various parts of the world, including violence directed against western facilities including our embassies and consulates. That violence is absolutely unacceptable, it's not a response that one can ever condone when it comes to such a video. And we have been working very closely and, indeed, effectively with the governments in the region and around the world to secure our personnel, secure our embassy, condemn the violent response to this video.

And, frankly, we've seen these sorts of incidents in the past. We've seen violent responses to "Satanic Verses." We've seen violent responses to the cartoons depicting the Prophet Mohammed in an evil way. So this is something we've seen in the past, and we expect that it's possible that these kinds of things could percolate into the future. What we're focused on is securing our personnel, securing our facilities.

CROWLEY: Do you at this moment feel that U.S. embassies abroad are secure?

RICE: We are doing our utmost to secure our facilities and our personnel and in various vulnerable places. We have demanded and we are receiving the cooperation of host governments. Host governments have also put out very strong messages in Libya, in Egypt, in Yemen and Tunisia condemning violence, saying that it's a completely unacceptable response to such a video. And we feel that we are now in a position doing the maximum that we can to protect our people.

CROWLEY: Why would one not look at what is going on in the Middle East now and say that the president's outreach to Muslims, which began at the beginning of his administration in Cairo and elsewhere has not worked because, yes, this video sparked it, but there is an underlying anti-Americanism that is very evident on the streets. So Why not look at it and think that this is this outreach has failed?

RICE: For the same reason, Candy, when you look back at history and we had the horrible experience of our facilities and our personnel being attacked Beirut in 1981, we had the attack on Khobar Towers in the 1990s. We had an attack on our embassy in Yemen in 2008. There have been such attacks. There have been expressions of hostility towards the west.

CROWLEY: But this was sort of a reset, was it not? It was supposed to be a reset of U.S.-Muslim relations?

RICE: And indeed, in fact, there had been substantial improvements. I have been to Libya and walked the streets of Benghazi myself. And despite what we saw in that horrific incident where some mob was hijacked ultimately by a handful of extremists, the United States is extremely popular in Libya and the outpouring of sympathy and support for Ambassador Stevens and his colleagues from the government, from people is evidence of that.

The fact is, Candy, that this is a turbulent time. It's a time of dramatic change. It's a change that the United States has backed because we understand that when democracy takes root, when human rights and people's freedom of expression can be manifested, it may lead to turbulence in the short-term, but over the long-term, that is in the interest of the United States.

The mobs we've seen on the outside of these embassies are small minority. They're the ones who have largely lost in these emerging democratic processes, and just as the people of these countries are not going to allow their lives to be hijacked by a dictator, they're not going to allow an extremist mob to hijack their future and their freedom,. And we're going to continue to stand with the vast majority of the populations in these countries.

They want freedom. They want a better future. And understand that we're with them in that long-term endeavor.

CROWLEY: All right. U.S. ambassador to the U.N., Susan Rice. I got to let you go here.

RICE: Thank you. Thank you very much.

CROWLEY: We'll switch gears next and talk to Democratic Minority Leader Nancy Pelosi about her road map to retake control of the House.

And later, a batch of fresh polls show Mitt Romney may be losing steam in his bid for the White House. Supporter and former New York City Mayor Rudy Giuliani is here to discuss.

(COMMERCIAL BREAK)

CROWLEY: No matter what they promise as a candidate, presidents can't do much of what they want without a cooperative congress, which brings us to the U.S. House currently run by Republicans who hold 240 seats compared to 190 held by Democrats. To take control next January, Democrats need a net gain of 25 seats in November.

At the Democratic Convention earlier this month, House Democratic leader Nancy Pelosi told reporters she's looking for a 27 seat pick- up, that would put her in line to regain the speakership.

She is expecting victories in Texas, California, Illinois, New York, Washington State, and Arizona. Democrats are also eying power changing winds in the presidential battleground states of Florida, Ohio, Iowa, and Nevada. And there is even talk about Montana where the House seat has been Republican for 15 years.

We should stress that most polls point to, and most political forecasters predict that Democrats will gain seats, but not enough to win the majority.

Democratic leader Nancy Pelosi and the reason for her optimism is next.

(COMMERCIAL BREAK)

CROWLEY: Earlier I visited with House Democratic leader Nancy Pelosi. We began with the Democrats' chances for winning back the majority in November.

(BEGIN VIDEOTAPE)

CROWLEY: I read something in "Roll Call" that described the prospects for Democrats retaking the House as theoretically possible but unlikely. Would you agree with that?

PELOSI: No. I think that, first of all, I don't know what that is, but I do know that the source of our confidence is, and that's the quality of our candidates. They're just great. The fact that they are strong in terms of their grass roots mobilization and their resource raising and the rest. And that the issues are with us.

For one year and a half since the Republicans passed their budget, which the Romney-Ryan now, Republican budget, which severs the Medicare guarantee, we have been saying three important issues of the campaign, and in alphabetical order they are Medicare, Medicare, Medicare.

On August 11th when Governor Romney chose Ryan, that was the pivotal day.

ROMNEY: Paul Ryan has become an intellectual leader of the Republican Party.

PELOSI: That is a day things really changed.

We were on a path. I would have said to you then we were dead even. Well, momentum is very much with us. The Medicare issue in this campaign.

So we have a message. We have the messengers. We have the money. We have the mobilization. We have an excellent chance to take back the House.

CROWLEY: Just quickly, the Romney campaign says that Medicare will always be a choice, but that they want to open it up so that they're not cutting off the Medicare option.

PELOSI: Well, you know, that is completely upside down. It's a contradiction of Medicare. Medicare is a guarantee. To make it a voucher is to put the decision in the hands of the insurance companies. Seniors know that. I'm a senior. I know that.

The whole pillar that Medicare is about economic and health security for our seniors and those who depend on Medicare. There are families who need their parents and grandparents to be provided for under Medicare. Everybody understands that.

If you don't believe in Medicare, you will say what the Republicans are saying.

CROWLEY: Let me ask you, if it should turn out that you gain seats in the House, but you don't take over the majority spot, would you still run for leader of Democrats?

PELOSI: Well, I don't ever predicate anything when losing. I feel very confident about our ability to win. Who will lead the party after that is up to my members. I feel that I...

CROWLEY: Oh, sure, but would you still run, whether it was for speaker or Democratic leader?

PELOSI: Well, I actually, didn't choose to run last time. My members chose that I would run last time.

But this isn't about me, this is about Medicare. It's about Social Security. It's about women's rights. It's about the American dream. It's about our democracy. All of that is on the ballot.

CROWLEY: If we look at the polls rather than the possibilities, it looks as though there is an even chance that the senate Republicans could take over and that the probability is that Democrats will not take over in the House.

So let's say everything stays as is and the president is re- elected. What's different about the dynamic that has been so toxic between Capitol Hill and the White House if we have what currently the polls show is -- you know, if the election were held today?

PELOSI: Well, with that theoretical, the -- you'll see more of the same because it's really important for the public to know that the Republican obstruction of President Obama's jobs bills and whatever he was advancing, their obstruction is their agenda. They really don't believe in...

CROWLEY: Does that change? If nothing changes in the dynamic...

PELOSI: It's what they believe in. Now I have always said in my Republicans take back your party, because this wing of the party or this over the edge crowd that is in charge -- taking charge of wagging the dog in congress is never going to cooperate, because they do not believe in a public roll. Clean air, clean water, public safety, public education, public transportation, public health, Medicare, Medicaid, Social Security, they don't believe in it, and that's what their budget is about. And that's what wee we vote on the floor almost every day.

CROWLEY: Do you see that changing.

PELOSI: No, I don't see it, that's why it's important for us to win the election so that we can go forward because bipartisan collaboration is on the ballot too.

When President Bush, George W. Bush, was president and we were in the majority and I was the speaker, we had our differences, we fought, but we also found common ground.

GEORGE W. BUSH, 43rd PRESIDENT OF THE UNITED STATES: I thank the leadership of the congress for joining us here.

PELOSI: There are so many places where we came together.

CROWLEY: So you could work with Mitt Romney basically, if it came to that?

PELOSI: Oh, Mitt Romney is not going to be president of the United States.

(LAUGHTER)

CROWLEY: Let me ask you...

PELOSI: I think everybody knows that.

CROWLEY: The president has put out his -- by law he had to put out a response to detail what its cut and what doesn't get cut under what we call sequestration, which are just mandated across the board cuts in both sides of the ledger. It says it will be horrible if it happens, et cetera, et cetera. The Republicans have complained repeatedly that there is no presidential leadership on this.

What is the president's involvement been so far in trying to get Republicans and Democrats together to avoid this fiscal cliff?

PELOSI: Well, the president as recently as yesterday I received a call from him saying we really do have to have an agreement, which I fully agree with, and the must have as much -- do everything we can to find common ground. That's what we did one year ago, more than a year ago in July/August of last year and the president worked very hard with the speaker to come out with a bipartisan agreement that was a big design which had $4 trillion over 10 years in deficit reduction and the House and Senate Democrats said Mr. President, we're with you on this. He agreed to it. The Republicans walked away. CROWLEY: Is he a work-the-phoner, though? I mean, compare him, say, to Bill Clinton who you also worked with. I mean, the image that we have is a president that does not do that as much as a Bill Clinton did in terms of offering guidance, trying to get people together in the same room, reaching out to Republicans, reaching out to you. The level of leadership from the president when it comes to legislative things compared to former President Clinton.

PELOSI: Well, I would say that they both score very high in terms of leadership. If you measure leadership in the number of phone calls, well, that might be a little bit of a different story because they're different personalities.

CROWLEY: Yes, more contact with Bill Clinton over the years.

PELOSI: Well, I wasn't leader or speaker when Bill Clinton was -- President Clinton was president, but we all -- but I saw how he worked with Congress and our leadership at the time.

Make no mistake, President Obama is, of course, a great leader. He has great vision for our country. He knows the issues. He has a plan. He is eloquent and can draw people to what he has to say, and that's all great.

He also is such a respectful person. And I have never seen -- I worked with presidents to a great or lesser degree, certainly to a greater degree to President Bush and President Obama, and this president has listened, spent time, respects the opinions of the Republicans to an extent that I think -- I wish one of them would come up with a new idea because he has more patience listening to them than I do.

But so, really, leadership should not be measured in the number of calls. But they were both great. They are both great leaders.

CROWLEY: So I'll just extrapolate from that that perhaps Bill Clinton was more hands-on than President Obama, but they both -- you think they both showed leadership?

PELOSI: Well, I think they're both hands-on. It's just a question of how they spent their time. And the challenges are very great today that the president -- as they were under President Clinton, but I think he uses his time well. I have no complaint with that.

CROWLEY: House Democratic Leader Nancy Pelosi, thank you for joining us today.

PELOSI: Thank you, Candy. My pleasure.

CROWLEY: I appreciate it.

PELOSI: Thank you.

CROWLEY: Battleground polls show trouble for Governor Mitt Romney. Supporter and former New York City Mayor Rudy Giuliani is here next.

(COMMERCIAL BREAK)

CROWLEY: I'm joined by former New York City Mayor Rudy Giuliani.

Mr. Mayor, thanks for being here. It occurs...

RUDY GIULIANI (R), FORMER NEW YORK CITY MAYOR: Nice to be with you.

CROWLEY: ... to me that you, as well as anybody, understands that when there is a crisis, Americans tend to rally around their leaders. So with that in mind, tell me who had the better week this week, President Obama or Mitt Romney?

GIULIANI: Well, I think clearly Mitt Romney. Largely because what we see is the president's policies in the Middle East falling apart. I mean, the reality is the president got elected to reset our relationship in the Middle East. We might as well not have had the reset.

I mean, look at the American flag being burned, unrest in 20 countries, a front page article in The New York Times today saying they anticipate numerous additional demonstrations over the next four or five months.

America is no more popular in the Middle East than it was four years ago. And now in addition to that, we've shown this kind of provocative weakness to the Middle East. And we were for Mubarak before we were against Mubarak. We were more or less neutral on Gadhafi until we wanted to overthrow him.

Hillary Clinton announced that Assad was a reformer. Now we want to overthrow him. And we don't seem to be willing to set a red line for Iran when that's exactly what Jack Kennedy did in the Cuban Missile Crisis.

And you do that any time you are dealing with a provocative enemy that needs to know, well, how far can you go so we have no confusion? The president refuses to do it. Prime Minister Netanyahu is absolutely correct in pushing him to do it.

CROWLEY: There are plenty of people who would argue that the president as commander-in-chief had a better week, but I want to move you on to some things that I think are possibly troubling inside the Romney campaign.

This is the latest look at some battleground states from the NBC News/Marist poll with The Wall Street Journal. Ohio, it has President Obama up 7 points. And in Florida and Virginia, the same poll has President Obama up 5 points. What is wrong there?

GIULIANI: Nothing is wrong. It's a close election. Those are polls...

CROWLEY: Well, that's -- some of these -- I mean, those are pretty good leads compared to what we have seen before.

GIULIANI: I don't know. Those are the kinds of leads John Kerry had on Election Day, and George Bush became the president. You know? So those are -- those are margins that are well within striking distance for either candidate. To be overconfident about who is going to win this election, in fact, whoever is overconfident about whoever is going to win this election is probably going to lose it.

This is a darn close election. Whoever expected what happened in the last week, week-and-a-half with -- in this election. This was going to be an election about the economy. It's now becoming an election that's looking an awful lot like 1980 with Jimmy Carter-style president in the White House.

CROWLEY: But sure -- even you would agree, surely, that having American hostages held for 444 days is a little different from having a protest outside American embassies, yes, there -- and we had the deaths of these -- the tragic deaths of these four Americans in Libya, which a lot of folks are arguing is a different thing from saying everything here has failed.

So the question is, do you actually believe that this no longer is about the economy?

GIULIANI: No, no, I do. I believe it's about the economy, but I think the situation in the Middle East is becoming more and more important. And, Candy, I would argue that the situation in Iran is equally as dangerous as it was with the hostages there except this time they want to become nuclear.

And the president is fiddling while Iran is just moving ahead. I mean, he had to be forced -- he had to be forced to use these crippling sanctions, which he has used late, and I don't know how crippling they are since he has exempted 20 countries from them.

CROWLEY: And yet at...

GIULIANI: I mean, these sanctions...

CROWLEY: ... this point, Mr. Mayor...

GIULIANI: Even the U.N. is saying his sanctions aren't working. They are not working. The president doesn't want to deal with it.

CROWLEY: And yet at this point can you tell me something different in Mitt Romney's proposed policies toward Iran than President Obama's policies? They both said Iran should not be allowed to acquire a nuclear weapon, period. What's different?

GIULIANI: Well, I believe that Mitt Romney would set a red line. He'd make it clear exactly the point beyond which...

CROWLEY: Why doesn't he do that now?

GIULIANI: Well, he might over the course of these debates. He might very well do it. Although then you'd all criticize him for engaging and interfering in foreign policy. I mean, Mitt Romney can't win no matter what he does.

He spoke out as a leader about a really, really ridiculous statement by the State Department, for 16 hours they had a statement out there apologizing. All of a sudden he gets criticized.

I mean, the administration was clearly wrong about the level of security needed for that ambassador in that consulate. And you had Nancy Pelosi just on saying there was enough security.

If they are as wrong in their security estimate of Iran as they were about the consulate in Benghazi, we are in serious trouble.

CROWLEY: Let me turn you back to the economy, since it remains issue number one. When you look at our -- I'm sorry, at a New York Times/CBS poll, this was about the probable electorate, and the question was, which candidate would do a better job of handling the economy and unemployment? President Obama, 47, Mitt Romney, 46 percent.

Your candidate has lost the edge when it comes to the economy. If the economy is as bad as Republicans have told us it is, what is holding Mitt Romney back here because from your description of the economy, others' description of the economy, this really should be a president that doesn't have a chance and yet he's beating Mitt Romney.

GIULIANI: There's no such thing as an incumbent president doesn't have a chance. Having the presidency is an enormous advantage. The president has used it well. They have done a good job, I think an unfair one, they've done a good job of raising all kinds of irrelevant questions about Mitt Romney and Paul Ryan, and the Romney/Ryan campaign has to overcome that.

But if you just look at the fundamentals, you know, 43 months of 8.1 or plus percent unemployment, no American president has ever been elected with these kinds of job loss numbers and permanent unemployment.

We haven't had something like this since the Great Depression.

CROWLEY: Which I think...

GIULIANI: I think that's going to...

CROWLEY: ... argues for why he isn't doing better. But let me, in our final moments, ask you whether you believe that the Romney campaign, that Mitt Romney needs to come out and say specifically, here is what I would do to reform the tax code, here are the loopholes I would close.

Does he need to be more specific? Does he need to give a foreign policy speech? Because the rap now from a lot of Republicans is, we don't -- there is no real alternative out there. Does he need to do that?

GIULIANI: Well, these are a bunch of Republicans who are, you know, running scared, because the polls aren't -- I mean, Romney is not ahead by 10 points or 15 points which, of course, would be totally unrealistic. I think he's running a perfectly fine campaign. This is the level of specificity that American candidates usually give in a campaign.

My goodness, President Obama wasn't terribly specific four years ago when he told us he was -- he ran on hope and change. Hope and change. Look what a strategy that has been for the Middle East. Hope and change and now we have demonstrations in 20 countries.

CROWLEY: OK. All right. Mr. Mayor, thank you so much for joining us...

GIULIANI: Thank you.

CROWLEY: ... this morning. Come see us in the new studio.

GIULIANI: Always a pleasure, Candy.

CROWLEY: Thanks.

A tribute to five American heroes, after this.

(COMMERCIAL BREAK) CROWLEY: And finally we leave you with images from this week's tributes to five American heroes. Friday the bodies of the four Americans murdered in Libya, Christopher Stevens, Glenn Doherty, Sean Smith, and Tyrone Woods (ph), returned home to the U.S.

And just the day before, a memorial service was held here honoring Neil Armstrong, the first man to walk on the moon. He died at the age of 82. Armstrong never saw himself as a hero, but his extraordinary accomplishments didn't just leave his mark on the moon but here on Earth too.

Thanks for watching STATE OF THE UNION.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Neil will always be remembered for taking humankind's first small step on a world beyond our own.

UNIDENTIFIED MALE: No one, no one, but no one could have accepted the responsibility of his remarkable accomplishment with more dignity and more grace than Neil Armstrong. He embodied all that is good and all that is great about America.

UNIDENTIFIED MALE: Gracious God, on behalf of a grateful nation, and in the presence of grieving family members, friends, and colleagues, we welcome home for the final time Ambassador Chris Stevens, Mr. Sean Smith, Mr. Glen Doherty, and Mr. Tyrone Woods.

HILLARY CLINTON, SECRETARY OF STATE: If the last few days teach us anything, let it be this, that this work and the men and women who risked their lives to do it, are at the heart of what makes America great and good. OBAMA: Four Americans, four patriots, they loved this country. And they chose to serve it and served it well. They had a mission, and they believed in it. They knew the danger, and they accepted it. They didn't simply embrace the American ideal. They lived it. They embodied it.

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