[Fareed Zakaria:] Welcome to all of you in the United States and around the world. I'm Fareed Zakaria. We'll start today's show with something Americans see as a bigger threat than Iran Russia, North Korea, or China. ISIS. We'll help you sort fact from fiction on the rise of these terrorists, their aspirations, and their true power today. And we'll give you a rare glimpse deep inside ISIS-held territory.
[Unidentified Male:] I think you must know your enemy if you want to defeat him.
[Zakaria:] What is it like to live in the so-called Islamic State? You'll find out. Also, the Supreme Court is about to hear arguments on gay marriage, so we'll look at some global lessons on the subject. Does the institution of marriage crumble because gay people want in? We now have evidence instead of hot air with which to analyze the claim. Then there are lots of people telling you how to build up your resume, but how do you build your character? David Brooks has written a book that debuted at the number one spot on "The New York Times" best- seller list. He will tell you how to be good. Also, how the biggest hedge fund manager in the world runs his business every day. Finally, an extraordinary birthday party in space. But first, here is my take. The discussion of Hillary Clinton's candidacy has so far thoroughly explored her video announcement, restaurant choices, clothes, health, ethics, and of course, her husband. Relatively little attention has been devoted to her ideas or the ones that should animate her campaign. The easiest way for Clinton to change the conversation would be to put out some big policy proposals, and it would be good for the country as well. There are two broad themes up for grabs for the next election, reform and investment. Marco Rubio has staked out his claim as the champion of reform. In his latest book and other places, Rubio has argued intelligently for a revamping or replacement of old systems that don't address today's needs. Some of his ideas are standard fare Republican rhetoric, others are fresh and even surprising. America, like most advanced industrial countries, needs reform and restructuring. Regulations pile up and lobbies fight hard to keep benefits for established industries. The tax code is a corrupt mess. But is this the greatest and most urgent problem facing the U.S. today? When you compare America to the rest of the world, it does not seem to be hobbled by inefficiencies. In the World Economic Forum's latest global competiveness report, the United States ranks third. This is why America has outperformed almost every other advanced economy since the global crisis of 2008. On the other hand, America is in dire need of investment in physical and human capital. In the same World Economic Forum report, the United States ranks 12th in overall infrastructure, 24th in the quality of its electricity supply, and a stunning 101st in mobile telephone subscriptions. The American Society of Civil Engineers details the dangers. Let me paraphrase from its most recent report card for America's infrastructure. The average age of the country's 84,000 dams is 52 years, and of its 607,000 odd bridges, 42 years. 42 percent of the country's major urban highways are congested, which costs the economy an estimated $101 billion in wasted time and fuel every year. The need for investment in human capital is less visible but, in fact, more urgent. Social mobility, the ability to rise out of the economic class you were born into, has stalled in America in large measure because poor children have inadequate nutrition, child care, and education. As "The New York Times" columnist Eduardo Porter has noted, the United States is virtually alone among rich countries in that it spends substantially less on educating poor children compared to privileged ones. In New York, for example, local government spends about $26,000 per child in the richest neighborhoods compared with just $13,000 in the poorest neighborhoods. Another crucial investment should be in science and research. The federal government is spending less as a percentage of GDP in these areas than it did in the 1970s. This has things backwards. In that era America still had a large industrial economy with tens of millions of jobs available for people with only high school degrees. Today those jobs in manufacturing and steel and automobiles are all in China. The United States needs to create jobs in sectors and industries of the future. We should really be investing much more, not less, in science at this point. Even Newt Gingrich has suggested doubling the budget of the National Institutes of Health. I would propose more broadly that Washington set a goal to double the percent that the federal government spends on basic research. Now if Hillary Clinton starts talking relentlessly about investing in America, maybe the press will stop asking her what kind of burrito she ordered. For more, go to CNN.comfareed and read my "Washington Post" column this week. And let's get started. Terror was once again atop the news this week. On Thursday the president announced the deaths of two American al Qaeda leaders as well as two Western hostages in airstrikes in the AFPAC border region. And Yemen's chaos continues to attract jihadi groups from around the Middle East including ISIS. Let's talk about it all with a couple of terrific guests. Philip Mudd was deputy director of the CIA's Counterterrorism Center. He is now a CNN counterterrorism analyst and he's the author of a new book "The Head Game." And Emma Sky arrived in Iraq in 2003 and finally left in 2010. Her last role was as political adviser to Ray Odierno when he was the commanding general of U.S. and allied forces there. She is the author of a new book about her experiences in that country, "The Unraveling: High Hopes and Missed Opportunities in Iraq." So, Phil, first talk about this strike and about the hostages. We forget that al Qaeda is still around. What did you make of this operation?
[Philip Mudd, Cnn Counterterrorism Analyst:] Well, tragic, but inevitable. What you have here is what we call a signature strike. That is 10 years ago you might have looked at a specific individual and used a drone to strike that individual. There is a transition to say if we see a pattern of activity where we think there are al Qaeda fighters in a compound, you can surveil that compound for potentially, in this case, several hundred hours, determine if there are women or children present, and hit a target that might include dozens of people. The tragedy in this case is no matter how long you surveil that compound, you're not going to know if there are hostages inside. This is a tragedy of war.
[Zakaria:] Because the hostages will not be moving around.
[Mudd:] That's correct.
[Zakaria:] They'll be hidden in some basement or something.
[Mudd:] That's correct. You're going to spend a lot of time ensuring that you limit the number of innocents who are killed. But if you're going to have hostages inside a building there's no way you have a drone that can look inside that building and determine what's in there. So this is tragic but I'm not sure it's avoidable.
[Zakaria:] Let's talk about other American military operations. The ones against ISIS in Iraq. What is your sense? The United States has staked its anti-ISIS campaign really on Iraq much more than Syria. How is it going?
[Emma Sky, Author, "the Unraveling":] In the last few weeks you can see there've been good gains made against ISIS. When you look at the summer, ISIS was storming across Iraq. Now ISIS has lost 20 percent to 30 percent of the territory it had gained. It has lost 10,000 of its fighters. Recently the battle of Tikrit, U.S. air power made the difference there and ISIS has been pushed out of Tikrit. However, it's still able to launch operations as we have seen in Ramadi and in Irbil.
[Zakaria:] What do you make of ISIS'ability to govern these territories? Because that's the that's to me the interesting thing is. They take over these places. What happens when they start to trying to govern them?
[Mudd:] Very limited capabilities. We've seen this since the 1990s when you had Egyptian and Algerian groups trying to take over in those countries. No capability to transition from intimidating a population to governing a population. The problem we have in America in assessing movements like this is we want to look at what happened over the past week, whether they took Tikrit, whether they took Ramadi. The real question is over the course of years, once they take bits of territory, can they provide schooling, can they provide medicine? And the answer over time is no. The problem is that takes a lot of blood and lot of time to figure that out.
[Zakaria:] And ISIS is not any better because people keep you know, the argument is they're better than al Qaeda at this stuff.
[Mudd:] I don't think so. I think a lot of these groups have a motivation that says, look, we're motivated by god, by a book, to proceed along the line we've taken, and therefore there is no compromise. I think what you'd find even among some Sunni villagers today in Iraq is while these guys might be better initially than a Shia government but over the course of months or years they do not provide a future or solution.
[Zakaria:] So that's the interesting question. Better than a Shia government. Because a lot of the you know, maybe not attraction to ISIS but the reason ISIS has been able to make gains in Iraq certainly and also in Syria is the Sunnis don't like being ruled by the Shiites in one case, the Alawites in another. That Sunni rage that's fueling it. Is that changing you think?
[Sky:] I think it's not just about being ruled by Shia. It's about the type of government. When you look at 2007 to 2009, violence came down dramatically due to the surge. Everybody in Iraq and ourselves thought Iraq was moving in the right direction. People believed in the political process. Unfortunately, what happened in 2010 was the party that won the election didn't have
[Zakaria:] See, we always think there's a technocratic fix. If we give the Iraqi army more weapons when there's usually a political fix which is hard for us to do. Do you think, Phil, we can defeat ISIS?
[Mudd:] I don't. I think there's an interesting conversation nationally led by the president that says that has to be our goal. I look around the world as a counterterrorism guy from the CIA and say, where have we won? Pakistan? Afghanistan? Have we won in Yemen? Have we won in Somalia yet? Have we won in places like the answer is we can win against segments of groups that conduct acts of terrorism. We can't win against an Islamic idea. That's for local populations, regional populations to win. So our objective, frankly, shouldn't be winning. That's an American concept. Our objective should be ensuring that people in America stay safe, meanwhile enabling governments overseas to carry the political message, the religious message that can lead to peace but I don't think we can win again these groups.
[Zakaria:] And when you look at the widening regional dimension, so if you look at what's going on in Yemen where Saudi Arabia has intervened, really essentially invaded Yemen, intervened into a foreign country, what is going on there you think?
[Sky:] I think this is all another outcome of the Iraq war, the war and the way in which Obama administration left Iraq, left Iraq as a very weak state and changed the balance of the power in the region in Iran's favor. And this has set off this geopolitical competition between Iran and the Gulf States and turns local grievances into this regional proxy war that we're seeing in Yemen.
[Zakaria:] Bottom line, Phil, are Americans threatened by all this? Should we care?
[Mudd:] I think we should care about the small segments of these groups that might send people to New York or Washington. We should enable governments to go against the major players on the ground like ISIS, but most 98 percent of ISIS, not a problem in New York or Washington.
[Zakaria:] Fascinating conversation and two terrific books, "The Unraveling" and "The Head Game." We're going to have you on, Phil, to talk about this is about making decisions.
[Mudd:] Yes.
[Zakaria:] We've got to talk about that. Next on GPS, an extraordinary chance to witness life inside ISIS territory. A German journalist dared to go there even after the beheadings. The footage he brought out is chilling. You won't want to miss this.