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primary. i'm fredricka whitfield. "fareed zakaria gps" starts right now. >> this is "gps, the global public square." welcome to all of you in the united states and around the world. i'm fareed zakaria. first up, private equity. the words are on everyone's lips thanks to mitt romney. we'll sit down with one of the inventors private equity, the co-pounder of the legendary carlyle group, david rubenstein. then i have a lot to talk about with an all-star panel. ariana huffington, steve rattner, david frum and mort zuckerman. next up, what do the shipyard in tahrir square have in common? a lot. first, here's my take. i spent the last few weeks working on an essay for "time" magazine on barack obama's foreign policy. and in association with that piece, i interviewed the president last wednesday in the oval office. let me give you a few of my thoughts and impressions. obama seemed relaxed, calm, confident. i asked him about mitt romney's attacks on him as indecisive, timid and nuanced. i don't quite know why being nuanced is a bad thing but that is what romney said. obama responded that romney and the rest of the republican field are going to be playing to their base until the primary season is over. after that, he said, he looked forward to having a foreign policy debate. overall, i think it's going to be pretty hard to argue that we have not executed a strategy over the last three years that has put america in a stronger position than it was when i came into office, he said. i think obama has good reasons to be confident on this front. he ended the oval office with the united states deeply unpopular around the world, with vast commitments in iraq and afghanistan, difficult relations with many countries and a large part of the world feeling it had been ignored by an america obsessed by the war on terror. obama was determined to pare down america's commitments, its military footprint and regain trust and good will abroad. and for the most part, he succeeded. there were 140,000 troops in iraq when he came into office. there are zero now. he added troops in afghanistan, but there, too, a drawdown has begun. he scaled back the nation building aspect but embraced and expanded the counterterrorism angle, fighting al qaeda and other terrorist groups. obam ordered more drone attacks in the first two years of his presidency than george w. bush did in his entire two terms. eight years. and the results have been noteworthy. most of al qaeda's senior leadership has been killed. the strategy's crowning success was, of course, the killing of osama bin laden. if the war against al qaeda is the most visible and dramatic success story, the most significant long-term success might be in asia where obama has pivoted. asia is the new arena of global wealth, power and politics and obama decided to expand american presence in the region with a flurry of diplomating i, political and military moves over the last six months. he did so carefully and skillfully so it was seen by asian countries as a response to their requests rather than a unilateral assertion of american power. when historians write about an obama doctrine, they might point to his new asia strategy. his declaration that america is a pacific power and we're here to stay. all in all, it's a pretty strong record which is why you actually don't hear republicans talking much about foreign policy on the campaign trail these days. for more on all this, read my cover essay in this week's "time" magazine and the interview or go to time.com for the complete interview. let's get started. looting. that is what newt gingrich says private equity is all about. but rather than take his word for it, i wanted to go to the top. my next guest is a pioneer of private equity, the term didn't really exist before david rubenstein and his partners founded the carlyle group almost 25 years ago. today, carlyle is, by some estimates, the largest private equity firm in the world. the companies in their portfolio have revenues of approximately $100 billion. if rubenstein's name sounds familiar, he was also in the news this week for donating $7.5 million to fix the washington monument. welcome, david. >> my pleasure. >> do you understand the attacks that people are making about private equity, about mitt romney? the basic argument, as i understand it, goes, private equity companies buy these companies, load them up with debt, fire lots of workers, find some low-cost place to do the same thing and that's how they make money and it's terrible for american workers. >> well, i think that's unfortunate because that's not the reality. the reality is this. private equity firms are very good at buying companies, improving them, strengthening them, actually increasing employment in many cases and doing a very good job for the investors. most of whom are public pension funds. fire workers, policemen, teachers. they are the beneficiaries principally of private equity. >> do you thing basic model that people look at is wrong then? that they say these private equity comes and -- so when you buy a company, how do you strengthen it? you know, how -- what is the magic that makes you able to grow the company other than firing workers and, therefore, reducing costs. >> firing workers is something rarely done. private equity statistics so when you hire more workers you make more money. private equity firms are trying to hire more workers and make the companies bigger than when they -- >> because they make more stuff. >> that's what the statistics show. when you hire more people and make more products or more services that you sell, you actually make more money and that's good for investors. actually what private equity does is this. somebody like my firm will buy a company. we are innocecented to do well. the managers of the company, the people who are the ceos running the company. they get a large piece of the profits as well. typically we do this in a private setting. we don't have to worry about public reporting for a long time. the company's ceo can worry about making the company more efficient over a four to six-year term. over a 10-year, 20-year and 30-year period of time if you invest with a good private equity firm you are likely to get a higher rate of return than almost anything else you could invest with. we're simply incenting the workers and ceos and professionals to be aligned with the investors that make the companies grow. >> what do you think of bain capital and the stories you hear about it in the context of this campaign? >> well, it's disappointing if you are in an industry that is actually adding value, creating jobs, making america more efficient in many ways and more effective in many ways. private equity is dominated by the united states companies. the largest private equity firms are here. many people around the world are looking to us to how we do private -- how they should do private equity there. the chinese, for example. they very much want to import our private equity statistics and -- because those statistics show that we are very good at what we do and they want these skills and these know-how we have here. so why is it the chinese are so interested in learning what we do in private equity? because they want to make their companies more effective, efficient and strengthen employment as well. so i don't think what happened to bain in terms of the criticism is really that fair. they may have done some things i don't know about years ago that aren't the practice of today. remember, much of what mitt romney did happened 20 years ago or more and the practice of the industry have evolved. >> the other part about private equity that people worry about or are kind of stunned by is the kind of money you guys make. so because there may be an ipo for carlyle, you had to report this and the three founders of carlyle, i think, collectively made $450 million, plus returns from your own investments. you made several hundred million dollars last year. do you understand how a lot of americans look at that and say this just isn't fair? >> well, first, i come from very modest circumstances. my father worked in the post office. probably never made more than $8,000 a year as an employee of the post office. so when people can rise up from very modest circumstances and do well economically, i think that's a good thing about america and we should encourage that kind of activity. secondly, i give away about 50% of my income. so my desire to give back to the country is pretty strong and i intend to give away a lot more. i've signed the giving pledge with warren buffett and i do have a good income by most american standards but i'm giving it away and doing kinds of things like you mentioned the other day, the washington monument. third, i don't really set the rules about what income will be and taxes and so forth. if taxes are something that people are concerned about, congress should change the taxes in the context of comprehensive tax reform. most importantly, the money that i make or my partners make is perfectly aligned with our investors. if our investors make a lot of money, then we'll make money. so the pension funds that invest with us are doing very well, yes, we will do well. because we are doing well, i'm fortunate to be able to give away the bulk of my money. >> do you know that there is a proposal that the bulk of the money you make which is currently taxed at capital gains rates, which is much lower than income tax rates that that should be changed. a lot of people feel that isn't fair that this is really income and it should be charged at a higher rate. do you support changing the rate of carried interest from capital gains to ordinary income. >> there are very few people who actually go to congress and say please tax me higher. maybe there are some but there aren't many. in my case what i would like is congress to tackle tax reform in a comprehensive way. trying to do it piece meal doesn't usually work well. when i work in the white house for president carter we try to do comprehensive tax reform. we made some progress. other presidents have as well. if you want to change that particular provision, do it in the context of everything else. the tax system we have today is not fair in many ways. i wish it could be improved. when you have 10,000 pages of regulations and nobody can fill out their own tax return, that's not a good thing. so i wish we would change it, but don't blame me for complying with the law. all i'm doing is filling out my tax returns or my accountants are and i'm paying what i'm supposed to pay, though i'm giving away a large amount of the money and probably lowers my tax rate because i'm giving away so much money. but change the law. but don't blame me for the law. i didn't write the law. >> but in the context of comprehensive tax reform you would be comfortable with -- >> i would like to see what the whole changes would be. i can't just pick out one change. i want to make sure we have good incentives for doing what we do well in our business. the united states does very well in private equity and we have a very good economy. the most innovative economy in the world. i want to make sure we don't do anything to tax reform that would do away with that. i want to make sure that whatever congress does, it encourages people to do the kind of investing that we do. >> let me ask you about the economy because you are looking at it with all these companies that you own, $100 billion in revenue and this would put you as one of the largest corporations in the world, really if you were to count it that way. do you get the feeling the american economy is bouncing back? >> the american economy is in better shape than people thought it was just six months ago. i expect that this year will grow at 3%, maybe 3.5%. europe will probably be flat to negative. so the united states economy, while we have too much debt and i am very concerned about that. $15 trillion of debt, and we're running a $1.3 trillion annual deficit. that has to be addressed. i hope congress and the president will address that relatively soon and not wait until after the next presidential election to address it. but given those debt figures, we are doing reasonably well. i think we would do better if we tackled our debt problem, though. >> talk about the stuff you buy and give away. >> sure. >> so you are giving $7.5 million to clean the washington monument. you bought a -- >> more than clean it. it's repair it. earthquake damage, yes. >> you bought a copy of the emancipation proclamation and what did you do with it? >> i have bought a number of historic documents and i put them on display at places where i think people can see them. it's important for people to know about american history. i bought a copy of the magna carta. i put that on display at the national archives so americans can see the document that inspired the declaration of independence and the constitution and bill of rights. i bought a copy of the emancipation proclamation and put that on display at the oval office. i bought a couple of copies of the declaration of independence. one is on display at the state department. i bought a copy of the 13th amendment which freed slaves. that will be displayed somewhere ne else in washington soon. i'm proud of owning these documents and making sure that people can see them and learn american history. i'm very concerned people don't know enough about our history and the rights we have and the freedoms we have. and i think americans would learn more about american history, would be a better country. >> you buy all these documents. you don't keep any of them at home? >> no. >> if one were to go to your house, would there be any documents there? >> i don't want to have things in my house because how many people are going to see them? i want the american feem see them. millions of people go to the archives. million goes to the smithsonian or state department and they can see these documents. and that's more important than having them displayed in my house. >> david rubenstein, pleasure to have you on. >> my pleasure, fareed. up next, the gps roundtable. the economy, the primary race and more. 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[ kyle ] it's like we're connected. no we're not. yeah, we are. no...we're not. ♪ the allstate value plan. dollar for dollar, nobody protects you like allstate. aspercreme breaks the grip, with maximum-strength medicine and no embarrassing odor. break the grip of pain with aspercreme. there's lots to talk about today in politics. the economy and much more. let's get right to it. joining me now, ariana huffington is the editor in chief and president of the huffington post media group. david frum is a contributing editor for the daily beast and "newsweek." steve rattner left a long career on wall street to be the obama administration's car czar. now he is back in business. and mort zuckerman is the chairman of boston properties and the editor in chief of "u.s. news and world report." welcome to you all. david, let me start with you. one of the things i've been puzzling over is, what happened to the tea party? this was the party that -- you know, this was meant to be the thing that was going to totally transform the republican party. and it doesn't quite seem to have that had effect. >> failed to generate an alternative to mitt romney and it's taking a bad humiliation because of it. i think a lot of the energy has gone out of it. especially in south carolina, here's something that i think is maybe relevant. the senator jim demint from south carolina has been a vocal advocate of the tea party. he's also been the leading opponent of dredging the harbor of charleston. it needs a deeper harbor if it's to compete with savannah. people in south carolina were saying, this is beginning to interfere with somebody's livelihood. that it's one thing to say we refuse all federal dollars for everybody else but when you refuse federal dollars here in south carolina, that's a very different story. >> but it's interesting that you have, within the republican party, it's almost as though each of these candidates represents one element of the republican party. santorum, the more religious, you know, socially conservative. romney, the traditional businessman. is there a sense that even in the republican party, capitalism is on trial, that people are not convinced that being in private equity is such a great thing after all? >> i don't know about that. i must say that i think there is a sense that somehow or other this economy went south in a big way and somehow or other the business world, but particularly the financial world had a larger role in that than in previous times, certainly since the end of world war ii and there's some real validity to that. but i don't think -- to my mind, what's going to happen no matter where these people go, ultimately they'll choose between a republican and a democrat. the democrat happens to be obama. and one thing that will unite the republican party is their hostility to obama. however the primaries play out, that will be the major residue for the general election. >> what about the economy? i mean, one theory is that the tea party is beginning to wane in influence because it was part of what was fuelling it was just this despair and that economic numbers are getting better. >> there's no question. and i think mort might disagree with me, the economic numbers are getting better. we just had late last week, new claims for unemployment down to 352,000, which is the lowest number, i think, since 2008. and every indicator is pointing to a continuation of this modest economic recovery. but remember, people's incomes haven't really gone up during this, so there's still a lot of unhappiness. the unemployment rate is still 8.5%, plus or minus at the moment. there's plenty to worry about in the economy. i think the tea party just simply lost its mojo so to speak. i think it lost its sense of purpose and real direction. >> you know, the people and on the ground do not feel that the economy is getting better. i was speaking at the mayors conference in d.c. on thursday, and you have mayors who are republicans and democrats, and they all feel that they are struggling. that their constituents are struggling, that services are being cut. and all these 600,000 public sector jobs that have been cut under obama have impacted communities in a disproportionate way. so when you talk about things improving and the fact that unemployment claims are down, one of the reasons unemployment claims are down is because about 200,000 people are too discouraged now to look for work. >> that's not quite right. the new claims for unemployment insurance are for people who get laid off and then try to get unemployment. so it's not a -- >> but the 8.5% -- >> i don't disagree with any of you in the sense these cutbacks have been painful. people generally don't feel great about the economy. they shouldn't. and i finishing you look at the polls, what's also -- what struck me the other day in a poll is that democrats actually, by pretty wide margin think the economy is getting better. republicans think it's not getting better. i think that will all play into the politics of november. >> just on the economy. housing is at the heart of it. do you think residential housing is bottoming out and beginning to rise? >> you know, i don't think so. prices are still going down. if you measure it by the case-shiller index. and what is m