'This Week' Transcript: Karzai, Khan and Levitt

Politically, to get back to the politics point, the Democrats are the losers either way, because on the one hand, you've got people saying we need to spend more money, you didn't -- for Main Street. You put all this money into the banks and into the auto companies, what about Main Street? On the other hand, you got people saying, no, we need to worry about the debt, we can't spend another dollar. Democrats are caught in the middle of that.

REICH: This in some way circles back. I think the president must talk only about the economy and jobs. Not the mosque, not money in politics, not anything else, not only between now and the midterm but ideally, ongoing. I mean, this is the number one issue in this country.

AMANPOUR: Let's just move on, because, as you say, it is the No. 1 issue. Everybody is talking about it and rightly so, because it affects each and everyone's lives.

But on a positive note here, not just for the Democrats but also for the world, hopefully, they've announced today that, this week, rather, that there will be talks between the Israelis and the Palestinians, direct talks for the first time in 20 months. Now, that's got to be good, George.

WILL: Oh, no, it doesn't.

AMANPOUR: Now, George.

(LAUGHTER)

WILL: You can argue that the peace process is the biggest threat to peace in Palestine.

AMANPOUR: You can also argue that process is better than no process.

WILL: That is what I'm precisely arguing against. The fact is, 19 years ago, almost a generation ago, we had a big hullabaloo because in Madrid in 1991, the Palestinians and the Israelis engaged in direct talks. Nineteen years later, we're doing it again.

Here is what we don't agree on. Mr. Abbas has not said that Israel has a right to exist as a Jewish state for the Jewish people.

AMANPOUR: He recognizes Israel's right to exist.

WILL: Not as a Jewish state for the Jewish people. He has been asked dozens of times to say it, and never has, and I suspect never will, partly because he believes in a right of return.

Mr. Netanyahu says the Palestinian refugee problem will be solved outside of Israel. Mr. Abbas wants East Jerusalem as the capital of the Palestinian state. Mr. Netanyahu says Jerusalem is and will remain the undivided capital of Israel. Mr. Netanyahu says a West Bank state, a Palestinian state on the West Bank, must be demilitarized, must be forbidden to have relations with Hamas -- with Hezbollah and Iran, for example, and must have on it an Israeli presence to make sure that weapons do not come in from the eastern borders.

AMANPOUR: Given quite a lot of those positions, and obviously security is primary for the Israelis and certainly for the government of Prime Minister Netanyahu, where do you think this can go? I mean, if any of you are thinking of it, because there were previous parameters. There were the Clinton parameters, there were the talks between Abbas and the previous prime minister, Olmert, which were slightly different than Netanyahu's conditions.

WOODRUFF: And in the spirit of full disclosure, going back even before that, I covered the Camp David negotiations under President Carter with Menachem Begin and Anwar Sadat.

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