(CBS News) Below is a transcript of "Face the Nation" on August 18, 2013, hosted by CBS News' Bob Schieffer. Guests include: CBS News correspondent Charlie D'Agata, Sen. Lindsey Graham, R-S.C., Reps. Jackie Speier, D-Calif., Bob Goodlatte, R-Va. and Bobby Scott, D-Va., and New York Police Commissioner Ray Kelly. Plus, a panel with Amy Walter, Bobby Ghosh and Kevin Madden.
BOB SCHIEFFER: And, good morning again. Well, the situation in Egypt is no better today. Since the military crackdown on pro-Morsi forces began on Wednesday, more than eight hundred have been killed. At least, a thousand people are wounded. There is no end in sight. We're going to begin this morning with CBS News correspondent Charlie D'Agata who is in Cairo. Charlie, bring us up to date. What's the latest?
CHARLIE D'AGATA (CBS News Correspondent): Well, Bob, we're expecting more demonstrations today and they're bracing for it here. But what we're seeing is really two worlds emerging. It's like two different versions. The story that you're seeing there in the outside world and what you're seeing here in Egypt and on Egyptian television. Now, we've just come back from the foreign ministry and we were handed these photos that show Muslim Brotherhood members and supporters using live ammunition against security forces. And it reads under the banner--Egypt Fights Terrorism. And what they're trying to suggest is that we're getting it wrong, that this is security forces that are fighting against terrorist groups. And they have to do this in-- in order to crush this-- this threat of terror. But it's not what we've seen. There may be supporters that had guns but largely what we saw, especially on Friday, the last big demonstration, where unarmed civilians going straight into the line of fire. We could hear the gunfire and then we just saw them come back on the backs of motorcycles and they've been shot in the-- in the head, in the neck, in the chest, essentially, shot to kill. That doesn't mean that armed civilians aren't fighting it out. They are. Another big concern now is that the government has said that they are proposing a ban on the Muslim Brotherhood and that's just going to cause more anger. There are hundreds of people that have been arrested and they will be charged, we're told, with murder and terrorism.
BOB SCHIEFFER: Well, Charlie, I guess this is a question no one can really answer, but how does this end? I mean how long does this thing go on?
CHARLIE D'AGATA: I think the real question here, and we may see it this afternoon, is how much steam does the Muslim Brotherhood still have? I mean their leadership has been arrested. They've been decimated. They know that whenever they do come to these areas, these protests, they will come under fire. The-- the military has said as much. So if we see large gatherings today and over the course of the next few days, like the Muslim Brotherhood intend to do, it will show you that there is a force and they will face the line of fire. Otherwise, it will show you that the military-led government has clearly got the upper hand.
BOB SCHIEFFER: All right. Well, Charlie, thank you so much and-- and be very careful.
CHARLIE D'AGATA: Thank you.
BOB SCHIEFFER: And joining us now Senator Lindsey Graham. He is just back from Cairo where he and Senator John McCain met with both sides. He's in Clemson, South Carolina, this morning. Senator Graham, this has been a while since I've seen any pictures like this. And now we are seeing and you heard Charlie talk about the-- the Egyptian generals who are trying to say this is the--
SENATOR LINDSEY GRAHAM (Armed Services Committee/R-South Carolina): Right.
BOB SCHIEFFER: --war against terrorists. And the fact is the head of al Qaeda's brother, that's Mister Zawahiri has been arrested now and we're told he was planning to bring in armed groups to oppose the generals. I mean isn't this just make it even more complicated in trying to figure out what we ought to do and-- and who we ought to be supporting here?
SENATOR LINDSEY GRAHAM: In a way, yes. But in a way, no. I mean we can't-- after 2011, we sided with the protesters against Mubarak. There's no going back for our country to supporting strongman dictatorships. The Muslim Brotherhood corrupted their mandate. They won the election. The Egyptian people are not terrorists. They got a majority of the vote. But after a year of governing, they drove people away and this coup--and it was a coup--had-- has a lot of popular support. But where are we headed? We're headed for Algeria. The Brotherhood will go underground, al Qaeda will come to their aid, and you are going to have an armed insurgency, not protesters, on your hands in the next six-- sixty days or ninety days and we are going to have a failed state in Egypt and we are going to have to suspend our aid because we can't support the reaction of the military. Even though, the Brotherhood overplaying their hand started this, we can't support what the military is doing in response.
BOB SCHIEFFER: Well, we don't want to encourage government to-- to come to power there that has--
SENATOR LINDSEY GRAHAM: Right.
BOB SCHIEFFER: --al Qaeda-- al Qaeda elements in it, do we? I mean and if we cut off that aid--
SENATOR LINDSEY GRAHAM: No.
BOB SCHIEFFER: --doesn't that just help that?
SENATOR LINDSEY GRAHAM: Bob, al Qaeda is never going to win at the ballot box. If there was a new election, the Brotherhood would get beat. They would be marginalized by the Egyptian people. The army is making these people martyrs. You're looking at Algeria where the opposition becomes an armed insurgency. The best way to solve this problem is to write a new constitution where everybody has a say and have new elections. If you had new elections, the Brotherhood would get creamed at the ballot box, but they are going to be a very formidable force on the streets. They're going to get aligned with al Qaeda. Al Qaeda is going to come uninvited into Egypt and you're going to have a failed state. That means gas prices go up for us, the Suez Canal gets compromised and Egypt becomes a staging area for terrorist acts against Israel. This is an absolute disaster in the making.
BOB SCHIEFFER: Well, you've been very critical of the President. What would you do? You say you would cut off this aid, but beyond that, what would you do?
SENATOR LINDSEY GRAHAM: Yes. I would tell the generals that we're going to suspend all aid until you allow a democratic transition and the aid is just a symbol for the relationship. It's not that much money. What would happen if we cut off the aid is that Western tourism ends in Egypt for the foreseeable future for as far as the eye can see. Western investment comes to a standstill. Egypt becomes a beggar client state of the Sunni Gulf Arab-- Arab Gulf states. Egypt's future is really damned and I'd make that point clear. It's just not about the aid, it's about the relationship. We're the strongest nation on Earth. Everybody that sides with us tends to do better than people that we oppose, so I would play to the best interest of the military. Stop this before it gets out of hand. We can't support where you're taking Egypt, not tell the Brotherhood, forget about the condition of Morsi being put back in as President before you have a new dialog. I would be firm with the military and the Brotherhood. We do have a lot of influence. If American business stops investing in Egypt and American tourists stop going to Egypt, their economy is going to be in ruins. There's a lot at stake here for us and them. If you had a winner-loser list from a failed state in Egypt, the Egyptian people and the American people would be on the loser list. We need to avoid that.
BOB SCHIEFFER: Well, you were there. You and Senator McCain talked to leaders--
SENATOR LINDSEY GRAHAM: Yeah.
BOB SCHIEFFER: --on both sides, you talked to General al-Sissi.
SENATOR LINDSEY GRAHAM: Mm-Hm.
BOB SCHIEFFER: Do you think he is actually running things now?
SENATOR LINDSEY GRAHAM: Absolutely. You know I saw a man very conflicted. He's having people whisper in his ear from the Sunni Gulf states, even Israel, "Crush the Brotherhood." If you think you can take twenty-five or thirty percent of the population and put them all in jail and kill them, you're making a mistake. That is Algeria. And we've sent mixed signals. John McCain and I called it a coup because that's exactly what it is but we wanted time to restart. When Senator-- Secretary Kerry said that the military was restoring democracy, they took that the wrong way. When they started jailing all the leaders of the former government that was a signal to me that they weren't interested into a transition, they were not trying to restore order, they were trying to grab power and somebody needs to look al-Sissi in the eye and say you are going to destroy Egypt, you are going to doom your country to a beggar state, you're going to create an insurgency for generations to come. Turn around, General, before it's too late. You're a better man than that.