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Is America in retreat?

This is a RUSH transcript from "The O'Reilly Factor," June 23, 2014. This copy may not be in its final form and may be updated.

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O'REILLY: Thanks for staying with us. I'm Bill O'Reilly.

In the "Personal Story" segment tonight, is America in retreat. Many say yes, including me, your humble correspondent.

All over the world, the power of the U.S.A. seems to be in decline. Our enemies certainly have been emboldened. But this has happened before in our history.

The question is, how bad is it now. Joining us from Washington, Fox News Political Analyst Charles Krauthammer, author of the book, "Things that Matter." So, Charles, how bad is it.

CHARLES KRAUTHAMMER, FOX NEWS CONTRIBUTOR: Well, temporarily, it is very bad. But there's a big difference between decline as a condition and decline as a choice.

What we have with Obama is a president choosing decline. But this is very much unlike how many people talk about decline as a condition, a result of something wrong with America.

Britain, after the Second World War, had declined as a condition. It was exhausted, broke, parts of it were leveled. It had lost a generation of young men in two world wars.

It gave up everything. It had to give up everything. America is in precisely the opposite condition -- strong economy, innovative people.

We've just stumbled across one the great energy bonanzas in history, natural gas and oil. We're the Saudi Arabia of North America.

Parts of the world that we have, we're in a position to dominate again. But we have a president who doesn't believe in American exceptionalism and American greatness.

And he has chosen for America to retreat for the Middle East, to not lift a finger in places like Ukraine. Basically, to make us one nation among others. And that is a choice.

O'REILLY: OK.

KRAUTHAMMER: It can be reversed.

O'REILLY: Couple of things.

KRAUTHAMMER: And that's, I think, the challenge America faces.

O'REILLY: You know what the interesting thing is, we're doing the segment tomorrow on THE FACTOR. A lot of the conservative radio voices in America said exactly what you said, in the beginning, in the very beginning of the President's tenure.

And they said, you know, this guy, he wants America to decline in power. He is not going to promote our best interest. This is on right wing talk radio.

And many people, including me, were skeptical of that approach, OK. They're skeptical. And, tomorrow, we're going to say, "Look, these guys may have been right from day one."

Now, you are stating, without a shred of doubt, that that's what the President wants to do. If he were sitting in my chair here, he would vehemently deny that, Charles.

He would say, "That's not true. I want America to be the strongest, most prosperous nation on Earth." You know he would say that.

KRAUTHAMMER: Look, I didn't come up with this yesterday when ISIS came across the border. I wrote a cover piece in "The Weekly Standard" called "Decline is a Choice," where, on the basis, thrust of the President's speeches are the apology tour, of the way he went around talking about America as a nation, which had sinned deeply.

I wrote this and said, "This is a man who believes that America ought to retreat, as a matter of ideology and, in part, because he's a president who wants to see all our efforts on domestic affairs to become a social democracy like Europe.

And when Europe had to make that choice after the Second World War, it gave up greatness abroad. It gave up its empires. It gave up its military --

O'REILLY: Military --

KRAUTHAMMER: -- so we could create the welfare state.

O'REILLY: But you're not disputing the fact that the President, if he were here, would say, "Charles Krauthammer, you're full of baloney. I don't want America in decline. I don't want -- I disagree with everything you said." He would say that.

KRAUTHAMMER: Look, I'm not saying that the president wants America to be a country that has injured itself. I think he would rationalize it.

And he'd say, "No, the way to strengthen America is to retreat, to concentrate on what's happening at home." But I think he is very comfortable with the fact that America is not exceptional.

When he was asked that question on the first tour he made abroad about American exceptionalism. He said, "Oh, yes, I believe in American exceptionalism the way the Greeks believe in Greek exceptionalism and the British exceptionalism.

O'REILLY: Right.

KRAUTHAMMER: That means that everybody is exceptional. Nobody is. There is a sense in -- I think, Obama feels. And I wrote this at that time in 2009.

Incidentally, it's the last chapter in my book where he says, it is very clear that he believes that America, in some way, perhaps does not have the moral right to be the leader of the world.

And I think he feels that the sins that we have created in the past, the injuries --

O'REILLY: Right.

KRAUTHAMMER: -- that we've inflicted on others, the Iraqis, I think he would list, among others, does not entitle us to the kind of hegemonic position, dominant position that we had --

O'REILLY: That may be right.

KRAUTHAMMER: -- after the end of the Cold War.

O'REILLY: All right. Charles Krauthammer, everybody, as always.

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