He uses this an an example to analyse why deterrence wouldn't work against Saddam with respect for WMD. It's an excellent summary of why deterrence worked against the Soviet Union.
However, what he doesn't take into account with his beat-up Pinto versus the Jaguar example, is that in a confrontation, the Pinto in the end wont suffer much economic hardship (in fact SDB explictly admits this in his analogy.) However, Saddam, if he talkes on the US in a nuclear exchange, will suffer a lot more than a cruimpled fender. He will be dead.
In other words, if we threaten to use conventional forces to (for instance) defend Kuwait against a second attempt by Saddam to invade and absorb, and if Saddam says that if we do he'll use a nuke against an American city, will we be willing to sneer at him, say "If you do we'll retaliate massively" and then go ahead as if the threat had never been made?
the same logic applies to the US during the Cold War. In fact, it was worse - the USSR would have not nuked one city, it would have nuked ALL our cities. Yet we had to be ruthless - as SDB himself argues - because deterrence is useless unless the other side believes you will actually do it. What SDB is saying that for some reason, we cannot credibly be perceievd as willing to use our nukes. We CAN. If we were credible against the USSR, we are certainly credible against Saddam, who if he had a nuke would at best get one city.
SDB's argument assumes that there is something different - weaker - about the USA today than during teh Cold War. Saddam is a small fish, and we have stared down the "nucular" barrell with a lot more powerful enemy than him. He is small potatoes.
Saddam is a conventional enemy. He is a conventional nation, with conventional designs of regional power, and we have a playbook 50 years old that shows how to deal with him. We have the Big Stick and we will beat anyone - nuclear or not - with it, if we are threatened.
And we have deterred him before, John Major himnself has admitted that we explicitly told Saddam during the Gulf War - "use chemical weapons against Israel, and we nuke you." That threat was credible and he didn't dare use his (enormous at the time!) stock of bioweapons on his pathetic little SCUDS.
unfortunately , Steven's attempt at debunking the Saddam can be deterred argument is based on a poor assumption - that we Americans arent willing to take a risk. We are a lot stronger than that, and we have already been there during the Cold War.