The collapse of the Yemeni government, coupled with the death of Saudi Arabia's King Abdullah on Friday, throws the future of America’s fight against Islamist extremists in the volatile region into question.

On "The Kelly File," Charles Krauthammer said the detachment from reality of the Obama administration on the consequences on its policy of retreat is truly staggering.

"The president actually imagines that we are shrinking the space in which terrorists are acting," Krauthammer said. "And that's what worries me."

He said that the administration was surprised by what's occurring in Yemen, just as it was by the rise of ISIS.

"Remember, Obama had just said it was a JV team," Krauthammer noted. "It's astonishing that a president would get that wrong."

"Obama's idea is that the country went wrong by acting over-strongly to 9/11, by being a bully, by opening up these prisons, by Guantanamo. And he would come in and he would allow the world to see a different America. And he put us openly and, essentially, deliberately into retreat, thinking that's the way to rectify our relations."

Watch the clip above and see more from Krauthammer on "The Kelly File" below.