Martin Kramer pretty much demolishes argument A.
Walt thinks that by any objective measure, U.S. support for Israel is a liability. It causes Arabs and Muslims to hate America. Since he thinks the United States should disengage from the Middle East, and follow a policy of "offshore balancing," he believes America needs to cultivate a sense of shared purpose with Arabs and Muslims, many of whom detest Israel or its policies or both. The less the United States is identified as a supporter and friend of Israel's five million Jews, the easier it will be for the United States to find local proxies and clients to keep order among the billion or so Muslims. And the only thing that has prevented the United States from seeing this clearly is the pro-Israel lobby, operating through fronts as diverse as AIPAC, The Washington Institute, and—yes—even the Brookings Institution. Have I simplified Walt's argument? Probably not as much as you might think.
To answer Walt's simple argument, I'll respond with a simple question. If you need an ally somewhere, don't you want it to be the smartest, most powerful, and most resourceful guy on the block, who also happens to admire you? And what is the point of having an ally who's backward, weak, irresolute, and thinks in his heart of hearts that you're his enemy? That's the choice the United States faces in the Middle East.
It took the United States some twenty years to figure this out. Between 1948 and 1967, it believed in Walt's zero-sum concept of the Middle East. The United States recognized Israel in 1948, but it didn't do much to help it defend itself, for fear of alienating Arab monarchs, oil sheikhs, and the "Arab street." That was the heyday of the sentimental State Department Arabists and the profit-driven oil companies.
So Israel went elsewhere. It got guns from the Soviet bloc, and fighter aircraft and a nuclear reactor from France. It even cut a deal with old adversary Britain at the time of the Suez adventure. Israel wasn't in the U.S. orbit, and it didn't get significant American aid, but it grew ever stronger. It even became a nuclear state. Then came June 1967, and Israel showed its stuff. In October 1973, it achieved what military analysts have called an even greater victory, repulsing and reversing a surprise attack that might have overwhelmed a less determined and resourceful people.
It was then that the United States began to look at Israel differently: as a potential ally. The fact that the United States hadn't backed Israel before 1967 didn't prevent key Arab capitals from falling into the Soviet orbit. To the contrary: along with Nasser, they tried to play Washington off Moscow, with a preference for Moscow since it made policy by uncomplicated diktat. America's Arab allies were in a precarious position, and in 1958 it had to send the Marines to Lebanon to bail some of them out.
In 1967, Israel showed itself to be stronger than the whole lot of its neighbors, transforming U.S. perceptions. Israel looked to be the strongest, most reliable, and most cost-effective ally against Soviet penetration of the Middle East, because it could defeat any combination of Soviet clients on its own. It could humiliate them, and in so doing, humiliate the Soviet Union and drive thinking Arabs out of the Soviet camp. That worked: expanded U.S. support for Israel persuaded Egypt to switch camps, winning the Cold War for the United States in the Middle East. Egypt thus became an American ally alongside Israel, not instead of Israel, and became integrated into an overall Pax Americana. The zero-sum theory of the Arabists—Israel or the Arabs, but not both—collapsed. U.S. Middle East policy underwent its Copernican revolution.
One could also argue that the scapegoating of Israel and the Jews does far more to keep the Arab world down than the actual existence of Israel or the US's allaince with Israel. And, as Pat Curley points out, having David Duke and the Muslim Brotherhood come out in favor of your argument surely means that it's flawed.