I was initially very skeptical about this, but I decided to look at the scene for myself.

I played it over and over, turned the volume way up...and it appears that's exactly what Clemenza says.

Since it follows Michael's line "You're gonna kill all those guys?" (or something close to that), I can only interpret it as Clemenza making a sarcastic comeback to Michael. Sort of like:

"You're gonna kill them?" confused

"Naw, we're just gonna make them really, really uncomfortable." grin

We must remember that at this point, Michael was a "civilian" and people like Sonny, Tessio and Clemenza had yet to really see him as anything other than "Joe College" (even though they knew Michael was a war hero).

To see how Clemenza changes his opinion of Michael, we need look no further than the scene where he instructs Michael before the Sollozzo/McCluskey hit.

Ex-Lax? Seems plausible to me.

Signor V.

"For me, there's only my wife..."

"Sure I cook with wine - sometimes I even add it to the food!"

"When life itself seems lunatic, who knows where madness lies?"

"It was a grass harp... And we listened."

"Do any human beings ever realize life while they live it? Every, every minute?"

"No. Saints and poets, maybe... they do some."