This is a rush transcript from "On the Record," June 13, 2012. This copy may not be in its final form and may be updated.
GRETA VAN SUSTEREN, FOX NEWS HOST: Now to the presidential campaign, and this might hit home again for Karl. Has President Obama changed his campaign strategy to blame the Bush administration? Here's what the president told supporters in Baltimore.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: This notion that somehow, we caused the deficit is just wrong. It's just not true. And anybody who looks at the math will tell you it's not true. And if they start trying to give you a bunch of facts and figures suggesting that it's true, what they're not telling you is, is that they baked all this stuff into the cake with those tax cuts and a prescription drug plan that they didn't pay for and a war.
So all this stuff's baked in with all the interest payments for it. It's like somebody goes to a restaurant, orders a big steak dinner, martini, all that stuff, and then just as you're sitting down, they leave.
OBAMA: And accuse you of running up the tab!
(END VIDEO CLIP)
VAN SUSTEREN: Even James Carville doesn't like the idea of saying that the buck doesn't stop here and it's the other guy's fault. It's a strategy. It's a political strategy.
KARL ROVE, FOX NEWS CONTRIBUTOR/FORMER BUSH SENIOR ADVISER: I want him to keep doing this. First of all, it shows the contempt of the President of the United States for the intelligence of the average American. If you take a look at the last year of Bush, FY 09, and you include all the TARP spending that was done as of January 20th, 2009, and the initial auto loans granted by Bush, the deficit was equal to 2.7 percent of GDP, less than half of what it was in the latter half of 2009 when Obama was in office and spending wildly!
Remember, he comes in and immediately spends a lot more of the TARP money. He immediately asks for an omnibus spending bill to plus up the federal budget. And he also asks for a stimulus bill of $862 billion.
If you take a look at it and look at his spending, it drives spending from 20.2 percent of GDP when Bush leaves office, including the TARP money he spent and the auto money he spent and the budget that he approved, to nearly 25 percent of GDP after Obama gets into office.
He is responsible for the debt run-up on his watch. It is fine for him to try and blame it on President Bush or a Japanese tsunami or on ATM, but it makes him look weak, and the American people are not that dumb!
VAN SUSTEREN: I think -- I suspect if he were here, he would say that the debt run-up was something that -- because of his economic ideology, that you stimulate the economy by pouring more money into the custody...
ROVE: Well, then don't blame it on Bush!
ROVE: He's a Keynesian!
VAN SUSTEREN: I'm guessing what he's saying, though, is that the Bush administration, rightfully or wrongfully, made such a mess of it that he had to spend so much money, and as a consequence -- and he's going to say that he needs four more years to...
ROVE: Bush made him spend that money?
VAN SUSTEREN: I'm just saying what I think...
VAN SUSTEREN: I'm not defending it. I'm telling you what I think he's saying.
ROVE: But fine. Let him keep doing that because the American people see that as a weak leader. That's not somebody who's in charge. That's somebody who's making excuses. And we do not like to elect people President of the United States who are excuse makers. We want a president to be big and bold.
And remember, on January 10th of 2009, he said, Let me tell you exactly what will happen. If you want to know exactly what will happen, take a look at this report, which will show you if you pass the stimulus, unemployment today would be 5.7 percent. There'd be 13 million more Americans more working.
That's what he said his policy would do! Now, either his policy didn't work or he deliberately misled us! Either way, he's responsible for it!
VAN SUSTEREN: What else can he do?
ROVE: Well, it's difficult. The one thing that he could have done was last year, begin to lay the predicate for a bold, forward-looking agenda, say, I'm going to reform the tax code, I'm going to -- I'm going to tackle entitlements, I'm going to put our fiscal house in order.
You know, all of those things would have laid the predicate so that this year, he could say, We need to continue to fight the important battle here. But now he's reduced to saying, You know what? It was worse -- I wasn't smart enough to figure out how bad it was. I've done the best I could, and I know it has come up short, but I have empathy for you being in a bad place. I mean, none of those three things work.
VAN SUSTEREN: What -- what -- what do you think -- I'm perplexed by James Carville, who's a very strong Democrat, and I know he's a Clinton Democrat, but why he would make public statements about this. Is it -- do you think that they're not listening to him and this is just sort of -- you know, he doesn't get their attention, so now he's going to make public statements about -- about the way he's handling this?
ROVE: Maybe. But he's a guy of strong conviction and he wants to try and -- he wants the Democrats to win and he's trying to do his best to influence Obama to go another direction...
VAN SUSTEREN: But that's not going to do it, but insulting -- by telling him that his -- that his -- that his methodology is terrible!
ROVE: Well, maybe...
VAN SUSTEREN: I mean, that's essentially what he said.
ROVE: Look, that's how James sometimes operates, You're doing a dumb thing, do a smart thing. But let's think about this for just a minute. Step back for just a minute. We have Obama saying, We're going in the right direction. My -- you know, we came through rough times, and because of what I did, we're moving in the right direction, we're creating jobs and we're growing our economy. And then the second part of that is, is that you can't trust Romney because he's a vulture capital, a vampire who pillaged and looted these companies. Those are the two elements.
What James is saying is, Don't say that the economy is improving because people don't believe it. And two thirds of the people don't think your policies have -- they think your policies have either hurt or not helped economic growth.
So start off by saying, I understand you're in a bad place and I got empathy for you.
And then on the second part of it, James says -- and they test three different approaches, and the one that they recommend the most is attack Romney for -- they say he's going to cut Medicaid, he's going to end Social Security and Medicare and he's going to cut teachers, firemen and police.
Now, there's not much different, really, between those two things except in the second instance, James is saying, you know, My empathy with you is that I'm going to do things in the future to make the middle class better. But otherwise, they're both based on the same thing, which is ignore the reality of the current economy, and a big component, half or more of your job, is to disqualify Mitt Romney by going after him with a two-by-four.