• With: Karl Rove

    This is a rush transcript from "On the Record," February 1, 2013. This copy may not be in its final form and may be updated.

    GRETA VAN SUSTEREN, FOX NEWS HOST: The Obama administration is changing the rules, today HHS announcing big changes to the very controversial contraceptive mandate. Now, for months, religious groups blasting the ObamaCare mandate requiring employers to provide birth control. And now to today, the Obama administration announcing broader rules to allow religious groups to opt out.

    Karl Rove joins us. Nice to see you, Karl.

    KARL ROVE, FOX CONTRIBUTOR/FORMER BUSH SENIOR ADVISER: Thanks, Greta.

    VAN SUSTEREN: Well, the jury is still not back, so we know how everybody feels about it, but this change in rule does leave out those private business owners who for religious, maybe strong religious conviction -- they don't want to pay for contraception. So is this change going to be a good idea for everybody? Is it going to put the lid on the problems?

    ROVE: Well, we need to see the exact wording of the rule and see its full implications. I think this may be a strategic retreat on the part of the administration because, look, if you're a Catholic university, like Ave Maria University, which had filed suit not to be required, as an explicitly Roman Catholic institution, to violate its moral precepts by providing birth control to its employees, you were likely to win that lawsuit. You had an excellent chance of winning that lawsuit.

    If you were the archdiocese or a church or a church-related institution, you had probably a pretty good 1st Amendment chance of winning that. So the administration may have decided that having won the point for political value in the campaign, now is the time to retreat before it lost it in court.

    But we need to see really how the rule is, how expansive it is, let the lawyers work it over for a day or two and hope that something dropped out on Friday afternoon actually -- or Friday morning is actually as good as it sounds.

    VAN SUSTEREN: But is it -- I mean, at least as I understand it -- and it's early -- is whether or not it's -- it only applies to religious institutions, so that if you are a -- let's say you're deeply religious and you run a -- I don't know, a gas station or a restaurant or something, and you have more than 50 employees, you still under the "Obama care," unless you get a waiver, you have to provide for contraception, even if it violates your religious beliefs. At least that's how I read it.

    ROVE: Well, and if that's the case, then we are going to have a lot of unhappy people. Religious institutions will be out of it.

    But again, this is part of the broader topic that you raised, which is the government attempting to step in it and dictate to people in their lives. And we always have government playing a role in people's lives. It's a question of how expansive it is.

    And we've seen over the last several years, ObamaCare, which is, you know, small businesses -- you know, individuals, you need to purchase insurance or you get fined. Small businesses need to provide insurance that looks like this and is far more expensive than you're now -- than you're now laying out for premium support for your employees -- these things -- people see this as an erosion of their freedom to make decisions on their own.

    And when you add into it things like, you know, gun control and the administration's regulatory burden, particularly if you're running a business, you think the government is stepping into your life way too much.

    VAN SUSTEREN: Well, the other sort of interesting aspect of it, at least at first blush with this, is that women who work at the religious institutions who want contraception -- they can get a separate insurance policy to cover the contraception. However...

    ROVE: Sure.

    VAN SUSTEREN: ... and they don't have to pay for it -- they don't have to pay for it, and neither do their employers. Well, somebody's got to pay for it! And the way -- the way at least that it looks like is that the Obama administration thinks sort of the largesse of the insurance industry -- that they will pick up the freight. But somebody's picking up the freight.

    ROVE: Well, let's be honest about it. We all are. We're socializing the cost of this insurance by saying insurance companies have to provide it. They're not going to provide it free. They're going to charge all the other people in their customer base for it.

    So this is a way to take the cost associated with something that's popular, contraception, particularly for younger women, and have somebody else pick up the tab. And in our society, we ought to emphasize personal responsibility. If you want it, you can have it. You have to pay for it and it's your responsibility.

    VAN SUSTEREN: But the problem with the individual tab is that the whole idea was that everybody was in on it. Everyone was going to have to pay, so that we keep the price down because we're spreading it around. To the extent that some people are exempted or get waivers, that's going to raise the tab for everybody else, right or wrong?

    ROVE: Well, wait a minute. Wait -- well, look, wait a minute. There's -- the whole purpose behind ObamaCare was not to drive down costs. President Obama said pass this bill, and by the end of 2010, the average family of four will see their benefit -- their premiums go down $2,500. Instead, we've seen an escalation of it.

    Nothing's more expensive than something that's free. And in the case of ObamaCare, in essence, we take the consumer out of it and have the taxpayer pick up the tab, and as a result -- and we make things more expensive. We mandate that rather than being competitive by product, everything has to look the same and cost roughly the same.

    And we have funny subsidies built into the law. There's a thing called community rating, which essentially means that younger, healthier people will pay a higher insurance rate than older, less healthy people. So we're in essence having younger people subsidize older people. And when you get into subsidies, you become incredibly inefficient and you tend to make younger people in this instance pay more in order that older people will pay less, and in the process, you get -- you get the system out of whack.

    So look, this is not a system based around personal responsibility. This is a system based upon, in essence, transferring the cost of insurance from the consumer and their employer to the taxpayer.

    VAN SUSTEREN: And let me move right on to the other topic, which sort of -- is sort of related to that, and that's sort of this idea of personal freedom because a lot of -- a lot of Americans -- in fact, 53 percent now say that Washington poses a threat to their personal freedom. That number is up.

    ROVE: Yes, and you can understand why. We have ObamaCare. We've had the attack on religious institutions by saying you have to provide contraception. We now have a big robust debate about gun control, not about, you know, how do we stop horrific acts of violence by mentally disturbed people, but how do we take away the right of people to own certain kinds of firearms or to own firearms altogether.

    So you bet people have in the last several years become increasingly concerned about the intrusion of government into their lives. And it's -- and it's -- and it takes so many different forms. We're all now paying bigger taxes. Talk to any American who gets a paycheck and their January paycheck is smaller than their December paycheck. Why? Because taxes are going up, which some people rightly see as an infringement upon their freedom to control their own destiny and to spend the money that they make as they see fit.

    VAN SUSTEREN: I'm curious, what is your view on this whole debate of -- of gun control? What do you see as something that the American people or the government should or should not do?

    ROVE: Well, look, there ought to be reasonable restrictions on people who shouldn't -- you know, felons, people who are mentally disturbed. I mean, one of the things that worries me about this is, is that we seem to pay attention to the people who are not the source of the problem and ignore dealing with the problem.

    We know this. Cities like Chicago with very strict gun control laws don't have less crime than the communities surrounding them. And we also know that as ownership of firearms has expanded in our country, the country has -- crime has declined.

    The famous sociologist James Q. Wilson -- I remember talking to him in a -- from the White House after the Virginia Tech massacre. He'd written an article pointing out that in our rush to worry about firearms getting in the hands of people who shouldn't get -- shouldn't have them, we also were likely to step on the rights of people who had every right in the world to get them.

    VAN SUSTEREN: So -- so...

    ROVE: And his point was that between half a million and two million instances a year, a firearm is credited with stopping an act of violence. And if we restrain -- if we restrain the people's right to have firearms, we're going to restrain the ability to protect themselves.

    VAN SUSTEREN: So what's a reasonable restriction? I mean, how do you identify the people who shouldn't have guns? Someone may be perfectly normal today, but a year from now when that gun is still sitting someplace, maybe that person isn't perfectly normal. I mean, what is your -- what would you see as reasonably -- a reasonable restriction?

    ROVE: Well, we do have -- because of privacy laws, some states cannot provide the data about mentally ill people to be added into the database of -- for -- when we check for firearm sales. We ought to -- we ought to -- if -- if anybody is under any kind of order that calls into question their mental health or mental fitness, that ought to be part of the database. And there...

    VAN SUSTEREN: Would that include someone who -- would that include somebody who's having a marriage problem, is going to some sort of marriage counseling or couples -- would that be...

    ROVE: Well, no, no, no, no, no, no, no, no, no. No. Absolutely not. But -- but -- but you might have, if you had a domestic dispute that was involved in a potential divorce or a divorce proceeding, where someone sought a court order out of threats of violence, perhaps that ought to in some instances be taken into consideration.

    But look, here's the bigger deal. Why is it that we are talking about adding new laws when we're not doing a sufficient job of enforcing the laws that we have? People violate gun laws in America today, commit crimes with guns with impunity, and -- and -- and in many instances, don't get prosecuted to the extent of the law. And if we did do that, if we got serious about saying, OK, you lied when you showed up and tried to buy a firearm, we found out that you lied on your application, we're going to be serious about prosecuting you, maybe we'd have fewer people trying to buy firearms who shouldn't be buying firearms.