• This is a rush transcript from "On the Record," May 15, 2013. This copy may not be in its final form and may be updated.

    GRETA VAN SUSTEREN, FOX NEWS HOST: The IRS scandal is exploding! Late tonight, President Obama addressing the nation, insisting he will not tolerate the IRS's behavior.

    (BEGIN VIDEO CLIP)

    BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Americans are right to be angry about it, and I am angry about it. I will not tolerate this kind of behavior in any agency, but especially in the IRS, given the power that it has and the reach that it has in all of our lives.

    (END VIDEO CLIP)

    VAN SUSTEREN: The president also announcing the resignation of the acting IRS commissioner. But did the president make him a scapegoat? Karl Rove joins us. Good evening, Karl.

    KARL ROVE, FOX NEWS CONTRIBUTOR/FORMER BUSH SENIOR ADVISER: Hey, Greta. How are you?

    VAN SUSTEREN: I'm very well. So Karl, the news tonight that the acting commissioner has resigned. And one of my colleagues here at FOX News, anchor of "Special Report" Bret Baier, has sent an email and says that the acting commissioner was set to resign the position of acting commissioner as of early June, and he leaves the IRS entirely a couple of months later regardless of the current controversy. He got that from an official close to the acting commissioner.

    ROVE: Right.

    VAN SUSTEREN: And of course, he was -- only came into the job in November. So is he a sacrificial lamb or what?

    ROVE: Well, actually, Greta, he has -- in the -- in the IRS -- in the federal law, you can only be an acting director so long. So he was coming to the end of the term that he could be the acting director. They either needed to make him the actual director or replace him with somebody else. So in June, he was out one way or another.

    And I thought it was interesting today, he said, issued a statement saying he looked forward to an orderly transition. So the president didn't tell him to pack up your desk and get the heck out by the close of business. Apparently, he's going to remain there for some period of time until they name an acting replacement.

    Greta, I can't -- that statement tonight by the president was faux anger. First of all, remember, on Friday and then earlier today, his -- on Friday, the president, and earlier today Jay Carney, both said, Well, if this happened at the IRS, we'd be upset.

    Well, the IRS admitted last Friday that they did this. It wasn't a question of confirming it. They admitted it last Friday. And so the president knew that the outcry -- public outcry was rising. And so he went out tonight and said he would fire the acting director.

    And oh, two other things he was going to do. He'd have the -- the IRS would implement the IG recommendation, the inspector general report. Oh, really? Thank you. You were going to have to do that anyway.

    And secondly, he promised to cooperate with Congress in an investigation of the matter. Well, you know, Mr. President, you have no choice. You're going to have to. You're going to have to cough up your Treasury secretary and key officials of the IRS to go testify before Congress.

    So this was a nothingburger tonight. It was all about PR, about trying to get ahead of a story that he'd fallen way behind on. And look, I hold him in part responsible for this. I hold a lot of members of the Senate responsible for this.

    I've got in my column tomorrow morning in The Wall Street Journal -- look, let's remember Senator Max Baucus, the chairman of the Senate Finance Committee, sends a letter in September of 2010 saying to the IRS, Investigate these groups. By early 2012, Chuck Schumer of New York gets six other Democrat senators to join him. He pressures Congressman Pete Welch of Vermont to try and get together a similar House letter, all of them saying to the IRS, You better do something about this.

    And in part, the president's responsible. He went out in September of 2010 and said that 504(c)4 groups were, quote, "enemies of democracy," end quote. So you know, there -- there -- there's more than just low-level bureaucrats who are responsible for setting the tone and encouraging this kind of behavior.

    VAN SUSTEREN: Well, I guess -- I mean, there are a number of things you've brought up. I guess the first thing I'm sort of curious is that I - - for some reason, I'm a little sympathetic to this acting director. He just came into the job in November. Now it's, like -- now the president gets up in front of the whole nation and says he's out, as though there's something, like -- you know, that he's really stepping up to the plate...

    ROVE: Well...

    VAN SUSTEREN: ... and you know, we're really catching...

    ROVE: Right.

    VAN SUSTEREN: ... you know, the bad guy and throwing him out, you know, when -- when in fact, he's only been there six months. He was going to leave anyway because his term was ending, and he's not out the door anyway!

    ROVE: Well, remember, though, Miller is one of the people who knows about this early, and apparently did not tell Shulman, or if he did tell Shulman, the previous full-time director, the -- the nominated and confirmed director of the IRS -- if he did tell Shulman, then Shulman lied to Congress under oath.

    So Miller we now know knew about this before this became public and did not alert his superiors or raise a warning flag to his ultimate bosses inside the Treasury Department.

    VAN SUSTEREN: All right, so where does this go? What's going to happen? Is this an issue that was consuming us now for the next couple days and going to go away, or is this one that's going to stick around for quite some time and it's going to get more explosive?

    ROVE: I think it's going to stick around for some time. The question is, does it stick around for a while or a long while? And I think that all depends on how forthcoming the administration is about this.

    And look, I think we've got a lot of things to find here. First of all, how much pressure being brought to bear -- remember, the Senate Finance Committee chairman is -- is the -- is the oversight of the Treasury Department and ultimately the IRS. Their budget depends upon the good sufferance of the chairman of the Senate Finance Committee.

    Chuck Schumer is on the Finance Committee. So you get this, you know, rambunctious Democrat from New York who's on the committee rounding up six other members of the Democrats in Senate to send a letter, if you're an IRS bureaucrat, you sort of want to make certain you're on the good side of the chairman and his likely successor.

    So you know, this is -- this, I think, goes beyond just low-level bureaucrats in Cincinnati. We now know that there were bureaucrats in Washington who sent out these letters. We know there were bureaucrats in California who sent out these letters. This smacks of a greater, you know, sort of effort inside the IRS to punish conservative groups.

    Now, I have to admit, full disclosure, American Crossroads GPS is one of the 501(c)4 groups that has been mentioned in some of these letters by members of Congress, and whose application is still sitting before the IRS. So you know -- but we've got more to find out here. And the question is how forthcoming are people going to be is going to determine how long this lasts. Permanent damage has been done to the IRS.

    VAN SUSTEREN: Karl, we also -- I want to ask you about the breaking news tonight on Benghazi, the White House finally releasing more than 100 pages of emails. First of all, any idea why it took so long? You know, what was the administration trying to keep from us? And why in the world was this stuff classified?

    ROVE: I don't know why they took so long. I think they just thought that they -- if they continued to say nothing, that this would go away.

    I've got three observations about this, Greta. First, I'm amazed how many people in this email thing are communications people. You've got at least seven of them, the head of the office of public affairs at the CIA, Victoria Nuland at the State Department, Ben Rhodes and Tommy Vietor at the National Security Council, a guy named Sean Turner in the director of the office of national intelligence, Dean Boyd at the Department of Justice, and Aaron Pelton at the U.S. U.N. office. So we've got a bunch of communications people.

    Why are -- why are so -- all these communications people setting out the definition of what happened in Benghazi? It strikes me they ought to be smaller players in this and there ought to be bigger players.

    The second thing that strikes me is Victoria Nuland is clearly driving the antagonism towards the CIA-drafted points. And there's an interesting e-mail that she sends out in which she says, at 9:24 PM on Friday night, "These don't resolve all my issues or those of my building leadership. They are consulting with NSS."