• With: Karl Rove, Fox News contributor

    This is a rush transcript from "Your World," January 6, 2012. This copy may not be in its final form and may be updated.

    NEIL CAVUTO, HOST OF “YOUR WORLD”: Here he goes again.

    (BEGIN VIDEO CLIP)

    NEWT GINGRICH (R), PRESIDENTIAL CANDIDATE: I think, as people look at the record and they imagine him debating Obama, Obama is going to laugh at him. Obama is going to say, I developed Obamacare based on Romneycare. I even brought your staff into the White House.

    If he doesn’t win here, he couldn’t stay in the race.

    (END VIDEO CLIP)

    CAVUTO: Now, I want to stress, as I did yesterday, we have invited Newt Gingrich on this show repeatedly to explain the remarks on top of the one calling Mitt Romney a liar.

    Karl Rove now on what the residual potential damage could be to the speaker and maybe to party.

    What do you think, Karl?

    KARL ROVE, FORMER SENIOR ADVISER TO PRESIDENT GEORGE W. BUSH: Not helpful for the speaker’s cause.

    If he wants to be a real contender in this, this is exactly the opposite direction that he ought to be going. He made two charges today. One is, is that Romney in a debate would be unable to defend himself against Obama on health care.

    That is simply not true. We have seen the potential answer to this laid out starting as early as September at the Jim DeMint cattle call in South Carolina, and Romney has got a good answer, which is to say, look, I didn’t -- they are not the same. You raised taxes a half-a-trillion dollars. We didn’t raise taxes. We relied upon the exchange to be -- allowed people to have a diversity of product and to shop for it. You have a "one size fits all" mentality in which you are going to ration care using a board of 13 unelected bureaucrats, the Independent Payment Advisory Board.

    And you borrowed money, $700 billion over the next decade, according to Congressman Paul Ryan, to pay are your program, and we didn’t borrow money in Massachusetts to pay for what we did there. They are distinctly different, and you know it, Mr. President, and you need to stop telling falsehoods about what we did in Massachusetts and about what you -- and admit what you did in Washington.

    And Romney can do that with Obama. And Newt...

    CAVUTO: Maybe he can, maybe he can. But I’m wondering, though, if there is something going on here that is bigger than Mitt Romney and health care and whether it is has gotten personal now...

    ROVE: Oh, it’s been deeply personal.

    CAVUTO: ... and that Newt Gingrich, after playing nice guy, it’s now just going to be nasty, nasty, nasty.

    ROVE: Yes.

    And, look, Speaker Gingrich was loading Iowa with 32 percent of the vote -- 33 percent of the vote on December 3, and he ended up running fourth. And to be sitting out there lecturing about who could go on to the next stage or who could not go on to the next stage, it is un-presidential.

    He ought to remember what put him in the lead. People thought he was the best debater on the stage because he was the most knowledgeable about the issues, they liked him, and he had a big vision for the country. And instead he sounds like a churlish, angry politician, because guess what? I think that is what he is right now.

    CAVUTO: Yes, but he says, Karl, that what undid that lead was not anything he did, but what his opponents did, more to the point Mitt Romney did.

    When I was up in Iowa for the debate, I noticed Ron Paul had more than a few ads against him that were...

    (CROSSTALK)

    CAVUTO: ... negative, but they were very in-your-face.

    ROVE: That’s right, but he should have responded to them, instead of saying they are lying about my record.

    That didn’t work too well for Bob Dole when he used it. He should have gotten involved in the substance of the charges. Now, the problem is that he may not have had a good response on Freddie Mac, for example. But when you get attacked, you have two choices -- or three, actually -- ignore it, which in this instance with this much going on, you could not.

    Two is to whine about it, which is completely ineffective. And three is to get involved in it and turn the issue to your advantage. And Speaker Gingrich took the second course, whine about it, and not either the first course, ignore it, or the third course, which is the most important one, turn it to your advantage. Get in there, make an argument and return and flip the argument onto your opponent.

    CAVUTO: Well, it may or may not work in New Hampshire, but Newt Gingrich is not exactly political dead meat in South Carolina. He polls surprisingly well, despite the drubbing that he took in Iowa.

    What do you make of that state, since that is the one that Rick Santorum seems to be very focused on and is within spitting distance of winning? What do you think?

    ROVE: Well, look, here is the latest poll out of TIME, CNN, and ORC, Romney, 37 percent, plus 17 points from early December, and Rick Santorum 19 percent, and that is plus 15 points since early December. He was at 4 percent in early December.

    Newt Gingrich still in the game at 18 percent, but down 25 from where he was a month ago, Ron Paul at 12 percent, doubling from 6 percent, and Rick Perry at 5 percent. That’s down three from where he was early.

    Now, there is still time to turn it around, because we have two weeks in South Carolina. But message matters here. And the momentum is clearly behind the two guys who came out of Iowa with a good story, Romney, who was not expected to win, and Rick Santorum, who nobody thought would win.

    But you have got to have a strong message. That’s why I thought it was smart for Romney to go to South Carolina today and hammer Obama on the appointments to the National Labor Relations Board, because...

    (CROSSTALK)

    CAVUTO: You do not think it looks like he is dismissing New Hampshire, taking it for granted?

    ROVE: Oh, no, no, no. Look, he’s got a good number in New Hampshire.

    Now, there is another dynamic going on there. Santorum says his goal is to get Romney below 30 percent. You have heard Newt’s standard, which is even lower: If he can’t win here, he ought to get out of the race.

    Now, what happens on Tuesday night if, to Newt Gingrich’s argument, if Romney wins the state, and what happens to Rick Santorum’s argument if Romney gets better than 30 percent?

    CAVUTO: I have no idea. That is why you are here and I am just asking questions.