This is a rush transcript from "America's Election HQ," May 15, 2008. This copy may not be in its final form and may be updated.

MEGYN KELLY, CO-HOST: Well, here's a quote from White House Press Secretary Dana Perino now on the whole "Obama drama" today. She says, quote, "I understand when you're running for office you sometimes think the world revolves around you — that is not always true, and it is not true in this case."

Reaction now from Obama's senior foreign policy advisor: Susan Rice. Good evening, Susan.

SUSAN RICE, OBAMA SR. FOREIGN POLICY ADVISOR: Good evening, Megyn.

KELLY: So, Dana Perino's point seemed to be that President Bush has said this before, he'll say it again, this wasn't the president injecting himself into the political race, it was him making his position clear on the notion that we should sit down with our enemies.

Your response.

RICE: Well, Dana Perino can clean up her president's mess as she wishes. But the fact is, it was White House officials as reported by MSNBC and CNN this morning that said on background to their journalists that indeed the president was referring to Senator Obama and the Democrats.

Video: Watch the interview

So, this is not a manufactured issue on the part of the Obama campaign. This was a deliberate, vicious, divisive political attack by the president of the United States on foreign soil, standing in front of a foreign parliament. It's unprecedented, and it's outrageous, and it demanded a response.

KELLY: Nonetheless, it's put the issue back out there on the front pages about who is right — Obama, who does support sitting down with Iran, and negotiating without preconditions, or McCain, and for that matter, President Bush, who do not believe in that. You saw Bill put the full screen up from Senator Obama's Web site talking about direct talks with Iran without preconditions. A lot of folks don't believe that's the way to go, because they don't believe Ahmadinejad is someone who can be reasoned with.

Your response, Susan.

RICE: Well, let me be clear. First of all, Brit said that Senator Obama supports talking to terrorists because Iran is a terrorist. Well, look, first of all, Senator Obama has been very clear. He would not, he will not, and he would utterly rejects any direct discussions or negotiations or engagement with Hamas, Hezbollah, Al Qaeda.

The Bush administration has pursued a policy of speaking to state sponsors of terrorism, as it's done repeatedly with Sudan, with North Korea, and with Syria, which it invited to Annapolis, all on the state-sponsored terrorism list. All countries with which the administration...

KELLY: But let's stay on Obama.

RICE: I will come back to Obama.

KELLY: You're guy is the one who's running for president, people want to know where he stands on this.

RICE: I will — I'm very happy to come back to Obama. I just want to put this in context. This administration sits down and talks to state sponsors of terrorism.

What Senator Obama has said is that the policy that the Bush administration and John McCain have advocated, of refusing to deal directly with Iran has made us less safe. By invading Iraq, we have, indeed, increased Iran's influence, at our expense, and at Israel's expense, it's pursuing a nuclear program unabated. It's sponsoring terrorism. It's attacking our troops in Iraq. Senator Obama's view...

KELLY: How do you respond to that criticism — how do you respond to the criticism that if we sit down with the likes of Ahmadinejad, we give him credibility that he would not otherwise have, that he wins a P.R. war right there with the extremists?

RICE: Well, first of all, let me address that. First of all, Senator Obama said he would sit down with the Iranian leadership. The Iranian leadership may well be very different. Indeed, it's the supreme leader who has the bulk of the power in Iran.

KELLY: So, do you say now he will not sit down with Ahmadinejad?

RICE: He will sit down with the appropriate Iranian leadership at the appropriate time with due preparation in order to advance our national security interests. The fact of the matter is, that we have pursued a policy of refusing to sit down and deal directly with Iran. It has made us less safe. Secretary of state...

KELLY: I understand. You made that point, but I want to nail you down on the Ahmadinejad thing because that has a lot of people concerned, that's the guy most Americans know and they think he's a nut case. Will you say that Obama will not sit down with him?

RICE: Obama will sit down with the appropriate Iranian leadership at the appropriate time to advance our interests. That is what is, by the way, Secretary of Defense Robert Gates, said he thought the United States would do, and should do, and it's what Secretary Rice has said we ought to do.

The reality is — it is not a reward to sit down with our adversaries. Ronald Reagan sat down with the former Soviet Union at the height of its power. Richard Nixon sat down with communist China. John F. Kennedy did. Strong nations need not fear to engage directly with their adversaries to advance our national security interests.

KELLY: Understood. There are strong differences of opinion on that and some would challenge those facts as well. But I got to wrap...

RICE: Which facts would you challenge, Megyn?

KELLY: I got to wrap because we're out of time, but there is serious question about your characterizations about what Secretary of Defense Gates said...

RICE: No there isn't.

KELLY: ...as well as Secretary of State Rice. Neither one has supported meeting with Ahmadinejad. I got to leave at that because we're out of time. Thank you for being on. I appreciate it.

RICE: You know? Read the "Washington Post" today.

KELLY: Thank you for being here.

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