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Transcript: Political Strategist Karl Rove on 'FNS'

The following is a partial transcript of the Sept. 14, 2008, edition of "FOX News Sunday With Chris Wallace":

"FOX NEWS SUNDAY" HOST CHRIS WALLACE: A number of new polls came out this week that seemed to show the presidential race has turned, at least for now, in John McCain's favor.

Here to make sense of it all and to discuss what both sides should do next is master political strategist and Fox News contributor Karl Rove.

And, Karl, welcome back to "FOX News Sunday."

KARL ROVE: Great, thank you.

WALLACE: Well, great excitement, because we have a new Rove electoral map out today, and let's put it up on the screen.

For the first time since May, you now have McCain leading Obama. He's ahead. McCain is ahead in states with 227 electoral votes, while Obama leads in states with 215. Where has the movement been this last week?

ROVE: We've had several states fall from undecided into the McCain camp. We've had Montana and North Dakota, Florida. That means a total of 33 electoral votes moved into McCain's camp from that angle.

We've also had several states fall into the toss-up category that were once Obama — Washington state, and then Pennsylvania and Michigan are now up for grabs.

This has been offset by some gain — by one gain for Obama, and that is the recent polls in New Hampshire have moved that state's three electoral votes into his column.

WALLACE: Let me just say at this point I'm very impressed at your abilities on the Telestrator, and if this politics thing doesn't work out for you, I think the NFL could use you.

ROVE: Well, there we go. There we go. Would you like me to spotlight some for you?

WALLACE: No, no, let's not — don't drive me crazy here.

But I do want to go back to the map, because Obama's effort to turn — to expand the battleground seems to have failed with states like — at least for now, with states like North Carolina and Georgia; as you point out, Montana and North Dakota all going back into the red column.

ROVE: Right. Right.

WALLACE: As you look at the yellow states, the seven states that you still regard as toss-ups, who has the clearer path to the magic number of 270?

ROVE: Well, look. If you take the undecided states, the toss-up states, and put them into the camp of whoever leads, give the states where even it's within the majority of error, Obama leads, he gets 273 electoral votes and McCain gets 265. So the advantage is still with Obama.

What happens is — I don't know if you want to go to the map.

WALLACE: Real quick.

ROVE: Yeah, here. Nevada goes to McCain, Washington state goes to Obama, Colorado goes to Obama, Ohio goes to McCain, Virginia goes to McCain, Pennsylvania goes to Obama, Michigan goes to Obama. And that ends up giving you a race that gets settled to Obama's satisfaction.

WALLACE: All right. Let's take a look at the national polls, which seem, to my reading at least, to show a clear swing toward McCain from before the conventions until now. And let's take a look at them.

In the Washington Post poll back in mid-august, Obama was leading 49-45. Now McCain is ahead 49-47. And when you look at the internals of the poll, the shift is even more dramatic. White women — last month Obama led by eight points. Now he trails by 12 points.

Who would do more to bring change to Washington? They're fighting over the change mantle. In June, Obama led by 32 points. Take a look at this. Now he leads by just 12.

Karl, what's happened to the race? How significant is the change? And does McCain — even if it's narrow, does he clearly have an upper hand at this point?

ROVE: Yes, he does. McCain does have the upper hand now. The interesting thing is how volatile this election is. If you take the seven national polls that were run just before the Democratic convention, it averages out to an Obama lead of plus three.

If you look at those polls after the Republican convention in the last week, it is a McCain advantage of 2.8, which means that we've gone from being — we've got a six-point shift toward McCain. That means — in fact, it's even more dramatic than that.

If you look at the polls in between, if you look at the ones right after the Democratic convention, the lead for Obama is nine. So it goes plus three to plus nine for Obama to plus three for McCain, which means that we've had a — basically, a 12-point swing in the base in just over a week.

WALLACE: How do you account for it? What's happened and how much of it do you attribute to Sarah Palin?

ROVE: Well, we have a very volatile electorate. We have a bunch of people who like both of these candidates. They have strong positives and relatively low negatives for this point in a presidential campaign, and they're weakly linked to their choice.

And so things like the choice of Sarah Palin or an international incident, or something else — the performance in the debate — all of these things will have a big impact on the vote.

WALLACE: How has Sarah Palin affected it? In other words, how has she bolstered McCain and hurt Obama?

ROVE: Her positives are almost as high as Obama and McCain, both of whom who have been on the national stage a long time. And she has the lowest negatives of any of the four candidates for president or vice president.

So she's a breath of fresh air. People like her. They're responding well to her. And again, I wrote this in the Wall Street Journal on Thursday. This may be the first election since 1960 in which a vice presidential candidate affects the outcome.

WALLACE: And you're talking about Lyndon Johnson...

ROVE: Lyndon Johnson.

WALLACE: ... who helped in one state, Texas.

ROVE: Right.

WALLACE: But do you expecting the Sarah Palin phenomenon to last for the next seven weeks?

ROVE: I don't. But that's — the other question is do I expect the impact of Sarah Palin to have more durability, and the answer to that may be yes. It may be that people have an attitude about her that lasts long after the, you know, sort of celebrity focus of the media has dissipated.

WALLACE: All right. I want to put you in charge of the Obama campaign. This will come as a distinct shock to David Axelrod, but just for the purposes of this exercise you're in charge of the Obama campaign.

He has lost some steam. McCain has a lead — certainly not an overwhelming or clinching lead, but has got a lead. What should Obama do? How does he turn things back around?

ROVE: Well, I'd have two pieces of advice, one of which I wrote about Thursday in the Wall Street Journal, which was to stop attacking Palin. It doesn't do him any good. It diminishes Obama.

Now, they may actually be taking that advice. They may have come into it on their own. I'm sure they did, because the morning papers are filled with stories in which Obama's operatives say he's going to stop talking about Palin and focus instead on McCain.

The second thing, though, is one that I think is difficult for them to do, given the mindset of where they are, and that is they ought to stop attacking McCain. This is not about McCain. This is about reassuring the American people that Barack Obama's up to the job.

The people want change. There's a Democratic tide running this year. And if he were to focus instead upon, you know, defending, where necessary, himself, but putting his main emphasis on trying to get a message through — I'm up to the job and I've got a vision for the future for the next four years that you, the American voter, will find attractive — I think he'd be better served.

WALLACE: Now, we do have news. I got an e-mail from the Obama campaign just this morning in which they announced that in August they raised $66 million, 500,000 new donors — the biggest fundraising month they've had of the entire campaign — previous high was $55 million. This is $66 million.

How big a weapon is his financial advantage over McCain?

ROVE: Well, it's big. It's allowed him to try and expand the playing board. Now, look. They've wasted — you know, like in Georgia they spent, by one report, $1.5 million on television. They've opened up a bunch of offices.

In Montana, they've been running unanswered television ads for two months, opened up 13 offices. They've fallen 13 — or 11 points behind. So it — but it does allow him to try and expand it, the playing field.

Second of all, it will give the Democrats for at least the second presidential election in a row a financial advantage in the fall campaign. Last time around, it was about a $121-million advantage over the combined spending of the Republicans.

I suspect it won't be large this time around, but it will be approaching the $100 million mark.

WALLACE: You say that Obama shouldn't attack McCain, but I want to play a clip for you this week of Obama ridiculing McCain's claim that he is the agent of change. Take a look.

(BEGIN VIDEO CLIP)

OBAMA: John McCain says he's about change, too. And so I guess his whole angle is, "Watch out, George Bush, except for economic policy, health care policy, tax policy, education policy, foreign policy, and Karl Rove-style politics, we're really going to shake things up in Washington."

(END VIDEO CLIP)

WALLACE: When Obama and his camp talks about Karl Rove-style politics, they mention things like the McCain effort this week to make a big deal about lipstick on a pig, and to say that Obama was smearing Palin. They say it's diversionary tactics.

First of all, are you complimented or insulted by the reference to Karl Rove-style politics? And secondly, do you have any problem with what the McCain people are doing?

ROVE: Look, I demand a royalty every time they mention my name. When John Kerry stood up at the Democratic convention and used my name four times, I ought to get a small royalty, maybe 25 cents per mention, a buck per mention. I mean, please, it's my name. You know, stop using it without my permission.

WALLACE: I think you're a public figure.

But in any case, do you have any problem with what McCain is doing by, for instance, saying — which a lot of people thought was kind of made up — that Obama was smearing Palin?

ROVE: Yeah. Well, first of all, I do think that the lipstick remark was an inappropriate — and maybe it was unconscious, but it was a deliberate slap at Governor Palin.

The only time this word has intruded in recent months in the campaign was in her, you know, self-deprecating remark at the convention. So for him to use the lipstick remark less than two weeks after she used it struck me as too much of a coincidence not to have been a deliberate attack.

But look. Both campaigns are making a mistake, and that is they are taking whatever their attacks are and going one step too far. We saw this this week, for example, in the Obama ad where he makes the point, a legitimate point, that John McCain came to the United States Congress in 1982 and that he has been a longtime Washington insider.

But they then say he doesn't even know how to use a — you know, doesn't send e-mail. Well, this is because his war injuries keep him from being able to use a keyboard. He can't type. You know, it's like saying he can't do jumping jacks.

Well, there's a reason why he can't raise his arms above his head. There's a reason why he doesn't have the nimbleness in his fingers.

WALLACE: All right, and for fair game, what is McCain doing that goes a step too far?

ROVE: Well, McCain has gone in some of his ads — similarly gone one step too far, and sort of attributing to Obama things that are, you know, beyond the 100-percent-truth test.

They don't need to attack each other in this way. They have legitimate points to make about each other that are beyond, you know, the...

WALLACE: Real quick question — 30 seconds. Do they need to be 100 percent passing the truth? Just, in other words, when you were running Bush's campaign, did you care whether some fact-check organization...

ROVE: No, and look, you can't trust the fact-check organizations, with all due respect. They're human beings. They're individuals. They've got their own biases built in there.

But both campaigns ought to be careful about it. They ought to — there ought to be an adult who says, "Do we really need to go that far in this ad? Don't we make our point and won't we get broader acceptance and deny the opposition an opportunity to attack us if we don't include that one little last tweak in the ad?"

WALLACE: Karl Rove, thanks for coming in. Talk to you soon.

ROVE: Great.