This is a rush transcript from "The O'Reilly Factor," November 5, 2008. This copy may not be in its final form and may be updated.

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BILL O'REILLY, HOST: Some are saying the Republican Party's in a shambles, and many are very nervous about Obama. With us now, FOX News analyst Karl Rove.

So what should Republicans learn from last night? What's the big thing they should learn?

KARL ROVE, FORMER BUSH ADVISER: Well, they should learn that we need to be able as a party and as a conservative movement to talk about the things that people are talking around the kitchen table about. What about their jobs, what about their health care, what about getting their kids schooled, getting their kids off to college, what about retirement security? And we need to talk about those issues in a way that makes sense to people sitting around the kitchen table.

O'REILLY: All right. So McCain didn't zero in on the economy strong enough in your opinion?

ROVE: Well, I think all Republicans didn't. I mean, you know, when the whole mortgage crisis blossomed up at the end of September. How many of our candidates were out there pointing fingers at Fannie and Freddie and explaining to the American people how this all happened?

O'REILLY: Nobody.

ROVE: You called it right. Mortgage con. This is what it was.

O'REILLY: It was. It was a mortgage con. And you know, I could never understand why McCain didn't understand that, but let's move ahead. As an American, you're an American, right?

ROVE: Yes.

O'REILLY: You're a Texan. And sometimes Texans…

ROVE: Well, and I'm a Norwegian American, too. So proud Norwegian American.

O'REILLY: All right. Are you worried about Obama? Are you worried about this man?

ROVE: Look, I think…

O'REILLY: Come on, tell me the truth as an American, not as a pundit, not as a…

ROVE: Let me tell you what I feel as an American. First, as an American, I love my country and I want my president to succeed.

O'REILLY: So you want him to succeed…

ROVE: I want him to succeed.

O'REILLY: ...even though he's in the other party.

ROVE: That's right. Look, I was there when a president came in whom a lot of people in this country said, we don't think he's president, we will never accept him as legitimate. And I saw how bad it was for the country.

O'REILLY: The Bush haters.

ROVE: The Bush haters. And so I don't want to be one of those. I want to be a person who says I want our new president-elect to succeed. When he takes that oath of office after January 20, it's the obligation of every American to give him a chance. And we agree with him when we think he's right. We hope he's open to persuasion if his mind is open and not made up. And when he's wrong, we do have an obligation to say with all due respect we disagree.

O'REILLY: You never met him, right?

ROVE: I know him. I've met him, sure.

O'REILLY: Oh, you have met him?

ROVE: Oh sure, absolutely.

O'REILLY: How many times?

ROVE: A dozen or more.

O'REILLY: Really? You know him that much?

ROVE: Oh, yes.

O'REILLY: OK.

ROVE: In fact, we share a mutual friend. And so when he would come to the White House for meetings in 2005, 2006, 2007.

O'REILLY: As a senator.

ROVE: As a senator, we'd, you know, hang out a little bit and talk about our mutual friend.

O'REILLY: I didn't know that, and I'm glad now.

OK, so you know him as a guy. Are you confident that he has the ability — because you know how difficult this job is. You know probably better than anyone except the guy who's in the job. Are you confident, 100 percent confident that Barack Obama can do this job?

ROVE: Yes. I know he's smart. I know he's got tremendous potential, but this job requires discipline and focus and…

O'REILLY: Oh, he's disciplined and focused.

ROVE: No, no, well, maybe. But you know, it requires a willingness to engage, to get your hands dirty in making policy. It requires you to do your homework. It requires you to be an activist. It requires you to have values that are…

O'REILLY: So you're not sure. What I'm hearing from you is you're not sure.

ROVE: Well, look, if I was sure that he had it, I might have voted for him, but I voted for John McCain.

O'REILLY: All right. So you still have questions about him.

ROVE: And look, but here's the point. Now he's got the job. And we got to — every American hope that he is and pray for and support him in being up for the job.

O'REILLY: OK. Well, the far-right ideologues aren't going to do that., and they're never going to do that. But I think most Americans will. However, I heard on the radio today a lot of fear, a lot of fear, because, look, I've been covering this guy now for a couple of years. I don't know who he is still after all this time. I know his press people, his people keep the press away. I know he's a very disciplined guy, but he doesn't engage very much. I don't know, maybe he did with you. I don't know who he is. I don't know what he's going to do. I mean, I do know, as I said in the "Talking Points Memo," there's an enormous amount of pressure on him from far-left kooks.

ROVE: Right. Look, there are a lot of people who — there's a pent-up demand for spending in the Democratic Congress. There's a pent-up demand for redistribution schemes. There's a pent-up demand for retribution. You're going to have a guy on later who would love for the new president-elect to come in and serve up indictments against everybody who served in the Bush administration.

O'REILLY: That's Kucinich.

ROVE: Kucinich.

O'REILLY: Right.

ROVE: So yes, but you're right. This is going to be a big test for him because when he comes in, I see what happens when a president comes in. You get pushed and pulled and prodded and drawn in so many different ways. And the question is do you have clarity about what you want to do?

In your "Talking Points Memo," you had a very insightful point. He's talked about change. I've got a piece about this tomorrow in The Wall Street Journal. For 21 months, we've heard the poetry of change. Now it's the rather prosaic phase of actually governing. And we do not know what that word change means.

O'REILLY: No, because he's going to be pulled to the left. And then he's got to govern, you know, to the center. And what's he going to do?

Now I'm going to ask you a very, very tough question. Does President Bush feel responsible for the disintegration of the Republican Party?

ROVE: Look, President Bush accepts responsibility for his actions, and he believes that he has done the right thing. Now, he's not the guy who took earmarks. He's not Duke Cunningham who sold his — sold for a, you know, a boat on the Potomac and antiques, earmarks in the defense budget. We — he's not the guy who says…

O'REILLY: Does he feel badly though?

ROVE: No. Look, he has worked hard to build the Republican Party. He went out in 2002 and did…

O'REILLY: But it's in shambles.

ROVE: Let me finish. In 2002, he did something that never was done before, and that — except for one time in American politics. And that is got his party to gain seats in the House and Senate in the first off-year election. When he won re-election, he deliberately went out and made certain that he worked hard to get additional Republicans. He's only the second president in the history of America to get re-elected and have his party gain seats in the House and the Senate.

O'REILLY: But it all went bad in the end.

ROVE: No, no, no. Look, look, first of all, remember this. Barack Obama got 1.5 percent more than George Bush got in 2004. He got 4 percent more than John Kerry got in '04. He got 2.5 percent more than Al Gore got in 2000. And sure, I would have loved to have had more Republicans. One, I would have loved for John McCain to win. And we lost. And we need to figure out why we did and build from there.

But let's not all just sort of immediately say, oh my God, it's a total disaster and we're in shambles. Let's be realistic about what the problems are, and how we get out of them, and take our time, and not pick a premature fight with the new president. The American people don't want us to say oh, we don't like you and we're against everything that you do. They want us to be a reasonable position, you know.

O'REILLY: The loyal opposition.

ROVE: The loyal opposition…

O'REILLY: There you go.

ROVE: ...based on conviction and principle.

O'REILLY: All right. Karl Rove, everybody. Thanks for coming in, Karl.

ROVE: You bet.

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