This is a rush transcript from "On the Record ," December 10, 2008. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: This is a "FOX News Alert." Well, it's happened, moments ago the vote, 237 to 170. The House passed a $14 billion auto bail-out bill, 32 Republicans voting for the bill, 20 Democrats voting against it. But it's not over. It still must pass in the United States Senate. Republicans in the Senate are now gearing up for a fierce fight against the bill. There could even be a filibuster. Former governor Mitt Romney and former Speaker of the House Newt Gingrich will join us in moments.

But first, there is an explosive news in the Illinois governor scandal. We now know who "Candidate 5" is in the FBI's affidavit, and Candidate 5 is not happy. Did Congressman Jackson have anything to do with the scheme to buy President-elect Obama's vacant Senate seat?

Congressman Jackson today.


REP. JESSE JACKSON, JR. (D), ILLINOIS: I did not initiate or authorize anyone at any time to promise anything to Governor Blagojevich on my behalf. I never sent a message or an emissary to the governor to make an offer, to plead my case or to propose a deal about a U.S. Senate seat, period.


VAN SUSTEREN: Former Massachusetts governor Mitt Romney joins us. Good evening, sir.


VAN SUSTEREN: Governor, boy, what a stain on Illinois, another governor in trouble there.

ROMNEY: Yes, it's a sad commentary and it's a commentary about Governor Blagojevich, but also about our political system and perhaps also about the electorate. This is a guy who's been under investigation. It's been known for some time. And yet voters decided to reelect him. I don't know why, but sometimes we get the leaders we vote for.

And I hope in this case that you'll see Rod Blagojevich -- it's a hard name to say -- you'll see him resign, as he ought to immediately. You'll also see the legislature in Illinois put in place a process for selecting the replacement of Barack Obama through a special election, rather than through an appointment. Right now, the appointment process has been so badly tainted in the public's mind, it shouldn't go through without election.

VAN SUSTEREN: Well, you know, it's so bizarre because in theory, what could happen is -- we have no idea what the governor is doing tonight, what he's thinking. The legislature has not yet met to create a special election. But in theory, he could tonight appoint someone or even appoint himself. Now, Senator Reid and other senators have said they wouldn't seat any appointment. But this is a very bizarre situation they're in.

ROMNEY: No, I agree with you and I think it's -- it's so beyond the pale of anything that you expect from a public official that we're -- we're all shocked by it. And that's why I think you have to have Blagojevich resign immediately, and the legislature has to take immediate action to put in place a process for selecting the replacement of Barack Obama. We can't let a tainted process like this case a shadow on the United States Senate and on our system of democracy.

VAN SUSTEREN: And think of all the politicians in Illinois who know him well. I mean, right now, everyone's sort of running for the hills, understandably, but you know, they all know him. I mean, he's a fellow politician in the state, so everyone is now got to sort of distance themselves. Look at what Congressman Jackson had to do today. I mean, it really puts even President-elect Obama in a bad position because he knows him. So they're all sort of trying to figure out what to do at this point.

ROMNEY: You know, there are always going to be bad characters, but I think you also have an opportunity as a governor, as a senator, and particularly as a new president, to put in place a whole series of ethical conduct standards, whether they're part of the law or whether they're just the procedures that you establish, to set a tone for your administration.

In my own case, for instance, I said, Look, none of my senior appointments, none of my cabinet members can have immediate family members working as lobbyists. We're just going to try and separate that link between money and government. There are probably other things that people can think of to establish a reputation of a high level of integrity. You expect more of public officials, and I think we're going to expect those that take office, that have office to show those kind of standards.

VAN SUSTEREN: Well, it certainly is -- I mean, it certainly is something that Illinois is going to have to struggle with, one of their governors sitting in the slammer tonight and now another one not yet indicted but soon to be indicted, certainly charged by a criminal complaint.

All right, now to the family business, cars. Car czar -- any chance that you would want to be the car czar?

ROMNEY: You know, I don't think anybody would pine for that job. There are a lot of people who I think would do an effective job in carrying out a leadership role to help restructure the auto industry, but I don't think anybody's asking for that job. I don't know that anyone has been asked.

Watch Greta's interview with former Gov. Mitt Romney

But let me make a couple of points in this regard. One is, we want the U.S. auto industry to survive, to grow, to thrive. Two is that if we just send money to Detroit and say, Keep playing the game the way you have, that's not going to happen. What'll happen is the industry will decline and decline over the years until it doesn't exist anymore.

So what is needed is the opportunity to dramatically restructure the costs of making cars by Ford, Chrysler and General Motors. And for that to happen, you're going to have to have either a very powerful czar of some kind who can step in and open up contracts and change the basic structure of the industry, or go through a pre-packaged, managed bankruptcy. The government is going to be part of this process either through the courts or through a super-powerful car czar, if you will. But business as usual is not the way to preserve these jobs and to build a brighter future for the many people who work in the auto industry.

And by the way, as a son of Detroit, my dad was a CEO of a car company, I care very deeply about seeing this industry get restructured so that they can become resurgent and be a major employer for many, many years to come. There's no reason why Detroit can't play and win in the world market.

VAN SUSTEREN: I think, you know, most Americans, you know, do want to see the auto industry, you know, survive and (INAUDIBLE) because it has so much -- there's so many collateral effects to it, as well. No one wants to see people tossed out of jobs. The big question tonight is the House -- the House now has passed this bill. It's still got to go to the Senate. Are you in favor of giving or lending the auto industry $15 billion now, telling them to come back in January with a plan for restructuring, or do you think that this should first -- that this would be better off going to a bankruptcy court for restructuring?

ROMNEY: Well, the preference is to make sure that there is a restructuring because if you've got a $2,000 per car cost disadvantage, the American domestic manufacturers are not going to be able to compete either with the transplants -- those are the foreign guys who come and build factories here -- or with imports. And so you're going to have to see that restructuring.

If the car czar, which exists in the current bill -- and I haven't read the current bill, so I can't be too specific in that regard. But if that car czar doesn't have the authority to actually reduce the costs in the industry and make these companies competitive, then we will just be throwing good money after bad.

And the right thing to do here is to make sure that we do restructure these costs. That happens in bankruptcy. There are some down sides in bankruptcy, too. They could be alleviated by government participating in the process, either through a pre-packaged bankruptcy, they call it, where you agree to terms beforehand, go through bankruptcy to dot the I's and cross the T's. Or it could be done through a special piece of legislation, giving -- giving this car czar real authority.

We did that in our state, for instance. Our third largest city, Springfield, got in severe financial distress. The legislature and we worked together to put a control board in place. We gave support to the city, but we were able to open up the contracts, make them reasonable and save the institution.

VAN SUSTEREN: All right. We only have about a minute left, but I'm curious, Governor. I mean, it would almost seem like this would be a challenge you would enjoy. You've done the Olympics. You're a business guy. You're from Michigan. You're from a car family. Wouldn't car czar be a fascinating and interesting challenge for you?

ROMNEY: You know, my guess is that any one of the remarkable business leaders we have in this country would not pine for the job but would accept it out of a sense of obligation and duty. Look, I want to see this industry on its feet again, growing, you know, succeeding competitively here in this country. There's no reason why the Japanese and the Germans and other nations are able to make cars here and gain market share against our best brands. We can do it. We can compete. We can win. But just writing a check is not the answer.

VAN SUSTEREN: All right, one quick question. We all got to know Mrs. Romney during the campaign. How is she doing?

ROMNEY: She's doing great, thanks. She is a -- she's a strong woman, and she'll be out riding her horses again soon.

VAN SUSTEREN: All right. Well, we'll all be watching, and we wish her the best of luck, as well as the boys.

ROMNEY: Thanks so much, Greta.

VAN SUSTEREN: Thank you, Governor.

ROMNEY: Thanks, Greta. Good to be with you.

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