This is a rush transcript from "On the Record ," April 9, 2009. This copy may not be in its final form and may be updated.

MEGYN KELLY, FOX NEWS GUEST HOST: Well, Karl Rove goes "On the Record." Vice President Biden made waves recently when he told a dramatic story about a Oval Office confrontation he allegedly had with President Bush.

(BEGIN VIDEO CLIP)

JOSEPH BIDEN, VICE PRESIDENT OF THE UNITED STATES: We are more safe. We're more secure. Our interests are more secure, not just at home but around the world. We are rebuilding America's ability to lead. I remember President Bush saying to me one time in the Oval Office -- and he was a great guy, enjoyed being with him. He said to me, he said, Well, Joe, he said, I'm a leader. And I said, Mr. President, turn around and look behind you. No one's following. People are beginning to follow the United States again as a consequence of our administration.

(END VIDEO CLIP)

KELLY: Fascinating story. But did it really happen? We asked the man they call "the architect," one of President Bush's closest advisers, Karl Rove.

(BEGIN VIDEOTAPE)

KELLY: Karl Rove, thanks so much for joining us tonight.

KARL ROVE, GEORGE W. BUSH ADVISER, FOX CONTRIBUTOR: You bet. Thanks, Megyn.

KELLY: All right. So let's start with this latest claim by the vice president, Joe Biden, that he basically schooled President Bush and told him, Listen, you may consider yourself a leader, but turn around, no one's following you. A lot of people in the White House, which you were in when President Bush was there, have come out and said that just didn't happen. What's your memory of it?

ROVE: Yes. It didn't happen. Look, Joe Biden does this. I remember this a couple years ago when he made a similar claim. Joe Biden said, for example, that he spent hours with the president. Joe Biden was never alone with the president for more than a few moments. There was staff in the room at all times. He never said these kind of things.

I hate to say it, but he's a serial exaggerator. If I was being unkind, I'd say he's a liar. But it is a habit he ought to drop. You'll notice every one of these incidents has the same structure. Joe Biden courageously raises the impudent question. The president befuddledly answers, and Joe Biden drives home the dramatic response. And I mean, it just -- it's his imagination. It's a made-up, fictional world. He ought to get out of it and get back to reality.

KELLY: Really? So you're saying he just made this thing up out of whole cloth with no basis in fact?

ROVE: He's making these things up out of whole cloth. And you know, if you look back at him -- I mean, Joe Biden is spending hours, he said, with President Bush? I mean, please. I mean, members of Congress might spend, you know, a significant amount of time with the president if you added up all the meetings that they were in together with other people. But the implication that he leaves is that he and the president were sitting there in the Oval Office. He was tutoring the president. He was asking him the critical questions that no one was willing to confront him with.

I mean, this is -- this -- with all due respect to the vice president, these are the kinds of things you can get away with if you are a United States senator or a backbencher in the U.S. House of Representatives. You should not exaggerate and lie like this when you're the Vice President of the United States.

KELLY: Does this not happen, were a senator would spend, in his words, hours with the president in the Oval Office? Is that unusual?

ROVE: Well, it's not unusual for somebody to spend a considerable block of time with the president. But I think there are very few presidents who spend hours with somebody in the Oval Office, particularly a -- with all due respect, a blowhard like Joe Biden was. I mean, this guy is -- I've seen him in some meetings when he came to the White House. He was -- you know, he was -- you know, would have outbursts and say something that didn't really make much sense. This is not the kind of guy who becomes the confidant of any president of either party, particularly if it's the president of the other party that you represent.

KELLY: And Karl, would there be a note taker there? I mean, because I know some in the White House even said...

ROVE: Sure.

KELLY: ... I went back and looked at the notes of every meeting he had...

ROVE: Right.

KELLY: ... President Bush had with Joe Biden...

ROVE: Right.

KELLY: ... and I didn't see anything to back up any of these claims.

ROVE: Right.

KELLY: Would it have been in notes? Would somebody have been keeping notes of such meetings?

ROVE: Sure. Absolutely. Absolutely. There would be a note taker in the room. I thought it was interesting, Andy Card, who was the chief of staff, said he didn't recall any such meeting like this. Candy Wolf (ph), who was the head of congressional liaison -- these are the two officials most likely to be in there, the head of congressional liaison and the chief of staff.

I've talked to other members of the White House staff who -- both several years ago when this first emerged, and then in the last couple of days, and no one has any recollection of anything remotely akin to what Vice President Biden says he was routinely saying and doing in the White House.

KELLY: You know, Karl, this isn't -- it's not getting a lot of play. Do you think -- do people not care? If you -- as you claim here, if the vice president of the United States is absolutely flat-out lying about a conversation he claims he had with President Bush -- and not just one conversation but other conversations -- why doesn't anyone care?

ROVE: Yes. Well, first of all, could you imagine Dick Cheney as vice president in 2001 coming in and saying, Well, I had these kind of conversations with Bill Clinton or Al Gore or during the previous eight years, and here's what I told him, and if Gore or Clinton said, That's not accurate, don't you think the media would be all over it?

I think part of this is, is that it's the Obama administration and the media is giving him a pass. I think the other part of it may be that some in the media know -- look, this is a guy whose 1980 presidential campaign was derailed because he was found to be copying, plagiarizing a speech by Neil Kinnock, the leader of the British Labor Party, and recounting an episode in Kinnock's life as if it were in his own life, involving -- I believe it was a coal miner relative or something.

So this is a guy who has a reputation for embellishing -- mildly, I would say -- embellishing the truth. And he is doing so this time around, and the media ought to pay attention to it. The man is the Vice President of the United States, and he may be Joe Biden, but he's still the Vice President of the United States and ought to be held to a higher standard.

(END VIDEOTAPE)

KELLY: Well, up next, Karl Rove on the presidential bow controversy. Did President Obama bow to the Saudi king or didn't he? The White House denies it, but do the pictures tell a different story? Karl weighs in on that next.

Plus: The president's economic guru, Larry Summers, gets heckled by Codepink, C-Span looking more like Jerry Springer today. We're back in two minutes.

(COMMERCIAL BREAK)

KELLY: Welcome back, everybody. More now with Karl Rove.

(BEGIN VIDEOTAPE)

KELLY: You know, another thing not getting that much attention in the press is this dustup over whether President Obama bowed when he met the king of Saudi Arabia. And we've got the videotape of it, you know, that shows clearly, there was something that amounted to at least a stoop. But interestingly now, Karl, the White House has come out and denied this, saying explicitly it was not a bow, saying he grasped the king's hand with two hands and he's taller. And that was their explanation for what we saw there.

ROVE: Well, it reminds me of the politician who was caught in bed with somebody other than his wife by his wife, and he told his wife, Who are you going to believe, me or your lying eyes?

(LAUGHTER)

ROVE: I mean, who do they think they're kidding? I mean, this is a bow to the waist. I mean, for them to say that this is -- he was holding both of the king's hands and bowing and lowering his head because the king is shorter than him -- he'd have to be talking to Tattoo from "Fantasy Island."

(LAUGHTER)

ROVE: I mean, the kind only a couple inches shorter than he is. And look, they ought to admit the president bowed. He shouldn't have bowed. It was a breach of protocol. But it diminishes them for them to try and say to the American people, Don't believe what you see on the camera. I mean, the president...

(CROSSTALK)

KELLY: They didn't come out explicitly and do it. It was, like, an unnamed White House source that came out and said it wasn't a bow, wasn't a bow. But...

ROVE: Well, that says a lot. Would you like to be the White House spokesman on camera saying, No, that's not a bow? I mean, there's a reason why it is an unnamed White House spokesman is saying -- giving an -- offering an excuse because nobody's willing to go on camera and look them in the eye and say, Oh, yes, you're misunderstanding, that's not a bow. I mean, it's a bow. Please. It maybe was unintentional, maybe was unscripted. But don't ask us to expect (ph) it wasn't a bow.

KELLY: Isn't there somebody in the White House advising him on protocol? You know, This is what you do when you meet the kind. Don't bow! U.S. presidents don't bow!

ROVE: I would suspect so. I'm not certain somebody was so emphatic beforehand. They might have assumed after he met the queen of England the lesson was good enough. And look, I would -- I would readily -- look, these are big conferences. You're on a different -- you're in a different time zone. It's a -- you've got a hurried schedule. You know, people -- you know, I've been there. I understand how you can sometimes do some things that you might not otherwise do.

They ought to just simply say it was unintentional. It was not intended to be a bow, you know, and let it go. But the idea of saying to the American people, It was not a bow, don't expect -- don't believe what your eyes are telling you -- this bespeaks at an alarming or lack of respect for the intelligence of the ordinary American on the part of the Obama White House press operation.

KELLY: You know, and you -- you came out with an interesting op-ed today in The Wall Street Journal, talking about President Obama and his recent trip abroad, and talking about how contrary to many people's expectations, in your view, President Obama has quickly become one of the most divisive presidents we've had...

ROVE: Yes.

KELLY: ... in recent history. Now, coming from a guy who worked for George Bush, that's saying something. How do you get away with that?

ROVE: Yes. Well, it was interesting. I -- actually, this was identified by the Pew Charitable Trust, the Pew Research Center, where they took a look back at all of the -- they took a look at the approval ratings that President Obama and his predecessors had among their party members. And among Democrats, 88 percent of Democrats approve of the job performance of President Obama. But his job approval among Republicans has dropped to 27 percent.

Now, what -- it's called the approval gap. You take the support among, you know, people in your own party and subtract from it the support that you have among people in the other party. And if you look back, this is the biggest gap -- 61 points is the biggest gap in the history of American politics. The next largest gap is 51 in 2001 under President George W. Bush.

Now, President Bush had come through an awfully contentious election with a big court case in Florida and a narrow victory. He lost the popular vote. Democrats were not accepting him as a legitimate president. And yet his gap is smaller than the gap that in 11 weeks Barack Obama has been able to amass.

KELLY: Well, how do you explain that? How do you explain that?

ROVE: Well, there are two reasons. One is, is a friend of mine, a political science professor at the University of Missouri, John Petrossic (ph), points out that this is a secular trend, that since 1980, this gap, this approval gap, where the partisans of your party approve and the partisans of other party quickly begin to disapprove -- that that gap has been growing, that each successive president has had a higher gap, approval gap, than his predecessor.

But the other thing is, is it has happened so quickly, I think, under this president and to such an extreme degree is because the conflict between what he said in the campaign he would do -- get past the petty recriminations, he said, end the nasty partisanship, be a new kind of president with a new kind of politics -- and instead, what we have seen is, is that he has come into office and has frozen the Republicans out of deliberations on Capitol Hill. And when they made suggestions about the stimulus bill, he pointedly reminded them, quote, "I won."

And then he goes to Europe and feels obligated to trash his predecessor in office -- his predecessor while in a foreign country. Now, can you imagine Angela Merkel, Chancellor Merkel, getting up at an international conference and trashing her predecessor, Chancellor Schroeder, or Chirac being trashed by Sarkozy or Gordon Brown standing up and trashing Tony Blair?

The Europeans must have looked at him and thought, Don't you understand the campaign is over and you're the winner? I thought it was gratuitous, unfair, unnecessary and diminishing. It makes him look like he's not self-confident, like he's only able to advance himself by trashing his predecessor. And of course, the Europeans, a lot of them, think it's unfair because they had taken the measure of Bush and worked with him over eight years, and know him and like him.

KELLY: Yes, I got to go, but I want to ask you this. The Washington Times and some others have come out and said President Obama succeeded in that trip in becoming loved by Europeans and others abroad. As for whether he's respected, that remains an open question. Do you agree with that? Is that a fair question to raise?

ROVE: I think that's -- look, I don't know if it's love, but they certainly admire him and like him. And part of the reason is because he's not asking them to do the hard things. The Europeans don't like American leadership to remind them that we must do tough things. I mean, he went over there with two purposes, get them to stimulate their economies by additional spending. They told him to get lost. And get additional combat capacity for Afghanistan, and they said, No, we're not going to do that.

So he's -- and he -- and he did -- and talked to them in a way that doesn't hold their feet to the fire on the big important issues. Whether we like it or not, whether he likes it or not, America's president is the world's leader, and he must tell (ph) the world to difficult and dangerous tasks.

KELLY: Karl Rove, always a pleasure, sir. Thanks so much for being here.

ROVE: Thanks for having me, Megyn.

KELLY: All of us (ph).

ROVE: Appreciate it.

(END VIDEOTAPE)



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