This is a rush transcript from "On the Record," August 13, 2009. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: Moments ago, Karl Rove went "On the Record" about the heated town hall meetings and much more.

(BEGIN VIDEOTAPE)

VAN SUSTEREN: Karl, nice to see you. And town hall meetings are certainly consuming much of the nation. People have all sorts of views on them. What's yours?

KARL ROVE, FORMER GEORGE BUSH WHITE HOUSE ADVISER, FOX CONTRIBUTOR: Well, I wrote a column towards the end of July in which I said the big test was going to be for the opponents of health care, whether they showed up at the town hall meetings in August. And I said this would be a test of how hot people's anger was and how big their concerns were about health care. And boy, they're showing up in large numbers and they are sharing their views, and it's pretty extraordinary.

VAN SUSTEREN: You know what I think is sort of interesting is that, apparently, this has gotten under the skin of some. For instance, Senator Harry Reid was quoted in an article -- in an interview with Politics Daily and apparently said at a speech -- he referred to these people -- some of them -- as "evil mongers (ph) who are using lies, innuendo, rumor to drown out rational debate." That's ugly!

ROVE: That's ugly. Well, you know, we had the speaker of the House and the majority leader in the House, Pelosi and Hoyer, write an op-ed in the USA Today in which they -- in which they said these people were acting un-American. We had the White House, through the Organizing for America -- that's Obama's front group run out of the Democratic National Committee -- send out -- send around an e-mail saying that these people were, you know, tools of the insurance industry, which, you know -- these are ordinary -- what makes this so powerful is this are ordinary people, many of whom have never been involved politically before, who are feeling extraordinarily concerned about this gigantic monster of a bill that seems to be, you know, being rammed down everybody's throats, and they're going and making their opinions known.

Now, there -- there -- like a lot of people who do something for the first time, it's the first time they've participated in politics, and so they're a little bit rough around the edges and it's coming from spontaneous concerns, so it's -- it's not exactly, you know, prettied up and polished. But as a result, members of Congress ought to be paying, I think, even more attention than they would normally pay to this kind of -- kind of activity.

VAN SUSTEREN: Well, it's almost as though this bill moved so quickly, it's almost sort of rammed down people's throats, as though the people weren't to be considered and that the government knew best. And I think, you know, they came on so strong that I think they've forgotten that the American people want a voice in this.

ROVE: Right.

VAN SUSTEREN: You know, they want to be -- they want to know. They want to be heard.

ROVE: I think that's a good point. And look, remember, this didn't happen in isolation. We had the gigantic stimulus bill, about which lots of promises were made. We had the gigantic omnibus spending bill about which lots of promises were made. We had the cap-and-trade bill that the more people learned about it, the more concerned they -- they got about how it would affect their utility bill and how it would affect their job.

And then we have this gigantic health care bill about which so many promises have been made. You know, I was watching the president's town hall meeting in Portsmouth the other day, and I started making a list of the things that I knew were absolutely not true. You know, for example, The AARP has endorsed my bill. You know, You'll be able to keep your coverage, no matter what. There won't be any rationing, there won't be any (INAUDIBLE) things that were absolutely just simply not true. I won't sign a bill that will add to the deficit. This doesn't add to the deficit. I mean, the Congressional Budget Office has blown two holes in that one.

A friend of mine, the former National Economic Council director, Keith Hennessey (ph), has gone through and found 20 things in the bill which are empirically not accurate that the president said the other day, and he's now put those up on his blog, Keithhennessey.com.

It's a really remarkable testimony to the president's inability to get it right that during that speech, he's got 20 things that he asserts that are simply not true, from AARP's endorsement to the cost to the deficit- free nature of it, and so forth.

VAN SUSTEREN: I think it's remarkable that your friend could read and understand it because I've tried to go through it, and even before we get to the substance and content of it, I actually find it incomprehensible. And the thing that's alarming to me is that if this were passed, if this were signed and sent to be implemented across the country, nobody would know how to implement it. Then they start fighting. Then the lawsuits. Then it goes to the judges. And the judges can't figure it out because it's so poorly written. Then they decide. Then they're called activist judges for making it up when Congress didn't write it right in the first place!

ROVE: Right.

VAN SUSTEREN: So it just starts a huge problem!

ROVE: Well, and we also endow two very -- you know, we endow some unelected entities that are in various forms of this bill that get to make decisions about what kind of care is permissible and will be covered and what kind isn't, what kind of coverage will be allowed and what kind of procedures won't be allowed.

And I -- frankly, I don't want the federal government to be in charge of those kind of decisions. It's -- you know, it's nervous enough when we got the insurance company and our physician, and they got to iron it out. If it is -- if the physician is trying to iron it out with the government, we're going to have even less leverage as patients and as consumers.

VAN SUSTEREN: I do admire those members of Congress and the Senate, though, who hold these town hall meetings, even if they're taking a little heat, because not everybody is. But you know, they are at least facing the voters and taking them on, those that might disagree with them.

ROVE: I think you're right. I mean, it's their obligation, first of all. It's their job. They've got to make themselves available to their constituents. If not, their constituents have every right to have a beef with them.

And it's interesting. I mean, we've got -- out on Long Island, Congressman Steve Israel -- I mistakenly said that he wasn't having town hall meetings. His communications director notified me that at the moment that I said that, the congressman, Israel, was having a town hall meeting, but his neighbor -- neighboring congressman, Tim Bishop, was not having meetings.

So I mean, we do have members who've said, I'm not going to have these kind of meetings. We've got other members who've said, You know what? I'm suspending meetings. But I -- you know, you're right. I have to admire people who go out there and put themselves in the arena like that. Some of them do quite well. Others of them -- you know, Congresswoman Sheila Jackson Lee of my home state of Texas did a dreadful thing the other day by, you know, talking on the cell phone in the middle of her town hall meeting as a woman was asking her a question.

Senator Arlen Specter I think did himself a lot of damage in the minds of the people of Pennsylvania who he has to face at the polls next year when he had a town hall meeting in which he seemed to be berating some fellow by continuing yelling at him, Now, wait a minute, wait a minute, wait a minute. And so, you know, how they perform in these is going to say a lot to these people who are being energized by the health care issue to start taking an interest in politics.

(END VIDEOTAPE)

VAN SUSTEREN: Up next, Karl Rove says President Obama is unpresidential. He also thinks Democrats are scared and choosing someone to take it out on. Who? Karl explains next.

Plus: You've seen the video, Congressman Sheila Jackson Lee at a town hall on her cell phone while a woman asks her a question. Why did she do that? And will she apologize? The congresswoman goes "On the Record" coming up.

(COMMERCIAL BREAK)

VAN SUSTEREN: More with Karl Rove.

(BEGIN VIDEOTAPE)

VAN SUSTEREN: How about the recent poll numbers? Do they tell you anything?

ROVE: Yes. Well, it's really interesting. I've been looking at the FOX poll, for example, and what is happening is, is that the independents who were earlier in the spring looked sort of like Democrats when it came to supporting Obama overall and looked like Democrats when it came to supporting what they knew about the health care plan, now have moved dramatically the opposite direction and are now looking more like Republicans when it comes to opposing Obama on the health care plan and viewing his performance on this issue and other issues poorly.

For example, on the question of taxes, Do you think your taxes will go up or down under the Obama administration, the new FOX poll, Democrats say -- 57 percent of them say they will go up, but 95 percent of Republicans and 75 percent of independents say they'll go up. So the independents are now starting to look like -- look like Republicans.

And then there are significant defections from Democrats. For example, on the question of, Would your family be better off or worse off under the health care reforms being considered, 37 percent of Democrats say they'd be better off, but 10 percent of Democrats say they'd be worse off. And you know, we're starting to see some defection among Democrats. About 20 percent, 1 out of every 5 Democrats today opposes President Obama's health care plan. That's about doubled in the last -- in the last few weeks.

VAN SUSTEREN: All right, in that last one, the health care plan currently under consideration, where 49 percent oppose it...

ROVE: Right.

VAN SUSTEREN: ... 34 are in favor of it -- if those numbers hold or get worse for the president, can the Congress vote for this program, for this health care?

ROVE: Well, first of all, remember, the Congress is composed -- even the Democrats in Congress are composed of several different groupings, and there are going to be some people who are going to be so insulated from the overall opinion that, yes, they can vote for it. But what you got to think about is there are a number of Democrats from red states and there are 49 Democrats in the House whose districts were carried by John McCain and 61 it is, or 62, I think it is, whose districts were carried by Bush or McCain.

And if you're sitting there looking at these kind of numbers -- you mentioned it -- 34 percent favor, 49 percent oppose, but among independents, 27 percent favor and 50 percent oppose, nearly 2 to 1 against among independents. So if you start out with Republicans being 8 (ph) percent for, 81 percent against, and then you take independents being 2 to 1 against, if you're one of those red district or red state Democrats, you got to worry about what it's going to do to you. Even if the rest of the Democrats are going to be OK, you got to be worried about what's going to happen to you.

And yes, we're at a point where I suspect there are a lot of red state and red district Democrats who, if they were paying attention to the public opinion, would say, You know what? This is going to be really, really bad for me, particularly if they voted for the cap-and-trade bill. I've already heard from a number of people who said, I'm emboldened to run as a candidate, or we have been -- we found a really good candidate to run because of the cap-and-trade vote of our incumbent Democrat.

VAN SUSTEREN: If you're a fly on the wall in the White House right now, what do you think is going on there? Are they -- how do you think they're feeling?

ROVE: I think they want -- I think the problem still feel pretty good. I think they want a battle over the process. That is to say, they want us to be talking about, you know, are these people showing up in the town hall meetings real or not, because if we're talking about that, then we're not talking about the substance of the bill, and what got them into difficulty is the substance of the bill.

I think they deliberately went out and vilified people who showed up at these town hall meetings in order to have that controversy, rather than have a controversy about the bill. I think they're also going out of their way to change the whole tone of the debate from one was on a positive angle, Let's go out and help people get health care, to, Let's go vilify the insurance companies.

And I think that's a deliberate decision that they were in trouble and that the only way they could get out was by picking an enemy and going after them and making this a -- you know, a battle between, you know, good and evil. And I -- you know, it's what you do in a campaign. It's not what you ought to be doing as president of the United States. This is very unpresidential, and as a result, will undermine the president's credibility further not only on this issue but others, in my opinion.

(END VIDEOTAPE)


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