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Obama's Bipartisan Health Care Summit: Is He Playing 'Kabuki' Theater?

This is a rush transcript from "On the Record," February 17, 2010. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: Now Karl Rove uncut and "On the Record."

(BEGIN VIDEOTAPE)

VAN SUSTEREN: Karl, it's the one-year anniversary now of the stimulus bill, and I'm trying to figure out whether we're ahead of the game or behind the game. One year later, how do you assess the impact of the stimulus bill?

KARL ROVE, FORMER BUSH-CHENEY SENIOR ADVISER/FOX CONTRIBUTOR: Well, it's not only where we are, but it's why we are where we are. Look, I think the president today made -- put about as good a face as he could on the stimulus bill by saying, you know, We created two million jobs and we would be worse off if we hadn't have done this.

The problem is they can't -- their own numbers are -- don't support their argument. The president said, I -- you know, the stimulus bill created or saved two million jobs by spending $200 billion-plus out of the nearly $800 billion that Congress appropriated for the stimulus. And yet his own Web site, Recovery.org, that tracks these project by project by project, saves the -- says the stimulus bill has saved or created 595,623 jobs, most of them government jobs, jobs at state and local government, firemen, policemen, government bureaucrats, government vendors, and so forth.

Look, the economy is better today than it was a year ago. But let's be clear about it. It's not because, as the president said today, largely because of the stimulus bill. That's $200 billion. That's a pittance in a $14 trillion economy. What has mattered is that the U.S. Federal Reserve and other institutions like the Treasury and FDIC have injected $24 trillion of liquidity into the American economy. That's a lot of money sloshing around. Then we have low interest rates.

It's monetary policy, low interest rates and the injection of money into the economy, that has given us the economic sort of stabilization that we've got and not this sort of little pittance of government spending programs and odds and ends and miscellaneous ideas that had sad -- sitting in the bottom drawer of House appropriators for years and years and years. That's not what has done whatever has happened.

VAN SUSTEREN: Well, you know, I'm trying to sort of sort it out because you hear, you know, one thing from Republicans, one thing from the Democrats. So I'm trying to pull out some indicators to sort of -- in my mind to see what I think. And the two most obvious to me are housing foreclosures and unemployment. And I realize that those are lagging indicators. And I picked one of the most painful states in terms of the economy. In Ohio in the year 2009, the foreclosures on homes were up 3.8 percent. That's not the right direction in terms of the number that we wanted to see. I realize it's a lagging indicator.

In Ohio, for unemployment, in December of 2008, it was 7.4 percent. In December (SIC), it had risen more than 3 percent to 10.9 percent. So I'm trying to find indicators that are going in the right direction, not the wrong direction, and I'm not seeing those.

ROVE: Right.

VAN SUSTEREN: That's why I have a question about the stimulus bill. And I don't know if -- maybe those numbers are the wrong ones to look at.

ROVE: Well, look, the president himself laid out three standards. He said if we pass this bill, unemployment will not go above 8 percent. It went to 10 percent. He said if we pass the bill, I will create or save 3,650,000 jobs, and then in his speech a year ago today, he said 3,500,000 jobs. Even his own Web site, by changing the definition in a more generous way, says that this bill has provided money to 595,000 people who had jobs.

I mean, if you got -- if -- if their definition of changed or saved a job is -- saved a job is, is if that money goes to a program and if that job gets any money from that program. So you could be -- you could be a teacher and your local school district got some money, your job's, quote, "saved." You could work for a state government bureaucracy and because that bureaucracy gets money, your job is saved. You could get a pay raise as a government vendor, and your job is, quote, "saved." So by its own standard, it didn't work.

And finally, the president said this money will be spent immediately. Well, look, they have spent less than a third of the total. They have -- they will spend more money between 2011 and 2019 than they spent last year when we were trying to, quote, "stimulate" the economy. So by his own standards, it's been a failure.

Now, is the economy better? Yes, it is. But let's be clear about it. It's because the underlying strengths of the American economy -- it's entrepreneurs and risk takers and workers -- and because the federal government through the Federal Reserve and the central bank and other institutions through monetary policy has put $24 trillion of support into the American economy. That's a lot of money in a $14 trillion economy. Now, we -- and it creates its own problems over the long haul. We got to worry about inflation and unwinding that federal role. That's a lot of money sloshing around. But that's what has made the economy -- if it's any better, that's what's made it so, not this -- you know, this poorly timed and badly designed stimulus package.

VAN SUSTEREN: You know, though, the question, though, of whether the economy is better -- and I so want it better, but I remain unconvinced but that almost seems like sort of an academic discussion you'd have in class about economics. I look at, you know, the people -- people who want jobs. Can they get jobs? And the way this sort of "saved" business disturbs me is, first of all, I don't know if you can calculate it. But when you say a job is saved, it means you've met payroll.

ROVE: Right.

VAN SUSTEREN: And that payroll eventually is going to run out, and then there may not -- then you may not be able to save it. We're going to crash and burn. We need to actually create more jobs, which is a completely different concept. And I'm trying to find the number to know whether the Republicans are right or the Democrats. And I just don't -- where do I look?

ROVE: Well, look, here you -- just look at the Bureau of Labor Statistics. It'll tell you there are 2.8 million fewer people working today than were working when the stimulus bill passed. And look, the kind of jobs they've saved -- let's remember this. This is not a job in private enterprise, where the company is paying the employee and they're making a profit and they're paying taxes. These are by and large jobs in government, which means that we're going to be paying for those for the rest of our lives through increased taxes and higher debt. We're -- we've -- of the 595,623 jobs at Recovery.org, the government's official Web site, says it saved or created, the vast majority of them are government jobs, which means that everybody who isn't working for the government, they're picking up the tab for those people, and they're doing so with a deficit finance program that's going to extend on to the lives of our children and our grandchildren.

So I -- look, the president's right that the economy is somewhat better. The growth was stronger in the final quarter of last year, mostly because businesses had drawn down their inventory so low, they had to go out and buy some things to replace their inventories. But that's -- that's (INAUDIBLE) Job growth -- job -- job losses are starting to get smaller. We haven't started to create jobs. And most of the jobs that have been, quote, "saved or created" are government jobs, but that's somewhat better.

But let's be clear. It's not because of this, I hate to say it, stupid bill! I mean, this thing has -- I mean, think about it. A stimulus bill is supposed to be immediate, powerful, you know, effective right on the spot. This thing's going to spend more starting next year through 2019 than it spent last year! That's just insane! Weren't we trying to stimulate the economy last year, not in the year 2019?

(END VIDEOTAPE)

VAN SUSTEREN: Next, more with Karl Rove. He says something is -- ready for this? -- kabuki. Find out what that means next.

Watch Greta's interview with Karl Rove: Part 1 | Part 2

(COMMERCIAL BREAK)

VAN SUSTEREN: Continuing with Karl Rove on the one year anniversary of the stimulus bill.

(BEGIN VIDEOTAPE)

VAN SUSTEREN: One of the things that is interesting today on the anniversary the president has sent a number of members of his cabinet out to sell the bill. And I suppose that if the bill were a roaring success you wouldn't need to sell it. Everyone would be too busy working his job. So that's not a particularly good sign for the president.

Another not particularly good sign for the president politically is this number in the CBS/CNN poll where it say 52 saying today that the president doesn't deserve to be reelected. If you are the president and you wake up to that poll, what do you think?

ROVE: I would look deeper at that poll, because it said that six percent of the American people thought the stimulus bill actually created jobs, six percent. In polling, three percent, you get three percent that can say anything. Three percent will say the sunshine in the middle of the winter, that's the margin of error.

So six percent agree with what the president was saying today, which was extravagant rhetoric. He said the stimulus bill is largely responsible for any economic stabilization we've got. No it's not. The bank bill that gave $247 billion to the banks, which is now being repaid with interest, that had a lot more to do than the stimulus bill.

And I repeat, the Federal Reserve took $1.4 trillion of cash and injected it almost directly into the economy by blowing up its balance sheet. It has a -- the TARP inspector general says the steps by all the steps by all the monetary actors in our government generates $24 trillion additional liquidity in the system. That's a lot of money.

That's what is largely responsible for whatever good is happening to the economy, not this badly timed, badly designed, and poorly executed bill.

Remember, they said shovel ready projects. We heard that phrase until we were sick of it. Five percent of the total is devoted to infrastructure and those "shovel ready projects." There is money in here for all kinds of stupid things that have no relationship to creating economic growth.

VAN SUSTEREN: Also on the president's plate besides many of the international issues that they are facing right now is this health care summit he has scheduled for February 25th.

You have been quoted as saying that the president is the most polarized, and I guess in an effort on the 25th the whole point is to do the opposite and to bring people together. Why do you say he's the most polarized?

ROVE: If you look at the Gallup poll -- it's actually not me that said this. It's the Gallup poll that said this. They put out a special release on this.

If you take a look at the president's favorability ratings among Democrats and compare them to the favorability ratings among Republicans and look back at all the other presidents and compare their support among their party members with the support with the people in the other party, he is at this point in his term the most polarized in the history of the Gallup poll.

Part of the reason is -- because we have a meeting at the White House on February 25th, to discuss in a bipartisan way potential approaches on health care. The last such meeting the president had was March 5th of last year.

The Republicans were not present at a single White House meeting to discuss the House bill or the Senate bill or the negotiations on how to meld the bills together. We've gone almost a year, 11 months and a couple of weeks without a single substantive meeting between the White House, Democrats and Republicans, to discuss health care. It is astonishing.

And so, yes, he's pivoting on the 25th to try and look like he's being bipartisan, but that is simply kabuki. The attempt is to demonstrate either the Republicans wouldn't bother to show up, or if they did for the president to basically browbeat them and say you ought to cave and give in to my proposal.

All of these negotiations about a compromised bill between the House and Senate Democrats -- remember, this whole problem is the Senate Democrat bill cannot be passed by the house Democrats even though there are 255 Democrats in the House to 170 Republicans. They cannot get that bill through the House.

So now what they are doing is behind closed doors developing another bill and toss it out there on the 25th and say you Republicans who had not one word to say, we want you to agree to this bill. It is a phony deal. And frankly, the American people are going to see that.

VAN SUSTEREN: How does this president overcome the risk that no matter what happens on the 25th -- if he caves in to a bipartisan discussion he loses his base. If he draws a line in the sand sticks his heel heels down tough to save face, we don't get any progress.

How does he navigate these waters? Above and beyond everything it is not about Republicans, Democrats, it is how do we fix the system. So how does he begin moving on this?

ROVE: First of all I think the critical time were last year. There were four or five occasions where he should have drawn the Republicans into the dialogue and he didn't do it. The last available opportunity was just before Christmas when the Senate was trying to arrive at this bill making all these deals.

He needed to step in and at minimum no more "Louisiana Purchases," no more "Cornhusker Kickbacks." That would have set a good tone.

But what could he do now? He could rather than having a high profile meeting on the 25th, where he's going to toss this bill out to the Republicans and say, yes or no, he should be meeting behind the scenes with leading Republicans to say I want to bring you into what I'm thinking.

I want to make you part of the process. Here are the big issues we are trying navigate as we take these competing Democrat versions of the bill, and I'm trying to come to a compromise between those two. But I want to get your input as well, instead of doing what he's doing, which is to say we are going to jam it together and by god shove it down your throat. I'm at a loss.

VAN SUSTEREN: If he should have done that after the so-called Cornhusker deal, which was on the 24th of December. he certainly didn't show us that he had any intention to, because then he met behind closed doors with the unions and cut a deal with them in early January. So I don't think he got it at that point. Maybe now --

ROVE: For two months he hasn't.

VAN SUSTEREN: You would have thought if he recognized the impact of the Nebraska deal he would not have done the behind the closed doors with the unions, because that was stunning to many Americans, another deal cut for a special interest group. So he has a lot to do between now and February 25th.

ROVE: He sure does.

Congress needs adult supervision, whether it's a Democrat Congress or a Republican Congress, no matter what party the president is of, the president needs to be engaged in these major issues in a way that this president has not been engaged on health care.

He's been willing to go out and make the speech, stand in front of the teleprompter and read the words. But he has not been willing to get into the process and get his hands dirty, making sure it is a bipartisan product.

You cannot pass even with the overwhelming numbers and votes the Democrats have, you cannot pass a big thing like this unless you have bipartisanship.

Then again, I repeat, you have a bill passed by the Senate, which is now 59 Democrats, it had 60 when they passed the bill. It is now before the U.S. House of Representatives with a 255 to 178 Democrat majority, and they cannot pass the Senate Democrat bill.

And why? Because the president did not engage in this process earlier enough to make sure it was a bipartisan bill that had widespread acceptance.

VAN SUSTEREN: Karl, thank you.

ROVE: Thank you, appreciate it.

(END VIDEOTAPE)

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