This is a rush transcript from "On the Record," May 7, 2010. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: Tonight: Things are getting a lot hotter in Arizona! We have news tonight.

But first, Karl Rove right here, right now. He's the author of the new book "Courage and Consequence." Good evening, Karl.

KARL ROVE, FORMER SENIOR BUSH ADVISER/FOX CONTRIBUTOR: Good morning -- good evening, Greta.

VAN SUSTEREN: Whatever it is.

(LAUGHTER)

ROVE: Sorry.

VAN SUSTEREN: Evening, morning, they're all the same. All right, speaking of confusion, how about The LA Times and what they've done to Senator Boxer? They endorsed her last time around when she was running. Now they have something blistering in their decision not to endorse anybody in the Senate race, saying about Senator Barbara Boxer that she displays less intellectual firepower or leadership than one -- than she could. Wow!

ROVE: Yes, it took them a while to wake up, but they finally did, didn't they. That was a powerful non-endorsement endorsement. And it's a sign of the problems that she's got. She's a long-term incumbent. She is supposedly very powerful, and yet she's been consistently under 50 percent in the polls against her Republican opponents, who are far less well known than she is. Her problem may be that she is overexposed, too well known, and has run out of luck with the voters in California.

VAN SUSTEREN: But you know, it's funny. You know, in 2004, The LA Times had a much different view. And in endorsing her, they said -- they talked about how she helped prevent what they say is misguided exploration for oil and gas in the Arctic National Wild (SIC) Refuge in Alaska, blocked confirmation of extremist judicial nominees to prevent new offshore drilling -- I mean, they went through a whole laundry list. You know, they -- you know, six years ago, they thought she was great. What happened -- what changed with The LA Times?

ROVE: Well, two things. One is, remember, you just ran through a list of basically negative actions. She stopped this, she stopped that. She's now been in the majority. Last time around, she was in the minority. Now she's in the majority. And what has she been able to accomplish, including through her chairmanship of this big committee? And the answer is zero, zip, nada.

In fact, I think there was a crystallizing moment for opinion California that occurred in a hearing -- you may remember the moment -- when she is being -- is interrogating a general and the general refers to her as "ma'am." And she proceeds to take his head off. And I think that crystallized for a lot of people in California that both she is an unpleasant person and that she is an overweening politician. I mean, that was just sort of a moment of arrogance. To treat this distinguished, you know, officer of our military, someone who's served and sacrificed on behalf of our country -- to treat him as she might a doormat was particularly powerful. And I think it crystallized for a lot of people the weaknesses of Barbara Boxer.

VAN SUSTEREN: Well, no, but a lot of women sort of applauded her for standing up. And so you'd think in California, it might inure to her benefit. But let me ask you another thing, is that President Obama has now twice gone out to campaign for her. And is this sort of a slap in the face of President Obama? Because remember, in 2008, The LA Times endorsed President Obama, saying that he had showed maturity, steadiness, consensus builder inspires confidence, and now he's telling the people of California, Vote for Senator Boxer because she's essentially, you know, his candidate, and The LA Times says, you know, Forget about it, we're not doing it.

ROVE: Yes. Well, I don't think -- the president has got an obligation -- any president has an obligation to go in and help members of his party who are up for reelection and in difficult straits. And I think President Obama's demonstrated admirable loyalty by going out there and doing these two events.

But no, I -- look, I don't think The LA Times is going to -- like any newspaper, would be particularly swayed by the president's involvement if they have strong and harsh feelings towards Barbara Boxer. And I repeat, since she was last up for election, what has she been able to accomplish? In fact, she has -- she's shown this imperious attitude. I'm not certain how many women applauded her reading the riot act for -- to a military officer for using what is standard practice in the military referring to a superior woman as "ma'am." And so no, I don't -- the newspaper's not going to be particularly swayed by President Obama, nor should they. They should be looking at the interests of the state of California and the interests of the country, and does the particular individual they're examining stand up for the state effectively and stand up for the country effectively.

VAN SUSTEREN: All right, let me go across the aisle to the other side of this race, the Republican, former governor Sarah Palin endorsing Carly Fiorina over the -- over a candidate, Tom Campbell (ph), who was -- who people thought might be more in tune with Governor Palin's political philosophy. Stunned by that or not?

ROVE: Well, actually, there was a third candidate, State Senator Chuck Devore, who is the most conservative of the three candidates, and I think a lot of people in California, Devore supporters, thought that Palin -- were a little taken aback by Palin endorsing Fiorina. So on the surface of it, you know, she's endorsed a somewhat less conservative candidate than the most conservative candidate.

On the other hand, it should make a lot of sense. After all, these were the two most high-profile and most significant women inside the McCain for president campaign, other than the candidate's own wife. And my understanding is they formed a particularly powerful bond during the campaign, had an enormous amount of respect for each other, covered each other's backs and had an enduring friendship that came out of that. So you know, it's -- on one hand, it's sort of surprising on the basis of ideology. But on the other hand, based on common experience in a campaign where they became quite close personally, this is understandable.

VAN SUSTEREN: This does this matter to candidate Carly Fiorina? Is this an important endorsement?

ROVE: Oh, sure. In a primary, to get a high -- you know, high- profile figure like Palin to endorse you helps you. Now, you -- as it is with all endorsements, you only get part of their supporters, part of Palin supporters, and you get most of her detractors. So I mean, it's not an unalloyed -- no endorsement is an unalloyed advantage for a candidate. But you'd rather have this endorsement than not have this endorsement, and you'd rather have this endorsement than have it go to another candidate in the race. That's for certain. She's going to...

VAN SUSTEREN: How about -- would you rather...

ROVE: (INAUDIBLE) Fiorina (INAUDIBLE)

VAN SUSTEREN: Would you rather have an endorsement like this, or would you rather have the state newspaper endorse you?

ROVE: I'd rather, in a primary, have the endorsement of a significant figure inside the party. I mean, newspapers -- particularly, like The LA Times has a reputation of being a center-left newspaper. So if you get the endorsement of The LA Times in the Republican primary, it's not necessarily an unalloyed good. Same with, for example, the Orange County newspaper, which is a sort of a Libertarian center-right paper. Its endorsement in a Democratic primary is not as welcomed as other newspapers might be because of the editorial tone of its page.

So it just depends on the newspaper. But generally, I'd say that it's better to have the endorsement of somebody popular inside your own party in a primary than it is to have a newspaper endorsement from a newspaper that's generally identified with the other party.

VAN SUSTEREN: You know, it's sort of interesting. If Senator Barbara Boxer is vulnerable -- and many think that she is, a lot can happen between now and November -- but if she is vulnerable, this vying between the three candidates who want to be the Republican nominee is extremely important. And so it's -- you know, it's fascinating to watch them. Any thoughts on who's going to emerge the victor on this, or who's got the -- at least the inside track right you now?

ROVE: Well, Fiorina has sort of a little momentum from this and from some other activities going on out there, and I think she's likely to be the nominee. Campbell's giving her a much more spirited fight than was thought at the beginning. But I think at the end of the day, Carly Fiorina wins the nomination. And will be, if she does, a formidable opponent.

Campbell would give Boxer a run for her money, as well. In fact, it's going to be an interesting race because the Republican nominee, if they can come out with a united Republican Party, is going to be able to go after independent and Democrat voters who would readily give their vote to the other United States senator, Dianne Feinstein, but have shown in the recent polling distinct distaste for Barbara Boxer.

VAN SUSTEREN: You know, in looking sort of at the big picture of the United States right now -- and Dick Morris and I discussed this last night -- it certainly seems like the states are in almost a silent revolution going (INAUDIBLE) things have a little bit changed right now in terms of the states seem to be mad at the federal government. You've got Arizona and their immigration problem. You've got Florida, who's mad about the offshore oil and gas drilling. You've got all the states -- there seems to be a little rumbling among the states against the federal government. Am I wrong?

ROVE: Well, I think we go through a period in which they -- you know, the laboratories of democracy, the states assert themselves. But it's actually going on all the time -- I mean, Massachusetts passing health care reform, you know, Indiana with Governor Mitch Daniels taking a very strong stance against public employee unions and what they were doing to the state's pension funds and the state's pay structure. I mean, you get episodic, you know, episodes where it becomes more pronounced and more visible.

But that's one of the great things about a federalistic system is, is that, all the time, there are experiments going on around in different ways to solve different problems and for government to express itself in a different format than sort of one size fits all.

And so yes, we are, I think, in a period where we're seeing an upswing in the sort of states saying, We are going to take a pronounced role in defining our own futures on the big issues, which might bring us into conflict with the federal government. And that's healthy. Our country is always better for these episodes because things -- the states try things. In some states, they work and tend to get adopted elsewhere. In other instances, they don't work, and as a result, states avoid making the same mistake or following the same path.

VAN SUSTEREN: Well, in a few minutes, we're going to show an ad -- towards the end of the show -- that Governor Brewer has just taken out against President Obama over this immigration fight. But I mean, the people of Arizona, certainly at least a segment of them, a portion of them, seem quite furious at the federal government's inactivity on the issue of immigration. But it seems now to have become a rather bitter fight.

ROVE: Yes. Well, look, I've got to tell you, I'm really upset with the president of the United States and his comments two days ago. He should be lowering the temperature, not raising the temperature. And he went out and attacked the Arizona law as being racist and bigoted.

But look, there's a federal law. The Arizona law says that there's a misdemeanor for being in the state illegally and it allows under very carefully drawn circumstances law enforcement to inquire about somebody's immigration status if they have a reasonable suspicion that they're not a U.S. citizen. The federal government has a federal law which says that it's a felony to be in the country illegally and has a much lower standard that allows immigration officials, law enforcement officials, to inquire about immigration status and about your citizenship.

So if the president is attacking Arizona for being bigoted and racist, why is he enforcing -- why is he up -- why did he take the oath of office to enforce a law that is even tougher than the Arizona law? I mean, this is just politics, pure and simple!

VAN SUSTEREN: Karl, you've given me the sort of the segue into our next with you, so stand by, because we're going to ask you about what you just wrote about President Obama in your op-ed, that he is the "moralizer- in-chief." Now, we detected sarcasm in what you said, so we're going to ask you about it. And of course, you'll be back in two minutes -- Karl Rove in two minutes.

(COMMERCIAL BREAK)

VAN SUSTEREN: Karl Rove calls President Obama the "moralizer-in-chief." What does that mean? Karl is back with us. OK, Karl, moralizer- in-chief.

ROVE: Actually, I wasn't being ironic. He gave a speech in Ann Arbor that on the -- on the -- if you read the words, had some inspirational calls for a new civility and courtesy and respect in American politics. And he described what sulfuric language caused, which was it undermined deliberation. It made difficult compromise. It robbed us of a rational debate. I thought the words were great.

I just find a gap between the president's words and his actions. If the president believes these things about courtesy and respect, then maybe he ought to exercise a little presidential leadership, starting with Nancy Pelosi, who called the tea partiers un-American, Harry Reid, who called the Republicans in the Senate anti-American and said they only opposed the financial bill in its form that it was in last week because they wanted to, quote, "continue to make love to Wall Street."

I mean, look, the president, if he believes this, ought to say to them, Let's tone back the rhetoric. You're the leaders of my party in Congress, and let's tone back the rhetoric. And maybe he ought to tone back his own rhetoric because, after all, he has said some things -- health care, he called the -- liars, people who opposed it. He attacked -- on the financial rescue -- or the financial regulation bill, he attacked Republican Senate leader Mitch McConnell for being cynical and hypocritical.

I mean, that's the kind of stuff that -- you know, that's fine for commentators and so forth, but if you're the president calling on everybody to treat everybody with courtesy and respect, why don't you start with yourself? I mean, he's used a perverse and pornographic term to describe tea party members. Jonathan Alter repeats it in his book. Another Democratic congressman said the president said it to him. You know, why is the president doing that, if he believes that we ought to treat everybody as we'd like to be treated ourselves, as he said in the Michigan speech?

VAN SUSTEREN: Well, it's not just the Michigan speech. I went back to election night 2008. He said, Let us resist the temptation to fall back on the same partisanship and pettiness and immaturity that has poisoned our politics for so long. And I guess the question really is, is, can you -- you know, does he accept disagreement? And is disagreement that he's getting from the other side of the aisle fair disagreement, or is it petty and trying to provoke him?

ROVE: Yes, no, look, he has dismissed the -- you know, a lot of it. In fact, you know, he's dismissed a lot of people on the other side as not having legitimate arguments, and has basically several times, you know, screamed in campaign -- or campaign-style rallies advocating health care or other measures, you know, to get out of the way.

And talk about pettiness and talk about -- you know, here's a guy who came into office and immediately began to blame everything on his predecessor. I mean, it's -- you know, and people elect a president to tackle the problems of the country, not to try and shift responsibility and blame to somebody else and say, Oh, it's my fault, I'm just trying to clean up the messes that are left to me by my predecessor. We expect more from our president.

And that's what my problem is with the president's speech. The president set a high standard. I think he was justified in setting a high standard. All I ask now is that he try and live up to that standard by -- by -- you know, in his own words, his staff's own words and the words of his party's leadership in Congress, he ought to set a standard.

I cited Congressman Grayson...

VAN SUSTEREN: How?

ROVE: ... you remember him, Greta? You know...

VAN SUSTEREN: I do.

ROVE: ... that was the guy who -- you know, the guy said Republicans just want you to you die quickly when you get sick. And he said, "My message to Dick Cheney is STFU." You know, all the president needed to do was to allow one of his spokesmen to go out and say, We don't think that was constructive to the tone that we ought to be setting in Washington, and it would be a powerful message. Instead, they remained quiet.

In fact, often, it's the president's own people who are setting this tone. I mean, Robert Gibbs -- look, we're -- we got a crisis in the gulf with this blown-out well, and everybody's trying to do their best. And a couple of days ago, Robert Gibbs said -- told the press aboard Air Force One that the White House was going to, quote, "keep our boot on the throat of British Petroleum," end quote. And he later said that he said there was -- the phrase came from Interior Secretary Ken Salazar, whom I know, who's a mild-mannered guy. Look, we're in a crisis! Is it helpful...

VAN SUSTEREN: Is that, though...

ROVE: ... in the middle of a crisis to be using that kind of language?

VAN SUSTEREN: I guess, you know, because I'm sort of flip and say -- I oftentimes say that -- you know, that the Chinese have their foot on our throat -- I mean, I guess it depends on how you deliver it and what your intention is. I mean -- I mean, I guess -- you know, a comment like that...

ROVE: Yes, but Greta...

VAN SUSTEREN: ... I might make.

ROVE: Yes, Greta, but you're a commentator. You're -- you're a -- you're a -- you're -- you're a cable news host who's expected to have an opinion. We're talking about the difference between the -- the president said, Look, if we have elected officials routinely saying these things about each other, it hurts our ability to function as a democracy. I think he's right. I think it undermines the function of government when you question people's motives and even their patriotism.

So -- but he's talking about elected officials. He's not suggesting that our society should all temper our language and we should all be -- but he is suggesting that political actors would be better positioned and better able to have the kind of dialogue we expect them to have if they watch their language. And I think he's right. But that doesn't mean that you need to follow the same or that I need to follow the same.

It does mean, however, that the president suggests that the people who have to work together every day to try and solve the nation's problems ought to try and do so in a sense of courtesy and respect to each other, limiting the politics as much as they can. And he won't do that himself. So why -- why could he expect others to do it, if he won't either do it himself, have his staff do it himself, or call on the leaders of his party to follow his lead?

VAN SUSTEREN: Well, my guess is the American people love to see both sides of the aisle talking sometime, but we have -- nobody's talking right now across the aisle. Karl, thank you.

ROVE: Well, you know -- you know, Greta -- one point.

VAN SUSTEREN: Yes.

ROVE: Chris Dodd and Richard Shelby have clearly been talking to each other in order to get some compromises on this big financial regulation bill.

VAN SUSTEREN: And Senator...

ROVE: It's easier...

VAN SUSTEREN: And Senator...

ROVE: ... because they've got...

VAN SUSTEREN: ... Wyden...

ROVE: ... a cordial relationship.

VAN SUSTEREN: And Senator Wyden and Senator Gregg on tax reform. So I guess we do have some of that.

ROVE: Right.

VAN SUSTEREN: Anyway, Karl, thank you.

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