Transcript: Karl Rove on 'FOX News Sunday'

The following is a partial transcript of the March 2, 2008, edition of "FOX News Sunday With Chris Wallace":

"FOX NEWS SUNDAY" HOST CHRIS WALLACE: We got a sneak peek this week at what a general election campaign between John McCain and Barack Obama would sound like, especially on foreign policy.

To get a better idea of how Republicans will go after Obama or Clinton, we're joined by former White House adviser, architect of two presidential election victories and now, most important of all, FOX News contributor Karl Rove.

And, Karl, welcome back.


WALLACE: Let's assume for the moment that Barack Obama is the presumptive Democratic nominee next Wednesday. In general terms, and we'll get more specific, how should John McCain go after Obama?

What are things that he could do to Obama in a general election campaign that Hillary Clinton couldn't do in the fight for the Democratic nomination?

ROVE: Well, the most important things he needs to do are not connected with Obama. Let's come back to those.

But what he needs to do with Obama is treat his words as serious. She's been dismissive of his words. McCain needs to treat them as serious. And he needs to not point just to the thinness, but he needs to point to the values, views and actions that those words would lead or have led Obama to.

Second of all, he'd need to draw attention to the gap between the rhetoric and the reality. Obama makes two very important claims. He appeals to the desire of Americans to see their leaders in Washington come together in bipartisanship, but he's not done that in the three years that he's been in the Senate.

In fact, on many votes where there is a bipartisan agreement, out there in the group of dissenting Democrats is Obama.

And then he makes the claim that tough issues require leadership. In fact, he made a very dramatic statement in the Wisconsin speech, Wisconsin victory night speech, in which he had a litany of issues that were important and required leadership.

And McCain is going to be able to say, and should say, "You're right, those require leadership, and I've been providing it. You haven't been." So at the end of the day, he, McCain, creates an image of himself as a reform-minded leader strongly who has worked across party lines and will tackle these big issues.

WALLACE: Let's break this down. That's a really good overview, but let's talk specifically about Iraq. Here is how Obama fired back at McCain on the war in Iraq. Let's look.


OBAMA: John McCain may like to say he wants to follow Usama bin Laden to the gates of hell, but so far all he's done is follow George Bush into a misguided war in Iraq.


WALLACE: And if we look at the latest poll, voters oppose that war in Iraq by almost 2-1.

So, Karl, if it comes down to a question of whether to keep fighting in Iraq, which is McCain's idea, or to begin, and pretty quickly, to pull out, which Obama says, doesn't Obama win?

ROVE: No, because Obama's position is, "I'm for withdrawal from Iraq regardless of the consequences and the conditions on the ground."

The American people don't like this war. But they do not like the idea of withdrawal without paying attention to the conditions on the ground. They want the military commanders to say what we can and should do. They don't want politicians to do it.

There was another poll this week that I think said 15 percent of the American people believed in unconditional withdrawal from Iraq.

So if this becomes a battle between a guy who says, "Look, whether you like whether we got -- whether you agreed with us going there or not, we're there, and the question is should we stay there and win and pursue the right policy, or should we withdraw without condition and suffer the consequences," and a candidate who says, "I'm for withdrawing without regard to what the conditions are," John McCain will win that argument.

WALLACE: All right. But Obama has found a clever way to link the war in Iraq to our domestic problems with the economy here at home. Let's watch.


OBAMA: We are spending $12 billion per month. That is money that we could be spending here in the United States, rebuilding our infrastructure, building schools, sending kids to university.


WALLACE: If he's able to define Iraq in terms of where do you spend that $12 billion, on the battlefield over there or on infrastructure and social programs here, doesn't Obama win?

ROVE: Well, Obama -- it's a good argument for Obama, but I'm wondering where it goes, because it really is a very neo-isolationist argument. It basically says, you know, "We should not be involved in the world because of the consequences to the budget here at home."

Well, we were not involved in the world before 9/11, and look what happened. Look at the cost to the American economy after a terrorist attack on the homeland. We lost a million jobs in 90 days after 9/11.

If we were to give up Iraq with the third largest oil reserves in the world to the control of an Al Qaida regime or to the control of Iran, don't you think $200 a barrel oil would have a cost to the American economy?

So you know, it's a cute thing in a primary. I'm not certain over an 8-month general election that you can make the argument that we ought to take a look at every foreign policy commitment in the United States and measure it on the basis of the number of dollars that we've got there.

I happened to be in Los Angeles on Monday, and somebody had heard Obama say this to me, and they were Democrat, and at dinner they said, "I'm worried about that, because does that mean he's going to be looking at our support, for example, for the state of Israel and looking at it in terms of what could we be doing at home with those dollars?"

And it was a nice line, but I'm not certain how durable a line it necessarily is.

WALLACE: All right. What about the economy itself? I mean, the sort of cliche is people vote for peace and prosperity.

McCain is defending an unpopular war. As for the economy, let's take a look at a recent poll which shows that 66 percent, two-thirds, of Americans think the country already is in a recession.

How does McCain counter Obama not only on the war but now also on a Republican economy?

ROVE: Right. Well, first of all, what will matter really is the state of the economy in the fall.

In the early part of 2000, for example, the economy was in pretty good shape. But by the fall, people had a sense that there was a slight deterioration. That helped Bush over Gore.

So the question is what's the economy going to be in the fall. And if it's bad in the fall, this is going to be a real problem for McCain.

Then the question gets to be what are you going to do about it. And I'm not certain that we know how that debate is going to play out yet. We're starting to see the outlines of it, McCain saying, "I want to keep taxes low, I don't want to raise taxes, I want to keep spending in check, I want to do something to help the people who are losing their jobs."

We have -- at least in Ohio, we have Obama taking the perspective that trade agreements, NAFTA and other trade agreements, are bad for our economy, and we need to do something about these big corporations that are offshoring jobs.

And we'll see how that plays out over the next eight or nine months. I'm not certain that an isolationist or a protectionist or a populist campaign necessarily works as well in a general election as it does in a primary.

WALLACE: All right. Let's talk about the magic word in this campaign, and that is change.

ROVE: Right.

WALLACE: McCain will be 72 this fall. Obama will be 47, and he's already playing that card. Let's watch.


OBAMA: I respect John McCain, but he's tied to the politics of the past. We are about the policies of the future. He's the party of yesterday. We want to be a party of tomorrow.


WALLACE: I mean, you've not only got rhetoric, you just have the images of the two guys up there on a stage in a debate against each other.

One looks like he could be the other guy's father or, conversely, the other guy's son. How does McCain fight that?

ROVE: Well, first of all, every presidential election is about change. I mean, let's not kid ourselves. This is not a new word in a presidential election. Every election, presidential election, is about change because every presidential election is about the future, not the past.

This is a problem for McCain. He's 72 -- will be 72 by the election. He's got a vigorous, young opponent on the other side. And we'll have to see how that plays out. There's nothing that he can do to make himself younger than Obama.

The question is can he make himself more -- can he make people more confident in his leadership and his experience and his ability than Obama can.

Obama has the other side of the equation, which is he's got to do more to shore up to the "I'm up to the job."

I thought it was interesting, incidentally -- you'll notice that in this particular segment, Obama said -- you know, Obama's taken -- early on was saying, "We honor John McCain for his 50 years of service to America." He started in Wisconsin -- started dropping the 50 years.

I think it's because probably somebody inside the group focus- grouped it or inside his campaign focus-grouped it or tested or somehow woke up to the fact that that was a little -- you know, sort of that was blowing up in their face.

That was a little insulting to say 50 years to try and make it appear that he was way over the hill when, in reality, a lot of people reacted negatively.

WALLACE: We're running out of time. I want to hit a couple of last final points quickly.

A speaker at a McCain rally this week talked about, repeatedly, Barack Hussein Obama. The Tennessee Republican Party talks about support for Obama from anti-Semites and anti-Israel people.

I know McCain has denounced this. You're shaking your head. But if you don't have your fingerprints on it, is this kind of talk out in the bloodstream of the American politics helpful?

ROVE: Look, the Hussein -- using his middle name helps Obama. It doesn't hurt him. So anybody who wants to help John McCain would stop using...

WALLACE: Explain that.

ROVE: Well, because I think people look at it and say, "Hey, look, that's one step too far. You're trying to leave an implication that he is a Muslim when I know he's not."

And I think it -- you know, a lot of times attacks in politics fail -- in fact, they turn into a negative for the person who's doing the attacking -- because people think it's gone too far. And this, frankly, goes too far.

Now, having ties to Louis Farrakhan and his anti-Semitic comments -- you know, people have a reasonable -- that's a reasonable question. "Well, do you agree with him or do you renounce him? Do you reject him?"

But this idea of getting up there and using the guy's middle name in order to imply something about him is -- it goes too far.

WALLACE: All right. We've got 30 seconds left. What are the chances that this conversation is completely irrelevant and that Hillary Clinton ends up upsetting him?

ROVE: Well, she could. She's going to -- it looks like she'll do well in Ohio. The question is how close does she get in the popular vote in Texas.

I noticed a very interesting thing. Obama is spending this weekend, part of this weekend, in Rhode island. He's trying to take the state. It was expected to be hers. I think he's trying to go for three out of four.

And I think, though, it is a mistake for his campaign to be calling on her to be thinking about getting out. That is not the thing you do when the other guy is going down. You're rubbing their nose in it and it never leaves good feelings.

It's, you know, better to be like McCain is with Huckabee and say he's got every right to be here, and I applaud him for...

WALLACE: And is that you read Durbin as doing today?

ROVE: I read Durbin as trying to figure out how to do both. I mean, because on the one hand, he did say it's up to her to decide. But on the other hand, he was cautioning her to basically think about getting out if she can't win.

It's up to the delegates of the convention to decide who wins and loses, not the Associated Press report, you know, on who has what kind of delegate count.

WALLACE: You mean we don't get to decide that?

ROVE: No. The American people decide.

WALLACE: Thank you for reminding us of that. All right, Karl. Thank you. Always interesting. See you for this week's primary coverage.

ROVE: Yes, sir. Thank you.