This is a rush transcript from "On the Record," June 10, 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."
VAN SUSTEREN: Karl, nice to see you.
KARL ROVE, FORMER ADVISER TO PRESIDENT GEORGE W. BUSH, FOX CONTRIBUTOR: Thanks for having me.
VAN SUSTEREN: All right, some of the big news of the day is that the president has a special master to examine executive pay.
ROVE: In financial institutions receiving government money.
VAN SUSTEREN: What do you think about ?
ROVE: I think it's a bad idea. I understand we want to be concerned about the appropriate use of the funds by these companies, but I just -- I worry whenever the government gets into setting policy in pay standards for private enterprise.
There are going to be consequences. The institutions that do not get TARP funds are going to be able to scoop talent up, and some of those, a lot of those are going to be foreign companies. They're going to be companies that are privately traded, that don't have public stockholders. They're going to be able to go in and grab some of these people. And it's -- companies that have got the government aid are going to be less competitive than companies that don't. And companies that are publicly- traded are going to be less competitive than the privately-held companies. And I worry about that.
VAN SUSTEREN: Well, what about my sort of populist view on this, is that instead of hiring someone, spending the money to have someone in charge of it, why not just have transparency? Pour it on the Internet and let the people shame the people. We shamed them out -- the GM -- the auto executives out of their fancy jets. They showed up the second time last fall in cars. But why not have transparency? Let us see what they're getting paid.
ROVE: You know, I'm not certain that Americans are necessarily a good standard of what a top-flight trader at a Wall Street company ought to get paid or that a very talented loan officer, what she ought to be getting at a bank. I think that ought to be left up to the banks. And simply putting all their salaries up on the Internet may cause -- we saw it in some of the instances, with AIG and others, where literally physical threats were made against people because of how much money they were making. These are...
VAN SUSTEREN: But the top people. I mean, like, Nardelli, when he left Home Depot, got a -- who was the later then with -- he was with Chrysler -- he got a $210 million golden parachute. I mean -- I mean, for the upper echelon people, why not...
ROVE: Well, the boards ought to be held responsible for it. The marketplace ought to hold -- hold companies responsible for their golden parachutes for their big executives. But I think there's a big difference between that and saying we're going to have a special master whose job it is to look at the top 100 executives or the top whatever percentage of people that you have in your firm and make public determinations about what they should get and what they shouldn't get, particularly when it's a competitive marketplace.
If it's American publicly traded company, they're now immediately at a disadvantage to a foreign company and they're at a disadvantage to a privately held company. And we're going to -- we're going to, in essence, be draining talent away from these companies that need all the talent they can get. If we want to get our money back out of those companies, we want to have smart people in those companies, running them just as well as they can.
VAN SUSTEREN: But how do we know if we're giving them taxpayer money in these bail-outs that there's not highway robbery, that they're not lining their own pickets and taking off? I mean, shouldn't be there some sort of -- at least some sort of transparency or some sort of supervision...
ROVE: Well, you know...
VAN SUSTEREN: ... you know, without stepping in and running things?
ROVE: Right. Well, I think -- I think there ought to be some review of it, but the question is -- I mean, again, do you want to subject individuals who just happen to work at a bank that we want to have be strong and get back on its feet to public abuse because somebody says, Well, that person was making, you know, $250,000 last year, and I think they ought to be making less? I mean, we got to be very careful about this.
And I understand the necessity of making -- you know, we have a fiduciary interest here. We want to make sure that it's our money is being well spent. On the other hand, we want to make sure that these enterprises succeed. We do not want to be saying to people, If you're associated with an institution that has received government money, there's going to be a high price to be paid for you professionally and personally.
And remember, a lot of institutions got government money that really didn't need government money. We have a number of banks that (INAUDIBLE) I was -- I happened to be in a meeting with some people last month who worked at a strong regional bank that accepted federal money that really didn't need the federal money, and now they're desperately trying to get it back to the government's hands. So some of these institutions, you know, don't want to be in a place where the government's looking over their shoulder in this way.
VAN SUSTEREN: How about if it's for people whose salaries are over, like, a threshold, like over $2 million or $3 million a year?
ROVE: Well, again...
VAN SUSTEREN: Still don't like it.
VAN SUSTEREN: If they get bail-out money.
ROVE: I got real concerns about how you handle it. Let's say we set a limit. Remember, the limit was not $2 million. The limit was going to be -- cap -- the administration initially said, We're going to cap pay at $500 million -- $500,000. That's going to be all than anybody could get.
VAN SUSTEREN: But that was outrageous. I mean, people jumped on that.
ROVE: Right. Well, but you know, they seriously thought about it, and it had an effect where people said, You know what? I've got a choice between accepting a job at a bank that needs my help in order to get back on its feet or going off here and working for a privately held equity fund or a foreign-owned financial institution. I'm going there, not there. And that's the kind of effect that government policies have. The unintended consequences of what we do sometimes has enormous ramifications.
VAN SUSTEREN: The president has -- yesterday came out and was pushing this "paygo," "pay as you go," wants it as a law on Capitol Hill. It's now a rule. Can you help me understand? And now, I realize that maybe I'm asking the wrong guy. But this is the president who pushed the stimulus bill of $800 billion in February.
ROVE: It was $787 billion.
VAN SUSTEREN: All right, $787 billion -- which we don't have.
VAN SUSTEREN: And now he is standing there, wanting to make sure that we don't do any more spending that we can't afford. Can you reconcile that?
ROVE: Well, you can't, particularly if you read the details about the proposal. It will exempt all of his favorite spending programs from the so-called "paygo" provisions. For example, Congress is increasing discretionary domestic spending this coming fiscal year over this fiscal year by 10.4 percent, and they're not going to be required to, in essence, pay for that. It allows them to pay -- it allows them to begin this gigantic new $1.50 trillion entitlement for health care without, quote, " paying" for it. This is a cosmetic gesture. This guy is going to run up a $1.8 trillion deficit. That's what it's projected to be this year.
VAN SUSTEREN: Do you take some responsibility, meaning you, the Bush eight years, for this...
VAN SUSTEREN: You take absolutely no responsibility? Because...
ROVE: No, let's put...
VAN SUSTEREN: For the -- for the debt.
ROVE: Well, look, we had a deficit that ran 2 percent of GDP. And we were fighting a war and trying to grow the economy. He's planning a 4 percent of GDP.
VAN SUSTEREN: That's twice.
ROVE: Twice. He's going to -- you know, his smallest deficit is $200 billion larger than Bush's largest deficit. Think about that. Obama's smallest deficit. We go to $1.8 trillion this year. We then decline under his budget plan to roughly $650 billion in three years. And then for the next seven years back -- we go right back up to over a trillion-dollar deficit. That's his plan, and that's based on rosy economic assumptions. The deficit this year is expected to be $1.845 trillion.
In July, there's a thing called the mid-session review, the MSR. That's where Congress and budgeteers go back and look at the economic assumptions and regauge what it is. I will bet you a dime to a dollar that the deficit goes up in July. That is to say, this deficit could conceivably get as high as $2 trillion in this year because we had the $787 billion stimulus bill, we had the expansion of SCHIP, we had $410 billion omnibus spending bill to increase spending for the latter half of the fiscal year. I mean, this guy just got a giant hose and spreads the money around.
VAN SUSTEREN: What -- in that $787 billion -- again, you might not be the right guy to ask this question -- but when it was passed in February, there was a big rush to do it. And some of the projects were said to be shovel-ready, and everyone sort of thought the money'd be flowing out the door. Now the numbers, in the last 24 hours, I hear it's only 5 to 6 percent of that $787 billion -- there was even a rush to -- no -- everyone was in such a hurry to pass it, no one got to read it.
VAN SUSTEREN: And there was a -- but I mean, what happened? Is this sort of the government bureaucracy? Why is only 5 or 6 percent out?
ROVE: (INAUDIBLE) nature of the so-called stimulus. It's one thing if you say, We're going to cut taxes because then it immediately begins to show up in checks. If you're...
VAN SUSTEREN: Right, withholding tax.
VAN SUSTEREN: Right.
ROVE: But it's another thing if you go out there and say, We're going to increase spending by $787 billion. Most of it -- you know, most of that is spending increases. Some of it's tax cuts, but most of it's spending increases. The bill itself plans -- in the bill itself, it plans to spend more between the years 2011 and 2019 than in this year. It will spend more next year than this year. That's in the bill itself.
VAN SUSTEREN: Right.
ROVE: Weren't we trying to stimulate the economy this year? There's roughly $200 billion of...
VAN SUSTEREN: What's -- what's he -- what...
ROVE: There's roughly $200 billion of stimulus in this fiscal year, by the end of October. The rest of the $787 billion is next year and in years all the way out to 2019 because it's not a stimulus measure. It is every leftover spending promise, everybody's wish list for big government expansions that was hiding in the desk drawer of David Obey, the chairman of the House Appropriations Committee. They slapped it in the bill and put it out there.
I mean, we got money in there for smoking cessation counselors and obesity counselors. Good idea maybe, but is it worth -- you know, I don't know too many of them that are out of work right now. Shouldn't we be concerned about things that would get Americans back to work? That's why Obama's got a problem with jobs. He promised us 3,650,000 new jobs by the end of 2010. I'm keeping track of it at Rove.com on a monthly basis, when the new -- when the new jobs numbers come out on the first Friday of every month. We are roughly 5 million jobs below his target.
VAN SUSTEREN: Up next, more with Karl Rove. You think getting a driver's license is a pain in the neck? Well, what does Karl Rove think it would be like if the government were in charge of your health care? Karl Rove will tell you.
VAN SUSTEREN: More with Karl Rove.
VAN SUSTEREN: Health care --
VAN SUSTEREN: ... which is burning up the midnight oil, people are trying to figure out -- what we should do about health care?
ROVE: Well, look, we need -- we need health care reform. I've got my own views about what that health care reform ought to involve. But I've written a column for Thursday morning's Wall Street Journal in which I talk about one element of health care reform that's being talked about in Washington that we should not have, and that's the so-called "public option." The idea here is, is that in addition to being able to get insurance from 1,300 companies that sell insurance, private insurance, that the government would set up, in essence, its own government-run insurance program to compete with all those 1,300 private companies.
First of all, we don't need it. We got 1,300 robust companies out there competing with each other. We've seen what...
VAN SUSTEREN: What about people who don't have insurance, can't afford insurance?
ROVE: Well, but you know, there are ways that the private sector is trying to find ways to provide them product. In fact, it's being restrained by government. The government restraint there is that they've got to put a lot of things into a basic policy that most people don't need, and it drives up the cost for everybody, these so-called "mandates."
But we see the effect of competition among private health care providers in the Medicare prescription drug benefit, where there was a big battle over this in 2001 and 2002, where proponents of a so-called public option then said, We need to have a government-delivered prescription drug benefit. And the majority in Congress said, No, we're going to have this delivered by private companies competing with each other. The Congressional Budget Office estimated the cost of the program by last year, 2008, would be $74 billion a year. The actual cost was $44 billion a year, 41 percent less, despite the fact that there were more seniors who signed up for the program and they signed up earlier and were using it more.
And what kept prices down? What kept prices down was all the companies -- nearly 100 companies provided plans competing with each other on price and benefited services.
VAN SUSTEREN: All right, there seem to me two -- two distinct groups. One is those who have insurance. And let those insurance companies compete and lower the price if -- you know, under a purely capitalistic viewpoint. The other are the people who don't have insurance. And how do they get covered, I mean, under your plan?
ROVE: Well, remember, there are different kinds of people in that pool of people who are not covered. Twelve million of them are illegal aliens. I don't think anybody is suggesting that the United States taxpayer ought to pick up the tab for a health insurance policy for somebody who is here illegally.
VAN SUSTEREN: All right, so stop there. If they show up in an emergency room, then what happens?
ROVE: We end up picking up the tab. They...
VAN SUSTEREN: So we do end up picking up the tab, even...
ROVE: Well, but we...
VAN SUSTEREN: ... whether they have insurance or not insurance.
ROVE: But we don't -- we don't pay a premium. We don't give them an incentive to come here. This is an additional incentive.
VAN SUSTEREN: OK.
ROVE: There are a bunch of those people -- I think the number -- and I'm going to be off on any of these numbers a little bit, but roughly 7 million of them are more than 300 percent of the poverty line. That is to say, these are making $50,000, $70,000, $80,000, $100,000 who just make a decision, I'm not going to get health insurance. A bunch of them are people who are eligible for Medicaid or SCHIP today and are not -- and have not enrolled in those programs. That is to say, there's already a program, and if we were doing a better job of signing up people who are eligible, they'd be covered.
VAN SUSTEREN: Since the Bush administration left office on January 20th, the government certainly has gotten involved in our lives and our business.
ROVE: A lot more.
VAN SUSTEREN: It really -- I mean, there really has been a profound - - profound shift.
ROVE: Right. And this is one of the things that worries me, going back to this public option in the -- that's being talked about by a lot of Democrats.
VAN SUSTEREN: Public option being what?
ROVE: The government-run private insurance program. Because the other thing that it's going to do is it's going to utterly collapse the market for private insurance because the government pays today -- like on Medicare, the government pays 81 percent of what -- it pays hospitals -- excuse me -- hospitals 71 percent of what the private insurers pay those same hospitals for the same procedure. And it pays doctors 81 percent of what private insurers pay.
So the government comes in and says, We're able to -- we're going to use our purchasing power, we're going to use our monopoly power, to tell you exactly -- we're going to fix the prices. And here's what we're going to pay you.
And that's going to happen is the -- right today, the bill for that care that we get under Medicare that is not picked up by Medicare gets paid for by all the people who are not in Medicare or Medicaid. That is to say, everybody else picks it up. The average family of four has roughly $1,800 a year in health care expenses that are not theirs, it's the cost they're picking up for somebody else.
The American Association of Pediatric Hospitals thinks it gets back 35 cents -- actually, 65 cents out of every dollar of expenditure it puts out for a person covered by a government-run health plan. It will utterly collapse, though, the health care system, the private health care insurance system, because what'll happen is people will say, Well, you know what? I'm running a business. It's cheaper for me to just turn it over to the government.
Now, what that means is the government will be your insurance company. Now, if you think dealing with an insurance company's bad, how about if you have to deal with the government, where the government says, You got no alternative? We're it.
Content and Programming Copyright 2009 FOX News Network, LLC. ALL RIGHTS RESERVED. Transcription Copyright 2009 CQ Transcriptions, LLC, which takes sole responsibility for the accuracy of the transcription. ALL RIGHTS RESERVED. No license is granted to the user of this material except for the user's personal or internal use and, in such case, only one copy may be printed, nor shall user use any material for commercial purposes or in any fashion that may infringe upon FOX News Network, LLC'S and CQ Transcriptions, LLC's copyrights or other proprietary rights or interests in the material. This is not a legal transcript for purposes of litigation.