This is a rush transcript from "On the Record," April 15, 2011. This copy may not be in its final form and may be updated.
GRETA VAN SUSTEREN, FOX NEWS HOST: Did you hear what President Obama said at his fundraiser? Now, he didn't mean it for public dissemination, but he got caught by a "hot mic" and it was taped. Now, here's what he said.
(BEGIN AUDIO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: You want to repeal health care? Go at it. We'll have that debate. But you're not going to be able to do that by nickel-and-diming me in the budget. You think we're stupid?
When Paul Ryan says his priority is to make sure that we're -- you know, he's just being America's accountant, and you know, trying to, you know, be responsible. This is the same guy who voted for two wars that were unpaid for, voted for the Bush tax cuts that were unpaid for, voted for the prescription drug bill that cost as much as my health care bill but wasn't paid for.
(END AUDIO CLIP)
VAN SUSTEREN: So what do you think about that? Earlier today, we asked Karl Rove, former senior adviser to President George W. Bush and author of the book "Courage and Consequence."
VAN SUSTEREN: Karl, nice to see you.
KARL ROVE, FOX NEWS CONTRIBUTOR/FORMER GEORGE W. BUSH SR. ADVISER: Great to see you, Greta.
VAN SUSTEREN: All right, the president got caught on that pesky little thing called a recording machine. CBS Radio has a recording of him at a fund-raiser last night, and he made some reference to Paul Ryan, the congressman from Wisconsin. But overall, the president step over the line get himself into some political trouble with that or just reaching out to the base?
ROVE: Well, he's just trash-talking the Republicans in front of a Democrat crowd, and you know, I suspect exaggerating a little bit about the tone that he took in White House meetings. I don't think he probably said to the Republicans, You think we are stupid.
But you know, it was not an attractive tone. Look, we're 18 months before the presidential election. He doesn't have a Democrat opponent. You think that he would be interested in being the Commander-in-Chief, the President of the United States, rather than being the "Campaigner-in-Chief," you know, a speech pol out there trying to get the vote.
And that's exactly -- you know, this is just demeaning. We ought to - - the president ought to be saving time for getting good things done for the country and not be so intent upon trash-talking the Republican opposition and making it difficult to work with him.
VAN SUSTEREN: What I thought was unusual -- and I suspect everybody does a little trash talking in private, just not everybody gets caught on tape -- and that wasn't the worst trash-talking I've ever heard in my entire life, by any means.
VAN SUSTEREN: But I thought it was interesting he mentions Congressman Paul Ryan. It almost seemed a little bit to me like he -- there's been an awful lot of Congressman Paul Ryan on his mind, whether it was at the speech at GW or even last night, when he was amongst his friends. And I wondered if -- obviously, Paul Ryan has the budget out for the Republicans, but I wondered if Paul Ryan's getting a little bit under his skin.
ROVE: I think Paul Ryan's right in his brain. In fact, remember, this started at the Blair House, which is where they had their first occasion to be in contact with each other in 2010. And that's where the president had his lunch eaten by Ryan, who took apart the bill and demonstrated that it was not going to reduce the deficit, it was going to add to the deficit.
Ryan is a meticulous, thoughtful, articulate, deeply informed and passionate advocate, and President Obama has clearly not been in touch with -- you know, in January, he said, Oh, I've read Paul Ryan's proposal and it's serious. And then in the speech that he invited Paul Ryan to, he went out of his way to say it's not serious.
Now, I suspect that what's happened is, is that the president's got a little jealous of the attention that Ryan's gotten and realizes the danger represented to the Democrats by Ryan's thoughtful approach. He's taken ideas like premium support, which used to be wildly supported by some Democrats, and has made it part of a conservative reform package. And I think it unnerves the president.
VAN SUSTEREN: In your recent op-ed piece, you said that the Republicans won the debate over the 2011 fiscal budget that went down Friday night. Frankly, I thought the Republicans got rolled. They wanted $100 billion, at least some of the freshmen. It went down to $38 billion. Then I read the CBO report and I find out with all this murky math that it's really only about $351 million...
VAN SUSTEREN: ... in cuts, so...
ROVE: No, it's not.
VAN SUSTEREN: ... how do the Republicans win?
ROVE: No, it's not.
VAN SUSTEREN: OK.
ROVE: First of all, you need to distinguish between budget authority, permission to go spend money, and outlays. Before you can go spend a dime, you got to get budget authority. And what that bill did is it cut out $38 billion in budget authority. And what the CBO said is, is that, We think about -- you know, the money that you increase defense by is going to get spent and the money that you cut is going to -- is going to only reduce outlays by $352 billion by the end of the fiscal year because most of that money that you've cut would have been spent in the future or you're retracting it from the past, so it doesn't affect the baseline.
VAN SUSTEREN: But, well, let me just...
VAN SUSTEREN: Let me ask you a question about that because I -- the intricacies because I dug into it and I understand what you're saying, but this is what the American people hear, $38 billion being cut from spending, whether it's, you know, promises and IOUs in the future, whatever. And now they see the actual spending reduction, the actual is $350 million is what...
ROVE: No. No.
VAN SUSTEREN: ... they're reading.
VAN SUSTEREN: And -- and they're hearing that it's non-partisan. That's what they're hearing.
ROVE: No, no, no, no, no. What they're hearing is the CBO saying outlays. Now, there's -- everybody agrees. Even the CBO report yesterday said, Look, outlays are going to cut by $38 billion. The government is not -- not going to spend $38 billion.
However, by September 30th, there will be only $352 billion -- million in cut from the baseline spending of the budget. The rest of it will be cut later. And then they go on to have a very odd paragraph. They say, We can't tell you how much this is going to mean over the long term because we've not redone our annual multi-year forecast of the baseline of the budget. What that means is they said, Look, you cut $38 billion out of the budget. It's going to take us a while to figure out how much of that is cuts this year that will be -- that will show up next year and in subsequent years.
Let me give you one example. They made no effort whatsoever -- that $352 million number is discretionary spending only. It includes none of the mandatory. In a separate report, CBO says, We acknowledge that you're cutting $500 million in this year's expenditures for a mandatory program under Pell grant, and over the next 10 years, that'll save $8 billion additional above and beyond the $38 billion that we're cutting out of this years's budget authority.
So look, this thing is going to have hundreds of billions -- I wish it had more than hundreds of billions than I think it's going to end up having -- of savings for the American taxpayer by cutting budget authority, which ultimately means you can't spend the money, which reduces outlays.
VAN SUSTEREN: And is that why -- I mean, I'm tell you that that brings us sort of into these weeds that are...
VAN SUSTEREN: ... you know, for people who don't live and breathe this, you know, it all seems enormously confusing. But is that your reason for thinking that...
ROVE: Yes. Look...
VAN SUSTEREN: ... the Republicans...
ROVE: No, no, no. Not...
VAN SUSTEREN: ... won this round?
ROVE: ... the only thing. Not the only thing.
VAN SUSTEREN: OK.
ROVE: First of all, let's step back a little bit. From December...
VAN SUSTEREN: OK.
ROVE: ... when President Obama wanted to spend more money to today, the budget authority of the federal government has been reduced by $60- some-odd billion. So between what happened in December, what happened in the two temporary short-term continuing resolutions and what happened Friday night, the Republicans have got $60-some-odd billion worth of budget authority cut, which means, ultimately, the government doesn't spend $60 billion it was otherwise going to spend.
Second of all, what happened is the tone of the debate changed. It shifted from, How much more money are we going to spend? We're going to go be spending money on high-speed rail and high-speed Internet and quote, "countless green jobs" -- that's what the president said in the State of the Union address -- to the president's speech on Wednesday, in which he said, We've got to cut $4 trillion in spending.
Now, he didn't describe how he was going to do it. And when you peeked underneath the surface and you looked at the fact papers they put out at the White House, it was smoke, mirrors and asterisks. But the president basically caved and said, OK, I now agree with the Republicans we've got to cut money out of the budget, and I'm going to commit to finding ways to cut $4 trillion out of it.
Now, he may -- he didn't do that and he won't do that. But you know, the fact of the matter is, is they've got the wind behind their back now and the battle is over, How do we trim the FY '12 budget, the next year's budget, down from the president's levels? And what do we do about the debt ceiling? Do we let it go through -- as the president says, let it go through clean or do we strap it with a very robust package of spending restraints and deficit caps that cause the deficit and spending to begin going down?
VAN SUSTEREN: All right, one quick question on the Donald Trump controversy, since he has grabbed headlines across every network and every newspaper, this whole birther issue that he has raised. I don't agree with Donald Trump on this. I'll say it right from the get-go. But does this hurt the Republican Party?
ROVE: Well, it hurts Donald Trump and it removes -- he was an interesting candidate who had a business background and could have contributed to the dialogue. But his full embrace of the birther issue means that he's off there in the nutty right and is now an inconsequential candidate.
I'm shocked. The guy's smarter than this. And you know, the idea that President Obama was not born in Hawaii, being -- you know, making that the centerpiece of his campaign, means that he's just -- you know, now, you know, a joke candidate. Let him go ahead and announce for election on "The Apprentice." The American people aren't going to be hiring him, and certainly, the Republicans are not going to be hiring him in the Republican primary.
VAN SUSTEREN: Can he bring himself back?
ROVE: I don't know. He's so far out there. The initial part was, he said, Well, I think the president was born in the United States. I acknowledge that. But I don't understand why he hasn't put out the birth certificate. Now it is weird conspiracy theories, saying things that people -- you know, none of his family knows what hospital he was born in in Hawaii. Wait a minute. Everybody -- you know, yes, his family knows know what hospital he was born at. You know, nobody knows him in college? One of my White House deputies was a classmate of Barack Obama's at Harvard and helped get him elected the Law Review editor.
So you know, this is just -- he's now embraced full-throated the nuttiness that somehow or another, Obama was born in Kenya and his parents and grandparents arranged to have birth -- birth notices printed the next day in the Honolulu newspapers so that 40-some-odd years later, he'd be eligible to run for president. It just -- you know, I'm sorry to see it happen. He had an opportunity to provide an interesting contribution to the dialogue.
VAN SUSTEREN: This week, former senator Rick Santorum has inched closer to making an announcement. And also, the -- Congresswoman Michele Bachmann's raising an awful lot of money. Either one of those two have a chance?
ROVE: We'll see. Santorum filed an exploratory committee. Let's be careful about reading too much into Bachmann's fundraising. She raised it under the guise of I had a tough race last time give me money to continue to fight these battles because they are coming after me again. I'm not sure that is translatable into the presidential campaign. We'll see.
She will do better in Iowa because she was in Iowa and represents a Minnesota district. It is hard, there's a reason why the last president that we ever elected who came from the House of Representatives was James Garfield. It is hard having representing one-435th of the country to jump on the stage and to really say here's what I've done. What is the record of accomplishment?
Even Garfield was chairman of the ways and means committee, currency committee. He was a known expert on currency questions important issue of the time. He helped lead civil service reform. You have to have a robust record in the House to jump on the stage. It is why people are talking more Paul Ryan than they are Michele Bachmann.
VAN SUSTEREN: Karl, thank you.
ROVE: Thanks, Greta.