How Politically Damaging Was Obama's Middle East Speech?

U.S.-Israel Relationship on the Rocks? Part 1

Karl Rove sounds off on president's new Israel policy

This is a rush transcript from "Hannity," May 20, 2011. This copy may not be in its final form and may be updated.

SEAN HANNITY, HOST: Less than 24 hours after some say that President Barack Obama virtually spat in the face of the state of Israel, Benjamin Netanyahu, the prime minister of America's closest ally in the Middle East arrived at the White House.

Now, tensions ran high as the two leaders came face-to-face for the first time since the president shocked the world yesterday by calling on Israel to return to its pre-1967 borders. At the conclusion of the meeting, the prime minister had some very strong words for President Obama.

(BEGIN VIDEO CLIP)

BENJAMIN NETANYAHU, PRIME MINISTER, ISRAEL: While Israel is prepared to make generous compromises for peace, it cannot go back to the 1967 lines, because these lines are indefensible.

Before 1967, Israel was all of nine miles wide. Half the width of the Washington Beltway. And these were not the boundaries of peace, they were the boundaries of repeated wars.

(END VIDEO CLIP)

HANNITY: Now, today's meeting comes just as details of a highly contentious phone call between Prime Minister Netanyahu and Secretary of State Hillary Clinton became public. According to The New York Times, Netanyahu was reportedly furious during the discussion saying that President Obama has pushed Israel too far.

And meanwhile tonight, there's news on the 2012 front. And it all surrounds the potential candidacy of former Alaska Governor Sarah Palin. Could she be preparing to throw her hat into this race? Well, here's what she said just last night.

(BEGIN VIDEO CLIP)

SARAH PALIN, FORMER ALASKA GOVERNOR: I think my problem is that I do have the fire in my belly. I am so adamantly supportive of the good, traditional things about America and our free enterprise system. And I want to make sure that America is put back on the right track. And we only do that by defeating Obama in 2012.

(END VIDEO CLIP)

HANNITY: All right. Sounds like things are going to get very interesting within the GOP field.

And joining me with reaction to both of these developing stories is the author of bestseller, "Courage and Consequence" he's a Fox News contributor, the one and only, Karl Rove. Mr. Rove, good to see you, sir.

KARL ROVE, FOX NEWS CONTRIBUTOR: Great to see you, Sean.

HANNITY: All right. First of all, this is such bad policy. But what happened today at the White House, I think was -- correct me if you have a different view -- I felt it was one of the most embarrassing moments for a United States president that I saw in my lifetime. It was like a professor with a student. And it was like, no, no, no, let me explain to you the world as it really is 101.

ROVE: I thought it was a remarkable moment. And I thought Prime Minister Netanyahu did it with poise and subtlety and strength. To say to the president of the United States, the speech you gave yesterday calling upon us to give the Palestinians the number one thing they want which is return to '67 borders, is not going to happen. This goes to show -- I'm trying to figure this all out, Sean. It is like "Keystone Kops." The president makes a speech without preparing the ground work with Israel or I suspect even with the rest of the parties in the Middle East. And invites the Israeli prime minister to come here the day after he's going to give the speech. I mean, it's sort of like, was he hoping to sort of cow Prime Minister Netanyahu into silence in the Oval Office? He could not. This goes to show the difficulty of the United States trying to impose a settlement on its timetable and its terms in the Middle East by doing so we cause stresses and strains within the Israeli political system and the Palestinian political system and makes it difficult to actually get an agreement.

HANNITY: You know, it's funny, not only did he not lay the ground work which is usually, you know, what the precedent is for something like this, Jay Carney, his press secretary denied that this was going to take place. So, the question is not only who is advising him. He basically is saying to Israel, sit across the table, concede everything that they want, by the way to a group that is still according to its charter, dedicated to your destruction. And the president -- did you see how defensive, and tight and almost angry the president looked today?

ROVE: Yes, look, he's thin-skinned. But he has no one to blame but himself or put himself in their place. If you want to do what he wanted to do which was basically to pressure Israel into doing this, don't invite the prime minister to come over here the day after and give him an Oval Office venue in which politely, but firmly the prime minister laid out the views of Israel.

Now, Sean, there were a couple good things in the speech. The speech did involve a full throated endorse by President Obama of President Bush's democracy agenda. After dissing it in the 2008 campaign, ignoring it during the '09 and 10. I mean, remember, he was nowhere to be seen for five weeks when the Iranian elections were stolen. He actually cut aid to the democratic composition in Egypt. You know, finally he said, you know, I believe in democracy in the Middle East. And he did so, and I thought it particularly articulated in a powerful way. But it was a flip-flop. But fine, he flipped in the right way.

HANNITY: You know, I don't know if I interpret a little differently than you, I just felt these for more words, meaningless words by a president saying what he thought he needed to say. And it's not going to be backed up by action.

What is the political fall-out, when you have liberals like Joe Lieberman, more independent in Joe's case, but Ed Koch, the former mayor of New York, Anthony Weiner, Alan Dershowitz, of all people, highly critical and a lot on the left are very critical of this decision and basically say, this is going to be a disaster for Israel.

ROVE: Well, there are already problems emerging among Jewish voters. In fact, last week, there's an interesting piece in The New York Times, in which essentially the Obama campaign said, yes, we have a problems amongst Jewish voters because we're presumed to be, you know, against the Israel. In fact, look, the language is there. I mean, when President Obama talks about Israel occupying -- you know, you can't have a vibrant democracy as long as you depend upon occupation, that is the language of the left. That is the language of those who hate Israel, and why he adopts it is beyond me.

But there's a story that said basically that the Obama campaign said yes, we've got a problem, that's why we've nominated Penny Pritzker who had been the fundraising chairman for Obama in '08 for the Hyatt family, the Hyatt Hotel family in Chicago. And to be an emissary out there to the Jewish community.

The president is going to give a speech tomorrow on Saturday in front of AIPAC, the big Jewish lobbying group. But, you know, I think the damage has been done by the reality of the president's position which is, I mean, look, he has now put himself in the place where he has said to the Palestinians, think about this, the number one thing you want return to the '67 borders, I the American president am going to tell you that I'm telling the Israelis you better do that. Why would the Palestinians wanted to negotiate in good faith? They got the president to negotiate for them. And he's already come out on their side. This is the kind of thing that paradoxically causes there to be less opportunity for real solution rather than more.

HANNITY: Very well said. It almost seems like amateur hour. And the idea that he would say this on a Thursday and before the world watching, told, no that is not going to work. In almost like in a way that he was being educated.

Let me ask you about Governor Palin's statement. It seems that Governor Palin, Mitch Daniels, Michele Bachmann, Jon Huntsman are going to be the latest entries into the GOP 2012 field, your thoughts.

ROVE: I think we are going to have a wide robust field, and we know Huntsman is going to be. And we don't know if Daniels or Palin are going to get in. I think we'll know within the next couple of weeks on both of them. I was taken by Governor Palin's comments because she has been so quiet on this for a while and had a low profile that encourage others like Bachmann to jump in and try to occupy that space.

There's one sobering thing about Governor Palin's potential entry. Most people at this point are unknown to the broader electorate, she is not. She is well-known to the broader electorate. Particularly after the fantastic performance that she had as John McCain's running mate in 2008.

But there have been 27 individual states that have had polls of the match-up between President Obama and a number of Republicans, including in couple of, in 27 instances Governor Palin has been matched against President Obama in those states. She is ahead of them in one state, West Virginia. She's essentially tied with them in four states, including my state of Texas and Montana. And she is behind President Obama in 22 states. Now, most candidates would find themselves in that place right now simply because most candidates are not well-known. She however, is well-known. So, she's got to come out here, strong and with a big organization and a strong message and a concerted effort if she is going to start moving those numbers.

HANNITY: If the numbers we're facing on the economy today, we now have 57 consecutive months of housing prices falling, inflation going up, the high price of gasoline, record debt, deficits, GDP as a percentage spending insane.

You know, my question to you is, if that stays the same, does it become so mathematically impossible for the president to win reelection?

ROVE: No, because he will come hard at whoever the Republican nominee is. We are about ready to see the most negative campaign ever wage by a chief executive for re-election. I mean, this is going to be one tough, mean, ugly campaign, waged out of Chicago by the Obama campaign. And we should not underestimate its ability to, you know, eke out a narrow victory.

Look, they are spending money, our tax dollars wherever they can in order to ingratiate themselves with voters. I wrote about this week in the Wall Street Journal, their attempt to grab $20 billion from the banks to hand out to ACORN groups and favored individuals around the country, paid for by everybody who's got a check, account, or credit card or loan at those banks. And, you know, I call it a bank heist. Because they are stealing money from banks for no good purpose at all. That's how these people are going to run for the next, you know, for the next year and a half.

HANNITY: All right. Karl Rove, good to see you on this Friday night, I appreciate it.

ROVE: You bet, thank you.

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