This is a rush transcript from "On the Record," August 16, 2011. This copy may not be in its final form and may be updated.
GRETA VAN SUSTEREN, FOX NEWS HOST: Tonight, Texas Governor Rick Perry comes out swinging Texas-style! Just days after announcing his run for the White House, the governor is now sparking outrage, taking aim at Federal Reserve chairman Ben Bernanke. The topic, our nation's recession. The governor, with a touch of Texas swagger, said Fed chairman Bernanke would be treated "pretty ugly" in Texas if he were to print more money. And then, though, the governor cranked it up a bit more, calling Bernanke's handling of the recession "almost treasonous."
And that was too much for the White House. The White House fired back. Press Secretary Jay Carney said threatening the Fed chairman is probably not a good idea. And then President Obama cautioned Governor Perry, saying if you're running for president, you need to be a little more careful of what you say.
So does Governor Perry want a do-over? Well, it sure doesn't sound like it because his office is saying, in part, the governor was expressing his frustration with the current economic situation. Now, one thing is safe to say, both sides of the political aisle are fired up!
Joining us is Karl Rove, former senior adviser to President George Bush and author of the book "Courage and Consequence."
Good evening, Karl. And Karl, the statement by the governor of Texas is causing a little bit of a stir, certainly on the Democratic side of the aisle. What do you think about it, smart, dumb, ineffective, bad way to start, good way to start?
KARL ROVE, FOX NEWS CONTRIBUTOR/FORMER BUSH SENIOR ADVISER: Yes, bad way to start. You don't want to accuse the Federal Reserve chairman of being guilty of a crime punishable by death, which is what treason is. I thought Governor Perry was, you know, not very adept in his remarks yesterday. But I thought he was very skilled this afternoon when The New York Times tried to bait him into repeating the charge. And he said, I stand by my remarks about the decline in the value of our currency, but he refused to repeat the charge.
And that's -- you know, he's learned his lesson. He's going to step away. It's one thing to say the Federal Reserve is following a policy with its quantitative easing that's undermining the value of our currency, and that is wrong for America, wrong for our prosperity, wrong for our future, and accusing him of a crime that, again, is punishable by death.
But you know, Greta, there was something you just said in the introduction that really grabbed my attention, Jay Carney and Barack Obama lecturing Rick Perry. Barack Obama, when he ran for president in 2008, wrote a book. And in that book, he first of all attributed to me a comment that I never made, which was that we are a Christian nation. I find that remark offensive.
We're based on the Judeo-Christian ethic. We derive a lot from it. But if you say we're a Christian nation, what about the Jews, what about the Muslims, what about the non-believers? I mean, one of the great things about our country is the 1st Amendment guarantees you the right to believe or not to believe, as you choose.
And then the next page, Governor -- then Senator Obama called me a '60s-style radical. Now, I don't recall having tried to firebomb a federal building or led a -- you know, to blow up a draft office. And yet this president is going to lecture us?
Here's a guy who's been calling the Republicans, in essence, people who don't love their country. You know, please, Mr. President, don't be lecturing us on this. Your rhetoric has been intemperate. And Rick Perry gets a pass. He's done it once. Let's see if he does it again. I doubt that he will. I suspect he's learned his lesson.
VAN SUSTEREN: He's learned his lesson, but let me ask you this. And it's true of almost every politician, whether it's Vice President Biden saying the Tea Party acted like terrorists -- which now, of course, everyone's morphed it into saying that he's saying the Tea Party is terrorists -- he said they acted like it, which is a little bit different to me.
But you've also got this situation which is going to certainly come back to haunt Governor Perry -- at least it's going to be a couple days' cycle. There's a -- in 2005, when he left a television station, he didn't know the satellite was on and he said, "Adios, mofo," or something like that -- I don't know, something, and he's going to get nailed for that. There's a book coming out about him. He's also talked about secession.
I mean, he's been -- you know, he's been quite bold. And everyone's got -- everyone's got a videocamera on his phone now. So you know, yes -- yes, today or yesterday -- and you've got the president saying things that he shouldn't.
Where do we draw the line? And do we just sort of push through all this and be amused for a short period of time and move on?
ROVE: Well, look, that's up to the candidates. President Obama's not going to stop accusing his political opponents of not loving their country. I mean, you know, he's just not. So we -- let's get used to it. But let's don't give him stuff on our side of the aisle to use, as well.
And look, Governor Perry will come across tough. He will come across strong. But he need not come across with the kind of remarks that impugn the integrity or accuse somebody of violating the law. And I suspect this was a -- it was good to happen now. And in the next couple of weeks and months, the memory of it is going to fade unless he repeats the same kind of thing again. And I doubt that he is.
I thought it was a very good signal today when The New York Times tried to bait him into repeating the charge that Ben Bernanke, Federal Reserve chairman, was somehow guilty of treason. And while the governor did not step back from his criticism of the Federal Reserve's loose money policies, he nonetheless didn't take the bait and refused to repeat the charge.
And that to me sent a very strong signal that he was -- he recognized that it was not a particularly good thing to say and that he was going to find a more artful way of making his strong views known.
VAN SUSTEREN: All right, a new poll out, Rasmussen poll, has Governor Perry up about 10 points, at 29 percent, actually 11 points above Romney at 18 percent, followed then by Bachmann at 13 percent, and then it goes down. Why the sort of the jump ahead? It is sort of the glow of being the newest one in, or is it deserved? And why is Perry the front-runner today?
ROVE: Well, we've seen this happen three times before with people getting big bumps up. We saw with it Herman Cain with a good debate performance. We saw it with Donald Trump getting into the race. We saw it with Michele Bachmann with having a boomlet, which has now started to fade.
Governor Perry adroitly handled his announcement. He dominated the coverage even before he announced. He held his announcement on the same day as the Iowa straw poll, so he ate up most of the oxygen that day. And the next day, in the reports on the announcement -- or on the straw poll results, Michele Bachmann was the first paragraph, but he was the second paragraph.
So he's got a bump in the polls. The question now is, can he do the things necessary to sustain it over the next two or three weeks, and can he do this in more than one poll? Let's be careful. This is one poll, and sometimes we get different results from polls taken at the same time.
But it's -- it's -- there's no doubt about it. He's handled his announcement pretty adroitly, and he's come on the scene with a lot of passion and I think also with a very appealing public image. You saw it over the weekend, where he was glad-handing his way through the Iowa state fair.
I thought he did a very useful thing on Sunday night. He took Michele Bachmann to school in her hometown, her birthplace, Waterloo, Iowa, the Blackhawk Republican Lincoln Day Dinner. Perry showed up early. He shook every hand. He circulated from table to table, sat down at a lot of the tables, posed for pictures, got up and gave a good speech, hung around, shook hands, mingled with the crowd.
On the other hand, Bachmann was ensconced in her bus just a few yards away from the facility, showed up just moments before she was supposed to speak. And after she spoke, she hung around, but only to sit behind a table and sign T-shirts, protected by her staff.
That's not how you do it in Iowa. Iowa is a retail place, as are New Hampshire and South Carolina. And I thought Governor Perry very smartly handled Sunday night. I think that's probably the last time Michele Bachmann is going to campaign exactly that way at a big dinner.
VAN SUSTEREN: You know, it -- if you dig a little deeper right now, the media's starting to come out and sort of dig into Governor Perry's -- the things that he's saying on the campaign about the success of Texas. And what may be successful in Texas may not translate to the rest of the country.
For instance, one of the things that -- one of the articles pointed out today is that Texas has done so well because the price of oil has gone up and Texas is a big oil state. Texas has done well because of all the -- the 60 percent increase of trade with Mexico and it happens to be a border state. It talks about all the sort of, you know, special things about Texas. And it says Texas education, though, when you dig deep, that it has cut so much money, slashed so much money to education that it's not doing as well, so that -- so that -- like, right now, he seems to be riding high. But when you start digging into these numbers, it may not be as appealing.
ROVE: Well, everybody, when they jump into the race, is better. You know, people start to pick away at them. There's no doubt about it. And there is some truth in what -- some of what you say.
For example, the issue of energy. Energy prices have been high during much of this first decade of the 21st century. But look, Texas was growing about half again the rate of the federal -- as the rest of the country in terms of jobs in the '90s, when energy prices were much lower.
And I think it is because Texas has a pro-business environment. We have low regulation, low taxes, sensible regulation. We have had in the last two decades a good climate for tort laws. And as a result, Texas has become a magnet for jobs. And you're right, it existed before Governor Perry. But there are things that he's done, whether it is keeping state spending in check, actually cutting spending this year, first time since World War II that a governor of Texas has cut spending, and continuing to push forward on the tort reform efforts, medical liability reform, begun under his predecessor, Governor Bush -- he expanded it. He got a small version of "loser pays" passed in this legislative session.
All these things have helped keep the Texas progress going. What we've got in Texas is not the result of one man or one administration. It's been decades of hard work by Republicans and Democrats to get the state in the right place. And the question is, can you take those same kind of principles and apply them to the country as a whole and see some change in our economic position? And I would suspect that's going to be a powerful case Governor Perry can make.
VAN SUSTEREN: And I should note that he had -- that at least since 2009, that there have been an increase of 260,000 jobs, which is -- in the state of Texas, which is not insignificant.
But let me ask -- I assume that the Republicans, in making a decision -- I may be going way down the road -- wants to find the candidate that the Republican Party believes can beat President Obama. And even today, President Obama was embracing Governor Mitt Romney, saying, It's amazing -- it's amusing to watch one of the major Republicans, obviously meaning Governor Romney, now trying to wiggle out of the fact that my health care bill is very similar to the health care bill he passed at a time when he needed to compromise because he was living in a Democratic majority state.
So now President Obama -- by President Obama embracing Mitt Romney -- and you're going to see that for the next 18 months, I assume -- does that disable him from being the one the Republican Party thinks can beat the president, since that's such an unpopular with the Republicans?
ROVE: Well, that depends on Governor Romney because President Obama gave him a big gift today. There are big differences between what they did in Massachusetts and what they did in Washington. And if Governor Romney seizes this opportunity to begin to distinguish the differences, he'll help himself in the primary and if he were to be the nominee to help himself in the general election.
But the question is going to be whether or not he's going to do that. For example, Massachusetts didn't raise taxes. President Obama did. He raised taxes on hospitals, insurance policies, medical devices, drug companies. He even had a hidden tax on student loans. The Obama law has - - borrows a bunch of money from Medicare, Social Security and a new insurance program called Class in order to pay the current expense of the health care program, and continues to borrow money decade after decade after decade from those same programs, always leaving behind an IOU which somebody's going to have to pay at some time.
So there are big differences. The question is whether or not Governor Romney is going to seize the opportunity. It's a Christmas gift in August from President Obama by him picking out of the crowd Governor Romney and going after him in the Midwest. Let's see if Governor Romney's adroit enough to pick up on it and go after him.
VAN SUSTEREN: All right, Representative Michele Bachmann, obviously a huge hit in Iowa this weekend at the -- at the straw poll. But Iowa's a very different political environment than, for instance, New Hampshire. How does she do two things, one is convince the Republican Party that she, indeed, is someone who can win against the president, and secondly, how does she win over the very different political electorate Republican Party in, for instance, New Hampshire?
ROVE: Right. Well, first of all, remember, winning the straw poll gives you a boost, but it doesn't guarantee you the Iowa caucuses. In fact, the only person in the modern history of the caucus who has won the straw poll, won caucuses and gone on to be president is George W. Bush in 1999 and 2000.
So the first thing she's got to do is solidify the strength that she had in the Iowa straw poll and turn it into an organization capable of winning the caucuses in February. Only 17,000 people voted in the straw poll. Probably six times that number, maybe seven -- excuse me, 120,000 to 130,000 people are going to vote in the caucuses. So she's got to expand that organization.
Second of all, she's got to convince people that what she said, that she's the spear of the -- you know, the tip of the spear in the fight against Obama is accurate. If I were her, I would not try and make an argument about, I'm the most electable. She could always be, you know, sort of out-bid on that. Look, she spent $8 million last year. She raised $12.5 million, spent $4 million to raise it, got $8 million for her reelection bid in the second most Republican district in Minnesota, and got only 54 percent of the vote in a great year for Republicans.
In 2008, she actually ran 7 points behind John McCain. I think she's the only Republican member of Congress to get reelected while running behind John McCain's 2008 numbers. So I wouldn't make it electability, but I would make it through ideological thrust, which she made so effectively in winning the straw poll.
VAN SUSTEREN: There's been some word today, at least a lot of sort of chatter here in D.C., that Congressman Paul Ryan, from the great state of Wisconsin, I might add, is considering it, although there's been a denial out of his office, but considering running for president. Is he viable? Is he a strong Republican -- strong candidate for the Republican nomination?
ROVE: Yes. Well, you know, if he were to get in the race, he has the makings of being a strong congressman. But that's the question. Would he be? You know, that would only be told by his performance.
We're hearing similar rumors about Governor Christie of New Jersey, and we're hearing similar rumors about Governor Palin, who has a schedule after Labor Day that looks suspiciously like that of a candidate, not of a -- you know, not of a -- somebody selling books or hawking television programs.
But look, here's the interesting thing. Let's step back even further. Apart from Ryan, Christie or Palin, the fact of the matter is, the contest is relatively fluid. Even with Romney as the nominal front-runner, even with Perry jumping in this weekend with a strong start, even with Bachmann taking the straw poll, this is still a relatively fluid situation.
And we're likely to see the possibility of other candidates and we're likely to see a lot of twists and turns because so many people are sitting on the sidelines, so -- a much smaller number than normal are actually committed to candidates. And the larger audience that's sitting on the sidelines is sitting there as observers and spectators, if you will, sort of like Olympic judges, rating each of the candidates every day that they perform because the Republican -- the vast majority of Republicans are so intent upon beating Obama, they want to make sure they've got a good candidate.
I think some of them are deflated by 2008. Others of them are just expecting a lot of their candidates. And as a result, they're sitting there on the sidelines. I think it's one of the reasons why Tim Pawlenty had trouble. He's a good man. He ran a good campaign until the second debate, the New Hampshire debate. And then when people expected him to go after Romney on health care and he didn't, it sort of deflated his campaign. If you can't take on Romney, what are you going to do about taking on Obama?
And I think the same attitude prevails today. People are watching these candidates and saying, Before I commit my heart and soul and my pocketbook to you, I want to see how good you can do.
VAN SUSTEREN: All right, we've only got 30 seconds left. Is there a drop-dead date beyond which nobody can -- I mean, what's the -- I mean, where you can't get on any ballots or anything?
ROVE: Interesting question. November 21st is the first deadline. And it's for -- I want to say for Missouri. You don't even have a deadline for the Iowa caucuses. You can have people show up that day and put your name in. But the first deadline is November 21st. By then, you have to be in or you start losing on November 21st, November 22nd, and a few days after that, the right to participate in a number of the early contests.
VAN SUSTEREN: Karl, thank you.
ROVE: Thank you, Greta.