This is a rush transcript from "On the Record," August 24, 2011. This copy may not be in its final form and may be updated.
GRETA VAN SUSTEREN, FOX NEWS HOST: All right, from the real threat of getting pulverized by a hurricane to the unemployment choke on our country. And now this. Grim news just released by the Congressional Budget Office. The CBO is now projecting an 8 percent or higher unemployment rate through 2014.
We know what that means for you, but what does it mean about the presidential race in 2012? Earlier today, former senior adviser to President George Bush and author of the book "Courage and Consequence," Karl Rove, went "On the Record.'
VAN SUSTEREN: Karl, nice to see you, sir.
KARL ROVE, FOX NEWS CONTRIBUTOR/FORMER BUSH SENIOR ADVISER: Greta, nice to see you.
VAN SUSTEREN: OK, a report today CBO says not to expect unemployment to fall below 8 percent by 2014, which of course, is two years beyond the 2012 election. How much attention do you think the White House and the campaign for President Obama is paying attention to that report?
ROVE: It's a problematic one and not just because it came from the Congressional Budget Office, but because it also mimics similar analyses from the Federal Reserve and from the private sector. There seems to be a broad consensus among economists that the unemployment rate, today at 9.1 percent, is likely to be in the range of 8.5 percent by election day.
And remember, part of the drop between 9.1 and 8.5 is going to be because we're going to have a large number of workers who are so discouraged at not being able to find work that they're going to drop out of the workforce altogether, and therefore look like an improvement in the number.
VAN SUSTEREN: See, what I would do if I were running on that issue, if I were running the president's campaign, I'd say, Look, you know, I'm running on a trend. It is a downward trend from 9.1 or 9.2, whatever starting point you want to do, if you want to start from where we are right now, and say that that is the direction that the country needs to go, and that -- you know, there's -- that the economy has been sluggish, horrible, but we're on the right path. Don't change horses now.
ROVE: Well, I'm sure that's what they're going to probably end up trying to do. There are several problems with that. One problem is, is that people don't feel that we are on the right track. By a huge margin approaching 6-to-1, they think we're on the wrong track.
And second of all, it doesn't mesh with the reality. As Glenn Kessler in, of all places, The Washington Post, pointed out, if these estimates are true, then President Obama is on the track to have the worst record as a president in the United -- in the history of the United States when it comes to jobs. And if we have unemployment at this rate by election time of next year, then he'll be number one in one thing he doesn't want to be number one in, which is the worst record on jobs.
VAN SUSTEREN: Except that's for right now. If we're talking about let's say in September of next year, not next month, but next year, that the number is steadily going down -- I don't know that it is. I certainly hope that unemployment is going down. But I think at that point, it becomes an effective argument. It's a lousy argument right now. I mean, he'd be in big trouble right now.
ROVE: Well, look, first of all, we all hope that every American who wants to get a job can get a job. But if it's 8.5 percent next year, the difference between 9.1 and 8.5 is not going to be particularly good, especially if you look inside the CBO report and see they're projecting anemic economic growth through not only 2011 but 2012 and 2013, as well. In fact, they think that economic growth might get worse in 2013 because, remember, the Bush tax cuts expire at the end of 2012. So they see economic growth slowing even further in 2013.
And here's the other thing. If you were Barack Obama and his political team in Chicago and in the West Wing of the White House, you cannot be happy with the fact that the last president -- you know, we've not reelected a president since 1936 who had unemployment at 7.2 percent or higher. And the one who had unemployment at that rate was Ronald Reagan in 1984.
The problem for the Obama administration is, is that President Reagan had economic growth rates in the latter quarter of 1983 and throughout 1984 well in excess, two and three times the amount of economic growth that's being anticipated for the coming year-and-a-half. So he had a much more robust growing economy which made people feel better. If we have anemic growth plus unemployment essentially where we are today, it's not going to feel that much better.
VAN SUSTEREN: See, I think that a slight decline -- I mean, a direction going down in unemployment is favorable for him. But the problem that I don't understand, if I were running his PR, his campaign right now, the last thing I'd have him doing is vacation at a very elite place like Martha's Vineyard. I'd have him at the Wisconsin Dells, where -- you know, where if you're lucky enough to be able to go on vacation -- or the Wisconsin Dells sure looks much more, quote, "American" or regular than it does sort of the -- the very expensive enclave, Martha's Vineyard. I think that PR problem is going to resonate far more than -- than if -- if -- you know, if the numbers are going down. I think he's in better shape over the numbers going down than the PR.
ROVE: Well, I think the image is wrong, too. You know, it's interesting. Our Fox colleague, Dick Morris, literally told President Clinton in '93 and '94, You can't go to Martha's Vineyard because, you know, people don't like seeing you with the swells up there on Martha's Vineyard. You need to go vacation in the American West, which he did for two years.
Look, I don't begrudge any president a vacation. Having been inside the White House, I understand what kind of pressures they're under. And they're allowed to go someplace where they can relax for at least part of the day. I mean, every president takes the White House with him wherever he goes. But I think you're right. The idea of, you know, sort of the wine-sipping, you know, elitists on Martha's Vineyard just doesn't comport well with what ordinary Americans are facing in their lives.
VAN SUSTEREN: See, I think image really matters. Like, you know, is -- does he really care? Does he understand? Does he realize what we have? And I still can't get over the fact that he said, I'm going to give the jobs report after I come back, rather than sort of slipping it into the press office and letting them fax it out to the media so he could tell everybody. And then he goes off to a very elite place. I think that's a bad image. I'm not saying he shouldn't have a vacation, but if I were running his PR, I'd be -- I'd certainly want him to look like he didn't have a tin ear.
ROVE: Well, it's not only the PR machine. Look, the reason that he waited until -- he's going to wait until September to lay out his jobs plan is he doesn't have one today. And if you look at the policy shop at the White House -- I mean, he's lost the head of the National Economic Council. He's lost the -- you know, he's recently replaced Larry Summers with Gene Sperling, who's a pretty bright guy. He's lost the head of the Council of Economic Advisers. You know, he's being briefed on the jobs plan by sort of a level three guy from the White House staff during his vacation.
It's not just the PR of it. The president is way behind the power curve. In fact, that's turning out to be pretty persistently a problem over the last year for President Obama is that he's always behind events. Whether it's internationally or domestically, he tends to be behind events.
And this one is going to hurt him, I think, badly. I think the impression of, Oh, I'm off to my vacation and I'll see you in September and I'll tell you then what my jobs plan is, is a problem for him. And so will the composition of the jobs plan itself. If it is simply, We're going to extend unemployment compensation, we're going to renew the payroll tax holiday, both of which are in effect today, people are going to have a right to say, Well, wait a minute. Is that supposed to grow jobs? Haven't done too well at doing that this year.
VAN SUSTEREN: You know, I have one little slightly different view of what you just said in terms of the people that you said that have left him. I actually think that looks good for him because the people -- because look, we're in a terrible mess. And those people who have been advising him have not exactly led him in the right direction.
I think it looks great that he's cleaning house. I think it's great that Summers is gone. I think it's great that anybody who's been on his economic team that has gotten us to this point where we're still at 9.1 or 9.2 percent unemployment -- you know, I think, you know, clean slate. I think the president should even be very dramatic about it and say, Here's my new team. The last team -- well, they didn't do so well.
ROVE: Yes. Well, look, and that may be, you know, unfair to the members of the team because we never really know what they advocated. We do know that Christine Romer, the former head of the Council of Economic Advisers, and Jared Bernstein, the former economic adviser to Vice President Biden, were the two people who put their names on the document issued on January 10th of 2009 that said, If we pass the stimulus, unemployment will top out at 8 percent by the end of the summer of 2009 and by this time in 2011 would be at 6.2 percent.
You've seen the graph that shows, you know, the line (INAUDIBLE) unemployment would be if we didn't do anything, a lower line if we passed the stimulus bill. And the reality is, we got higher unemployment than they forecast even if we didn't do anything and didn't pass the $862 billion stimulus bill. So those two people got their names on a document. The rest of these people, we don't know where they were.
But you're right. A president sometimes needs to make a sacrifice of his people in order to say to the American people, Clean slate, going to start again, new team, different ideas. We'll see if that happens in September. I doubt it from what we've seen thus far in the newspapers about what they've leaked as might be part of this plan.
When you got the -- when you got Jay Carney standing up in the White House press room and saying, Extending unemployment compensation will create jobs, you got to wonder if these people really do get it.
VAN SUSTEREN: All right, not to beat a dead horse, but those who you say may have advised the president to do something else, they're obviously very ineffective to get him to change course because the course that has been taken has not been too particularly effective. So -- and whatever, but I'm not going to beat a dead horse on that. All right, now, on line...
ROVE: You just did. Greta, you just did.
VAN SUSTEREN: OK, well, I learned well. I learned that from Bill O'Reilly. Just kidding. All right...
ROVE: There you go.
VAN SUSTEREN: There you go. Now I'm in real trouble. All right, you have an article on line, The Wall Street Journal, it's going to in the print edition tomorrow, in which you credit, correct me if I'm wrong, Speaker Boehner with really taking command of the legislative agenda to the extent -- or to -- at the expense of the president. Explain your view.
ROVE: Well, it's -- this piece in The Wall Street Journal on Thursday morning, on line tonight, is -- I was driven by the fact that, look, very rarely is the Speaker of the House the political sun around which the president of the United States rotates. But think back over the last year. It's the Speaker Boehner who has set the terms of the debate and it is -- and the outcomes have been more reflective of Speaker Boehner's priorities than they have the president's.
And it started even before he became speaker. In the lame duck session last year, you remember President Obama said, I want to end the tax cuts for wealthy Americans, the top two brackets, and it's vital that we use this to make the wealthy Americans pay their fair share. And at the end of the debate, it was Boehner who had set the theme of, It's not the time, when we got high joblessness and low economic growth, to raise taxes on anybody, who won the day.
And if you look at the battles over spending and the battle over the debt ceiling vote, it is Boehner who has bent the president towards his direction. And now, even in the fall, it is Speaker Boehner who said, You need to send up those trade agreements which have been languishing on your desk. And now President Obama is even beating up the Congress for not having yet passed the trade agreements which he has yet to send up to Congress for their consideration.
So this piece is about that, you know, we're going to shortly have returning to Washington the politician who's done more than anyone else to shape the national agenda in Washington this year, and it's not President Obama. It is Speaker John Boehner.
VAN SUSTEREN: Not to take away from Speaker Boehner, but I have (INAUDIBLE) you know, I actually have a slightly different view. I think it's the Tea Party that has shaped the national agenda. I'm not sure -- who knows what Speaker Boehner would have done. But it's the Tea Party and the people they have elected that have really held the feet to the fire of the Republican Party.
I'm sort of curious, would we -- would -- you know, would -- would Speaker Boehner have done the same but for the influence of the Tea Party within his party?
ROVE: Oh, I think he would because, look, Boehner's instincts are -- look, for example, he has never been in favor of earmarks. He considers them corrosive and corrupting and has never accepted, never sought and never want to have an earmark for his district. That's sort of being Tea Party before Tea Party was cool.
So I think the Tea Party at times has strengthened Boehner's hands and at some times it's weakened Boehner's hands. And I think it's a testament to his leadership that over the course of the year, he has taken the voice of the House Republican caucus, if you will, and embodied it in policy.
In fact, that's one of the points that I make in the piece. I was struck by a comment that Boehner made in a private dinner I attended in Texas last year. In fact, it was Boehner, a couple from Ft. Worth and me having a steak with Boehner in a restaurant on a night he was campaigning in Texas and didn't have anybody to eat with. And Boehner talked about how in the current House of Representatives, then led by Speaker Pelosi, that only four or five people mattered, the Speaker and the Majority Leader and the Majority Whip, the Rules Committee chairman and the chairman of the committee of whatever item they were discussion, and everybody else didn't matter. And he said that is not how the Founders intended the House of Representatives, the people's body, to operate. And he said it with a lot of passion.
And we've seen this as he's been speaker. He's been attempting to have -- you know, to make certain that the Republican Conference represents the will of the House, that he has ceded power to committee chairmen to do actual work there. He is a -- he has basically emboldened and encouraged other young, ambitious Republican leaders. And he has not rewarded members by giving them earmarks or threatening them with retaliation. He doesn't like the former, and the second is not in his nature. And as a result, these three things have caused him to be a stronger leader, not a weaker leader. It's been one of the great paradoxes, give up power and get more influence as a result.
VAN SUSTEREN: In anticipation of talking to you today, I did some research. And in the last five days, every time practically the name Rove comes up, it comes up with -- about a comment you made about Governor Sarah Palin. What is it about Sarah Palin, Governor Sarah Palin, that if anyone says her name, you know, or someone like you, that it just explodes? Is that the media or is that Governor Palin or what is -- or is that Karl Rove?
ROVE: No, no. That's Governor Palin. Look, the head of grass roots organization on her behalf in Iowa said roughly the same thing I did, which is not knowing any inside information, it looks to us like -- both this fellow in Iowa and to me -- that she's more likely to be a candidate. The things that she's doing in Iowa, showing up at the Iowa state fair, running this ad, saying, I'm looking forward to being back there on September 3rd, attending a big rally on September 3rd, all signal to me that she's likely to be more -- more likely to be a candidate at some point.
I've never said she's going to declare on the 3rd, but I've said this schedule looks more like the schedule of somebody who wants to be a candidate...
VAN SUSTEREN: Well, why is -- why is...
ROVE: ... than somebody who's just a celebrity.
VAN SUSTEREN: Why is everyone so -- but why is everyone...
ROVE: You know what? Here's...
ROVE: I'm mystified. Look, she is all upset about this, saying I'm somehow trying to sabotage her -- sabotage her in some way and that how dare I speculate on her future. Look, if she doesn't want to be speculated about as a potential presidential candidate, there's an easy way to end the speculation. Simply say, "I'm not running."
But instead, every time she pops up into the public eye, like she did on CNN on -- at the Iowa state fair a short number of days ago -- she said, I haven't made a decision. I'm just speculating that the kind of schedule she's keeping leads me to believe that it's more likely than not that she's going to be a candidate.
Now, I said I wouldn't bet a lot of money on it because I -- it's a close thing and I'm not privy to her thought-making process. But it is a sign of enormous thin skin that if we speculate about her, she gets upset. And I suspect if we didn't speculate about her, she'd be upset and try and find a way to get us to speculate about her. So...
VAN SUSTEREN: I actually -- I actually -- I actually don't know if it's Governor Palin or not. I don't know anything about that. I was merely reflecting on the fact that the media, is you mention the name Governor Palin, I mean, no matter what you say or Governor Palin -- I mean, I don't -- I have no idea whether -- whether she has -- even knows -- I assume she knows that you said something about her. But why -- what is it about Governor Palin that even the media can't let go of it?
ROVE: Yes. Well, first of all, I do assume she -- she -- when her -- when SARAHPAC issues a statement, I assume that Governor Palin authorized the statement. So she knew exactly what SARAHPAC was going to say. But look, here's the deal...
VAN SUSTEREN: I didn't even know about, but OK.
ROVE: Oh, yes. Yes, that's where -- that's where -- that's where her comment came from was a statement put out by SARAHPAC. But look, she's a big -- she's a potentially big factor in the presidential election. If she were to get in, she'd be a "contenda," as they would say. She was the vice presidential nominee in 2008. She maintains a following.
There are people who want her in and there are some people who would be deeply concerned if she did because she'd be eating into their -- into their ranks. But she's a player. And so if she doesn't want to be speculated about, then end the speculation by saying, "I'm not going to be a candidate."
Until then, I would just recommend she might get a slightly thicker skin because if she's got this thin a skin now, when people are saying, Well, I think she might be a candidate, what kind of -- how's she going to react if she does get into the campaign and gets the scrutiny that every presidential candidate does get? I mean, that's not going to be a pretty sight if she's as thin-skinned in the fray as she is on the edges of it.