Rove: Pres. Obama's budget is a 'campaign document' - 'We're running a gigantic enterprise as if it were a lemonade stand'

Rove on Obama's 2013 Budget Plan

Former Bush adviser dissects president's $3.8 trillion spending plan and 10-year vision

This is a rush transcript from "On the Record," February 13, 2012. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: President Obama today unrevealing a new budget for 2013, here it is. And the $3.8 trillion spending plan instantly sparking an outcry from Republican lawmakers. The president says his plan will cut $4 trillion from the deficit over the next decade.

So where is he going to get that money? Some of it, $1.5 trillion would come from tax increases on the wealthy, wealthy being defined as those who make more than $250,000 a year. That is not particularly popular with Republicans, but that isn't all. It isn't just the tax increase on the rich. Congressman Paul Ryan says the president's budget contains broken promises and recycled gimmicks. Congressman Ryan plans to off an alternative plan.

So how will the budget plan play out in the presidential election? Karl Rove joins us. Nice to see you, Karl. So, Karl, is this budget going any place to begin with?

KARL ROVE, FOX NEWS CONTRIBUTOR/FORMER SENIOR ADVISER TO PRESIDENT BUSH: It will be an object of discussion here. But let's tree treat it as a serious document even if it was meant as a campaign document and not a serious document because it gives us insights into the president's thinking. You mention his claim he is going to cut $4 trillion over the next decade as Jack Lew said. There is $2.50 cents in cut for every dollar in taxes.

But you know what, that turns out not to be the case. Keith Hennessey, a colleague of mine at the White House who is not out of Stanford, drew my attention to a document. This is the budget table. One of them is called summary table S3, deficit reduction since January of 2011. It spells out how the president is going to get $4 trillion in spending reductions, deficit reductions. He is going to increase taxes by $1.5 trillion and he is going to have $3.8 trillion in so-called spending reductions.

But if you look at this table, it shows you something interesting. First of all, they are counting $1.7 trillion in spending cuts that have already been enacted in previous years. They are counting that in this year's budget. That is completely phony. They have $1.720 trillion that have been enacted, so he is counting that a second time toward the $4 trillion. He has new spending, $1.45 trillion cuts in tax increases and $800 billion of interest reductions that come as a result of these cuts and income tax increases and spending cuts.

So you really have $1.20 in new taxes, $1.5 trillion, for every dollar in spending reduction. Not $2.50 in cuts and a dollar in tax increases. He has got $1.20 for every dollar in cuts. Then when you start looking at the cuts --

VAN SUSTEREN: I have to stop you, just one second, Karl.

ROVE: Yes.

VAN SUSTEREN: This is a Fox News alert. The plane we believe is carrying Whitney Houston's body has just arrived in New Jersey. Moments ago the plane touched down at Teterboro Airport. Houston's body was flown from Los Angeles where she was found dead on Saturday. Funeral plans for Houston are now under way. Funeral services are expected to be held in New Jersey. Houston was born in Newark, New Jersey, raised in East Orange. Stay tuned to Fox News Channel for the latest developments on the death of Whitney Houston.

Now, we go back to Karl Rove. Karl, sorry to interrupt you. I wanted to try to catch the plane landing. Let me ask you a question about this -- we still have the picture. We're going to keep the picture up. We have this bill, we have six or eight inches of pages, and Senator Harry Reid has said he has no intention of putting it on the Senate floor. So this is dead on arrival in the Senate, do you agree?

ROVE: The Senate Democratic leader tells the president the budget is dead on arrival. That is pretty astonishing statement.

VAN SUSTEREN: Not only that, think of all the man-hours and women hours putting this document together. And you would have thought that the president and the Senate majority leader would have had a conversation whether this is going to even be voted on. I think of all the tremendous amount of work, what a waste of time for the taxpayers and American people. They paid for all this. This is ridiculous.

ROVE: I know, but I think it's recognition of how much it's filled with gimmicks. Remember the figure, $1.254 trillion? If you go to table S2 of the document, you'll find the following. They have cut in overseas contingency, that is Afghanistan and Iraq, $824 billion. That is considerable chunk, two-thirds of money. Guess what. This is complete gimmick. It says let's assume the war in Afghanistan and Iraq continue at current levels for the next 10 years and then let's assume they don't. let's assume the gear down. That saves us $848 billion. Nobody expected combat operations in Afghanistan in 10 years to be conducted at the levels they were last year. So it's completely phony.

So there is reason why Harry Reid we're not taking it up. It's a bunch of stuff they couldn't pass when they had Democrat majorities in the House and Senate.

VAN SUSTEREN: Why do we pay to have it created? I'm arguing why didn't they decide beforehand instead of wasting all this money of the American taxpayers for creating this?

ROVE: Greta, this president has not been serious about the budget process nor has the Senate Democratic leader. President of United States has an obligation to present a budget and he has failed to meet the obligation three out four years. The Senate is obligated under law from 1974 to pass a budget resolution by the 15 of April each and every year and they have not done it for going on three years. We're running a $3 trillion a year enterprise called the U.S. government and we don't do it with a budget that is passed in the normal course of things and a body that has 13 appropriations bills and signed by the president before the budget year.

We are running a gigantic enterprise as if it were a neighborhood lemonade stand. The president is not serious about the budget and neither the Democrats. The House Republicans passed a budget resolution last year. We had the president's chief of staff on Sunday saying the reason we haven't passed a budget in the Senate is because it requires 60 votes and you can't get 60 votes in Senate. A budget requires only 51 votes. Did he not know that or was he simply trying to mislead the American people?

Don't ask me to defend what President Obama is doing. He has done a terrible job on managing the fiscal condition of the country, and as a result we have a fourth budget of a row with a deficit above trillion dollars after he promised four years ago he would cut the deficits in half and called the level of deficits back then unpatriotic. If you double the size of the deficit, are you unpatriotic as well?