This is a rush transcript from "On the Record," April 4, 2012. This copy may not be in its final form and may be updated.
GRETA VAN SUSTEREN, FOX NEWS HOST: Right now, the turf war, and it is simply bizarre. It's sparked by the battle over the national health care law. Now, it started on Monday, when President Obama gratuitously insulted the Supreme Court, followed by the president's twisted and incorrect statement about the Court's power.
This obviously enraged a federal appeals court down in Texas. They fired back, issuing an order to the Justice Department to give a written explanation of President Obama's comments by noon tomorrow.
And today, Attorney General Holder jumped into the fuss.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: (INAUDIBLE) plan on submitting a response to the fifth district court and Judge Smith on judicial review tomorrow?
ERIC HOLDER, ATTORNEY GENERAL OF THE UNITED STATES: Yes, we're in the process of formulating that response now, and we will be sending something to Judge Smith and I guess the other members of the panel.
UNIDENTIFIED MALE: Along what lines? Do you know how you'll respond?
UNIDENTIFIED MALE: What would be appropriate?
HOLDER: Well, I mean, I think that, you know, what the president said a couple of days ago was appropriate. He indicated that we obviously respect decisions that courts make under our system of government, and since Marbury versus Madison, I guess back in 1803, courts have the final say on the constitutionality of statutes.
But courts are also fairly deferential when it comes to overturning statutes that the duly elected representatives of the people, Congress, pass. We think that the Affordable Care Act is a statute that can stand constitutional muster, has been examined by a number of courts, held constitutional by a number of courts, including by a couple of very prominent conservative jurists.
(END VIDEO CLIP)
VAN SUSTEREN: Well, right now, the Justice Department has less than 14 hours to meet the court's deadline. So what should the Obama administration be doing?
Karl Rove is here. Nice to see you, Karl.
KARL ROVE, FOX NEWS CONTRIBUTOR/FORMER BUSH SENIOR ADVISER: Nice to see you.
VAN SUSTEREN: All right, the attorney general tried to sort of nuance that one. He said the president's response was appropriate, but it was wrong. He didn't say it was wrong. I did. So I mean, the attorney general was trying to be, I guess, polite about his boss.
VAN SUSTEREN: So how does the president sort of pull out of this sort of mess that he's made?
ROVE: Well, first of all, let's be clear. What Attorney General Holder described as the president's remarks bear little relationship to what the president actually said. The president never said Marbury versus Madison. He never said the Supreme Court has the right to declare it unconstitutional. It was, frankly, a thinly veiled threat, and I thought it was unbecoming to the president. But the...
VAN SUSTEREN: Well, actually, day two, though, I actually thought was worse because on day two, he said that -- he sort of backed off that, and what he said is that, you know, if the Supreme Court does strike this down that it's going to be horrible for people.
VAN SUSTEREN: In other words, saying that the ends justifies the means...
ROVE: That's correct.
VAN SUSTEREN: ... when the analysis should be whether or not...
ROVE: That's right.
VAN SUSTEREN: ... it is constitutional and let the Congress and the Supreme -- and the president pick up the mess.
ROVE: The Supreme Court has to act as the defender of the Constitution and not to be looking at, as you say, the outcomes. They have to be looking at, is it in conformity with the Constitution of the United States?
Ironically enough, though, it is now within Attorney General Holder's hands to sort of let this controversy die away. If he provides a document tomorrow that is not confrontational, that is deferential, that goes out of its way to be responsive to Justice Smith's -- Judge Smith's request, then this issue will start to away.
But if he is defiant, if he attempts to, you know, sort of find a way to needle either Justice -- Judge Smith or the United States Supreme Court in it, it'll simply make the controversy last longer.
VAN SUSTEREN: You know, I have a different view of this because, I mean, I think what happened was, is down at 5th circuit, is the court obviously was angry about the president's remarks because the president called them "unelected" when they are presidential appointments for life. The president doesn't even have a lifetime job.
And so they asked the Justice Department lawyer about whether or not the federal courts have authority to review statutes. And she promptly responded, Yes, Marbury versus Madison. That should have been the end of it.
But then the court decided, because they were still angry -- they fired off this letter...
VAN SUSTEREN: ... to Justice. And so now you've got -- you've got the president bullying the...
VAN SUSTEREN: ... the federal courts, the Supreme Court, and now you've got the federal court sort of bullying back.
ROVE: I don't see it bullying back, but I do see it as being defiant. Because remember, this is not the first time the president has made the United States Supreme Court a political whipping boy.
You remember, it was not too far south of here in the United States Capitol where, during a State of the Union address, with the Supreme Court stuck in front of him, mute, that he attacked them over the Citizens United decision to say things that were patently not true! We'll now have a flood of foreign money.
Well, the Tillman Act in 1907 prohibits foreign contributions. The Citizens United decision had nothing whatsoever to do with that! And he excoriated the Court sitting right there in front of him in a very undignified and unbecoming way!
VAN SUSTEREN: So he's -- he...
ROVE: So there's a hostility on the part of the president -- interesting enough, a constitutional law lecturer at the University of Chicago -- towards the proper role of the federal judiciary!
VAN SUSTEREN: Well, he was likewise rude to Congressman Paul Ryan a year ago...
VAN SUSTEREN: ... at a budget speech, when he invited him to be in the budget -- then he insulted him when he was in the audience. But...
ROVE: In the (INAUDIBLE)
VAN SUSTEREN: But I got that. He's rude. I got that. And he picked this fight. I got that. But the problem is, is that we've got to do something to stop this sort of pettiness, where the court is now reaching beyond -- the appellate court trying to reach beyond to the Justice Department. Someone needs to put an end to this. And...
ROVE: And the attorney general can, and the attorney general can do so by providing three pages that say, Of course we respect Marbury versus Madison, and the -- we depend upon -- in our free society, we depend upon the courts.
Go back to -- I think it's number 59 or number 65 -- I may have the number wrong -- Hamilton's piece in The Federalist Paper in which he describes the important role of the judiciary. Now it is the weakest, and yet perhaps the most vital of the three branches of the government. Pay homage to the process and to the -- and to the principle of -- of judicial review and be done with it!
VAN SUSTEREN: Not to beat a dead horse, though, but you know, the whole idea (INAUDIBLE) the same reason that presidents protect executive privilege, there are certain, you know, areas of power within the three executive branches that need to be protected.
And the -- and I -- look, the president started it. I am totally behind it. The president was wrong legally. I'm totally -- you know, I'm totally in agreement with that.
But the problem is that the judiciary is reaching beyond the courtroom, beyond -- when they got the answer from that Justice Department lawyer, in order to get into a little bit of a schoolyard brawl with the Justice Department.
And frankly, I think that it should be ended here, and I don't think the -- I don't think the attorney general should respond, and I think that should be the end of it.
ROVE: Well, if he didn't respond, it would simply cause it to go on. I mean, it's one thing to have a low-level lawyer sitting in front of the 5th circuit say that thing. It's another thing to have the attorney general submit it as a document in response to that.
Let's be done with it, and the best way to be done with it is for him to affirm what she said in court are his thinkings -- his thinking and the Justice Department's thinking, as well.
VAN SUSTEREN: It's sort of interesting, though, the sort of -- it's a common theme that the president is -- I think a lot of people think he's arrogant or that, I mean, he's sort of rude -- I mean, the whole thing that he did with Paul Ryan a year ago. And I'm sort of curious whether, you know, this is something that's going to -- by the time November rolls around, will this be stale and old or is this something that...
VAN SUSTEREN: You know...
ROVE: Because look, this is the way he is. You talk about a year ago? How about attacking Paul Ryan this week by totally distorting the Paul Ryan budget?
Here's the Paul Ryan budget summary right here. Here's the summary of the president's budget. President Obama says, Well, I want to spend $47 trillion over the next 10 years and Paul Ryan wants to spend $40 trillion, and in his speech declares that he's going to cut programs, program after program after program, when he knows that's not true!
For example, you know, this -- this budget spends more money than we're spending today! For example, Medicare right this year, we'll spend $478 billion. You know what this budget calls for spending next year? $503 billion!
Now, what Ryan is attempting to do is to slow the future growth of government spending. Are there going to be cuts in some areas? Yes. But the president made it sound like it was a heartless, cruel experiment that was going to slash money.
Social Security, $773 billion being spent this year. Next year, $813 billion under the Ryan budget! And yet the president was depicting this as across-the-board cuts, particularly those that would fall on America's seniors!
VAN SUSTEREN: You know (INAUDIBLE) because I thought when he did that -- I thought that it -- I actually thought that the president looked weak because he's fighting...
ROVE: He did!
VAN SUSTEREN: ... he's fighting with Congressman Ryan.
ROVE: He did!
VAN SUSTEREN: That's not his -- - that's not his opponent.
ROVE: He did. Look...
VAN SUSTEREN: That's not his opponent, yet he's...
ROVE: You've got -- you put your finger on a very important thing. One of the most important assets a president has is the image of him as a strong leader.
Think about this. President Obama picks a fight with the chairman of the House Budget Committee not once but twice within a year. He starts his general election campaign. We now have a presumptive Republican nominee, I think, in Mitt Romney. What does the president do? He runs a television ad attacking him over oil -- his ties to oil companies and then launches a speech in which he attacks Mitt Romney!
I thought Romney hit the right tone today, which is, Isn't it sad that President Obama has nothing in the way of a positive accomplishment or a forward-looking vision that he can run on, and he has to begin his general election campaign by attacking the Republican nominee?
VAN SUSTEREN: But it goes one step further, though. He's fighting with the House Budget...
ROVE: Budget Committee chairman!
VAN SUSTEREN: ... Committee chairman about a budget that's been passed in the House. Meanwhile, his own party, Senator Harry Reid in the United States Senate, doesn't have a budget! And so a leader -- I would -- I would...
ROVE: And -- and this is...
VAN SUSTEREN: He should be -- he should be calling Harry Reid...
VAN SUSTEREN: ... and saying...
VAN SUSTEREN: ... Senator Reid said -- Get a budget so we can begin this...
ROVE: Pass a budget resolution! And remember, this is the president's budget. How many votes did it get in the U.S. House of Representatives this week? Zero! How quickly is Harry Reid going to bring up the president's budget proposal? He's never going to bring it up!
VAN SUSTEREN: Well, he -- he could get his own. I mean, they could - - they own the Senate.
ROVE: No, no.
VAN SUSTEREN: He could have their own Senate budget.
ROVE: That's right.
VAN SUSTEREN: Senator Harry Reid could have that one, bring that one to the floor.
ROVE: Well, and look...
VAN SUSTEREN: Nothing to stop that.
ROVE: And look, statutorily, they're required under the 1974 Budget Act to bring up a budget resolution. They have not done so in the last three years. Now, they're not -- you know, they aren't obligated to pass it, but they're obligated to bring it up, and they haven't even brought it up!
Think about this. We're running a $3.6 trillion enterprise called the United States government, and we have not passed a budget under the regular order for an entire year since 2007. We passed a budget for half the fiscal year in 2008, for half of FY '09, fiscal year '09.
But this president is operating not by having a budget passed in the normal order of things so that the government knows how much money it's going to spend over the next 12 months, but instead, by -- by a series of - - you know, of -- of continuing resolutions and stopgap measures. It's unbelievable!
We've not had a highway funding bill, which traditionally, has been a six-year bill -- we've not had one since 2009! So we have people down at the state departments of transportation all around the country trying to figure out what is the next five or six years going to look like for them building roads and repairing bridges, and the federal government cannot bring itself, because of this administration, to pass a long-term highway bill!
VAN SUSTEREN: I guess every time I hear someone in politics criticize someone, the first thing I think of is, Well, have you done your job? And when you criticize Paul Ryan -- I don't know if his budget's a good one, a bad one or someplace in between, but the first I think is, OK, where's your budget?
And the Senate doesn't have a budget, so I'm very suspicious. But I'm curious whether this sort of -- you know, all the discussion now, whether it's about the Supreme Court or about the fact that the president is criticizing a congressman who has a budget and not pushing his own party to get a Senate budget...
ROVE: Right. Right.
VAN SUSTEREN: Is that a snapshot of the moment, or does it resonate in November, or are we going to all just be worried about gas prices in November?
ROVE: Now, look -- no, look, I think the president's going to continue down this he line, picking fights with people he shouldn't be picking fights with, blaming others for the difficulties that are occurring on his watch, throwing up his hands about solving the problems that the country faces and not being serious about the challenges and the work ahead!
You cannot tell me that if you have a budget that gets not a single Democrat vote in the House that this is a budget that is considered to be serious by members of your own party! If you can't get it brought up and voted upon by the United States Senate in a body (ph) and in a budget resolution which requires only 51 votes, when you have 54 -- excuse me -- 53 Democrats in the Senate...
VAN SUSTEREN: Plus the president -- plus the vice president. You have 54.
ROVE: Right. So I mean, you know, what is going on? I mean, the president is weak, and he is making himself look weaker by adopting these highly political tactics!
VAN SUSTEREN: But then you look at the swing -- there was a Gallup poll where the swing states -- and he has -- and I assume that Governor Romney's going to be the nominee -- he's ahead of Governor Romney in the -- of the independents in the swing states by 9 votes -- by 9 points.
ROVE: Let's first of all look at that. Swing states -- the president has 51 percent in the swing state poll. That's his vote. Governor Romney is lower than that, and right now, it's -- it is -- it's not a pretty sight for Governor Romney coming through this primary.
But you know what? In those battleground states -- remember what it is, Nevada, New Mexico, Colorado, Iowa, Wisconsin, Ohio, Pennsylvania, New Hampshire, North Carolina, Indiana, Florida and Virginia -- what did the president get in those battleground states in 2008? He got over 54 percent of the vote.
So the president is not looking stronger in the battleground states, he is performing weaker than he did four years ago!
VAN SUSTEREN: But he's still ahead.
ROVE: Yes, that's right, but...
VAN SUSTEREN: I mean, he may be weaker, but...
ROVE: But here's the point. Here's the point. If you're -- if you're -- if you're dropping -- remember, he won -- he won by about 53-47. What happens if he today -- at a bad time for Mitt Romney, the president is underperforming what he did four years ago by 3 points, that means it's -- he's got the capacity to be a 50-50 race!
And Romney will strengthen now the primaries are going to start to be behind him. The president is not in good shape. And point to the battleground poll -- remember, he carried virtually all those battleground states. If he has dropped 3 points in those battleground to 51, that means that some of those states, like Indiana and Virginia and North Carolina and Florida and Ohio could fall out of -- those were all close states. They could all fall out of his column.
And guess what? At that point, the Republicans need one more state out of the battleground states in order to win. New Hampshire or Pennsylvania or Michigan or Wisconsin or Iowa or Colorado or Nevada or New Mexico, and the Republicans take the White House!
VAN SUSTEREN: All right, you said this is a bad time for Governor Romney. He just won two states and District of Columbia. Why do you say it's a bad time?
ROVE: Well, it's good time for him in the intra-party fight. He is - - he is -- he is -- I think -- and I've written this in my column tomorrow morning in The Wall Street Journal. I think he is -- it's an inflection point that moves the contest his way.
But look, he's got a lot of cleanup to do now. We've come through a contest that has hurt the Republican Party brand and hurt his candidacy, particularly among independents, who kept thinking that -- looking at the Republicans, saying, Why aren't you talking about the big issues facing America?
They tune in on these debates, and the moderators would not be asking questions about jobs and the economy and deficit and debt and spending and health care, they'd be asking weird process questions or making the Republicans look as exotic as they could.
And now Romney has got to be in a place where he frames up the big issues, as he's begun to do this week with the speeches in Wisconsin and the speech today, as what's the big choice facing America on these big issues that the country cares about.
VAN SUSTEREN: All right. I think the polls show that he has recently taken a nose dive with women voters, a substantial difference...
VAN SUSTEREN: ... in the swing states.
ROVE: ... it's essentially one poll. Essentially one poll.
VAN SUSTEREN: OK. That was a big -- a big -- so I disavow that as having much weight in this.
ROVE: Well, look -- look, I think that if you looked at it, he -- he -- he will -- he is -- he is weaker today than he was two months ago or even six weeks ago among women, independent voters, Latinos and young people. But these are also groups that are up in the air about President Obama and reachable for Governor Romney, if he runs the right kind of campaign.
VAN SUSTEREN: What do you attribute that poll? Is that to the contraception discussion?
ROVE: No, I don't. I think it's just that -- look, the Republicans were not -- again, let's go back to the debates. They weren't -- the moderators were not asking questions about the big issues. The discussion was not about the big issues, it was about other things.
And then we've had this -- you know, when you got two guys or three guys going at each other as Romney, Gingrich and Santorum have, it's -- very rarely was it elevated.
And remember, you can come out of it. Four years ago now, who was ahead in the Democratic presidential sweepstakes? Hillary Clinton. She was leading Barack Obama by 5 points in the national polls, and yet he went on to win the nomination, as we know, won the general election.
VAN SUSTEREN: Does he seem concerned about the election, or does he seem confident?
ROVE: I think he's nervous, and he has every reason to be nervous, from his fund-raising, which is underperforming dramatically, to the -- to the polls. Look, he's the incumbent president of the United States, and look at these polls! Look at the nationwide polls. It's -- you know, he's at 47, 48, 49, 46.
The generic battle is 45 Obama, 44 generic Republican. I mean, that is not a good place for the president to be, and he knows it. That's why he's spending so much time on the campaign trail, despite the fact that's the wrong answer for the problem he changes. If you want to be strong as president, be a strong president, don't be an active, strong campaigner.
VAN SUSTEREN: Karl, thank you.
ROVE: You bet. Thank you.