OTR Interviews

Rove: Resignation of acting IRS commissioner, 'faux' Obama anger was a 'nothingburger' and just about PR in scandal

Karl Rove on the how Benghazi and the IRS and Department of Justice-AP scandals threaten Obama's ability to govern


This is a rush transcript from "On the Record," May 15, 2013. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: The IRS scandal is exploding! Late tonight, President Obama addressing the nation, insisting he will not tolerate the IRS's behavior.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Americans are right to be angry about it, and I am angry about it. I will not tolerate this kind of behavior in any agency, but especially in the IRS, given the power that it has and the reach that it has in all of our lives.


VAN SUSTEREN: The president also announcing the resignation of the acting IRS commissioner. But did the president make him a scapegoat? Karl Rove joins us. Good evening, Karl.


VAN SUSTEREN: I'm very well. So Karl, the news tonight that the acting commissioner has resigned. And one of my colleagues here at FOX News, anchor of "Special Report" Bret Baier, has sent an email and says that the acting commissioner was set to resign the position of acting commissioner as of early June, and he leaves the IRS entirely a couple of months later regardless of the current controversy. He got that from an official close to the acting commissioner.

ROVE: Right.

VAN SUSTEREN: And of course, he was -- only came into the job in November. So is he a sacrificial lamb or what?

ROVE: Well, actually, Greta, he has -- in the -- in the IRS -- in the federal law, you can only be an acting director so long. So he was coming to the end of the term that he could be the acting director. They either needed to make him the actual director or replace him with somebody else. So in June, he was out one way or another.

And I thought it was interesting today, he said, issued a statement saying he looked forward to an orderly transition. So the president didn't tell him to pack up your desk and get the heck out by the close of business. Apparently, he's going to remain there for some period of time until they name an acting replacement.

Greta, I can't -- that statement tonight by the president was faux anger. First of all, remember, on Friday and then earlier today, his -- on Friday, the president, and earlier today Jay Carney, both said, Well, if this happened at the IRS, we'd be upset.

Well, the IRS admitted last Friday that they did this. It wasn't a question of confirming it. They admitted it last Friday. And so the president knew that the outcry -- public outcry was rising. And so he went out tonight and said he would fire the acting director.

And oh, two other things he was going to do. He'd have the -- the IRS would implement the IG recommendation, the inspector general report. Oh, really? Thank you. You were going to have to do that anyway.

And secondly, he promised to cooperate with Congress in an investigation of the matter. Well, you know, Mr. President, you have no choice. You're going to have to. You're going to have to cough up your Treasury secretary and key officials of the IRS to go testify before Congress.

So this was a nothingburger tonight. It was all about PR, about trying to get ahead of a story that he'd fallen way behind on. And look, I hold him in part responsible for this. I hold a lot of members of the Senate responsible for this.

I've got in my column tomorrow morning in The Wall Street Journal -- look, let's remember Senator Max Baucus, the chairman of the Senate Finance Committee, sends a letter in September of 2010 saying to the IRS, Investigate these groups. By early 2012, Chuck Schumer of New York gets six other Democrat senators to join him. He pressures Congressman Pete Welch of Vermont to try and get together a similar House letter, all of them saying to the IRS, You better do something about this.

And in part, the president's responsible. He went out in September of 2010 and said that 504(c)4 groups were, quote, "enemies of democracy," end quote. So you know, there -- there -- there's more than just low-level bureaucrats who are responsible for setting the tone and encouraging this kind of behavior.

VAN SUSTEREN: Well, I guess -- I mean, there are a number of things you've brought up. I guess the first thing I'm sort of curious is that I - - for some reason, I'm a little sympathetic to this acting director. He just came into the job in November. Now it's, like -- now the president gets up in front of the whole nation and says he's out, as though there's something, like -- you know, that he's really stepping up to the plate...

ROVE: Well...

VAN SUSTEREN: ... and you know, we're really catching...

ROVE: Right.

VAN SUSTEREN: ... you know, the bad guy and throwing him out, you know, when -- when in fact, he's only been there six months. He was going to leave anyway because his term was ending, and he's not out the door anyway!

ROVE: Well, remember, though, Miller is one of the people who knows about this early, and apparently did not tell Shulman, or if he did tell Shulman, the previous full-time director, the -- the nominated and confirmed director of the IRS -- if he did tell Shulman, then Shulman lied to Congress under oath.

So Miller we now know knew about this before this became public and did not alert his superiors or raise a warning flag to his ultimate bosses inside the Treasury Department.

VAN SUSTEREN: All right, so where does this go? What's going to happen? Is this an issue that was consuming us now for the next couple days and going to go away, or is this one that's going to stick around for quite some time and it's going to get more explosive?

ROVE: I think it's going to stick around for some time. The question is, does it stick around for a while or a long while? And I think that all depends on how forthcoming the administration is about this.

And look, I think we've got a lot of things to find here. First of all, how much pressure being brought to bear -- remember, the Senate Finance Committee chairman is -- is the -- is the oversight of the Treasury Department and ultimately the IRS. Their budget depends upon the good sufferance of the chairman of the Senate Finance Committee.

Chuck Schumer is on the Finance Committee. So you get this, you know, rambunctious Democrat from New York who's on the committee rounding up six other members of the Democrats in Senate to send a letter, if you're an IRS bureaucrat, you sort of want to make certain you're on the good side of the chairman and his likely successor.

So you know, this is -- this, I think, goes beyond just low-level bureaucrats in Cincinnati. We now know that there were bureaucrats in Washington who sent out these letters. We know there were bureaucrats in California who sent out these letters. This smacks of a greater, you know, sort of effort inside the IRS to punish conservative groups.

Now, I have to admit, full disclosure, American Crossroads GPS is one of the 501(c)4 groups that has been mentioned in some of these letters by members of Congress, and whose application is still sitting before the IRS. So you know -- but we've got more to find out here. And the question is how forthcoming are people going to be is going to determine how long this lasts. Permanent damage has been done to the IRS.

VAN SUSTEREN: Karl, we also -- I want to ask you about the breaking news tonight on Benghazi, the White House finally releasing more than 100 pages of emails. First of all, any idea why it took so long? You know, what was the administration trying to keep from us? And why in the world was this stuff classified?

ROVE: I don't know why they took so long. I think they just thought that they -- if they continued to say nothing, that this would go away.

I've got three observations about this, Greta. First, I'm amazed how many people in this email thing are communications people. You've got at least seven of them, the head of the office of public affairs at the CIA, Victoria Nuland at the State Department, Ben Rhodes and Tommy Vietor at the National Security Council, a guy named Sean Turner in the director of the office of national intelligence, Dean Boyd at the Department of Justice, and Aaron Pelton at the U.S. U.N. office. So we've got a bunch of communications people.

Why are -- why are so -- all these communications people setting out the definition of what happened in Benghazi? It strikes me they ought to be smaller players in this and there ought to be bigger players.

The second thing that strikes me is Victoria Nuland is clearly driving the antagonism towards the CIA-drafted points. And there's an interesting e-mail that she sends out in which she says, at 9:24 PM on Friday night, "These don't resolve all my issues or those of my building leadership. They are consulting with NSS."

Some unnamed boss of hers is consulting with the NSS, which is the National Security Staff, meaning the White House. So the question is, who above Victoria Nuland was talking to who over at the White House about these talking points?

There's also a reference in here to a CVITS on Friday. There's a secure video conference with the CIA, State and White House and FBI, where they're talking about these talking points and the opposition of the State Department to these talking points. But also, it says that Mike Morell, the deputy director of the CIA, will sit down with Ben Rhodes of the National Security Council and his deputy, Tommy Vietor, to work out the talking points, which makes it sound like the White House is the ultimate shot caller on the talking points.

But the final one, most interesting -- I'm sorry...


ROVE: Go ahead.


ROVE: Well, the -- the final and most interesting point to me is, the question we've never gotten answered is, who is responsible for cooking up the story that the anti-Muslim video is what caused this? And we may have -- I mean, we may have a clue in these.

On Sunday -- Saturday afternoon and evening, there's a series of exchanges between an unnamed person at the U.S. U.N. mission -- maybe Aaron Pelton, I don't know, the spokes person for the U.S. U.N. mission, and Tommy Vietor and Ben Rhodes, going back and forth about the preparation for Susan Rice for the Sunday morning talk programs.

Now, we do know that Victoria Nuland has already told the press, I had nothing to do with prepping Susan Rice, and Jacob Sullivan, who was then at the State Department, is now Joe Biden's foreign policy director, he, too, says, I had nothing to do with preparing Rice. But we have Pelton in communications with the White House, Ben Rhodes and Tommy Vietor, saying, you know, We need to get finalized on what we're going to say tomorrow morning.

So my question is, who was responsible for cooking up this story? And maybe Aaron Pelton, Ben Rhodes, Tommy Vietor or somebody else at the U.S. U.N. mission who was involved in sending those e-mails ought to step forward and answer the question of whether or not it was them who cooked up this story.

VAN SUSTEREN: I have two things. One is that I think Victoria Nuland is sort of an interesting study in this. First of all, she's the one who wanted to, at one point -- I think it was on the night of the 14th, which was Friday, she sent an e-mail and said the line about knowing there were extremists among the demonstrators will come back to us at the podium, you know, answering, how do we know who they are. So she was worried about that.

But she's also been very -- you know, she's worked very -- she's been a Republican administration employee, a Democratic administration employee, and she's now a very strong advocate in this and her name appears all over it. So she's interesting.

But the other -- the overriding conversation -- the overriding question I have is, why didn't everyone just tell the truth from the get- go? What's wrong with admitting it was terrorism? I mean, for -- you know -- you know, we need to -- we need to know if we're, like -- you know, if there's a risk out there.

I don't like all this scurrying around, all this hiding of the emails, classifying this dog and pony -- we've got Jay Carney, who I don't know how he faces the White House press corps now, having said that ridiculous stylistic thing. How is he supposed to develop credibility on behalf of the president from here?

ROVE: Right.

VAN SUSTEREN: I mean, like, you've got all this because -- you know, for one simple reason, they just didn't want to tell us the truth from the get-go!

ROVE: Right.

VAN SUSTEREN: I mean, and for no reason! I mean, no one made a -- no one got rich off this!

ROVE: Well, no real reason. They had political reasons. The head of the office of congressional liaison at State participates in this, and sort of says, Oh, we can't tell them -- we can't tell members of Congress about the warnings about all these previous incidents. That'll come back to haunt us. Well, they're clearly engaging in CYA.

And now, what's interesting, though -- and again, I repeat, Victoria Nuland is operating on behalf of, quote, her "building," and she says they aren't happy, and they are in touch with the National Security Council staff. Who was it that was at State Department who was unhappy? Was it Cheryl Mills, the chief of staff to Secretary Clinton? Was it Secretary Clinton herself?

Who was she talking to at the White House? Who were they talking to at the White House? Were they talking to Donilon? Were they talking to the -- to the chief of staff? Who were they talking to at the White House?

And -- and -- and frankly, I -- I'm a little bit -- you know, it gives me a little bit comfort that adults were trying to resolve this, not just simply all of these press types running around.

And then, of course, finally, the question is, was it Pelton at U.S. U.N. who briefed Susan Rice? And did Pelton come up with the lie about the video? Did they come up with -- they were in conversation, whoever that person was, with Rhodes and Vietor? Was it one of the two of them that concocted it, or one of their bosses? Did they tell the U.S. U.N. staffer, Hey, here's what Susan Rice needs to say tomorrow morning?

This is the biggest lie we've been -- and we had it told over and over again by a wide variety of people. The question is, who's responsible for propagating it? And the American people deserve to know.

VAN SUSTEREN: I think -- and let me just add one thing. When it's a matter of life and death, you know, I think we ought to be honest. You know, I mean, like, you know, all the political games that are played in this city, when it comes down to life and death, and that's what this is, and terrorism that could strike any one of us any time, that they should have told the truth. And you know -- and I hope we finally do get to the bottom. And I -- you know, we'll find out who did what and who didn't do what.

Karl, thank you.

ROVE: You bet. Thank you.