Obama: Fighting Both the Shadow of ACORN and Himself

This is a rush transcript from "On the Record," September 15, 2009. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: And tonight: How much worse can it get for ACORN? Well, a lot, apparently! There's another undercover tape, number four. Now, number four tape shows an ACORN employee giving advice to a very young woman who's pretending to be a prostitute. All four videos, shot by a filmmaker and his associate, have been given to FOX News.

Here is tape number four shot in California.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: (INAUDIBLE) Well (INAUDIBLE) is my hero. So do you know how you want to run it? (INAUDIBLE)

UNIDENTIFIED FEMALE: I was thinking (INAUDIBLE) doing it under the cover of a spa (ph). (INAUDIBLE) salons and...

UNIDENTIFIED FEMALE: (INAUDIBLE) what I would do is (INAUDIBLE) I would (INAUDIBLE) in my life have been abused, also (INAUDIBLE) but I don't think that that's a nice thing. (INAUDIBLE)

UNIDENTIFIED MALE: (INAUDIBLE) emotionally.

UNIDENTIFIED FEMALE: (INAUDIBLE)

(END VIDEO CLIP)

VAN SUSTEREN: Karl Rove joins us live. Well, Karl, this organization's sure getting the price, four tapes, and each one is more stunning than the last one.

KARL ROVE, FORMER GEORGE W. BUSH ADVISER, FOX CONTRIBUTOR: Yes. Today's was particularly unusual. She admitted to -- or claimed to have killed her husband because she thought he was going to abuse her at some point, so she claims that she shot him in the head. I mean, this is an organization that really must have a terrific human relations -- human resources department to hire people like that.

VAN SUSTEREN: Well, a lot of people may be unfamiliar with ACORN, but it's an organization that's done a lot of community activism, but has gotten a substantial sum of money over the years from the government.

ROVE: Senator Mike Johanns of Nebraska has estimated that they've received $53 million from one government department alone, the Housing and Urban Development department. I would suspect, if you added it up, there'd be several hundred million dollars that they have received in government funds over the years.

And they've done this despite the fact that they are -- you know, this is one of these peculiar and dangerous combinations, where you have a community organization which follows -- which has an explicitly political range of activities, but it also has sort of community service activities, like housing and social welfare services. And yet they're mixed together. And money's fungible, so you have money going to support things like helping people get housing that is also supporting the institution that's doing voter registration on behalf of Democratic candidates.

VAN SUSTEREN: Well, I'm sure there are a lot of very fine, good Americans who are in ACORN, but it certainly is stunning if -- you know, what we're seeing. And this is not done by the federal government doing an investigation, these are private citizens who did this and gave the tapes to FOX News. And you know, it -- you know, it's stunning to think of all of the money that's being poured out and is not monitored...

ROVE: Right.

VAN SUSTEREN: ... and you know, there are a lot of people at home tonight who don't even have jobs would love some of that money.

ROVE: Right. Well, and look, I don't think we've seen the end of these tapes. You know, we've had four stings in Washington, Baltimore, Brooklyn and now San Bernardino today. My understanding is there are a lot more tapes to come at a lot more sites.

ACORN is -- appears to be rotten, corrupt from top to bottom. I mean, look, I've been watching this group on voter registration efforts for years, and they are some of the worst actors out there. You know, if they sweep into your town or your community to do voter registration, you're going to find a lot of Disney characters on your voter registration rolls.

In 2004, there was an interesting incident in Albuquerque, New Mexico, which was I think insightful of the kind of enterprise these people run. A vice cop held a news conference in which he held up the voter registration card that his 15-year-old son had received and the voter registration that had been received by his -- by the young kid across the street. This kicked off a gigantic investigation by the local media that led to both city's newspapers -- both the city's newspapers editorializing about the rife fraud in voter registration conducted by ACORN.

The Democratic county clerk in Bernalillo County, Albuquerque, New Mexico, and the Bernalillo County sheriff -- one a Democrat, one a Republican -- called for a federal investigation. Ironically enough, that October, the same vice cop went on a bust, and in the drug house found a guy with a bunch of bad material and a bunch of paraphernalia, as well as a voter registration cards, absentee ballot requests and absentee ballots, who turned out to be a Cuban national on the payroll of ACORN.

So this is the kind of operation these people run. I'm not surprised by this. I am amazed that they got them on the record in the way that they did. I'm not surprised that there's activity inside ACORN.

VAN SUSTEREN: You know what I was surprised about? There was a Senate vote on Monday which forbids ACORN from receiving federal housing grants from the Department of Housing and Urban Development. They finally got that vote. And two Illinois senators, Senator Durbin and Senator Burris -- they were in -- were some that wanted to, you know, keep funding ACORN. There were other senators, as well. Seven voted to keep funding. But two from Illinois -- I thought, like, you know, what are they smoking?

ROVE: Well...

VAN SUSTEREN: I mean, we should at least put the brakes on while we figure out where the money's going.

ROVE: Yes. Well, and look, two things about that. One is -- one of -- the interesting one that caught me was Gillibrand, the new senator from New York. I mean, we have the Brooklyn example! They're on tape in Brooklyn, and yet she still voted to continue funding them.

And the other thing is this. This was in -- there are 13 appropriations bills. This was in the appropriation bill for Housing and Urban Development and Transportation. So it was a good vote, 83 to 7. But it also has to be approved by the House. And its version of the bill, which passed the House earlier this year -- they're going to have to reconcile these, and I would bet you a dime to a dollar that the Democrats in the House are going to be far more protective of ACORN. They're going to let this sort of -- hope it goes away, but I wouldn't be surprised to see Nancy Pelosi lead the Democrats in the House in voting to continue to fund ACORN.

VAN SUSTEREN: I think that without a full investigation, people are going to be very unhappy.

ROVE: Absolutely.

VAN SUSTEREN: Without a full investigation to see, you know -- I'm sure there are some, you know, good, honest people, but just to sort of weed out the bad ones.

Anyway, Karl, stand by.

ROVE: Excellent.

VAN SUSTEREN: We have much more Karl Rove. Don't go away, Karl. We're going to take a break.

And we are watching the breaking news out of New Haven, Connecticut, about the murder of 24-year-old Yale student Annie Le. The latest from police in minutes.

(COMMERCIAL BREAK)

VAN SUSTEREN: Karl Rove is still with us. All right, Karl, health care reform -- where are we? Will there be some or not?

ROVE: Well, you know, with the Democrats having 60 votes in the Senate and 257, I think, in the House, you'd think that Obama would get something. How much of it he will get I think is very much up in the air, but you'd have to think that, ultimately, he gets something to which he can claim health care reform.

However, he's making it more difficult for himself by his language in the speech last week, by the language in Minneapolis, when he went on his town hall meeting, by his language when he went to Pittsburgh for the AFL- CIO. He's taking the arguments of -- the concerns of his opponents and denigrating them, taking the concerns of ordinary Americans. We saw it last week, and the sort of the most controversial one was when he said, I'm not going to give health care -- will not be available to illegal aliens, and provoking Congressman Wilson's outburst.

But by Friday night, the administration responded to it not by saying that's untrue but by saying, You know what? We're going to close the loophole, because the bill, House bill 3200, said, You can't have it if you're an illegal alien, but they refused to have a verification procedure, so you know, all you had to do was show up, and you got it. In fact, in the Ways and Means Committee in the House, there was a vote to require people to provide proof of citizenship before they were eligible participate in the program. Democrats voted it down on a near party-line vote.

VAN SUSTEREN: Is he going to get the conservative Democrats at this point?

ROVE: You know, not if the -- not if the bill has a deficit. I mean, you know, he keeps saying, I will not sign a bill that adds to the deficit, and the Congressional Budget Office says it adds to the deficit. And remember, the reason why it adds to the deficit. Because, for example, in the House bill, it has 10 years' worth of revenue in budget cuts, Medicare and Medicaid budget cuts, the program doesn't start for two years, and it takes two more years after that before it ramps up to what it's likely to be.

So you have, in essence, two years of revenue where there's no cost, two years of revenue in which there's less cost, and yet despite this big sort of surplus that you start the program out with, by year six, seven or eight, you're in annual deficits and they simply get larger after that. It's $220 billion to $239 billion in the first decade, and the CBO says, in essence, it's going to be a lot bigger in the next decade. The estimate is $1 trillion of deficit in the second 10 years.

VAN SUSTEREN: We only have about 45 seconds left, but we went down to Honduras and interviewed the interim leader. And the viewers are going to see that interview in a few minutes. But tell me -- President Obama and Secretary of State Clinton have sided with the guy who got ousted.

ROVE: Who was trying to violate the constitution of his country and...

VAN SUSTEREN: Did they pick the wrong horse?

ROVE: They picked the wrong horse. And the question is, who was asleep at the State Department as the president of Honduras attempted to violate his constitution, force the -- force the constitution be -- there's one provision says you can't run for -- you can't run for more than a certain number of terms, and you can't change this part of the constitution.

And he was acting in an anti -- in a non-democratic fashion to abrogate that part of the constitution. And rather than stepping in early and keeping him from doing that, we end up stepping late, after he has been forced out by his supreme court and the legislature and the military, who said, You don't get to violate that part of the constitution and turn yourself into a strongman.

VAN SUSTEREN: So is it "Oops"?

ROVE: I think -- who's asleep at the State Department? And you know, this guy was problematic in the Bush years, and they had to deal with him. Somehow, they let him get out of control the first of this year because nobody was paying attention to it!

VAN SUSTEREN: Well, we're going to have the interview in a few moments...

ROVE: Good for you.

VAN SUSTEREN: ... with the new -- with the new guy. Anyway, Karl, thank you.

ROVE: You bet. Thanks, Greta.

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