This is a partial transcript from "Hannity & Colmes ," Feb. 9, 2005, that has been edited for clarity.

Watch "Hannity & Colmes" weeknights at 9 p.m. ET!

SEAN HANNITY, CO-HOST: Good to see you.

KARL ROVE, PRESIDEN’T BUSH’S DEPUTY CHIEF OF STAFF: Good to see you, good to be in New York

HANNITY: Good to see you and great to have you back. When I show you this map, all that red, what is it 81 percent of the counties in America?

ROVE: Eighty-one percent of the counties in America and he increased his vote in 87 percent of the counties in America.

HANNITY: What does that mean to you?

ROVE: Well, I think it means the acceptance, I think America looked at this president

And saw in a time of great challenge of change, the steady and strong resolved leader that they felt comfortable having lead the country for the next four years.

HANNITY: What happened in the South, if you go back to 1980, 20 Democratic senators six Republicans and now its 22 Republicans and four Democrats. What happened?

ROVE: I think in the collapse of the Democratic Party and the growth of the Republican Party, one thing alone wouldn’t have done it but both things together have made for a pretty dramatic change for what used to be in the solid bastion of the democratic party I mean think about between 1856 and 1964 I think it was an only occasional southern state that ever voted for a republican for president and there was only an occasional republican member of congress during that entire time after the collapse of the reconstruction era there was literally no republican member of the senate from the south from the 1880s or the 1890s through 1961.

HANNITY: It’s an amazing change that has taken place, lets talk about Election Day. It’s interesting, we had a lot of close states here, you brought Pennsylvania in pretty close, New Hampshire, Wisconsin, Michigan, Minnesota.

ROVE: Oregon.

HANNITY: Oregon’s another one — close margins, but if you listen to John Kerry, this race came down to 60,000 votes, changing one direction in Ohio.

ROVE: We won by 3 million plus votes, increased the total by 12 million by what the president got four years ago, they clearly thought that they were going to win, and the thought they were going to win because their ground game in places like Ohio and Florida. As you saw the campaign in the final six weeks, the board kept shrinking and all the shrinkage was to our favor — states that they had said earlier on were going to be in play like Louisiana, Arkansas and Missouri moved out of play relatively early into our camp, Arizona, which was supposed to be a battleground state, North Carolina, West Virginia so as the campaign came to the end, the states that were in play tended to be more of the states that Gore won in 2000 and less of the states that Bush won in 2000.

HANNITY: How do you repair the damage — I think one of the big media issues in the campaign was 50 days out of an election, CBS comes out with this report - they ignore the exculpatory evidence in the President’s favor because they wanted to go forward with this, this is becoming a big deal now. I argue that if it weren’t for Col. Killian’s wife and son and Ben Barnes’ daughter bravely coming out and telling a different side of the story publicly, because they thought this report was so biased. This — that story, 50 days out of an election could have had a major impact on the outcome.

ROVE: Right.

HANNITY: How does — you agree with that, right?

ROVE: I think — I'm not sure how big an impact. It would have had an impact. But you're right; what happens, though, when a story like that comes out is — is that people who know things that differ from the story, who have credibility, like the Killian family and like Ben Barnes' daughter and like others, step forward to say something about it.

In this case, we also had this unusual example which I think is a testimony to our changing media, of the bloggers immediately jumping on this and, you know, just sort of, like the application of a lot of very talented minds, some of whom got it wrong and many of whom got it right, raised interesting questions about it that helped...

HANNITY: How does Karl Rove — how does the president repair the damage with an organization like CBS?

ROVE: Well, the president had Dan Rather in for an interview just before the State of the Union for lunch with the editor — anchors. And you know, we just move on. I mean, that's, you know, there's nothing we can do about it.

HANNITY: Just take it and go.

ROVE: Take it and go. I mean, you know, he is the president. He gets — he gets a lot of coverage, some of it good, some of it bad, some of it right, some of it wrong. And, but you know, if you — if you sit there as president and stay focused on that and not your job, you're going to be spending a lot of time doing — doing not very helpful things.

HANNITY: What do you think of this new media that we all talk about? We have the bloggers you just mentioned.

ROVE: Right.

HANNITY: Talk radio.

ROVE: Right.

HANNITY: Big audiences out there. The FOX News Channel is an alternative, fair and balanced.

ROVE: Right.

HANNITY: Do we get to the same conclusion if we didn't have the explosion of this new media, if we were just left with three major networks and one liberal cable network?

ROVE: Yes. The explosion of new media is going to — I mean, think about it. As we sat down and as we were planning the 2004 campaign, I sat down with Mike Deaver, who's a very bright guy, and asked him to tell me about the 1984 campaign. And when they had to deal with, you know, one picture a day, three national networks, wire story, you know, that was it. And now there's insatiable demand for content, and I don't think we fully understand all the implications of it.

I think democracy is healthier when there are more voices. We're — though it's electronic, we are, in a way, going back to a very early era, when there were a lot more voices in the marketplace, when there were a lot more newspapers and a lot more sort of community involvement, civic involvement and discussion about it.

So I — it's healthy, but it's going to be messy to sort of figure it out and begin to grapple with it.

HANNITY: Tell me if you agree with me that in many ways it seems that the Democratic Party, the campaign never ended. I want to give you some quotes and comments, and I want you to respond.

Three days before the historic elections in Iraq, Ted Kennedy pretty much called the president a liar and said that our military has become part of the problem not part of the solution. And then he started talking about a withdrawal.

Five days before the election, former Democratic presidential candidate, Dennis Kucinich, called the elections — pending elections a farce.

John Kerry, former candidate, your friend, said Iraq is more of a terrorist threat today; the world is less safe today.

ROVE: Well, we disagree with — I mean, we put — these policies through this administration with the support of a lot of Democrats has pursued is the correct policy. And I think very few people in the world could fail to be moved by the scenes that we saw on Election Day in Iraq.

I mean, it was just powerful. I don't know if you've seen it, but there's one particular thing that caught my eye in the last few days. There is an e-mail going around that shows stills from an unmanned vehicle that was hovering over Baghdad, and they show a street — they're all time-stamped and so forth. You see a street where there's clearly, an explosive device go off, and there are military vehicles there, investigating it.

A short time later, they show the same street. The military vehicles are gone and the street is filled with people, moving through the street. Then they pull back, and there's a scene of a building with a square in the middle of it, with the people milling around. And outside the building snakes a long line of people. And you realize it's a voting place.

The bomb goes off. Ten or 20 minutes later, the street is filled with people, walking bravely to the polls and then standing in line for God knows how long in order to vote. I mean, it was just — it's a powerful image of why freedom is really ingrained in everybody's, you know, sort of DNA. It's why, you know, people don't desire to live in slavery, as the president said. They desire to live in freedom and given a chance, will exercise that freedom in a very powerful way.

HANNITY: As a political strategist, put your analysis hat on here for just a second. Since the election, those comments — and Ted Kennedy's been out there often. John Kerry's been very critical. You have Barbara Boxer out front for the Democrats in a public forum, accusing Condi Rice, basically, of lying. And then we see she uses those statements in a political, you know, fundraising letter. Harry Reid we're going to get to in a moment.

What do you — strategically, what are Democrats deciding to do here? They made a decision that Howard Dean's going to be the head of the DNC. They decided to go left? Is that a good strategy?

ROVE: Well, I don't know what the Democrats have decided. Clearly, some leaders in the Democratic Party have decided to speak out in a way that I don't think is fundamentally accurate in some instances or right in others. I mean, I think Senator Kennedy's comments about the U.S. military in Iraq are fundamentally wrong, and the idea of setting an arbitrary timetable for withdrawal from Iraq is wrong.

But that's their right. And where the Democratic Party is going to end up, I don't think any of us really know. It's going to be some number of months and some number of combination of some number of voices before a image gets fully defined.

HANNITY: Yes. Harry Reid is upset with the president, Republican Party. They have a 13-page memo they put out on Harry Reid. Interesting. In that memo, he reiterated a point he had made earlier. He used very strong language against the president, called him a liar, said he betrayed Nevada, betrayed the country.

ROVE: Well, look, the politics is what's going on. But look, the president's going to continue to reach out to Democrats, try and find common ground. The president lets these things wash off of his back.

HANNITY: Is it hard to deal with somebody that uses harsh language like that?

ROVE: No. I know — I know the senator in question. He's a nice fellow. We both share Nevada roots. But that's the way Washington works sometimes. The important thing is for the president to keep focused on these big goals, reach out to people across party lines and encourage people to sort of leave the politics behind at a certain point. And it's a big part of Washington. It's part of our system.

But don't take it personally, and focus, yes.

HANNITY: One of the things this document pointed out is that, for example, on judicial nominees, Harry Reid is quoting as saying that, both in committee and on the Senate floor, all nominees ought to have an up or down vote. And now he's saying just the opposite, and his actions show that he's taken a different position now that there's a Republican president.

He once said about Social Security privatization on "FOX News Sunday" just in 1999, he said, "Most of us have no problem with taking a small amount of Social Security proceeds, putting them in the private sector." And now he's saying if someone wants to do this, they're going to have to find someone else — someone other than me.

ROVE: Well, just try to convince him of the rightness of — the rightness of our policy. And you know, a lot of people say things because of politics. And that's fine. But at the end of the day, we're confident we're going to be able to both get up or down votes for our nominees and get Social Security modernization passed.

HANNITY: Bill Clinton himself was the one who said that there was a looming crisis in Social Security. Al Gore reiterated the point often. Seems the mantra now of the Democrats is there is no problem.

ROVE: Well, again, the mantra of some Democrats. Give them the benefit of the doubt. But you're right. President Clinton did a courageous thing when he pointed out the looming insolvency of Social Security. I mean, we face a demographic time bomb that's going to go off with certainty. We may disagree as to what month exactly it happens, but the Social Security trust fund cannot sustain the program.

In 2018, we begin spending more than we're taking in on Social Security. Social Security is a pay as you go program. The payments made by current workers support the payments of current retirees. And in 2018, we start going into the red. Each year we begin spending increasingly more than we are taking in. And by 2042, the system runs out of money.

And the problem is demography. In the '50s, when we were starting out, when we were born, there were 16 workers for every beneficiary. And 3.3 today and on its way to two workers for every beneficiary. And the benefit is also ramping up at a level faster than economic growth and faster than inflation, because of some things built into the system in 1978. And as a result, it's on an unsustainable track.

HANNITY: If Harry Reid's right, and he has all of the Democratic senators on board, how does the president get this passed?

ROVE: Well, I noticed that there are — there are Democrats who we're talking to, the president's talking to, that other Republicans are talking to who clearly understand that this is a demographic time bomb that needed to be dealt with.

Time is our ally. The earlier we act, the more — the better it is. The more likely we give younger workers a better chance to have this robust earning vehicle called the personal retirement account. And the longer we wait, the more difficult a solution comes.

HANNITY: The two great examples now, that have been used in the last 25 years, one is Chile where there was fierce opposition. Many of the same arguments that are being used today were used back then.

ROVE: Right.

HANNITY: Only 25 percent of the population signed on in the beginning. Now 95 percent of the population got into it, because it works. And similarly, Galveston County, Texas, got out of the system. Fifty-one thousand dollars a years, an employee pays the same amount of money in. He'll get $4,000 a month, versus $1,500.

ROVE: Right. The powerful — well, all state and local governments are allowed to be exempt from paying Social Security taxes. And some — not only Galveston County, Texas, but we Texans are sort of progressive. It's the next-door neighbors in Brazoria County also. San Diego, California.

There are lots of countries — I mean, it's surprising. Sweden, for example, has a personal retirement account Social Security system.

HANNITY: All right. Let's look a little bit, and this is for real political insiders, and they want to get into Karl Rove's brain, because you are the architect. Let's look a little bit down the road in '08. We see some interesting maneuvers going on.

Hillary Clinton, clearly to move center right on issues like immigration, pro-life issues, family values issues. It appears, and it's been written up in the press, that this is a concerted effort on her part.

You have somebody like Evan Bayh, who comes out against Condi Rice. Considered a more moderate senator, from Indiana. What do you make of those moves?

And who do you see in the Republican Party that — because Dick Cheney just said this last week that he's not going to run. Who do you see in the Republican Party, and the Democratic maneuvering?

ROVE: You know, there's lots of time for good people to emerge. I mean, we just got through an election. We've got a couple years more. I'm sure there are people thinking about it and interested and planning for it. But that — I'm not one of them.

I do think this. I do think the country is a — our country is a center right country and we sort of — we're on the center and slightly to the right of the center. And the Republican Party is identified today as the center right party in the country.

And Bill Clinton artfully understood, with his new sort of third way Democrat. Remember, he ran for president in 1992 talking about balanced budgets and welfare reform and supported the death penalty. And he understood that there were symbolic steps that he could take to sort of emphasize his center credentials and — and — but the country is center right.

And that's where the Republican Party is. That's why we won the last election. It's why we won the election in 2002 when we shouldn't have. It's why we won the election in 2000 when we should not have.

I mean, we were at a time of relative peace and apparent prosperity in 2000, even though the economy was slowing down and the market had peaked and was on the way down. By the time of the November 2000 election, the economy was still, by the numbers, in pretty good shape. Not a good direction. Not a good trend line. But the incumbent party should have won.

I mean, all the economic forecasters, and there was a panel in September 2000 of all the political scientists who predict elections. And every one of them predicted a big Gore victory.

But the fact is, the president, by emphasizing the compassionate conservatism, by emphasizing that we were a conservative party with a heart, by being a center right party, garnered the attention and the support of the American people and won an election that he shouldn't have. And then won reelection by not talking about, "Hey, vote for me. I've done a good job," but saying, "Vote for me because I have big, important things that I want to help the country do in the coming years." And that was important.

HANNITY: Can Hillary win one day?

ROVE: I don't — I'm going to pass on that one. I think the presidential elections in 2008 are unpredictable. I do think the country is going to want to see a center right candidate. And the question is, can the Democrats offer up a candidate who's comfortable enough with Americans that they can overcome the advantage that we've got as being a true center right party in America?

HANNITY: Let's go over one last issue here, which is probably the most important. And it deals with Condi Rice now has been traveling through Europe and the Middle East and she made comments about Iran earlier today. And about the potential U.N. sanctions may be necessary at some point. She had interesting discussions in France, not particularly supportive of the president's plan in Iraq.

As we look at, now, the democratization and the potential now for a real shift in Iraq and elsewhere and you look at our allies and some of the support we lost, what is the overall plan? How do you bring some of these people in? And where do we go from here in terms of challenging those rogue nations, the axis of evil's face?

ROVE: Well, each situation requires different tools to be brought to bear. Clearly, though, the election in Iraq and the developing democracy in Iraq is changing so many things.

It is making possible the reestablishment of strong ties to some historic allies, because there is a recognition that, while they may have agreed or disagreed with what we did in Iraq, it is absolutely vital that Iraq succeed. So many good things can happen when Iraq succeeds.

I think there's also a growing recognition that, because of the president's firmness in dealing with Arafat, and his clarity in laying out the roadmap in the Middle East that we have, and because of what's happening in Iraq, we have a real opportunity for fundamental reform in the Palestinian Authority and the creation of two states, living in peace and harmony in Palestine and Israel.

And I — there's clarity on the part of the Europeans, I think, as to the concern that we all ought to have about an Iranian nuclear program. And I know the secretary is spending a lot of time talking with European leaders about a concerted, unified effort to bring about pressure for Iran to disavow and dismantle its program.

You see a similar sort of multilateral approach in the — in the Far East, where, you know, the North Koreans would love nothing more — better than to say, "It's us and the United States. And, you know, we're the little power who's rattling our saber. And the United States sits down with us and us alone."

The president was wise enough to say that's not the way we ought to go. We tried that in the '90s and it failed. What we need to do is bring to bear China, Russia, Japan and South Korea, with the United States, in a multilateral effort to make it clear to the North Koreans that they must disavow their trafficking in dangerous material and dangerous weapons and that there is no alternative.

And by having this concerted, unified effort, we are isolating them and bringing them along.

HANNITY: Karl Rove, thanks for being with us.

Content and Programming Copyright 2005 Fox News Network, L.L.C. ALL RIGHTS RESERVED. Transcription Copyright 2005 eMediaMillWorks, Inc. (f/k/a Federal Document Clearing House, Inc.), which takes sole responsibility for the accuracy of the transcription. ALL RIGHTS RESERVED. No license is granted to the user of this material except for the user's personal or internal use and, in such case, only one copy may be printed, nor shall user use any material for commercial purposes or in any fashion that may infringe upon Fox News Network, L.L.C.'s and eMediaMillWorks, Inc.'s copyrights or other proprietary rights or interests in the material. This is not a legal transcript for purposes of litigation.