This is a rush transcript from "Fox News Sunday," July 15, 2012. This copy may not be in its final form and may be updated.  BRIT HUME, GUEST HOST: The race for the White House intensifies as President Obama and Mitt Romney trade charges over who best can run the country.  HUME: We'll talk battle ground state politics and the impact of health care reform with two influential governors, Rick Scott of Florida and Terry Branstad of Iowa.  And then, campaign strategy. We'll talk with Karl Rove, the so- called architect of two presidential victories, and Joe Trippi, who redefined running for president in the Internet age.  Also, are the Obama campaign attacks on Mitt Romney's time at Bain effective? We'll ask our Sunday panel if the latest round of negative ads is working.  All right now on "Fox News Sunday."  And hello again from Fox News in Washington.  From the changing of welfare reform work requirements to implementing the new health care law, there is concern in some key states where the 2012 presidential election could be determined.  Joining us now are governors from two of those, Rick Scott, who comes to us from San Francisco, and Terry Branstad of Iowa, who's attending the National Governors Association meeting in Virginia.  Welcome to you both, gentlemen.  Let me start with this question that steered so much interest at the end of the week, which is a new -- a set of new possible waivers by the federal government of work requirements under welfare reform. This would appear on the surface to be simply a case of the states getting some more flexibility in how they administer the work requirements for receiving welfare benefits.  Let me start with you, Governor Branstad. How do you see these waivers? Some people are saying that it's going to gut the law.  GOVERNOR TERRY BRANSTAD, R-IOWA: Well, unfortunately, I think this is a huge step in the wrong direction.  I was governor along with Tommy Thompson from Wisconsin, John Engler from Michigan, when we worked with the administration back when Bill Clinton was president, to get the welfare reform passed, to move it from an entitlement program to a program that focused on job training and work. And we helped to move millions of people off of the welfare rolls into permanent employment. We reduced the cost of welfare and Medicaid as a result of it. It was very successful.  And now, we see this administration trying to gut it. I think it's illegal because it is in the law. I don't think they have a right to waive it. I know Tommy Thompson is saying he's thinking about suing them over it. I think it's absolutely wrong and a move in the wrong direction. The focus needs to be on helping people to move from welfare to work, not making people permanently dependent on the government welfare program.  We know that didn't work back in the '70s, '80s. And, finally, we changed it in the '90s. This program has worked.  It's absolutely a terrible step in the wrong direction.  HUME: But, Governor, isn't it unusual for a Republican like yourself to be arguing that the federal bureaucrats in Washington, with the rules they have laid out for this, know better than the governors in the states across the country and their subordinates about to how best to implement the law?  BRANSTAD: Well, actually, the governors are the ones that wrote the law in the first time. We're the ones -- I mentioned, Tommy Thompson, John Engler, you can talk to those governors that helped to pass this law and we saw it work effectively in our states. Welfare rolls went down substantially. We helped a lot of people moved to a higher standard of living and more opportunity.  And this guts it. This goes back to the kind of entitlement mentality, and that's --  HUME: Well, Governor, they haven't limited the work requirement that there be activity underway that lives to it to work. They are simply allowing the states to have more flexibility in how to implement that, aren't they?  BRANSTAD: Well, I would like to see more flexibility on the Medicaid program. I chair the health and human services committee for the national governors. We'd like more flexibility instead of these maintenance of effort requirements that the federal government has imposed us on Medicaid.  HUME: Governor, forgive me --  BRANSTAD: If you want more flexibility, do it under Medicaid.  HUME: I'm going to -- I'm going to come to Medicaid in just a moment.  Let me turn to Governor Scott.  Governor, how do you see this adjustment in the government's rules -- federal government rules on the work requirements for welfare?  GOVERNOR RICK SCOTT, R-FLA.: Well, Governor Branstad is right. I mean, first off, it'd be great if they gave us more flexibility on Medicaid, because that's just killing our state's budgets. With this, I mean, personality responsibility is very important. In our state, unemployment -- the number of people on unemployment in the last 18 months has gone from 568,000 to 321,000. And part of it is personal responsibility. People need to be going out and looking for a job.  If we -- we don't want people to stay on welfare. We want them to get back to work and that's what governors want. We want our states all busy and more jobs.  HUME: But, Governor, aren't you now in a position with the flexibility granted to you by the federal government to set the welfare to work requirements pretty much however you want it done?  SCOTT: Sure. We'll look at this, but we're going to keep the responsibilities in our states. I mean, I just wish they'd do this for everything. Do this for Medicaid.  Medicaid in our states is growing three and a half times our general revenues. Give us more flexibility on Medicaid. Give us a block grant. That's what they ought to be doing.  But this, we believe in personal responsibility and we're going to continue to have personal responsibility in our state. We want people to go look for a job and get back to work.  HUME: I assume, Governor, you'll do the same thing in Iowa -- keep the requirements similar to what you go, correct?  BRANSTAD: Absolutely. And I've got Chuck Palmer running the Department of Health and Human Services for us again. He helped me. And he ran it back in the '90s when we were able to dramatically reduce the welfare rolls and keep Medicaid under control.  Medicaid is growing dramatically in every state.  HUME: Let's talk -- let's talk --
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