Interview with Sarah Palin by Sean Hannity on Fox News' "Hannity & Colmes"

HANNITY: And welcome to HANNITY & COLMES. We're glad you're with us. I'm Sean Hannity. We get right to our top story -- top story tonight. Earlier today I sat down with Senator McCain and Governor Palin on the campaign trail at the headquarters of Lutron Electronics in Coopersburg, Pennsylvania.

Let's take a look.

(BEGIN VIDEOTAPE)

HANNITY: You just came off your debate last night, Senator, and you just came off your debate last Thursday.

Do you critique each other? Do you give each other advice?

MCCAIN: No, the only advice we give each other is to have fun -- two words -- and we talk before the debates, and just have fun, and it was obvious that certainly Sarah was having fun at her debate, and I was trying to have fun at mine, and I think we did.

HANNITY: But you did -- you did have fun. And you had -- was there a moment maybe before the debate where you were nervous, you begin to feel the pressure? It ended up being, what, 70 some-odd million people. We don't know the numbers from last night watching the debate.

Is that rolling through your head or you're just focused on what the mission is?

PALIN: Just focusing on the mission. And it was helpful though that you called me right beforehand, and he said those two words -- you said.

HANNITY: Have fun.

PALIN: Have fun.

HANNITY: No pressure. But while I have you both together, I want to talk about -- Governor, we discussed that you two had discussed the role that Governor Palin would play in the McCain administration.

Between the two of you -- Senator, let's start with you -- tell us what do you envision for the governor, as her role?

MCCAIN: Well, first of all she's probably one of the foremost experts in this nation on energy issues. She was responsible for -- to make a long story short -- a pipeline, the $40 billion pipeline bringing natural gas from Alaska down to the lower 48.

She has been involved in these issues of energy in many unique ways, including being on the board that oversights(sic) the natural gas and oil resources, and other resources in the state of Alaska.

And so I think that there's nobody more qualified to take on our mission of becoming energy independent.

Second, obviously, she has been a great reformer. I still don't think a lot of Americans appreciate what it's like for a Republican to take on an incumbent sitting governor of your own party. It almost never happens. They wait until they retire or whatever it is -- so it's clear that she's got a great record of reform.

And finally, you know those special needs families, I -- you know, when you -- after a debate you always kind of wish you had said something. And one thing that I wanted to say was that -- in our town hall meetings we have lots of families show up with children that have autism, and other special needs families.

Obviously, Sarah Palin wants to take on that task of helping relieve the burden, find what's causing autism, find a cure for it.

And so I think that those responsibilities, not only would I like for her to do, but she's uniquely qualified to do.

HANNITY: And on top of all the other responsibilities of being vice president -- and that means national security, and all the other issues.

MCCAIN: Can I just interrupt one second? Energy is.

HANNITY: You can do whatever you want.

MCCAIN: Energy is national security. Security -- national security is energy. If we don't become independent of foreign oil we're going to have greater national security challenge.

HANNITY: All right, maybe then I can have you two debate among yourselves on this one point. Because Governor Palin you have said that you're trying, you're working on Senator McCain on the issue of ANWR. And you said you haven't had success yet, but you're still trying.

PALIN: The important thing to remember, though, is that we're on the same page in understanding that it has to be an all of the above approach in dealing with the energy crisis that we are in. It's got to be the alternative sources of energy, getting plugged into the solution here.

Certainly, the domestic supplies of conventional sources also being tapped into, and then we've got to remind Americans that an effort has got to be even greater today towards conservation because these finite resources that we're dealing with obviously, you know, once oil is gone it's gone, once the gas is gone, it's gone.

And we've -- I think our nation has really become kind of spoiled in that arena. So it's an all of the above approach that he embraces, and that's good. That will lead us to that energy independence, as opposed to the other ticket where they have said, no, no, no, to every domestic solution that has been proposed.

And that was kind of perplexing last night listening to Barack Obama's position, all of a sudden, saying that we need clean coal and perhaps we need to offshore -- he's so on record as having opposed, and Senator Biden also, having opposed those.

So, you know, I think last night, coming away from your debate, too, one of the things that I got out of it was, I think Barack Obama is drilling for votes. I don't think that he's too keen on drilling for those source of energy that we need.

HANNITY: Well, you had pointed out about Governor Biden (sic) -- had once said, the use of word "raping" the outer continental shell.

PALIN: Yes. Yes.

HANNITY: . proponents of drilling, and -- but last night you brought up the fact that Senator Obama was against nuclear energy.

PALIN: Yes.

MCCAIN: We've got to develop the technology but go to the United States Navy -- we're sailing ships with nuclear power plants. You visit the French, the British, the Japanese, they all reprocess spent nuclear fuel.

But Senator Obama has done -- he's very good with words. He's very eloquent. But when you look past it, he has opposed offshore drilling and he has opposed nuclear power.

I mean, again, one of the things I was trying to stress in the campaign and in the debate last night, look at the gap between his rhetoric and his record. The most liberal senator in the United States Senate, that's why I urged the people watching last night, go to these Web sites, the National Taxpayers Union, Citizens Against Government Waste, and these other watchdog organizations.

Finally, this may sound a bit gratuitous, but at least because Senator -- Governor Palin -- Sarah Palin is so persuasive, I would like to come to Alaska, I haven't been there in many years anyway, and maybe I'll agree to go visit that area and have a look.

(CROSSTALK)

HANNITY: Are you going to take him moose hunting?

PALIN: Yes, let's do that, too, while we're at it.

HANNITY: Would you do that, Senator?

MCCAIN: Have some fish, you know, but moose hunting is fine.

(END VIDEOTAPE)

COLMES: Coming up, does John McCain think Barack Obama has the experience to lead this country? Sean pressed him on that and found out why it's not Obama's experience that McCain is worried about. More of Sean's exclusive sit-down.

And Newt Gingrich coming up with a reaction on HANNITY & COLMES.

ANNOUNCER: HANNITY & COLMES is brought to you by.

(COMMERCIAL BREAK)

COLMES: We now continue with Sean's exclusive sit-down with Senator John McCain and Governor Sarah Palin.

(BEGIN VIDEOTAPE)

HANNITY: This came up last night and this came up in your debate here. You used the line last night, which -- was interestingly, was a line that Senator Biden used about Senator Obama back when they were debating. And that is the presidency does not lend itself to on-the-job training.

And that raises the question -- I mean, because it seems to me a narrative has emerged, you know, the same lines that were used in the first debate by Senator Obama were used by Joe Biden in the second debate, were used by Senator Obama in the third debate.

Do you really believe that Senator Obama is prepared to be president of the United States? Does he have the experience?

MCCAIN: I don't. But I'll let the American people make a judgment in just 28 days. But I think he lacks the experience and the knowledge, and most importantly, the judgment that he has displayed.

The judgment that he displayed over his comments when Russia committed aggression against Georgia, and his failure, as I mentioned last night, to acknowledge that he was wrong about the surge.

He is -- in my view, does not have the judgment necessary to lead this country in very difficult times. And his record is replete with those misjudgments, whether it be his comments about -- in Afghanistan, all Americans are doing is bombing villages and killing innocent civilians.

HANNITY: Exactly -- the exact quote is "air-raiding villages and killing civilians."

MCCAIN: "Air-raiding villages," I mean, that's so insulting to the men and women who are serving in the military. I think that he should at least retract that statement.

But I think the important thing is his world view, his willingness to sit down with Ahmadinejad without precondition, or Hugo Chavez, or the Castro brothers, without precondition, giving them legitimacy, affirming their behavior and attitude towards their own people as well as towards us.

It shows a lack of knowledge and experience, and therefore, judgment.

HANNITY: Governor Palin, you had echoed those comments in recent days, this was immediately after the debate. And you actually is -- the phrase that Senator McCain just mentioned, "air-raiding villages and killing civilians," you said that that should disqualify him, meaning Barack Obama, from being commander-in-chief.

PALIN: Because there is such a gross misunderstanding of what our U.S. troops are doing in Afghanistan. What they're doing, of course, is fighting terrorism and protecting us, protecting our country.

And you know, they're building schools for the children in Afghanistan so that there is hope and opportunity there. So that just -- that gross misunderstanding of what the United States military's mission is right now is very, very concerning.

MCCAIN: Could I mention one other.

HANNITY: Yes, sir.

MCCAIN: . point on his record? Senator Obama said that he would never vote to cut off the funding for American troops in Iraq and Afghanistan. After promising that, he and a handful of others voted that way.

Now both he and Senator Biden said, well, it's the same vote that I cast. I cast a vote against withdrawal and surrender. And I had promised that I would do everything that I could to fight against any resolution that would entail withdrawal -- set dates for withdrawal and therefore defeat in Iraq.

So they're vastly different votes, they're vastly different.

HANNITY: Well, and Senator Biden had actually criticized him and said if you vote to cut off the funding...

MCCAIN: And said he took a political vote.

HANNITY: Well, he said lives would be lost.

MCCAIN: Yes. And has also said that Senator Obama took a, quote, "political vote." I agree with Senator Biden.

HANNITY: One of the things that keeps coming up is the economy, the economy. And maybe both of you can answer this question because it came up in your two debates and your one debate, 95 percent of the American people are not going to see their taxes go up.

You spent a lot of time in your debate dealing with that. You spent a lot of time in your debate dealing with that. Is that honest? Is that truthful?

MCCAIN: Well, first of all, it's not truthful in the respect that 50 percent or 40 percent of the American people -- of taxpayers -- American citizens don't pay taxes, federal income taxes.

So right there, that, obviously, is wrong. And maybe that means that he just wants to give them a check. But I don't know if you could interpret that as a, quote, "tax cut."

But more importantly, Senator Obama didn't tell, nor did he deny last night, that his plan raises taxes on small business income. Small business created 300 jobs -- thousand jobs last year.

We've lost at this -- so far this year, we've lost 700,000 and some jobs. Small business has created some 300,000 jobs. Eighty-four percent of employees, workers in America are employed by small business.

And he wants to tax 50 percent of small business income. That kills jobs. That keeps people from hiring.

So with Senator Obama's rhetoric, you always have to, one, look at the rhetoric, and two, look at the fine print.

HANNITY: Do you think that -- and I'll ask you, Governor Palin, this -- do you think -- for example, both of you have brought up the fact in two of the debates that he keeps saying -- you have made a point, well, wait a minute, you raised taxes 94 times, you had only been in the Senate a short period of time, and you voted to raise taxes on people making $42,000 a year and now you're saying that -- no, that's not going to happen for 95 percent of the people.

So is this just something -- is this a misnomer? Is this, you know, campaign rhetoric? Is he being dishonest, just not truthful with the American people?

PALIN: Voters have got to go to someone's record and see what they have proven already in terms of what they're capable of doing in the future, 94 times being on the wrong side of the American people in voting for higher taxes.

And then he proposing to spend now nearly a trillion dollars in new government growth. He doesn't explain how he is going to get the money to pay for that also. And then two, these three years in the Senate, that nearly $1 million a day in his own requests of earmarks for government to spend it.

That's somebody's record. I mean, you know, it shouldn't be controversial, it shouldn't hurt anybody's feelings or anything else. But these types of issues are brought up as somebody's record.

Now, that's as opposed to John McCain's record and my record where we have truly -- that track record that shows the reform, the desire to and the success in putting government back on the side of the people, our small businesses and our families.

HANNITY: All right.

MCCAIN: And one additional point.

HANNITY: Sure.

MCCAIN: When he ran for the -- for the United States Senate, he said he supported a middle income working family's tax cuts. He never introduced a single piece of legislation to implement that.

And instead, he voted 94 times to either increase people's taxes, or against tax cuts and -- voted for a resolution which called for taxing individuals who make as low as $42,000 a year.

Again, look at the record.

HANNITY: Now you brought up in your debate, Senator, that since the time you've been in Senate, about -- I think you said a $1 million of pork a day.

MCCAIN: Roughly.

HANNITY: Roughly. Joe Biden, last year, what, I think it was $120 million in pork barrels that he brought back to the state of Delaware. Both of them were -- pretty much dismissive in saying that's not that much money. Is that.

MCCAIN: The fascinating thing is when he says it's only, quote, "$18 billion." Now, it's a lot more than that. But $18 billion -- and anybody but an inside the beltway pork barreler would think it's a lot of money.

And you know the other thing that they keep not talking about, Sean, is the corrupting influence.

Now Fannie Mae and Freddie Mac -- we blew the whistle two years ago, a bunch of us. And Fannie and Freddie -- with campaign contributions to the same kind of system -- were basically gaining and purchasing influence so that the Democrats were fighting back against any real regulation and bringing under control what a lot of us said was going to be a train wreck.

(END VIDEOTAPE)

HANNITY: And coming up Governor Palin has been hitting Obama hard on the campaign trail over his ties to the unrepentant terrorist Bill Ayers.

Next the senator and the governor tell us what they think about Obama's questionable associations.

(COMMERCIAL BREAK)

HANNITY: And we now continue with more of my exclusive interview with Senator John McCain and Governor Sarah Palin.

(BEGIN VIDEOTAPE)

HANNITY: Governor, you in the last couple of days, this past Saturday, the "New York Times" came out with an article about the relationship between Senator Obama and a man by the name of Bill Ayers.

Bill Ayers takes credit for, of all days, in the "New York Times," September 11, 2001, says, "I don't regret setting bombs, I wish we did more," a man who admits to bombing the Pentagon, the capitol, New York City police headquarters, whose motto was get all the rich people, break their cars and houses, and go home and kill your parents.

How big an -- we expected this to come up last night in the debate. It did not. What more do you want to know about this relationship? What does it tell you about Barack Obama?

PALIN: Tells me again we need to question his judgment. And you know not only those terrorist activities that Bill Ayers was involved in, but the questions need to be asked, I believe, when did Barack Obama know of his activities?

We've heard so many confliction stories, and flip-flop answers about when he knew the guy, did he realize that he kicked off his political career in the guy's living room? First it was yes, and then it was no.

It comes down to again, judgment and truthfulness and a candidate's character.

HANNITY: Well, this is what we know. We know that he did kick off his political career in his house.

PALIN: Right.

HANNITY: The year was '95. We know they've sat on multiple boards together. We know they've given speeches together. We know there's been sort of a back and forth financially. Ayers contributing to Obama, Obama sort of working some money back through them.

What questions, Senator, would you like answered as it relates to this relationship? And do you think the American people should care about this?

MCCAIN: I think they should care about Senator Obama's truthfulness. I don't care much about old terrorist and his wife who are still unrepentant. By the way, she was as much or more active than Mr. Ayers was.

But the point is, it's not about them. It's about Senator Obama being candid and straight forward with the American people about their relationship. He has dismissed it by saying he was just a guy in the neighborhood.

We know it's much more than that. Let's reveal all the details of that relationship and then the American people can make a judgment.

HANNITY: But here's a question -- his answer is, well, I hardly knew him. I was 8 years old when he committed these, quote, "despicable acts." That's his answer.

But he was in his 30s and 40s when he sat on a board with him, gave speeches.

MCCAIN: When he was in his living room, yes.

HANNITY: And was in his living room. And I guess my question is, should the American people be concerned that he's capable in a post-9/11 world of fighting terrorism, when he is friends with an unrepentant terrorist?

MCCAIN: Well, I think that's also part of the judgment the American people make. But first, I think we ought to have a full and complete examination of the relationship. And then the American people can make a judgment.

And so far, I think it's very clear that he was a lot more than just a guy in the neighborhood.

HANNITY: Do you think this needs to be asked more in your next debate? Do you think it should have -- because a lot of us in the media was sitting back thinking -- because of the "New York Times" and because of your comments, Governor -- that this is something that needs to be vetted out.

MCCAIN: Well, I hope it's vetted out, if it needs to be vetted out. And I think the American people understand whether Senator Obama has been truthful and candidate about his entire relationship with Mr. Ayers, and with others very frankly.

HANNITY: Well, let's talk about others.

MCCAIN: Including the ACORN organization.

HANNITY: Well, we've got -- this is now part of a larger narrative that's emerging. And the Obama campaign seems very, very defensive about this. They don't want any questions, how dare you ask, this is unfair.

But he's friends with Father Pfleger, a radical -- fairly radical figure in Chicago, Tony Rezko, a convicted slumlord, we have in one case. And we know that he spent 20 years in the pews of Reverend Wright, who has said the most outrageous things, including G.D. America and "America's chickens have come home to roost" after 9/11.

What does that tell you, Governor, about Senator Obama and his radical associations?

PALIN: It goes right back again to the candidate's judgment and who he chooses to associate himself with in the past, perhaps the present. It makes me question who he would associate himself with in the future.

HANNITY: Yes. And we should -- Americans should be concerned about it.

PALIN: I'm concerned about it.

HANNITY: In what way?

PALIN: Concerned about it because, again, somebody's track record says so much about who they are and where they want to lead this country.

(END VIDEOTAPE)

COLMES: And coming up, more of Sean's exclusive interview. McCain and Palin explain why they're happy and comfortable to be the role of the underdog.

Plus we'll get a reaction from former Speaker of the House Newt Gingrich. All coming up on HANNITY & COLMES.

(COMMERCIAL BREAK)

(NEWSBREAK)

COLMES: We continue with Sean's exclusive interview with Senator John McCain and Governor Sarah Palin.

(BEGIN VIDEOTAPE)

HANNITY: Senator, your life story is you spent five-and-a-half years in the Hanoi Hilton. I think what I read, almost every bone in your body has been broken. And you've been tortured. And by the way, one of the reasons you don't use the computer, they ran that ad, is because of your war injuries. And you cannot lift your arms above your shoulders...

MCCAIN: Yes, I can do better than that.

HANNITY: But think of how this war has been politicized through the prism of your experience in Vietnam. The leader in the Senate, Harry Reid, said, "The surge has failed; the war is lost."

Dick Durbin compared our troops to Nazis. John Kerry said our troops are invading Iraqis homes in the dark of night, you know, terrorizing women and children. There are verbatim quotes. And Barack Obama said they're "air-raiding villages and killing civilians."

So my question is, you know, what does that -- that's poisonous rhetoric, but it goes on. What does it mean? How do you stop that if you're elected president and vice president?

MCCAIN: Well, we'll show them -- we'll show them victory. The American people understand what's at stake here. And the American people have rejected that. And a lot of voters will be making a judgment.

When the majority leader of the Senate declares the war lost, then a legitimate question is, who won? Al Qaeda? Who won? So these comments have been reminiscent in many ways to some of the rhetoric that was used during the Vietnam War that harmed our veterans so much, and harmed their ability to come all the way home.

Words matter. Words matter. And when Senator Harry Reid declares that the war is lost, well, our young Americans who are over there putting their lives on the line, it's not right.

HANNITY: All right. Last question. Tell us a little bit more about your relationship as it has grown. And I want the inside story about how you decided to ask Governor Palin and how that conversation -- I've got you together, so I want both versions before we let you go.

MCCAIN: I really was looking for someone who could shake things up in Washington and reform. And very frankly, there are some good, very wonderful people out there that we had to consider.

But I saw this as a real breath of fresh air that would sweep across America, give people inspiration, which Sarah Palin has, which would excite our base. But most of all, that Americans could look forward to to reform the way we do business in Washington and restore trust and confidence.

It's not an accident that Sarah Palin is the most popular governor in America. It's not an accident that she has given the people of Alaska money back. That she has cut spending and that she's done the things that we need to translate to our nation's capital.

HANNITY: Governor, your side of the story. When did you really begin to realize that Senator McCain was seriously thinking about selecting you as VP? And you said that you wouldn't blink.

PALIN: Right.

HANNITY: But, as that process was -- when did you think, this may happen?

PALIN: Oh, you know, really not until maybe we were face to face and I could look him in the eye and see the serious way he was willing to offer this challenge to me, this responsibility that he asked that I would take on. And of course, I was so happy to.

But, you for the years, I've been a big fan of his because of that independent spirit that just courses through your veins. And that has -- that's made me admire him. And I knew it was confirmation, it was right on that I was to support him when, early on in the presidential race, he had said something in the newspaper that was controversial -- imagine that -- about what was going on in the administration. It was independent, is what he had used, the tone of his comments.

And I had been asked about it up in Alaska, by the local press, and I said, "Oh no. He's spot on. You know? We don't need to keep going down that track," something that the administration was going on.

And then I got a call from a Republican member of Congress who said, "Yes, I understand that you're thinking about supporting McCain. Well, let me tell you about the hell he's put me through with earmark reforms."

And I said, "Right on. That's confirmation. He is the guy that I'm going to support."

HANNITY: The polls are tightening. Zogby two points. A two point race today. You got Hotline as a one-point race today. CBS has it as a three-point race, and it's even tighter among likely voters. Do you view yourselves as underdogs?

PALIN: It makes us work even harder. It does.

MCCAIN: We're the underdogs. She was an underdog when she took on a Republican incumbent governor.

(CROSSTALK)

HANNITY: I'm the underdog against Alan Colmes, so...

MCCAIN: I was the underdog throughout the primaries.

HANNITY: That's true.

MCCAIN: You might recall, many declared our candidacy dead. We're glad to be in the underdog role here. It excites and motivates our supporters. It gives Independents another look at us. And I'm very happy with where we are, Sean. I couldn't be happier.