This is a rush transcript from "Hannity," August 26, 2011. This copy may not be in its final form and may be updated.

FRED THOMPSON, GUEST HOST: Last night, one of the architects of President Obama's economic strategy stepped into the lion's den and went one on one with Sean.

Well, you've got to admire his nerve.

Tonight we've got round two of that heated interview with former White House economic adviser Austan Goolsbee. Take a look.

(BEGIN VIDEOTAPE)

SEAN HANNITY, HOST: Here's the president and he's off at Martha's Vineyard and having a nice vacation, hanging out with limousine, you know, those corporate jet guys, the really rich, the really wealthy that he often demonizes in speeches, which I find a little bit amusing.

But, here's the deal. The president does this and he says when I get back I got a plan, I'm going to -- we're going to talk about the economy and creating jobs. Let me just play a little brief history with the dates associated of the president resetting the button on the issue of the economy. Here's what he said.

(BEGIN VIDEO CLIPS)

PRESIDENT BARACK OBAMA, NOV. 2, 2009: The question is, how are we going to make sure that people are getting back to work?

OBAMA, JAN. 27, 2010: Jobs must be our number one focus in 2010.

OBAMA, JAN. 1, 2011: As president, that's my commitment to you, to do everything I can to make sure our economy is growing, creating jobs, and strengthening out middle class.

OBAMA, APRIL 2, 2011: And making sure jobs are available is the first thing I think about when I wake up in the morning. It's the last thing I think about when I go to bed each night.

OBAMA, MAY 7, 2011: Not a day goes by that I'm not focused on your jobs.

OBAMA, AUGUST 2, 2011: I'll continue, also, to fight for what the American people care most about, new jobs, higher wages, and faster economic growth.

(END VIDEO CLIPS)

HANNITY: All right, Austan, here's my guess and I know you're out of the administration now. Here's my guess, the president's going to come back from his Martha's Vineyard vacation and he's going to -- he's going to talk about new infrastructure, which means spending, another sort of stimulus. He's going to say we have to have new revenues and anyone that disagrees with him is reasonable except he will probably use different words this time, poll tested and focus grouped. Am I -- am I off track?

AUSTAN GOOLSBEE, FORMER WHITE HOUSE ECONOMIC ADVISER: Look, I -- that doesn't sound on track to the -- to the Obama I know. I think you're likely to see the president call for those things where we can agree. I am sure there's somewhere -- where there's going to be some disagreement. Now on the infrastructure, you're saying that's just spending but I would note that Chamber of Commerce agrees with the unions in this case that if we set up an infrastructure bank that wasn't controlled by pork and could be directed to some important economic investments, it might be able to attract some more building of factories in the U.S. So, I -- I wouldn't make light of that.

HANNITY: Isn't investment, though, another word for spending and wasn't this the same policy that's called the stimulus? And then we had the son of stimulus. I guess this is the great, great, great grandson of stimulus and -- and none of them have worked.

GOOLSBEE: I would say no -- no, I would say no and no and -- and I somewhat disagree with that third thing you said. But, so, the original recovery act is passed at a time when the private sector's in freefall so there -- it's more controversial because it involves more government than most people are comfortable with. It's not designed to be sustained that the government would be the primary driver of recovery, absolutely not.

It's just that there was no way to have the private sector leading the recovery when we're declining at the fastest rate in our lifetimes.

HANNITY: All right, but --

GOOLSBEE: Fast forward to now. In December, the president's passing a tax -- a bipartisan bill, last December, that's about investment incentives that are trying to get the private sector stood up, payroll tax cuts go to 150 million workers. It strikes me that's the style of things, things that are going to leverage the private sector, how we should do it now.

HANNITY: -- but here's the deal, you can't make the argument to me, I'm sorry, when interest rates are 21-1/2 percent and unemployment is at double digits and inflation is out of control like in the Carter years, I -- I don't buy the argument that President Obama inherited a worse economy than -- than Ronald Reagan. And he's doing, I see it, the opposite of everything that Reagan did and, you know, last recovery summer Joe Biden was promising 500,000 jobs a month. The president himself has made, you know, we -- by this point in his presidency we were supposed to have 5 million jobs, not a net loss according to the Bureau of Labor Statistics of 2-1/2 million jobs.

GOOLSBEE: But now wait a minute, the Bureau of Labor Statistics, you're counting the second half of the free fall that we were in when the president took office.

HANNITY: Excuse me, since the -- since the stimulus.

GOOLSBEE: From when the fall ended, when the stimulus was passed, I mean it's been spread out over three years.

HANNITY: Ok. Since the stimulus was passed it's been nearly three years.

GOOLSBEE: -- since the stimulus has passed, over the 17 months -- wait, take the 17 months where we're actually growing fairly robustly.

HANNITY: Growing? We're losing 400,000 jobs a month. We're losing.

GOOLSBEE: -- before the events at the beginning of this year, we added

2-1/2 million, we added 2-1/2 million jobs. When the president takes office we're losing almost 800,000 a month. When we slow that down and turn it around we add 2-1/2 million. It has taken longer than we anticipated. There's no question about it.

HANNITY: We didn't add. I can't let you get away -- we've lost 2-1/2.

GOOLSBEE: You're not -- that's not true.

HANNITY: Wait a minute. We've lost 2-1/2 million jobs.

GOOLSBEE:  We lost 8-1/2 million.

HANNITY: I have it here.

GOOLSBEE: What you're doing is you're adding the fall to the rise. We lose over the course of the downturn 8-1/2 million.

HANNITY: Wait a minute.

GOOLSBEE: We then come back 2-1/2 million.