This is a rush transcript from "Hannity," December 14, 2011. This copy may not be in its final form and may be updated.

SEAN HANNITY, HOST: We are on the eve of the biggest debate of this Republican primary season. Tomorrow night in Iowa, we will be there. The Republican presidential candidates will collide right here on the Fox News Channel. And ahead of that all-important showdown, some new polls are shaking up the GOP field. And they are showing us just how volatile this, well, nomination race really is.

First, we begin with the view from a nationwide poll where according to the Wall Street Journal and NBC News, former House Speaker Newt Gingrich leads Mitt Romney by a stunning 17 points. Now, they are followed by Ron Paul, Michele Bachmann, Rick Perry and Jon Huntsman.

But the story on the ground, in Iowa, very different. In a survey conducted by the left-leaning public policy polling group, Speaker Gingrich is leading by only one percentage point and surging now in to second place is Congressman Ron Paul with 21 percent of the vote. They are followed by Mitt Romney, Michele Bachmann, Rick Perry and Rick Santorum.

And joining me now right here in studio with his take on all of the latest developments in 2012 race, the author of the bestseller, "Book of Man," nationally syndicated radio talk show host, friend of the program, Bill Bennett. How are you?

BILL BENNETT, RADIO TALK SHOW HOST: Hi, Sean.

HANNITY: Last time I called you Bob. I thought you were going to kill me.

BENNETT: That's right. Yes. I don't get his rate either. Anyway, Merry Christmas. Merry Christmas.

(LAUGHING)

HANNITY: That is true. Well, it's good to see you again. What do you make of Ron Paul?

BENNETT: Let me just -- can I tell one story --

HANNITY: Yes, sure. Go ahead. Absolutely.

BENNETT: -- from "The Book of Man"? Because on the ground in Iowa, as you say, there is a place, you may know the story but I got profiled in "The Book of Man." A guy Ray Sorenson, there is this huge rock in Menlo, Iowa. And it used to be used for graffiti. In the late '90s, Ray Sorenson started to paint patriotic pictures on it, Marines putting up the flag at Suribachi. This year he did the Navy SEALs.

HANNITY: I notice the Marine pen on your lapel there.

BENNETT: Yes. We have a young son who's second lieutenant Marine Corps, we're very proud. Anyway, no one touches the rock anymore because of the patriotic pictures. That is the kind of stuff that comes out of Iowa. You know, that is what I hope we'll come to see from the citizens of Iowa. What I make is, I think Ron Paul could win this, because of organization, he has put it all in to it. And he could win this. I think it's very possible that with Perry coming on a little bit, everybody says Perry is coming on a little bit. It's tightening between Romney and Gingrich that Paul slips in with 22, 23 percent.

HANNITY: Yes. And look, Paul's followers are passionate.

BENNETT: Absolutely.

HANNITY: Look, all the candidates have received scrutiny. The latest one to get the most scrutiny is Newt Gingrich who has been surging in the polls.

BENNETT: Yes.

HANNITY: Mitt Romney has had his chance, Bachmann, Perry, we know what happened to Herman Cain. One of the things I think, for example, I like the idea that Ron Paul says, we're going to -- I'd cut a trillion dollars immediately. I do not, I have a very -- I cannot reconcile with his foreign policy.

BENNETT: No. There is none.

HANNITY: But did he get a pass? He's had this newsletter in '80s and '90s and some unbelievable things written in it. You know, order was only restored in L.A. when it came time for blacks to pick up their welfare checks. Now, this was in his newsletter.

BENNETT: Yes.

HANNITY: He says, he has no idea who put the newsletter together. No idea who wrote it. And he said, he sort of, I'm surprised when I read this, that this is not become an issue.

BENNETT: There is a way in which he is not taken seriously. And so people do not delve into details. But they should. I had a caller today say, just make him head of the Federal Reserve and be done with it.

Look, there is no foreign policy. There's no commander in chief. Because his notion of foreign policy is impossible. There is also other stuff. Conspiracy theories about 9/11 and so on.

So, the candidacy isn't going anywhere, except if he wins Iowa. And the reason that could be important obviously, he leaves things undecided. But he may then get a big hit and decide after several more states that he's going to go in to be a third party candidate. And then you're giving the election to Barack Obama.

HANNITY: Listen. Ron Paul does that, he splits the anti-Obama vote. And he will single-handedly, be responsible for the re-election of Obama which you would think is the very thing that he doesn't want.

BENNETT: And I hope the myopia is not such that he thinks these other guys are just like Barack Obama because they're all big government.

HANNITY: That's what he said -- look, he called me Rush Limbaugh and Mark Levin statists.

BENNETT: Sure.

HANNITY: And I had him on our radio program, I confronted him on it, and on this TV show I confronted him on it.

BENNETT: Well, if you guys are statists --

HANNITY: Yes, we're in trouble.

BENNETT:  -- there's a problem.

HANNITY: I have been called a lot of things.

BENNETT: Yes. Socialist Hannity.

HANNITY: All right. So, explain to me as you look at Newt and Romney, who is going to take that battle. I mean, Newt's winning in Iowa over Romney. Romney is winning by a big margin now, new poll out today in New Hampshire. Romney is winning in New Hampshire. Newt is winning in South Carolina and Florida.

BENNETT: I think Newt may well finish ahead of Romney in Iowa. I think Romney will finish ahead of Newt in New Hampshire. And I think it goes further. Remember, we have proportional representation. But taking the big picture, let's remember what we want this election to be about. We want this election to be about big issues. The big questions, the questions before the country right now. And mainly, what Barack Obama has done to this country. We do not want it to be about personalities. We do not want it to be about --