This is a rush transcript from "Hannity," May 22, 2012. This copy may not be in its final form and may be updated.

SEAN HANNITY, HOST: He is the personification of the American dream. Colin Powell, who join the army as a young man and went on to serve in four presidential administrations, will join me right here tonight in studio.

Now, Colin Powell's impressive resume includes being the 65th secretary of state under President George W. Bush, national security adviser under President Reagan, rising to the rank of four-star general. He was the chairman of the Joint Chiefs of Staff, overseeing the first Gulf War.

And in his brand new book, "It Worked for Me: In Life and Leadership," which hit stores today, Secretary Powell shares the experiences that he encountered throughout his life that shaped his incredible, remarkable career.

And it's good to see you again, Secretary Powell. How are you?

COLIN POWELL, FORMER SECRETARY OF STATE: Good to see you, Sean. It's been a long time.

HANNITY: It's been a long time.

POWELL: Yes.

HANNITY: You know, I was just, you are doing great. You look terrific.

POWELL: I am hanging in.

HANNITY: You're hanging in.

POWERLL: Just hit my 75th birthday, I'm feeling great.

HANNITY: I said this to you. You know, I know you have had a long career, but you know, you are looking really young. So, congratulations.

POWELL: Thank you.

HANNITY: All right. So, you talk about one story -- you spent a lot of time before coming on air, talking about President Reagan. I loved President Reagan.

POWELL: As did I.

HANNITY: All right. You worked for him. And you tell the story about, you came to him with a problem.

POWELL: Yes.

HANNITY: And then he is looking at the squirrel that he put some nuts out for earlier in the day.

POWELL: Yes. Well, I went in to tell him about this problem that we had. And just the two of us in the Oval Office, he's sitting in front of the fireplace, I'm off in the couch. And so, I'm telling him and he seems to pay no attention to me, so I talk louder. Still not paying attention to me. And then finally, he stops and he says, "Colin, Colin!" "Yes?" The squirrels just came and got the nuts I put out for them this morning. And so, "Yes, Mr. President." And so, I left. Went back to my office and I thought about it. And I said, "I know what he was saying to me," he was saying to me, "Colin, I really, really like you, I love you, I will sit here as long as you want me to, but it's your problem. I hire you to solve problems. You let me know when I have a problem."

And so, I learned that lesson. And when he did have a problem that only he could solve, Sean, he was like that, he was on top of it, asked the right question and made decisive judgments. And so, I learned a lot from him and I tried to apply it later in my life, to always have people that you can trust to get things done for you and let them do the things they can do and you try to stay a little bit above it. As I said to you, President Reagan was sort of a level of aggregation above the rest of us. I don't know if that's the right word.

HANNITY: Didn't you use the ground level?

POWELL: We were at ground level. And the leader, any leader should always be a little bit above the lead, not away from them, but thinking about risk and opportunity outside the immediate confines of the organization. And that's what Reagan was good at. And that's the message he communicated to not only all Americans, but all the foreigners he dealt with.

HANNITY: Yes, you know, it was interesting. Because at the time, the threat economically was not the decline of Europe or China, it was Japan.

POWELL: Japan.

HANNITY: Yes, you have a great story in the book about that.

POWELL: I end that chapter by telling the story of the whole Cabinet marching in one day to complain about the Japanese buying everything in 1988. And Reagan is sitting there, listening to them and they are saying, you know, "They bought Rockefeller Center, they bought Pebble Beach. We're to be spared nothing. And Mr. President, what are we going to do about it? Congress is mad. The people are mad." And Reagan just looks back and calmly said, "Well, I'm glad they think America's a good investment." That was it. It was -- the meeting was over.

HANNITY: Yes.

POWELL: He was over here. And of course, they didn't know if it wasn't a good investment at the time. They lost all their money and we got it all back.

HANNITY: Well, hopefully -- look, I have never been more worried than I am today about the economy, about the world situation. You know, this is -- I have known you for a long time. You were gracious enough as secretary of state, you would grant me interviews. And I spent time with you. I have watched your military career, where you grew up in New York. You didn't grow up with a silver spoon in your mouth by any stretch. And you've achieved the highest levels of power. And you work for Ronald Reagan. And what I didn't understand -- and hopefully, you can explain this -- is I look at President Reagan and where he stood on socialized medicine, on lower taxes, on limited government, government is the problem, not the answer. And then I watched as you endorsed President Obama -- I didn't understand it. And a lot of conservatives didn't understand it.

POWELL: I know that. I looked at it very carefully back in 2008. And I saw the economy going into a free fall. I saw a situation where we were in two wars that really weren't sorting themselves out as cleanly as they should.

HANNITY: Right.

POWELL: I felt that the Republican Party at that time was conveying an impression of harshness, there was a certain ugliness of some of the things that were being said about President Obama, and some of the things that you see at the campaign events. But it was the economy more than anything else that I thought he might be better able to handle than somebody who I have the highest regard for and have known for 30 years, and that's John McCain.

HANNITY: You know, I watched and I remembered -- and maybe this is just a point of disagreement we wouldn't be able to resolve. You know, when you didn't like in particular, you felt it was a character assassination to bring up, like, Bill Ayers. Let me go back and this is what you said at the time. And let me play it for and you ask you a question out of this.

(BEGIN VIDEO CLIPS)

POWELL, OCT. 19, 2008: I was troubled a couple of weeks ago when in the middle of the crisis, the campaign said, we are going on go negative. And they announced it, "We are going to negative and attack his character through Bill Ayers." And now I guess, the message this week is, "We are going to call him a socialist." Mr. Obama is now a socialist because he dares to suggest that maybe we ought to look at the tax structure that we have.

POWELL, "MEET THE PRESS"/NBC, OCT. 19, 2008: Because of his ability to inspire, because of the inclusive nature of his campaign, because he is reaching out all across America, because of who he is and his rhetorical abilities -- and we have to take that into account -- as well as he has substance, he has both style and substance. He has met the standard of being a successful president, being an exceptional president. I think he is a transformational figure. He is a new generation coming in to the world, onto the world stage, on the American stage, and for that reason, I will be voting for Senator Barack Obama.

(END VIDEO CLIPS)

HANNITY: That's when you made the endorsement. You said because of the inclusive nature of his campaign, reaching out across America. The president himself has now said the Republican plan for this country is for dirty air and dirty water. You are still a Republican, right? That Republicans want kids with autism and Down's syndrome, the elderly to fend for themselves. We have the Democratic ads, Paul Ryan look-alikes throwing granny over the cliff.