• This is a rush transcript from "Hannity," March 10, 2011. This copy may not be in its final form and may be updated.

    SEAN HANNITY, HOST: We just heard from the Wisconsin Governor Scott Walker about the latest happenings in Madison over the past 24 hours.

    And joining me now with reaction and all of these recent developments and her fight with Michael Moore is former Alaska governor, Fox News contributor, Sarah Palin.

    Governor, welcome back.

    SARAH PALIN, FORMER ALASKA GOVERNOR: Thank you so much, Sean.

    HANNITY: You know, I'm watching this from a distance. Why do you think the unions put so much stock in Wisconsin? I think there's a reason.

    PALIN: I think there is a political reason. And that's because Wisconsin is a Democratic stronghold. And there are a lot of Republicans, though, in the state who are pro-union because in the past any way, some union bargaining has benefited even Republicans there.

    So, yes, I think it was strategically picked because if you look at Ohio and Indiana, other states that are having these union protests, you don't see the turmoil and all the attention given as you're seeing there in Madison.

    HANNITY: Yes. And I wonder -- you know, in one sense, what was worse what happened with Obamacare? In other words, the Democrats had a chance. They could have debated this. They could have come back to the capitol, they didn't do it.

    But we had Obamacare, last minute, rammed down our throat. Nobody had a chance to read it. Now, we find out they have funded a big portion of this.

    What was your reaction to that?

    PALIN: Yes. There's a lot coming to the surface on Obamacare that really are reflective of what is going on, believe it or not, there in Wisconsin with union protests.

    Look, what happened there in Wisconsin, when Democrats who retreated across state lines in order to avoid civil debate and just doing their job, they needed to have been reminded that if your cause is worthy and just, and if it's -- if it's worthwhile, then you should have the ability to defend it. You shouldn't just retreat and duck and cover as the Democrats did there in Wisconsin because what it has caused is a distrust of the work product -- as Obamacare, we have so much distrust of what's in there because in that instance, too, Democrats crammed something down our throats, then kind of ducked and covered and said, well, you got to pass the bill and then find out what is in it. Same kind of paralleling situations here.

    HANNITY: As states come to grips with these budget deficits, what,

    $3.7 billion deficit in Wisconsin, $8 billion in Ohio, we now have, what,

    $14 trillion nationally. And as soon as cuts start being made, what we see there the violent rhetoric, the threats, this reaction -- do you think we're going to see a lot of more of this? In other words, is this the beginning of things to come?

    PALIN: Well, these union bosses that are acting like thugs, as they are leading some of their good union members down a road that will result in, unfortunately, somebody getting hurt -- if you believe the death threats that are being received by those who just happen to support amending some collective bargaining privileges of state unions. Well, it is these unions bosses' responsibility to turn down the rhetoric and start getting truth out there so that nobody gets hurt.

    And, you know, I talk about unions perhaps with a bias and it's because, you know, I'm a teacher's kid. As we speak, my daughters are enjoying the tutelage of some of the best public school teachers in the nation as they are in their classrooms today. And Todd and I both have union memberships in our back pockets through our professional careers.

    So, maybe my bias is, as a union member having known the way that this works, where it's not the good union members who want to be portrayed and perceived as being selfish and shortsighted, but it is union bosses who ultimately are driving towards governors having to be forced to privatize and outsource the jobs and the services that previously union members would have enjoyed. It's not the good union members and I say that from firsthand experience.

    HANNITY: All right. You took to Twitter today. And as always, it seems to make a lot of news when you do this. And you took on Michael Moore as a hypocrite. Now, Michael Moore was saying -- he actually used the phrase, "This is war." Jesse Jackson said -- you know, used terms like fight back, rebellion, et cetera.

    But you pointed out and found the hypocrisy on his part. Explain.

    PALIN: Yes, Michael Moore is a hypocrite. He's declaring war on this situation, trying to get people to believe that what Walker has succeeded in doing in trying to get their state to rein in government and live within their means, that that is somehow declaring war on the working class when -- look at what Michael Moore in his profession choosing not to use union workers as crew members on his film. That's hypocritical.

    And, you know, he's contributing to that rhetoric and causing more problems. If he could just help to turn down the volume, deal in truth, deal in reality. Reality is we have 15 million Americans who are out of work. We have states who were underfunded and underwater when it comes to pension and retirement plans for union employees. We have a $14 trillion debt. We have Middle East turmoil that is contributing to future inflation and high oil prices. And we have a president who is anti-U.S. oil.

    We have all these contributing factors, a kind of a perfect storm right now, where the last thing we need is someone like a Michael Moore trying to ratchet up the rhetoric and the panic in the electorate.

    HANNITY: You know, the idea that he didn't use union employees in his film is pretty ironic, considering he's now going to start a war and then he even went further last night by suggesting that, you know, this is a war leveled against working people in the country. And they got to stand up. Why didn't anybody stand up to him?

    Well, let me stay on the spending issue here, because, as you know, NPR gets funding. And when the Republicans now proposing -- we got to look at everything to close this budget gap we have. This year alone, another $1.6 trillion in new deficit. So, NPR is on the table, National Endowment for the Humanities and Arts and Corporation for Public Broadcasting.

    And we hear this NPR executive caught on tape and this is what he had to say about the Tea Party Movement.

    (BEGIN VIDEO CLIP)

    RON SCHILLER, NPR EXECUTIVE: The current Republican Party is not really the Republican Party. It's been hijacked by this group that --

    AMIR MALIK, MUSLIM EDUCATION ACTION CENTER TRUST, MUSLIM BROTHERHOOD FRONT GROUP: The radical, racist, Islamophobic, Tea Party people?

    SCHILLER: It's not just Islamophobic, but really xenophobic. I mean, basically, they are -- they believe in sort of white, middle America, gun-toting it's scary. They're seriously racist.

    (END VIDEO CLIP)

    HANNITY: Now, considering this election was about returning to first principles and the Constitution and limited government. And here's NPR meeting with people that he thought were from the Muslim Brotherhood and associated with them, saying this about the Tea Party. What was your reaction?

    PALIN: I think it's quite revealing of what the agenda there at NPR has been all these years. And it's kind of refreshing to see some proof of that.

    NPR, National Endowment for the Arts, National Endowment for the Humanities, all those kind of frivolous things that government shouldn't be in the business of funding with tax dollars -- those should all be on the chopping block as we talk about the $14 trillion debt that we're going to hand to our kids and our grandkids. Yes, those are the type of things that for more than one reason need to be cut.

    HANNITY: All right. We are going to talk about specifically those things that need to be cut. And also, how you think the Republicans are doing. We'll have more with Governor Palin right after this break.

    (COMMERCIAL BREAK)

    HANNITY: And welcome back to "Hannity" as we continue with former Alaska governor, Fox News contributor Sarah Palin.

    All right. So, how do like the idea that Julianne Moore will be playing you in an HBO upcoming movie? Your thoughts.