This is a rush transcript from "On the Record," July 29, 2010. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: With just her pen, Judge Susan Bolton smacked down Arizona State Senator Russell Pearce. He co-wrote SB-1070, and yesterday, the judge X-ed out parts of it, said they were no good. So what does the state senator think about that? Arizona State Senator Russell Pearce joins us live.

State Senator, you must not be thrilled by the fact that the judge has surgically removed parts of the statute you wrote.

STATE SEN. RUSSELL PEARCE, R-ARIZ.: Well, let's face reality. Actually, this is a huge victory for Arizona. You got to remember, one of the reasons for this bill is to eliminate sanctuary policies, policies that are illegal, that restrict law enforcement. Well, as of today, those policies are illegal in the state of Arizona! We've taken the handcuffs off law enforcement! They can enforce federal law without any reservation. They can ask those questions without reservation when they have reasonable suspicion or without. The Supreme Court ruled in Mueller (ph) (INAUDIBLE) years ago (INAUDIBLE) that law enforcement could ask that question (INAUDIBLE) ask about your age, your date of birth and where you live.

So it is a good day. So the really important part (INAUDIBLE) Now, she's really tried to neuter it. She put in Obama policy. She simply said, policy over law, that we think it may interfere with the priorities of the Obama administration. (INAUDIBLE) clearly, we know because their administration's policy is non-enforcement. Of course, it's going to be in conflict with that!

But clearly, this is a win. Polities in -- sanctuary policies in Arizona are illegal! Law enforcement can enforce the law, and will! And the loss of the ability of citizens, something our Founding Fathers thought was pretty important, we the people -- well, in Arizona, we still believe in we the people. If our government has a policy, any political subdivision, that limits or restricts the enforcement of our immigration laws, we will sue them! And that suit will be $5,000 a day every day until that policy is changed! This law will be enforced. And it also goes after day laborers, felony to hire them, 26-year high unemployment. You know, enough is enough! So if somebody picks up an illegal alien for day labor, they will be charged and their vehicle will be impounded for 30 days.

This bill still has a lot of teeth, and we will win on appeal.

VAN SUSTEREN: Well...

PEARCE: And I'm (INAUDIBLE) Greta, you know I ran...

(CROSSTALK)

PEARCE: Yes, I ran this bill in '05, '06, '07, '08, '09 and 2010! And I want to thank Governor Brewer for signing it! Finally, a governor that would sign this bill!

VAN SUSTEREN: All right. Now (INAUDIBLE) awful lot. And frankly, I don't see it as a victory and -- but whatever. You see it as a victory in terms of it's a good day for you.

PEARCE: Big one!

VAN SUSTEREN: I don't see that whatsoever. I mean -- I mean, fundamentally, you know, it's gotten everybody all revved up and all upset for the last three or four or five months. I mean, the real problem is actually quite a simple one, in many ways, is that Arizona wants its border more secure. You can perfectly secure it. And everybody else in the country wants some sort of immigration reform. Now, that, of course, is...

PEARCE: Yes, amnesty!

VAN SUSTEREN: ... a huge fight over that that means. Well, no, I mean -- I mean, not everybody wants amnesty. Some people...

PEARCE: Yes, no, it's amnesty.

VAN SUSTEREN: Well, no, I -- look, you know, that's -- I mean, it's - - something -- we need to figure out something, whether -- you know, I know some people want amnesty. Some want a workers' program. Some want -- some want something on deportation. But we got to at least figure something out.

PEARCE: But Greta, almost all of it's a path to citizenship. That's amnesty. Reagan realized the worst thing he ever did was grant that in '86. It just bring more law breakers. You know, we have good laws. We don't need...

VAN SUSTEREN: I don't think -- wait a second. Wait a second!

PEARCE: ... immigration reform...

VAN SUSTEREN: State Senator...

PEARCE: ... code word amnesty!

VAN SUSTEREN: State Senator...

(CROSSTALK)

VAN SUSTEREN: Not -- listen, a high percentage of people who are in this country who are not Americans are not law breakers! That's the problem. I mean, and there are a lot of citizens...

PEARCE: Well, wait. Wait. No...

VAN SUSTEREN: ... who are law breakers!

PEARCE: If they're here illegally...

VAN SUSTEREN: We simply don't...

PEARCE: ... they are!

VAN SUSTEREN: We simply need to figure -- we simply need to figure out a solution. And you and I can fight over details right now and...

PEARCE: But you know what? But we have one, Greta. We have one, you know? Go after the illegal employers. No free stuff. Take the handcuffs off law enforcement. They'll go home! They'll self-deport! The problem today is they break the law. They come across the border. And again, what's coming across that border today are bad guys!

VAN SUSTEREN: Can I get...

PEARCE: Human smugglers, gangs...

VAN SUSTEREN: Can I get one thing straight with you, State Senator?

PEARCE: You bet.

VAN SUSTEREN: I agree -- I agree your border should be secure. I don't think any state should have to worry...