This is a partial transcript from The O'Reilly Factor, January 26, 2004.

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BILL O'REILLY, HOST:  Now for the top story tonight, the Republican reaction to this.  Joining us from Washington is Clifford May, president of the Foundation for the Defense of Democracies.

You know, Mr. May, we wanted Ed Gillespie on tonight.  And I don't really want any part of this.  A little running for cover in the GOP, but you're a standup guy.  How do you see it?

CLIFF MAY, FOUNDATION FOR DEFENSE OF DEMOCRACIES:  Well, I'm speaking for myself, not for the Republican party.  Actually, I agree with about 98  percent of what you said.  The problem here is that we had an intelligence failure.  And our intelligence capabilities have not been what they should be, going back at least to end of the Cold War (search) when a lot of people, not least in Congress, but also in every administration said ah, the Communists are gone.  What do we need intelligence capabilities for?  Guess what?  We did.

And in some of the cases, our intelligence capabilities have been  weakened, even going back all the way to Watergate.  You remember things like the Church Committee, which tied the hands of intelligence.  We do need an overhaul.  We do need much better intelligence.

That said, Bill, I would only add this.  The war against Saddam Hussein (search), I think, was both just, no question about that and necessary.  This guy was a rogue dictator.  Terrorists were going through Iraq all the time, as David Kay (search) said and as you mentioned.  And there were weapons there that -- for the taking. 

O'REILLY:  OK, but here is the problem.  We live in a republic where the people are supposed to decide crucial issues, all right?  And the people can't decide the issue if they're given erroneous information.  And the Bush administration gave us erroneous information, not because they lied, but  because they got erroneous information from the Central Intelligence Agency.  And I believe President Bush hasn't been nearly aggressive enough in holding those people in the agency accountable. 

MAY:  I think we need to totally refurbish the CIA.  The question is whether George Tenet, who served Clinton, served Bush, is the best man to do it.   And if somebody thinks not in the Democratic party, they should say what they're going to do the about it. 

O'REILLY:  Well, what about Bush, though?  Why isn't he doing it now? He knows the 9-11 situation better than anyone on the planet.

MAY:  His...

O'REILLY:  And he knows this is a screw-up.  

MAY:  His marching orders to George Tenet (search) ought to be, we need to do --  overhaul the CIA so they can do the kind of intelligence gathering we need.

O'REILLY:  All right, come on...

MAY:  But understand this.  It's very...

O'REILLY:  Mr. May...

MAY:  ...the most important thing to understand, it seems to me is this.    Saddam Hussein was himself a weapon of mass destruction. 

O'REILLY:  No, that's baloney.  That is right-wing spin.  And a guy as smart as you, I don't want to hear you say that.

MAY:  No, no, no, no.

O'REILLY:  I don't want to hear you say that right-wing talking point business.  Look, let's get back to the issue here. 

MAY:  It's not the weapons of...

O'REILLY:  No, no, no, no.

MAY:  ...mass destruction.

O'REILLY:  The Americans can decide for themselves whether that policy was good for America or not.  But we got hurt overseas.  We still hurt overseas.  This Colin Powell went to the U.N., put this big WMD scenario in play.  And it turned out not to be true.  Our image overseas is hurt.  OK?

Here, half the population is with you and President Bush.

MAY:  Bill?

O'REILLY:  And half isn't.  Now I think I want to see a little leadership here on the part of the president.

MAY:  I understand.

O'REILLY:  I want to see him get out there and engage this issue.  

MAY:  I understand, but Bill, knowing what you know now, would you change your mind?  Would you think, ah, I wish Saddam Hussein would had  been left in power?  We had no business going there?

O'REILLY:  No, I wouldn't.  Not me.

MAY:  Absolutely.

O'REILLY:  But I want the American people to have accurate information.  

MAY:  I agree.  I agree with you entirely, but you know what?  There is  nobody who is in favor of  this war against Saddam Hussein, who has changed their mind.  The only people who are angry about this really are the people who weren't in favor of it before and they're not in favor of it now.  Saddam...

O'REILLY:  But that's not the question here.  Look...

MAY:  The question is...

O'REILLY:  ...the question is going to be decided in nine months in the ballot box.  And the American people can decide whether President Bush is looking out for them or not.

MAY:  Bill?

O'REILLY:  But here's the fundamental constitutional question.  All right? You have an administration, which is closed.  The Bush administration is not  open with the folks.  Everybody knows that.  All right?

Now you have, and I believe this report, and I've got to say, I will say this in President Bush's defense, President Bush could have booted this.  He could have said to Kay, hey, find something and this and that.  He wanted the truth.  He told Kay, even if it's black and bad and going to hurt me, you get it.  I think we all -- that reflects very, very well on the president, but he's got to now step up.  And  he's got to admit the mistake.  And he's got to take strong action to protect us, Mr. May. 

MAY:  I don't disagree with you.  But understand this.  Saddam Hussein did have weapons of mass destruction.  And he was further along than nuclear  development. 

O'REILLY:  He had Ricin.  That's what he had.  

MAY:  He had Ricin.  He had -- but he wanted to develop it.  There's no question that his scientists stole money from him and lied to him.  And we got the  same -- we have the information he had about that.

But since 1998 under President Clinton, the Iraq Liberation Act (search) has been official U.S. policy of both parties.  All President Bush did was to implement that policy of Iraqi liberation.

O'REILLY:  It's be very interesting to see...

MAY:  You know the good thing?  You agree and I agree that it was a good thing.  We do need, in an age of terrorism, better intelligence than we've had. 

O'REILLY:  That's right.  But we also need openness on the part of the president.  And he can't be sitting up in the White House not saying anything about it. 

MAY:  But let me -- but understand this.  The last thing the president wants  to do is say to the CIA, say to those operatives who were brought, you haven't  been doing a really good job.  He wants to quietly say we have got to get -- you and I can say the truth here with no spin. 

O'REILLY:  I think the time for quietly saying it, Mr. May, that's way, way in the past.  After 9/11 and this, no more quiet.  I'd start to bang a couple of desks here.  All right, we got go.  

MAY:  I -- no spin means that you and I say that the CIA needs to totally  refurbish itself for the new era.

O'REILLY:  All right.

MAY:  I don't expect the president to bash them on public TV. 

O'REILLY:  Mr. May, thank you.  We appreciate it very much.

MAY:  Good to be with you.

O'REILLY:  And a brand new poll question on billoreilly.com is should President Bush admit his administration made a mistake regarding WMDs?  Should President Bush admit his administration made a mistake regarding WMDs?  Billoreilly.com poll.  Please go on in.  We'd like to hear from you.

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