This is a partial transcript from "The O'Reilly Factor," June 7, 2004 that has been edited for clarity.

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BILL O'REILLY HOST:  Here to talk about Reagan's influence today is Fox News Political Analyst Newt Gingrich, whose new book is just out called "Grant Comes East (search)."  This is the second novel in a Civil War series.  And I  recommend it, of course.  I have to, because the speaker's sitting right here.  And with -- but I like these books anyway because I'm a history buff.  And you really put a nice spin on it.

Now Reagan and Bush pretty much the same ideologically.  Correct?

NEWT GINGRICH, FOX NEWS POLITICAL ANALYST:  I think so.  Very much so. 

O'REILLY:  Right.  Not a lot of difference between their beliefs,  traditional America, self-reliance, smaller government, although Bush has expanded the entitlements, and use  America's power when they feel  necessary, unilaterally.  Remember Reagan used it... 

GINGRICH:  Absolutely.  Absolutely. 

O'REILLY:  So why wasn't Reagan attacked as viciously as Bush is being attacked?

GINGRICH:  I think actually part of the reason for the attack on Bush is Reagan's success and then our success with the contract.  I think when Reagan first came in, the left thought they could laugh him off.  They thought they could be pleasant to him.  And he's such a pleasant man, that he made it a little bit easier.

And domestically, he wasn't able, other than tax cuts, to drive through the scale of change that he wanted because he never had control of the house.

I think by now, though, the left feels almost like they're  embattled.  Welfare reform passed, other things passed.  And they're  really afraid that with the Republican House, Republican Senate, a Republican president, who I agree with you, George W. Bush is very much like Reagan in his belief system, I think the left feels like it's  embattled.  At the same time, the left has gone further to the left.  It's more anti-religious.  It is more anti-America protecting itself  unilaterally.  It is more anti-tax cut.  So you've had a continuous drift to a more intense left wing. 

O'REILLY:  Do you know why that is?  Because I agree with you.  It's only been 16 years since Reagan left office.  Yet we have now an ideological nation that we didn't have back then.  Why has the left drifted left?  Do you have any idea?

GINGRICH:  I think because they've talked to themselves in the natural logic of their progression.  I mean, if you take, for example, from the time in 1963 when the Supreme Court says it's illegal to have school prayer, and you look at the logic of their decision, you ultimately take that logic and you get to the Ninth Circuit Court saying you cannot say "one nation under God" in a pledge of allegiance. 

The logic makes some sense.  Yet in 1963, people would have  thought it was utterly insane.

O'REILLY:  Yes, that never works.

GINGRICH:  It would have made no sense at all.  But -- so  what you have is an elite on the left, largely lawyer driven, largely driven by academic faculties and secondarily by some of the labor unions, but that group talks to itself all the time.  And they have less and less in common with sort of middle-class traditional values, Ronald Reagan, George W. Bush America. 

O'REILLY:  Yet -- but the vast amount of Americans haven't rejected that far-left approach.  They're competitive.  They dominate the media.  People are buying into them on the Web site.  Not to a great number, but they certainly made inroads. 

GINGRICH:  But I would say that the biggest challenge to George W. Bush and this generation of Republicans is to remember what Reagan did by inventing, by creating the Reagan Democrats. 

The morning Republicans learn how to reach out to younger African-Americans, Hispanic-Americans, and Asian-Americans, the left will be a distinct minority.  It is an artificially inflated vote today because African-Americans who strongly believe in traditional values automatically vote Democrat.  And Republicans have done not a very good job of reaching out to them.

Asian-Americans, who strongly believe in lower taxes and more entrepreneurship, live in big cities and very often vote Democrat by a  bigger proportion than their values would lead them to.  And Republicans haven't reached out as well.  Hispanics, who are very often Catholic and conservative nonetheless often vote Democrat because of past traditions.

The morning Republicans can break into those three ethnic groups on values and on attitudes and do with them -- create Bush Democrats over Reagan... 

O'REILLY:  But Bush has tried with the amnesty deal.  And he's tried to do it, because it resonates. 

GINGRICH:  Well, and I think -- well, I think if you look among Hispanics, he's actually made real progress and I think, in fact, he's doing better.  If you look among African-Americans, there are more candidates this year.  As George Will pointed out, the only three statewide African-Americans in the country, elected officials, are all three in Texas.  And they're all three Republican.  There are nibbling points, but he has gotten the breakout. 

O'REILLY:  No, he hasn't. 

GINGRICH:  And that would be the test for the campaign this fall. 

O'REILLY:  Wait, one more question on this and then we're going to talk about Saddam because Reagan had to deal with Saddam and terrorism. 

GINGRICH:  Right. 

O'REILLY:  What could Bush or should Bush learn from Reagan?

GINGRICH:  I think the biggest thing is that cheerful persistence is better than hostility.  And that if Bush stands firmly for what he really believes in this fall, I think he's going to win.  I think over focusing on anti-Kerry is not nearly as good as explaining why we should be pro-Bush. 

O'REILLY:  But Reagan was so much better as a communicator. 

GINGRICH:  Yes, but George W. Bush has a sincerity and a depth of honesty that people really do resonate to.  He's not the  communicator, Reagan was.  He wasn't a professional actor like Reagan.  But he -- when I talk to people around the country, there is a sense that you're seeing the real guy and that he's telling you with sincerity what he really believes.  That's pretty powerful medicine in American politics. 

O'REILLY:  OK.  Now when we come back with  Mr. Speaker, we're going to talk about Saddam Hussein and how Ronald Reagan dealt with him and the origins of terrorism, which Reagan had to deal with.

(COMMERCIAL BREAK)

(NEWSBREAK)

O'REILLY:  Continuing with Newt Gingrich, his new book is called "Grant Comes East," his second novel about the Civil War.

All right, Reagan -- one of the reasons he got elected was because Ayatollah Khomeini humiliated the United States, taking the  hostages.  Carter couldn't get them back.  Reagan comes in.  He did get them back.  And then the Iran-Iraq War started.  So obviously the U.S.A. was going to tilt toward Iraq.  Correct?

GINGRICH:  Right. 

O'REILLY:  What was the relationship between Reagan and Saddam?

GINGRICH:  Can I just say one very quick story about this? 

O'REILLY:  Sure. 

GINGRICH:  I'm a second-term member sitting on the platform for the inaugural.  The sky is very cloudy.  We're sitting there.  It becomes Reagan's turn to speak.  Literally, the sky breaks loose.  It was like Cecil B. Demille.  The sky breaks into sunshine.  It's beautiful.  And all the members, as he's getting up, the word is passing that the hostages have left Iranian air space.  It was just this magic moment.  We had 444 days of this stuff.  And before he's even sworn in, the Iranians have decided to send back the hostages because they didn't want to try take on Reagan. 

O'REILLY:  Do you think that was the reason?

GINGRICH:  Absolutely.  I think that they -- I think they thought if they waited, he would humiliate them and coerce them.  And it was better to get it over with. 

O'REILLY:  So you thought that the -- your opinion is they released the hostages.  And you remember, Walter Cronkite every night would say it's been 444 -- you know.

GINGRICH:  Yes.

O'REILLY:  And that just destroyed Carter right there. 

GINGRICH:  Absolutely. 

O'REILLY:  And you thought it was because Khomeini feared the U.S.A's retaliation?

GINGRICH:  Yes.  I think that Reagan was seen as a cowboy who would do anything.  And I think the Reagan people quietly were   saying to the Iranians...

O'REILLY:  Oh, absolutely.

GINGRICH:  ...we will do anything. 

O'REILLY:  So the Iran-Iraq war breaks out. 

GINGRICH:  And here's the challenge Reagan has.  And it's -- because I think they made some mistakes in this period, but it's important to put in context what they were doing.

Reagan's number-one goal in foreign policy is the defeat of the Soviet empire.  And everything he's doing is aimed at how do I corral the Soviet Empire?  How do I weaken them?  How do I get them to fall apart, which they ultimately do in a very short period.

In that context, containing Iran, it was seen as a very, very big issue because the Iranians were very full themselves.  They were very aggressive.  They were threatening Saudi Arabia.  They were threatening the oil states.

Iraq was the country prepared to fight with them.  And I think we saw ourselves as allied with Iraq against Iran.  And when you go back and look at that, it's pretty hard not to think that was a rational decision.

You had a choice between a rattlesnake and a scorpion.  Neither one of them is nice.  Neither one of them is positive.  Neither one of them's doing nice things, but which one is less likely to hurt you?  And the truth was in the early '80's, Iraq was much less of a threat than Iran. 

O'REILLY:  Now after the Iraqis started using gas, though, and illegal weapons...

GINGRICH:  I think we should have condemned them. 

O'REILLY:  But we did.  Did we not?  I think we broke relations.

GINGRICH:  Well, we weren't as aggressive as we could have been.  We tolerated Saddam's regime in the mid '80's more than we should have. 

O'REILLY:  But you would have walked away from him at that time?

GINGRICH:  Much tougher about that, because I think you began to see that Saddam was utterly inhumane and utterly destructive of people in a way that -- I mean, there are times you have to say both these groups are really horrible, and we don't want either one of them to win.  And I think there was a period there when we allowed ourselves to be tainted by being closer to Saddam than we should have. 

O'REILLY:  OK, now last question for you.  The U.S.A. acted unilaterally against terrorism in the Libya situation where there was a bombing in Berlin. 

GINGRICH:  Right. 

O'REILLY:  A disco.  One American only was killed.  All right?  We asked France to use their air space, to go in and bomb Tripoli.  What did France say?

GINGRICH:  No. 

O'REILLY:  No, wouldn't do it.  Hmm.

But Reagan did it anyway.  Is -- do you believe that Reagan  would be a more aggressive fighter against terrorism than Bush is? Would he have used more military power now?  Because that was a pretty big reaction for one American dead. 

GINGRICH:  No.  I think Reagan would use exactly as much force as he thought was necessary.  And I think he probably would be  remarkably parallel to what Bush is doing.

Remember, it was a one-time strike aimed at sending a signal to Gadhafi.  It was a very successful strike, but we didn't follow it up.  We didn't do a lot of other things.  Reagan was very careful about how much force he used. 

O'REILLY:  Yes, but look at what Reagan on one disco  bombing with one American compared to what Clinton did with two embassies, the U.S.S. Cole. 

GINGRICH:  Sure.  But look conversely at what Reagan did  not do in Lebanon after the Marines were killed.

O'REILLY:  Yes, 241.

GINGRICH:  Because we thought it was too hard a problem.  We -- I mean, Reagan was a very practical man.  He was very strong  ideologically.  And it's a little bit like President Bush.  There are probably 20 things President Bush would like to fix around the world, but he  can't get on his plate right now because he's got everything -- you know, he's got enough to  do. 

O'REILLY:  Right. 

GINGRICH:  And I think strong effective presidents have a sense of limit.  And it's the weak presidents who run all over the place doing 19 things badly, whereas the strong presidents pick two or three big things and stick at them till they win. 

O'REILLY:  OK.  You know, I think the war on terrorism started during the Reagan administration. 

GINGRICH:  Absolutely. 

O'REILLY:  I mean, that's where it started.  Mr. Speaker, always a pleasure to see you.  Good luck with the book. 

GINGRICH:  Thank you, Bill. 

O'REILLY:  "Grant comes East," and a few historians out there well worth your time.

And our new billoreilly.com poll question, is the media over doing the Reagan coverage?  And this helps us out.  If you think it's too much, let us know.  If you think it's OK, we'll take that into consideration as well in shaping the rest of the week here.

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