This is a partial transcript from "The O'Reilly Factor," February 1, 2006, that has been edited for clarity.

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BILL O'REILLY, HOST: The top story tonight, two other views on this. Joining us from that city Chronicle columnist Debra Saunders and Karen Hanretty, a rare Republican in the Bay area.

Am I overstating this, Ms. Hanretty?

KAREN HANRETTY, CALIFORNIA GOP STRATEGIST: No, I don't think you're overstating it at all. In fact, the only thing that you left out is that I think the city of San Francisco is the only city in America that actually pays for sex changes for its city employees as part of the healthcare benefit package out here.

But you know what? That's fine. That's the business of the people of San Francisco to elect representatives that provide what the rest of the nation might find a little off the wall.

What I find really disingenuous and perhaps — well, I do find it offensive is that Representative Woolsey and Lee both tried to make a political statement with one of their guests at the president's State of the Union address.

Put the T-shirt aside. I don't know if they knew that Sheehan was going to wear this T-shirt or not.

O'REILLY: Oh, sure, they did.

HANRETTY: But the fact is — but that.

O'REILLY: They absolutely knew.

HANRETTY: .is almost irrelevant, because they know that Sheehan in and of herself is a political statement. CNN would have had their camera on her the entire time. And.

O'REILLY: Oh, there's no question this was a set-up. I mean, there was no question that nobody knew — certainly, I don't know — but nobody knew what Cindy Sheehan would have done during that ceremony, but anything is possible. And they — these Congress women didn't care what she did. Do you agree with me, Ms. Saunders?

DEBRA SAUNDERS, SAN FRANCISCO CHRONICLE COLUMNIST: Well, of course. And of course, she was going to wear a T-shirt. When haven't you seen Cindy Sheehan in a T-shirt? She always wears them.

And you know, this is a set-up that — and I think she set herself up to be taken out, because she hid her T-shirt under her coat until she was seated.

O'REILLY: Right.

SAUNDERS: And then she's escorted out. Why? Because it's to feed this delusion that the anti-war left in the Bay area has that they are being censored.

Now in a way, it's a good thing that Bill Young's wife also shows up in a pro-war shirt. And they don't let her on the floor either. But — so that sort of puts the lie to that.

But there's this delusion that people have. I mean, Pete Stark, congressman from the Bay area, he called this Bush's Gestapo getting rid of them.

Lynn Woolsey put out a statement where she says since when does questioning the president get you whatever, I forget the term.

But the thing is the people who escorted her out were the Capitol police. They answer to the Congress. They don't answer to the White House.

O'REILLY: Well, look, I mean, they dropped the charges. And maybe she should have been allowed to sit there. I'm not even going to get into that.

What I do know for sure is that the congresswomen, Woolsey and Lee, wanted something to happen, wanted to embarrass President Bush. That's why they did it. And now, we want to know who these women are, Ms. Hanretty. Are these crazy women? Or who are they?

HANRETTY: Well, Lynn Woolsey, of course, from Marin, and — if there's any place perhaps more liberal than San Francisco, it's probably Marin County.

But you know, I think that more than embarrassing the president, because I don't think that they embarrassed the president. They're really embarrassing their open party.

O'REILLY: No, but they could have. If Cindy Sheehan had started screaming, or stood up, or did something like that.

HANRETTY: I think she would have been very.

O'REILLY: .the whole world would have seen that. And I'm telling you, I don't put that past the woman. I don't put it past her.

HANRETTY: Sure, but I think that she would have embarrassed the Democratic party much more so than President Bush because he's got the support of the people behind him. Look.

O'REILLY: No, I don't believe that for a second.

HANRETTY: When Nancy Pelosi.

O'REILLY: Worldwide? Worldwide?

HANRETTY: You don't think.

O'REILLY: I've got to disagree, Ms. Hanretty.

HANRETTY: I don't care what France thinks about the United States.

O'REILLY: I know you don't care, but this would have been used by al Jazeera, the French press, everybody else to say look, Americans hate him. He can't even give a State of the Union without them screaming at him. And that was the intent.

HANRETTY: Well, that's why Nancy Pelosi.

O'REILLY: That was the intent. And I just think this is so.

HANRETTY: OK, but that's why San Francisco Representative Nancy Pelosi owes an explanation, I think, to the people of America because after all, she's a leader in the Democratic party about what she thinks about all of this and what does this speak about the Democratic party as a whole.

You've got a woman who was invited to the State of the Union who just the other week was in Venezuela hanging out with Hugo Chavez.

O'REILLY: Yes.

HANRETTY: .and Harry Belafonte. And if that's - that is the caricature that Pelosi and her party want of the Democrats, it will - it continues to boast.

O'REILLY: OK.

HANRETTY: .why they keep losing.

O'REILLY: Debra, how did your paper cover this Sheehan thing today? They must have — San Francisco Chronicle probably thought this was swell, right?

SAUNDERS: Well, you can imagine. We did have - we had Pete start talking about Bush Gestapos and everything else. We have a story up on SF Gate right now that's the follow-up story on it.

You know, let me stand up for California Democrats, which I'm not used to doing. Senator Feinstein's office can't be happy about this because Cindy Sheehan is talking about running against Senator Feinstein.

So what you really have are two far-left members of Congress, Barbara Lee, who is my congressperson, and Lynn Woolsey, just going off in a way that embarrasses the centrists.

I mean, frankly, I am a Republican. There's nothing I would have liked better than to see Cindy Sheehan sitting there, because I think it would have had a lot of moderate voters looking at this and seeing the theatrics of censorship that the Democrats put up. And they — I think it would move them toward Bush.

O'REILLY: Maybe. All right, ladies, very interesting discussion. We appreciate it. We hope the House investigates the two Congresswomen and finds out what their intent was.

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