This is a partial transcript from "Hannity & Colmes" August 10, 2006, that has been edited for clarity.

SEAN HANNITY, CO-HOST A FOX News alert, you're looking live at Heathrow Airport outside of London, where officials have raised security to its highest level and over 500 flights have been canceled today. Huge backups were back at the security checkpoints all day long as officials searching for explosives in every form of liquid outside of baby formula and medicine.

Joining us now, former New York City Mayor Rudy Giuliani is with us.

Mr. Mayor, good to see you.

RUDY GIULIANI, FORMER NEW YORK CITY MAYOR: Good to see you.

HANNITY: We really could have had 9/11.

GIULIANI: Yes, sure, 9/11 and maybe worse. Kind of, I think my suspicion has been that one of the reasons that they have delayed it is to try to do something that's even worse than September 11.

And obviously, if they had pulled off even part of this, probably would have certainly been as shocking, and really very, very frightening.

HANNITY: I spoke to Secretary Chertoff today, and I asked him the question. We keep hearing that there are Al Qaeda cells, there are Hezbollah cells in the United States right now. So we really have to prepare ourselves. The 9/11 Commission is right. We are going to get whacked. We're going to get hit.

GIULIANI: I mean, sure. Assume that's the case. I was in London on July 7 last year. I was one block away from where the first bomb went off at the Liverpool station.

The U.K. has just about the best intelligence you can imagine. They've been doing terrorism going back to the 70s. They couldn't prevent that talk. And they have a much smaller problem than we do. They have a little island to protect. We have a big continent to protect. So that has to tell you — here they did a great job.

And I say, I think they're the very best. I mean, they are terrific, and they learned from last time. Last time they were victimized by U.K. citizens who turned out to be, you know, tremendous enemies of ours.

Now I think they probably expanded some of their profiles of what they're looking at and they're able to infiltrate, which was hats off to them. I mean, they saved thousands of lives by their intelligence work.

HANNITY: What's frustrating to me is we have now, five years since that day that you know as well as anybody, because you were right in the midst of all this.

It seems that we still have not united and come together or come to terms with or come to grips with the fact we're at war. That our enemy is Islamic fascism and that their goal is the destruction of innocent life.

GIULIANI: And Sean, we've been at war for a lot longer than we ever realized. I mean, this goes back to the 70's with the attack on the Israeli athletes at the Munich Olympics. The killing of Leon Klinghoffer. Wherever there's hijackings and bombings. Like this was in '94, '95, where because of American intelligence and Philippine intelligence, they were able to arrest and stop people who were going to bomb 10, 12 airplanes.

We kind of think like it started with September 11. It goes way back.

HANNITY: Way back.

GIULIANI: And there were a lot more incidents before September 11 than since September 11.

HANNITY: You talked at length about how 9/11, you would go home for the one or two or three hours of sleep that you try and get in the days after 9/11. And you stop and you thought about Churchill and the bombing in England, and how he dealt with it.

It seems that in many ways, you tell me if my analogy's wrong here, that we're seeing the rise of Nazism before our eyes. And the world's response is well, as long as we end the immediate hostilities, we can go to the U.N. and maybe we can negotiate with these people.

GIULIANI: You cannot negotiate with them. These are not people — they have demonstrated to us that they despise us. They hate us. They want to kill us.

And they want to kill us because we're a modern society. They want to kill us because we give women rights. They want to kill us because we have freedom of religion. They want to kill us because we have elected officials. They want to kill us because we're modern and we can't give that up.

What are we going to negotiate away? The rights for women? Are we going to negotiate; we're going to set up this Islamic state?

ALAN COLMES, CO-HOST: As we speak — good to see you by the way.

GIULIANI: Thank you.

COLMES: As we speak there is an attempt now to have some kind of a deal with Hezbollah. There's talk of a cease-fire within days. The French, the U.N., the United States — is this a mistake? Because you're saying they want to kill us. You can't talk to them.

Wouldn't it be great to have hostilities end while we work toward a more permanent truce?

GIULIANI: Well, I mean, I hope that Israel gets the time to clean out as much as Hezbollah as they possibly can clean out. Because the more that's left behind, the more that we'll threaten Israel after some cease-fire is arranged.

The reality is that they want to kill us. I mean, what do you do about people that want to come into your home and they want to kill you?

COLMES: Hamas wanted to kill Israelis, now duly elected representatives of the Palestinian people. Hezbollah is duly elected in Lebanon in cabinet and legislature. They're political as well as military. They are integrated into society. They have to be dealt with on a person-to-person basis.

GIULIANI: Well, when they're integrated into a government, we have to deal with them. But the reality is that Hezbollah is an independent terrorist organization that has been killing Israelis for the last five or six years and has been mounting this tremendous — in fact, I think in a way, thank God that the Israelis were able to go had there now, because suppose they had to do this four or five years from now. Who knows what kind of missiles they would amass, what kind of weapons they would amass. I think this has been very, very helpful to us.

I think this also underlined why the effort in Iraq is so important. Engaging the terrorists by being on offensive against them has kept us safe. And we're not going to be safe forever, and we are going to be attacked again.

But I am convinced that the actions that George Bush took by going on offensive against terrorism starting on September 20, 2001, has given us a degree of...

COLMES: How did it make us safer when there's more global terrorism? What happened in Morocco and Spain and what almost happened today?

GIULIANI: It was going on in the 1970s, the 1980s, in the 1990s. The USS Cole happened before September 11. The plot that was uncovered to take out something like 15, 20 airplanes in 1995 was going on before September 11.

The reality is that we've been able to accomplish something that nobody, including the two of you and me, would have thought was possible on September 11.

The night of September 11, one of the reason I was reading the Churchill book was I expected that we were going to be attacked numerous times. By going on offense against them, we have been able to give ourselves a degree of safety that we otherwise would not have had. And that was a brilliant decision.

HANNITY: We'll pick that up when we come back.

I also want to ask you about Joe Lieberman that took place, also the pending election and more to come.

We'll be back. More with Mayor Rudy Giuliani, next.

(COMMERCIAL BREAK)

COLMES: This is a FOX News alert. You're looking live at John F. Kennedy International Airport in New York City.

Homeland security Secretary Michael Chertoff said tonight that the foiled plan to explode U.S. airplanes over the mid-Atlantic would have been a massacre, quote, comparable to 9/11.

We now continue with former mayor of New York City, Rudy Giuliani.

Just picking up where we left off at the end of last segment in terms of our safety and how this kind of thing will happen. Are we significantly safer now than we were on 9/11, and how do we know that?

GIULIANI: Look, we are safer, but we're not safe. So there's a continuum there that's very, very hard to describe accurately. Meaning we do a lot more things to try to stop terrorists at airports and many, many other ways.

A plot like this probably was uncovered because of the things that the U.K. learned from the July 7 of last year penetration by the terrorists. So you've got intelligence services that worked together much better than they did before, share information.

But no, of course we're not perfect.

COLMES: Do you concur with the 9/11 Commission, some of its findings and their complaint that they haven't been listened to and that we haven't implemented some of the things that they said would help?

GIULIANI: No. 1, most of the things they recommended I think made a great deal of sense. I think many of them have been implemented. I honestly can't tell you the ones that haven't been. Seems we've made a lot of changes.

Our intelligence services are, I think, much more effective now. I think we have a tremendous amount more cooperation than we had before. I think we concentrate on this a lot better than we did before.

Security at airports is much greater than it was on September 11. But obviously not great enough to have dealt with this. Nobody had thought of what happened if they bring liquid in. So now you move to another level and have to deal with that.

COLMES: In New York City one of the issues was first responders and the ability to communicate on police radios. Basic things like that. Do we have confidence that, for example, in New York and other major cities, those issues have been dealt with?

GIULIANI: They've been dealt with as much as they can be. Technology is technology. The radio issue is still being dealt with. It's still being dealt with four or five years later, because these technologies don't work 100 percent. You know, how many times has your cell phone gone down when you talked on the cell phone?

COLMES: Still happens.

HANNITY: I have Cingular. Mine never goes down.

COLMES: For that plug, they're going to give him a month free service.

GIULIANI: They all go down. So now multiply that under stress where thousands and thousands of people, including first responders trying to use their radios.

COLMES: The fact is, 9/11, we didn't think about this stuff. It happened and our now our whole consciousness has changed. And now we worry about...

GIULIANI: And we've improved but we are not at a level of — certainly not at a level of perfect safety. Probably never going to get there. And we're probably not going to be at the level that we should be. We still have to do more.

But the fact is that we should give some credit to our government. They have kept us safe. And honestly, Alan, I didn't think that was possible.

On September 11 or September 12, you would ask me — I think some people probably did — are we going to get attacked? We were preparing for numerous attacks over that short period and then well into the next couple of years.

Somehow, some way, we've been able to keep ourselves safe for this period of time. And I think some of that was just thank God and some of it, I mean, the policies of the government, including being on offensive against terrorism.

HANNITY: It's amazingly politically how some people don't give the president, who I think has been outstanding, along with Tony Blair since 9/11, dealing with this threat never wavering. That's rare. And they paid a political price.

GIULIANI: I met Tony Blair outside of St. Thomas Church a few days after September 11, because he came here for the memorial service for the British citizens who were killed of which there were many.

And he told me that this reminded him of what his parents went through in World War II, of what happened in the battle of Britain and I think is deep inside him. I think he understands that we made that mistake once before. We made that mistake in the '30s, when we thought we could negotiate with somebody that it turned out we couldn't negotiate with.

And we should not make that mistake again. I mean, we went through 20, 30 years of being on defense against terrorism. We should politically unite around the idea that we have to be on offense against terrorism.

When President Bush said that on September 20, 2001, I think every single member of Congress got up and applauded. I was sitting there. And he was right.

HANNITY: What is amazing, I would argue, and I think it's fairly self-evident that both President Bush and Tony Blair have paid a political price, big time, for their moral clarity and standing for what they see as right. So did Joe Lieberman, did he not?

GIULIANI: Well, yes, I think Joe Lieberman is a perfect example of how you can be victimized over one issue when, in fact on just about everything else, he's a pretty straight liberal Democrat.

On this particular issue, he believes that we have to be on offense against terrorism. And, I don't know why his political party won't allow him the kind of flexibility to have that viewpoint.

HANNITY: All right. I've got to ask you one political question, just one.

COLMES: I wonder what that's going to be?

HANNITY: I asked you once today. You're spending a lot of time in Iowa, New Hampshire and South Carolina. Can one assume that you are very seriously now contemplating announcing running for president?

GIULIANI: You can assume that I'm seriously talking to people and getting their advice. But I'm not contemplating announcing for president. That's...

HANNITY: If you were to, when would you do it?

GIULIANI: It wouldn't be until after the 2006 election, probably into 2007. I am working very, very hard to elect Republicans to the House and Senate, because I think George Bush needs support, particularly in his effort against terrorism and also on the economy.

HANNITY: Isn't one of the big differences of our time, and a lot of people think Republicans may be in trouble in November in terms of the House and the Senate, but isn't the big difference here the pre-9/11 mentality, the post-9/11 mentality that I view Democrats — with all respect to my friend Alan here — I think they are consistently, profoundly wrong and weak on national defense and homeland security. Do you think they're weak?

GIULIANI: I think the issue is that as a party, the Republican Party is united around the idea that you have to be on offense against terrorism, that what we did in Afghanistan, what we're doing in Iraq is absolutely necessary.

What Israel is now doing to Hezbollah is absolutely necessary. I think the Democratic Party is split on that. I mean, I think there's a split — may not even be right down the middle, may be considerably more on the side of "let's get out of Iraq, because it's getting too tough, getting too difficult."

Not every Democrat. Joe Lieberman obviously is one, but look at what happened to him.

HANNITY: What does that say about the Democratic Party, that Lieberman lost over this issue?

GIULIANI: We have a difference of opinion on this. I think we are wrong.

HANNITY: Does it mean the Democrats are taken over by the hard left?

GIULIANI: I think the Democratic Party is the party of the left.

COLMES: One last question. This is not about partisan politics, but on May 15 next year in South Carolina, there will be a presidential debate. Will you be in South Carolina on that date?

GIULIANI: I don't know the answer to that yet. But as soon as I know, I'll come on here and I'll show you my schedule.

COLMES: As soon as you get that schedule...

(CROSSTALK)

HANNITY: We'll be down there that night, and we'll pick it up.

COLMES: All right. Because if you're in South Carolina when we're there, we'd like to have you on our show. We'll book it right now.

GIULIANI: OK. If I'm there, I will be on your show at some point.

COLMES: Mayor Giuliani, thank you very much. Thank you for your time. Good to see you tonight.

GIULIANI: Sure.

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