This is a partial transcript from "The O'Reilly Factor," August 16, 2006, that has been edited for clarity.

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BILL O'REILLY, HOST: The troubling situation in Iraq: July was the worst month for Iraqi civilian casualties since the war began 41 months ago. Sunni and Shia militias are murdering people and nobody seems to be able to stop it.

So based upon the continuing carnage, it seems another strategy is urgently needed in Iraq.

Joining us now from Washington, FOX News analyst Newt Gingrich. The stats are undeniable. You've got Iraqi civilian deaths, July, 2006, 3,438 people. And the commanders tell us they can't stop it. What say you?

NEWT GINGRICH, FOX NEWS POLITICAL ANALYST: Well, first of all, I think we have to recognize that the strategy which they have been following has failed. And I think it's important to recognize that, because until you're prepared to admit that this strategy's failed, you're not going to have the energy and the drive to shift to a new strategy.

O'REILLY: So the Bush administration hasn't admitted failure yet along the lines of controlling the militias.

GINGRICH: Well, I think that there are three things you have to do immediately. The first is dramatically expand the Iraqi security forces, to have a large enough security force to have the kind of 20 to 1 advantage over the enemy that you have to have in this kind of a war.

Second, it's increase the number of Americans committed long enough to get the country stabilized.

And third, in every part of Iraq that is stable, dramatically accelerate our ability to help their economy grow to help people get back to work, to help young people have a future so that you're giving them an alternative to joining militias or an alternative to...

O'REILLY: All right, let me challenge the assertions you just made. If you increase the Iraqi security forces, and after three years, you know, we're into a quarter — three and a quarter years, we still don't have, according to the commanders, they still don't have confidence in most of the Iraqi forces. So it's not — they're not doing that well there. Some of them are OK. Most of them are not.

So then you're bringing in people that after three years, four months, still can't do it. And the infiltration into the Iraqi army by the insurrectionists is huge, particularly in the police precincts, that there are informers in there, that there are people — jihadists in there. And they can't screen them out.

And number two, if you put more American boots on the ground — American casualties actually going down in Iraq. June, July of 2006 is much lower than June and July of 2005. So the war now is centered now between Shia and Sunni. I think Zarqawi's death pretty much nailed al Qaeda there. Now it's the civil war. And I don't think even more American boots on the ground, American boots on the ground, are going to stop the Sunni and Shia from killing each other, do you?

GINGRICH: Look, I think that you have to decide whether we are in fact, in favor of trying to help an Iraqi government survive, or whether we're prepared to pull out and leave chaos behind.

O'REILLY: But how much urgency do we have to put on the Iraqi government to solve their own problem?

GINGRICH: I think we have a lot of urgency. But Bill, you can't have it both ways. If the current government doesn't have enough military forces to solve the problem, and you don't want to increase the military forces they have, they're not going to solve the problem.

O'REILLY: I think it's almost like the South Vietnamese. They had plenty of soldiers to beat the North Vietnamese.

GINGRICH: No.

O'REILLY: They just wouldn't fight.

GINGRICH: Well, look, I'm an optimist. I'd rather think this is more like South Korea, which took a period of time to get stable after the Korean War.

O'REILLY: But we're not seeing that.

GINGRICH: Which was a dictatorship for a long time.

O'REILLY: All right.

GINGRICH: But I think it is possible to win there. I do not think we're going to win with the current strategy.

O'REILLY: No. I think that strategy has to change, but I think the Iraqis have to be told you guys got to step up because this is now your problem, not our problem. We defeated Al Qaeda there. Now you've got to stop killing each other, because both Sunnis and Shia are in the government. And they got to stop or their own throats are going to get cut.

Now people who dissent from Iraq have now become the target of Dick Cheney in — off the Lieberman election. Let me play you the sound bite from Cheney. You react to it. Roll it.

(BEGIN VIDEO CLIP)

VICE PRESIDENT DICK CHENEY: The Dean Democrats have defeated Joe Lieberman. Their choice instead is a candidate whose explicit goal is to give up the fight against the terrorists in Iraq. What these Democrats are pushing now is the very kind of retreat that has been tried in the past.

(END VIDEO CLIP)

O'REILLY: Fair?

GINGRICH: Well, I think it's fair. I think it's very clear that Lamont wants to leave Iraq as rapidly as possible. For that matter, John Kerry has talked about leaving Iraq as fast as possible. John Edwards has talked about leaving Iraq as fast as possible. That's a legitimate position, but they should have to defend it. They should explain why they think we will be more effective in the Persian Gulf with Iran if we leave Iraq in chaos.

But I think where the vice president and I disagree is I think the administration has to come forward with a dramatically bolder, more aggressive strategy for winning. I don't think the American people want to see 3500 dead Iraqis a month and be told keep — you know, stay the course. I mean, this is not a course that's going to lead to success.

O'REILLY: All right, I agree with you. I think we need a total definition of a new way, but I also think the Iraqis have got to be put on notice that you've got to do better, because we can't do it for you.

GINGRICH: Bill — look, I agree with you, but their military is doing much better. Their police are not. So we need to overhaul the police. We need to dramatically strengthen their military. And we need to cut through all the baloney and get economic help to the parts of Iraq that are peaceful, because we have had a pathetic failure to help the people of Iraq economically in ways that I think would dramatically reduce.

O'REILLY: And with all those billions they're pumping in there, I mean I think we've got to watch that money even further.

All right, when we come back with the speaker, I want to talk to him about Iran, the Middle East, and the Holocaust cartoons in Iran. Unbelievable.

(COMMERCIAL BREAK)

O'REILLY: Continuing now with FOX News analyst Newt Gingrich. Nobody I know thinks that the United Nations force and the Lebanese army is going to restrain Hezbollah's military machine, going to disarm it, going to cause any disruption to it. Why then, if that's true, did Israel stop fighting?

GINGRICH: I frankly don't know. I think that this is a very bad defeat for the democracies. I think the United Nations' resolution is a disaster. I think it will not be implemented effectively.

We've seen the United Nations force in South Lebanon for over 20 years totally fail to do their job. There's no reason to believe they're going to do it now. And I think everybody should notice that Assad of Syria and Ahmadinejad of Iran both publicly, in an orchestrated way, claimed credit in the last 24 hours for having defeated the United States and defeated Israel. I think this is a very significant defeat for the United States and for the democracies.

O'REILLY: See now, we had the Israeli ambassador in the United Nations, Dan Gillerman on earlier this week. And he's a smart guy. And he basically said look, world opinion matters to Israel in the way we conduct ourselves. And we wanted to give the world a signal that we are for peace and that we are reasonable people in this way.

But if they do it again, and he said on this — I don't know whether you saw it, but he said on this program that'll be the end of Lebanon. That will be it. One more time, Lebanon's done. And by implication, Syria as well. Is that what you think will happen if Hezbollah starts up again?

GINGRICH: I don't know. I mean, you know, I would have thought this time that the Israelis would have gone into Lebanon hard enough to destroy Hezbollah.

If you look at the total number of missiles fired at northern Israel, if you look at the almost a million Israeli refugees, you know, the news media almost never covered the Israeli refugees, the Israeli children hiding in bomb shelters, the fear in northern Israel. It's a very one- sided news coverage.

So my question for Ambassador Gillerman would be, what makes him think the news media will be any more fair next time?

And next time, remember, Hezbollah will be hiding behind a United Nations force, which will announce promptly they're going to investigate.

I think it is a substantial failure. I think it's very revealing that Hezbollah is already passing out Iranian money to help rebuild South Lebanon. I predict Hezbollah will come out of this stronger than they were before the war started. And that is really a very bad defeat for the United States and the democracies.

O'REILLY: In Iran, they have this week, a exposition of cartoons that mock the Holocaust. It's almost like they're just spitting in the face of the world, Iran. Yet the world yawns. No condemnation of Iran, no bad feeling toward Iran, it seems. Why?

GINGRICH: I think that there is an acceptance of anti-Semitism and an acceptance of hatred of Israel, which verges on the period before World War II.

I think that the - you know, the fact is that last October, the Iranian national television ran a 10-minute children's cartoon designed to recruit 10-year-olds to become suicide bombers. And that was a cartoon which featured Israeli solders being killed by a child who is a suicide bomber.

Ahmadinejad has said publicly he wants to eliminate Israel from the face of the earth. How often do they need to tell us they hate us, they want to destroy us, they're going to do everything they can to kill us. And we keep finding new ways to be surprised by it.

O'REILLY: And this is.

GINGRICH: I just regard this as one more step in their process.

O'REILLY: And this is replication of the Nazi threat in the '30s, in your opinion?

GINGRICH: It is absolutely parallel to Adolf Hitler and the Nazis in the `30s. And it amazes me how the Europeans in particular can just close their eyes and pretend...

O'REILLY: Americans, too, though, Mr. Speaker. Americans absolutely true. They don't like Iran, most Americans, but they're not upset about -- they're not going let's take him out. No way.

GINGRICH: Well, over 60 percent of the country sees Iran now as a real enemy. And I think this is the point where Vice President Cheney was right.

The part of the Democratic party which favors weakness, appeasement, and surrender, has to confront the question what do you do with somebody like Ahmadinejad, who says publicly…

O'REILLY: You talk to him.

GINGRICH: …that he wants to defeat us.

O'REILLY: You chat, that's what The New York Times says. You want to chat.

All right, Mr. Speaker, thanks very much. As always, we appreciate it.

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