This is a partial transcript from "The O'Reilly Factor," June 28, 2007, that has been edited for clarity.

BILL O’REILLY, HOST: Now for "Top Story" tonight, a conversation with perhaps the most controversial woman in the country, especially after her latest confrontation with John and Elizabeth Edwards. Ann Coulter, whose bestselling book "Godless" is out in paperback just in time for the beach. Scared of sharks? Carry that book.

(LAUGHTER)

O'REILLY: Ann joins us now. All right. A little humor here before we get to the Edwards stuff in a minute. But I am very curious about your vision of illegal immigration. I mean, now we have nothing. Now we have status quo, which is a disaster. What do you want to see in that area?

COULTER: Point one, defeat the amnesty bill, which we're well on the way to today. That would have been an absolute disaster. Having 12 million illegal immigrants live in the shadows is better than rewarding them by giving them amnesty, and in point of fact it's almost, not quite, almost as good as enforcing the laws we have and building a wall.

Because as with the welfare bill it sends a message not only to Kennedy and President Bush, but to the illegal immigrants coming across the border that America is not rolling out the welcome mat. That this was defeated so resoundingly by the American people against the wishes of the elites, and by the way, against the wishes of most of the hosts on FOX News, shows that the American people can make their views known pretty well these days. And it is not for illegals getting amnesty.

O'REILLY: But it's Democrats and Republicans. There are a lot of Democrats who didn't like this bill because it didn't let enough people...

COULTER: I didn't say Republicans. I said Americans.

O'REILLY: But you are right. I mean, there were so many things in the bill, 500 pages, 800 pages, that people said, “Oh, I don't like that, I don't like that.”

COULTER: Oh, I think there was a big thing they didn't like. Don't mix that up. It was the amnesty people did not like.

O'REILLY: I agree with you. But if you look at the problem, if you secure the border and you stop the madness and you send a message that you want sent, and I agree with that as well. This isn't, you know, an all skate. You just can't walk in here any time you want. If you do that first, then I believe you can find a way to allow some, not all, of the 12 million to stay in the country and you can control it.

COULTER: I've got to say, I just don't see that as the desideratum of what our legislation should be. How do we get these people living out of the shadows? Who cares if they're living in the shadows? They're illegal.

What we want to do is figure out how to deport them. You keep saying, “Oh, we can't round them up, we can't round them up.” Well, OK then, the punishment is they're going to live in the shadows. And by the way, I have…

O'REILLY: So it's either deportation or the shadows?

COULTER: I didn't get to point two — no that's your position.

O'REILLY: No, no. But I'm saying, your position is either deportation or the shadows.

COULTER: No. I'm saying that — if those are our options, in the shadows is better than amnesty.

O'REILLY: No, you can have any option you want. I want to be clear here. So you wouldn't allow anybody who snuck into the country or overstayed their visa or whatever.

COULTER: To become a citizen? Correct.

O'REILLY: No one.

COULTER: Correct. Because you are rewarding illegal behavior, you are encouraging more of it. It's the basic law of...

O'REILLY: OK. So the Ann Coulter view is, if you snuck in here, you cannot become a citizen ever?

COULTER: Yes. I don't see why not. I mean, if we're not like…

O'REILLY: And you would rather have then.

COULTER: We don't have a shortage of people trying to become citizens in this country. I suppose if we needed more we could bend the rules there.

O'REILLY: Well, you can do any kind of legal immigration work program.

COULTER: Yes. Actually now that you mention it, that sounds like a good rule.

O'REILLY: All right. That's a pretty strident position, that's a tough position you are taking, because there are people here…

COULTER: I don't think it's that tough.

O'REILLY: Well, listen, the government of the United States is culpable in this. They let these people come in. Winking at them and saying, big business needed it. Look, read in The Wall Street Journal. You know, The Wall Street Journal wants them here. Why? Because business wants them here.

COULTER: Well, you didn't let me get to point two of the…

O'REILLY: All right. So there is a tacit allowance.

COULTER: …"anti-Factor" immigration plan.

O'REILLY: Look, Reagan, when he gave his amnesty could have sealed that border down. And he didn't. He…

COULTER: There were also only 3 million illegals then and even Reagan said it was the biggest mistake he ever made.

O'REILLY: Only 3 million?

COULTER: Are we getting to point two of the Ann Coulter immigration plan?

O'REILLY: Is there a point two?

COULTER: Yes. You started arguing with me at point one.

O'REILLY: All right. What's point two?

COULTER: Point two, build the wall. Point three, which I'm rushing to so you don't interrupt me — massive employer sanctions. And by the way, I could shut that down tomorrow.

O'REILLY: What would you do to the employers?

COULTER: I would say that illegals would not be deported if they sued their employers for violating the minimum wage law, that would end it tomorrow. Because the reason they hire illegals is because illegals can't sue them if they pay them less than the minimum wage. I mean, in theory they can.

O'REILLY: So you would let the lawyers sue on behalf of the illegals.

COULTER: And no employer is going to hire an illegal after that.

O'REILLY: That's not a bad thought. But I think that…

COULTER: Yes, it is.

O'REILLY: I think that you — my disagreement with you is, I believe the federal government is culpable here. They allowed these people…

COULTER: So do I. That's not a disagreement.

O'REILLY: …to come in. They winked at.

COULTER: But you think that you…

O'REILLY: And so it's not all the illegal aliens' fault.

COULTER: OK. But you want to punish Americans because it's George Bush's fault.

O'REILLY: I don't want to punish Americans at all.

COULTER: Well, you are punishing Americans by deciding...

O'REILLY: Well, it's Bush's fault, it's Clinton's fault, it's Bush the elder's fault, it's Reagan's fault, it's all their faults.

COULTER: OK. So let's punish America.

O'REILLY: I am not punishing America at all.

COULTER: Yes, you are. You are changing the nature of the country in a way Americans do not want it changed.

O'REILLY: Look, I don't want to sound like Geraldo, but there are good people here working hard, doing positive things for America. I think we give them a chance on a case-by-case basis.

COULTER: Yes, like the Mexican-Americans working as U.S. Border Patrol guards whom George Bush has prosecuted.

O'REILLY: But there are good people here. I think we give them a case-by-case after we secure the border.

(COMMERCIAL BREAK)

O'REILLY: Continuing now with Ann Coulter. A brand-new FOX News/Opinion Dynamics poll says John Edwards is favored by just 10 percent of Democratic voters. That is not good. So Edwards needs attention, and he needs money in order to jumpstart his campaign. Maybe that's why Elizabeth Edwards called a television program to confront Ms. Coulter the other day.

(BEGIN VIDEO CLIP FROM "HARDBALL")

ELIZABETH EDWARDS, WIFE OF JOHN EDWARDS: The things that she has said over the years, not just about John, but about other candidates, it lowers our political dialogue precisely at the time we need to raise it. So I wanted to use the opportunity, which I don't get much because Ann and I don't hang out with the same people, to ask her politely to stop the personal attacks.

(END VIDEO CLIP)

O'REILLY: OK. Now after that interview, and nobody knows this, we called Elizabeth Edwards and we said, you know, we're really interested in this personal attack stuff because we have a problem with that on the left. Would you come on, either sit on a set or on a phone? No.

Now I am saying to myself, wait a minute, you call into a program that no one watches, all right. And you have a point, right? No one watches. Because nobody sees this.

COULTER: That is accurate.

O'REILLY: I'm giving you a forum where 10 million people on radio and TV are going to see it and you say, “No.”

(LAUGHTER)

O'REILLY: Then I'm saying, maybe there's something else here. And I think they used you. I think the Edwards, John and Elizabeth, used you to get attention to him. Because what he is doing this morning? You saw him.

COULTER: Well, they're all over the networks, including Chris Matthews, lying about what I said.

O'REILLY: But it doesn't even — look, we expect that kind of thing when you are involved. But what's John Edwards doing this morning? He's screaming about, they're giving me money.

COULTER: I think he is taking orders from Elizabeth.

O'REILLY: I think Elizabeth is smarter than he is.

COULTER: I am not sure this is a brilliant fundraising ploy.

O'REILLY: They have gotten a lot of money.

COULTER: Not as much as I have off of his attacks on me. And I mean, as is evident even today, they're going to be a lot more Americans who like Ann Coulter than hate Ann Coulter. Good luck with your fundraising, John.

O'REILLY: All right. So you don't think that you were taken here? You don't think they set you up on the show?

COULTER: Well, I don't know what you mean, set up. I don't think there's any possible way.

O'REILLY: Well, I mean, they said, look, we got Coulter on the show.

COULTER: Oh yes, they called her in advance.

O'REILLY: Right. They called in advance. We're going to do this because we're getting a little — look, it's just like me and Stuart Smalley, Franken, that idiot. I played right into his hands when he had his book out. You know, they want to get in a fight with you.

COULTER: If I could just say, I sort of object to your description of this as if I lost a fight. I don't think they would have done it to anyone else. I don't think they would have called in on…

O'REILLY: Were you surprised that she called in?

COULTER: …your pal Al. If Al Franken were on, they wouldn't have had the wife of someone he had made a nasty joke about call in. But still I am more of a man than any liberal is. So you know, I don't care.

(LAUGHTER)

O'REILLY: But did they tell you she was going to call in?

COULTER: As I was walking to sit down, right before, “She might call in.”

O'REILLY: All right. So they gave you a little big of a head's up.

COULTER: No, I think what was — I think that isn't so bad. What was a little weird was how she was allowed to talk uninterrupted for 45 minutes browbeating me. I felt like I was in kindergarten.

O'REILLY: Well, you got your shots in.

COULTER: Oh, no, no, no. Every time I thought it was my turn to respond, I get interrupted. “No, no, no, Elizabeth Edwards is still talking.”

O'REILLY: All right. Now, I want to play the clip in total, not the little…

COULTER: Ah, not the deceptive one you played at the beginning.

O'REILLY: No, that was a tease. This is the real — this is the thing that I guess Elizabeth Edwards was objecting to. Roll the tape.

(BEGIN VIDEO CLIP FROM "GOOD MORNING AMERICA")

COULTER: I wouldn't insult gays by comparing them to John Edwards, now that would be mean. But about the same time, you know, Bill Maher was not joking in saying he wished Dick Cheney had been killed in a terrorist attack. So I've learned my lesson, if I'm going to say anything about John Edwards in the future, I'll just wish he had been killed in a terrorist assassination plot.

(END VIDEO CLIP)

O'REILLY: All right. So that was a wise guy remark. And people did take it out of context. But it is still, and you know this, provocative to the nth degree.

COULTER: No, it isn't at all.

O'REILLY: That is not a provocative remark, Ms. Coulter?

COULTER: OK. No, but just before I answer that question, can we think of any other American who has to constantly explain this word, that word, what does this joke mean? This is getting to be my entire book tour, having scolds tell me that, “Oh, that's not funny and I wouldn't have used that word.”

That isn't saying that anyone should be killed, but is making a comment about what Bill Maher said, and I am confident your viewers understand that. No one complained about what Bill Maher said.

O'REILLY: I did. I complained about it.

COULTER: Duh, it's a syllogism. OK. The mainstream media didn't.

(LAUGHTER)

O'REILLY: No, I didn't really complain.

COULTER: I feel like I'm back in kindergarten, explaining to talk show hosts, this is a syllogism. What it means is, no one complained.

O'REILLY: It's a gotcha game. They want to get you. But Maher didn't.

COULTER: Well, OK, then don't tell me I shouldn't have said it. That's like saying, I can't say yes then, because then they'll twist it and say, we were asking if you were a child molester. No, you were asking if I was a Republican. You can't say anything.

O'REILLY: OK. But you know that's provocative. But you're a friend of Maher's.

COULTER: It is not provocative, it is a great point.

O'REILLY: Yes it is. You are a friend of Maher's, right?

COULTER: I haven't seen him for a while, but yes.

O'REILLY: OK. But he didn't want Dick Cheney to die. In his remark, he basically said, other people would be alive if Dick Cheney died. Another very provocative point.

COULTER: The world would be a better place.

O'REILLY: Right. But he didn't say, “I want Dick Cheney to die,” just as you didn't say, “I want John Edwards to be killed by terrorists.”

COULTER: No, no, no, OK. We'll go back to my lesson on syllogisms. That is not a parallel. That is not a parallel at all. I wasn't saying it. I was saying, the mainstream media says this is OK. And therefore apparently it's OK to say things like that. That would be saying things like that.

O'REILLY: Are you telling me the mainstream media are liberal? Are you telling me that? Is that what you're telling me here?

COULTER: I'm saying I can't take explaining the English language to talk show hosts any more.

O'REILLY: But it gets you a massive amount of publicity.

COULTER: I am the illegal alien of commentary. I will do the jokes that no one else will do.

(LAUGHTER)

COULTER: And I am sick of explaining it.

O'REILLY: OK. But you could be deported for that. And we have guys outside that, you know, boom.

(LAUGHTER)

O'REILLY: But come on, this gets you good publicity for your book.

COULTER: No, it doesn't. I have sold five bestselling books being described…

O'REILLY: Then why do you think they have done that? Because people know who you are and know you are provocative.

COULTER: This idea that what — you know, I set one day and thought, I know, I'll tick off all of the publishing industry. I'll get the entire mainstream media to hate me. I'll get academia to hate me, and then I'll start writing books. I'll be rich by noon. It is not a very good plan, Bill.

O'REILLY: Listen, of course it is. Everyone knows your name and a lot of people like your brassy style.

COULTER: They know my name because they read my books.

O'REILLY: They know your name because you go…

COULTER: That's exactly why liberals attack me.

O'REILLY: …and you say the F-word and then you say the name John Edwards. That's why they know your name. Come on.

COULTER: Just for the viewers, I did not say the F-word. I referred to the Isaiah Washington incident, which was also described all over FOX News.

O'REILLY: You said the F-word.

COULTER: …which was he went into rehab for using the word "faggot," not the F-word.

O'REILLY: All right.

COULTER: That is as bad as Chris Matthews. You Irishmen.

O'REILLY: Oh geez. All right. Ann Coulter, everybody. You make up your own mind. We report, you decide. That's our slogan. And there she is. Thanks for coming in, we appreciate it.

COULTER: Thank you.

O'REILLY: All right. Have a nice summer.

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