This is a rush transcript from "Hannity & Colmes," January 31, 2008. This copy may not be in its final form and may be updated.

SEAN HANNITY, CO-HOST: Super Tuesday is just five short days away and the clock is ticking to the biggest political show-down in recent memory. On the Republican side, John McCain and Mitt Romney continue to trade attacks after last night's debate in California, which might charitably be described as testy.

While on the Democratic side, Hillary Clinton and Barack Obama continue to position themselves to compete in as many states as possible in every corner of the country. And joining us right now is former Massachusetts Governor Mitt Romney. Governor, welcome back.

MITT ROMNEY, PRESIDENTIAL CANDIDATE: Thanks, Sean. Good to be with you.

HANNITY: We appreciate it. You said after Florida -- and it was a tight race in Florida, tight race. You said -- you talked about Washington being broken. And you said, if you want to change Washington, you can't change it by sending the same people back there, just sitting in different chairs. Clearly you were talking about Senator McCain?

ROMNEY: Well, Senator McCain, but also Hillary Clinton and Barack Obama. Look, Senator McCain has had 25 years in service in Washington. It's been a good long time. He hasn't solved the problem of illegal immigration. I don't think he's taken it on before, other than McCain- Kennedy, and that wasn't good.

He hasn't solved the problem of campaign finance. Actually, McCain- Feingold made things worse. As you deal with the challenges that America faces, you realize he's had a long time to deal with them, hasn't got the job done. Let's let someone else have a chance.

HANNITY: Full disclosure, governor, on my radio show we have a primary Tuesday in New York, and I said I would be voting for you in that. And this is after a long campaign of examining, but it goes to the heart of -- and I like Senator McCain personally, I really do. I love his life story. He's a war hero. But on substantive issues, governor, on immigration, on free speech with McCain-Feingold, on issues like tax cuts, the class warfare rhetoric -- he used it again with you last night -- Guantanamo, interrogations, drilling in Anwar. These are not small issues.

He continually and on a regular basis aligns himself to the left Democratic side of issues. Is that a fair characterization? Why do you think he's having so many problems with conservatives like myself?

ROMNEY: Well, I think you underscore the very reason, which is that while he is a national hero who served our country in time of war, and he's served in the Senate for 25 years, he has been a maverick in that he's gone against his own party on some very important issues. He said he voted against drilling in Anwar. He voted against the Bush tax cuts. He was one of only two Republicans to oppose the Bush tax cuts.

He also, as you indicated, authored this campaign finance bill, which has been devastating to our party. It took a big whack at the First Amendment. At the same time, he also authored McCain-Kennedy, which is an amnesty bill. The first version wasn't as bad as the last version, where all illegal aliens in the country get to stay here forever. And on "Meet The Press" over the weekend, he said he would sign that if he were president.

His postures are -- on those famous bills that he's known for -- are frankly not aligned with our party.

HANNITY: You said, governor, today that you could win a two-man race, if it was head to head. Governor Mike Huckabee similarly today, "The Hill" was reporting, that he said there's no way that he will drop out of this race here. Now, right now, I see that you're ahead in a number of states, for example, no surprise Utah, no surprise Massachusetts. Colorado, you're winning in that state by a pretty significant margin as well. But if Mike Huckabee stays in the race, do you feel he's splitting the conservative vote in the party?

ROMNEY: Well, he has every right to stay in the race just as I do. I'd never suggest he not stay in the race, but I think at this stage, given the success of the campaign to date, it's pretty clear that he's not been able to garner the support that he'd hoped to get. Look at a place like Florida. It's a southern state. Senator McCain and I were number one and number two. He beat me there, but not by a lot. But Mike Huckabee was number four.

He's going to keep going. There's no question but that his voters are voters that in large measure that would come to me. That's the way the cookie crumbles. I'm not going to cry about that and wish him well. But I think most people recognize that a vote for Mike Huckabee is a vote for John McCain, and if they want John McCain as their nominee, why, that's exactly what that vote would do.

ALAN COLMES, CO-HOST: Governor, it's Alan Colmes, welcome back to our show. Full disclosure, I'm voting in the Democratic primary on Tuesday.

HANNITY: For who?

COLMES: I don't know yet. I've not yet decided, believe it or not. I like them both. They're not that far apart on the issues. I want to know if I can have a yes or no answer on this question. Is John McCain a conservative?

ROMNEY: On some issues, yes, on other issues, no. And on some of the most important issues that our nation faces right now, he's not a conservative. And perhaps, more importantly, on many issues relating to the economy, he's really not somebody terribly well steeped in the economy. He himself has said that's not his strong suit, and if you're looking at a slowdown coming, and potentially an economic battle unlike anything we've ever faced before, you've got to have somebody who's had a job in the real economy to lead this country.

COLMES: You've said, as a matter of fact, that very thing. You said in Orlando -- you said I think it's helpful if you want to run the economy to have actually had a job in the private sector, you said, which I've had. Does that mean that Dwight Eisenhower would not be a good choice for president?

ROMNEY: No, it's saying that right now, given the circumstances in this country, and the need that we have to have a person who knows how we're going to stand up to China and India, Europe, Latin America, who knows how trade agreements affect industries here, an individual who knows how to fight for every god job, how to protect every industry with every ounce of his strength. That's what I do. That's what I know.

I used to get paid by companies to help them become stronger and more successful, and then I went into business of doing that my own. That kind of experience is kind of unusual, and I think highly valuable at a time like this.

COLMES: You said -- earlier today in an interview, you said there's a number of issues where I have a conservative view and others I have a more liberal view. On which issues, governor, do you have a more liberal view?

ROMNEY: I probably shouldn't have used the L word, if I did, but I apologize for that.

COLMES: It's a wonderful word. I welcome you to use it. Where would you fall in that category?

ROMNEY: I'd say that not all conserves line up with me on a few of the positions I have. For instance, I support having a Department of Education. I support No Child Left Behind. I think it's improving our schools. I agree that we need to give more flexibility to states in applying it, but I support it.

I also put in place a provision in Massachusetts that gets everybody health insurance. And I know some conservatives have heartburn over that. I think it's the ultimate conservative plan, because it says people who can afford to care for themselves and buy insurance, they should either do that or pay their own way, but don't --

COLMES: I want to know where the liberal positions are. There are some areas where you said you are liberal.

ROMNEY: I'm having out a hard time picking out what's described as liberal because I'm not liberal. But I can tell you two things that obviously are not as conservative as the Cato Institute are my views with regard to education and also health care.

COLMES: You said to the "San Francisco Chronicle" last year -- you said, I don't believe we're going to be rounding up 12 or 20 million people and deporting them. I do believe we need to have the people who are here as aliens register so we now how many there are. Now, recently you've been saying and you said to Politico.com, illegal immigrants who arrived recently should be deported, and that you would then follow that by getting the others out of the country.

Now that seems like now you're saying get them all out, but at one point you were saying they're here; they're probably going to stay here, let's find a way to make that work. So I'm confused about what the true position is.

ROMNEY: Pretty simple, which is you're not going to know which people are going to stay and how long until they've all been registered, they've all come in and you know who they are. So that's necessary to begin our program. And in my view, the first thing you have to do with those that are here illegally is find out how many there are, where they are, what their circumstances are. Those that have just been here for a month or two ought to go home right away. Those that have been here for a long period of time, have children in school, I'd let them stay longer, until they're able to arrange their affairs, perhaps sell a home or something of that nature, and then ultimately return home.

The problem I had with McCain-Kennedy was that that bill said that every illegal alien, 12 million illegal aliens, other than those who have committed crimes, all get to stay here forever if they pay 3,000 bucks. And that simply makes no sense.

COLMES: We'll pick up with Mitt Romney in just a moment after the break. More to come tonight. Also Newt Gingrich will be here along with his analysis. And not all conservatives are jumping on the McCain bandwagon. Ann Coulter explains why.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

ROMNEY: That's not what I said.

SEN. JOHN MCCAIN, PRESIDENTIAL CANDIATE: The quote is, "we don't want them to lay in the weeds until we leave." That is the actual quote, and I'm sure fact checkers --

ROMNEY: What does that mean.

MCCAIN: It means a time table until we leave.

ROMNEY: Senator --

(CROSS TALK)

ROMNEY: Is it not fair to have the person who's being accused of having a position he doesn't have be the expert on what his position is? How is it that you're the expert on my position when my position has been very clear?

(END VIDEO CLIP)

COLMES: One of the more heated exchanges between the top two Republican presidential candidates, Governor Mitt Romney and Senator John McCain in last night's debate. We continue with Governor Mitt Romney. How peeved are you at John McCain?

ROMNEY: Well, it's sort of Washington politics at its normal level, which is attack the other party at the very last minute; after having had 15 debates, drop something in Florida that's absolutely untrue, has been seen by "Time Magazine," the "New York Times," the "Washington Post," Bill Bennett -- all the people looked at it and said McCain is not telling the truth here. He knows he's not telling the truth, but it scored him some points. It's the old Nixonian kind of approach, which I think is unfair.

COLMES: Tell me if I understand this correctly. We've talked about it on this show. I've talked about it on my radio show. You said to Robin Roberts that we have to have a series of time tables and milestones, but they shouldn't be for public pronouncement. It sounds to me like you want time tables. You just don't want to make them public?

ROMNEY: Time tables with an S at the end, Alan, and benchmarks and milestones. What's that's talking about is saying how much progress are we making toward getting police trained? How many areas are under control? What progress has happened with the parliament, with regards to the de- Baathification? There's a whole series of things that have to happen, and the president has done that.

We do have a series of time tables and milestones. But to say that I have a date specific for withdrawing troops is, frankly, totally wrong. Senator McCain knows that. In this debates, I've been asked time and again when I'd withdraw, and I said not until we're sure that al Qaeda is not going to make a safe haven out of Iraq.

COLMES: You're upset with him. You think he's misrepresenting you. He's been upset with you. He's upset with you because he claims you put out an ad in New Hampshire saying that he would let every illegal immigrant stay here permanently and even let them have Social Security, when actually the McCain bill was they have to go back to their country first and you only get Social Security after you become a citizen of the United States. So he said you played dirty politics by misrepresenting his position in ads you paid for and took out.

ROMNEY: Well, let's talk about the facts. McCain-Kennedy says to every illegal alien in this country they can get a Z Visa. They don't have to go home. They get a Z-Visa for 3,000 dollars. It says it's only good for four years. But if you keep reading in the bill, you find out that the Z Visa is renewable indefinitely. They can stay here forever, become permanent residents, never go home.

And, also, those that are illegal that turn legal, we give them Social Security credit for the years they were here illegal. And so that is giving an illegal person a Social Security benefit, and it's one of the reasons that -- I'm not the only one to say that. Senator Grassley of Iowa, many others said the same thing at the same time.

Look, the guy is in favor of a form of amnesty for illegals. That's why America turned against him several months ago. They just forget. I'm going to remind them.

HANNITY: Governor, on this issue of time tables, the next question, it was raised to you that President Bush said he would veto any bill that Congress sent him if time tables were in them. Would you do the same thing if you were president? You said you would veto the bill, which clearly means you do not support time tables. This was very disappointing to me. And I've got to tell you something, I was calling it a Florida surprise by Senator McCain because it was dishonest. It was deceptive. "Time Magazine," "Newsweek," the A.P. and Bill Bennett, George Will called it Clintonian. Everybody that I know -- it was clearly a dishonest attack. Does that change your opinion of him at all?

ROMNEY: Well, I think it's going to change a lot of people's opinion about the Straight-Talk Express, which is what he's been selling for some years, that he's a straight-talker, and he tells it like it is. I think people recognize that he'll say anything to get the presidency. It's been something that he's been campaigning for well, probably a decade or more, and it's within his grasp almost. And then all of a sudden this guy Mitt Romney stands up and I'm in his way. And he's going to say whatever he has to, and not just doing something that was inaccurate, but doing it at the last possible minute in a state where there's a big military component, was frankly --

HANNITY: It's like an October surprise where you're off-message. And I thought it was so flagrantly dishonest when you said you would veto it. It became a big decision for me in my decision for this coming Tuesday in New York. Let me ask you this, governor; I understand that Tim Russert on "Meet The Press" offered an opportunity this Sunday for both you and Senator McCain to go head to head in a debate. You've accepted, and is it true that Senator McCain rejected it?

ROMNEY: Yes, it is. And there's actually more to the story because when Senator McCain was on "Meet the Press" with Tim Russert the week before, Senator McCain said that he wanted to debate me on the economy and that he'd be willing to debate me on the economy. So, when Tim Russert followed up and said great, senator, we'll do that on my show, I said, I'm happy to debate John McCain on the economy.

Frankly, I listened to his comment at the debate on the economy. You may have heard it. It was a stream of consciousness type of discussion, where he talked about punishing people on Wall Street, and then he mentioned something about a town in Norway. It really was a very unusual answer. I just don't think he has a grounding in how the economy works. Frankly, that was at the heart of not only how Ronald Reagan rebuilt America's economy, but how we won the Cold War. We out-competed the Russians.

HANNITY: By the way, governor, you're both invited to come on this program in a free and open exchange and debate. We'd love to have you. Would you accept?

ROMNEY: Absolutely.

HANNITY: OK, you're very welcome. Governor, always appreciate you being with us. Thank you very much.

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