This is a rush transcript from "Hannity & Colmes," February 28, 2008. This copy may not be in its final form and may be updated.

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SEAN HANNITY, CO-HOST: Earlier, Alan and I talked with Senator Trent Lott about the recent Obama surge, the struggling Clinton campaign, and the Republicans' chances of holding onto the White House. Take a look.

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HANNITY: And Senator Lott, welcome back to "Hannity & Colmes." Always good to see you.

SEN. TRENT LOTT (R), MISSISSIPPI: Glad to be back with you, Sean.

HANNITY: Now, are you as surprised, as so many of your colleagues, at the flailing of the Clinton campaign in this race and the rise of, you know, Barack Obama? Are you as surprised as everybody?

Watch Trent Lott's presidential predictions: part 1 | part 2

LOTT: I am surprised, to tell you the truth, Sean. I had thought that the Clinton organization and Hillary herself would be almost unstoppable. And to get the nomination, I thought that we'd have a good chance to win the general election with a Republican. But it's been startling to watch.

But I watched the debate the other night, for instance, Sean, I thought she was — substantively, she was good. She did a good job. But right now Barack Obama has got Teflon on him, and it's hard to put any kind of a, you know, hit on him.

HANNITY: Now, I think we also underestimate, a lot of us, you know, the likeability quotient. I mean, not really a lot of difference, as far as I see, between the two candidates. But he's more likeable than her in so many ways.

So, it raises the question — you used the word "Teflon." How does Senator McCain deal with the fact that he's raising all this money, that he has all of these crowds, all of this hype involved in this campaign, and, of course, the fainting crowds out there? What would you recommend Senator McCain do? How does he combat that?

LOTT: Well, two reactions to that. First of all, I think he has become a phenomenon. He's getting these great crowds. He gives excellent speeches. He is a very charming guy. I know that on a personal basis.

But I don't believe that kind of stratospheric, you know, relationship or reaction can continue from here all the way to November as people really do look at the substance and who is — who's ready to be president, who's ready to be commander in chief.

When they look at John McCain's positions on defense and foreign policy and terrorism, and energy and fiscal policy, they're going to say, you know, I'm not — I just don't want to take a chance with Barack Obama.

HANNITY: Well, I also think the issue of change, you know, what are we changing towards? I mean...

LOTT: Yes, change can be bad. Change is not necessarily good. If you change in the wrong direction, if you go to more spending, more government regulation, more government control, more taxes, a weaker foreign policy, a declining defense capability. That's change that's not good for America.

HANNITY: From my standpoint, too, I think the change that they're talking about here is change that would go back to an era of Jimmy Carter, and that is weak on national security. You know, the government being the answer to all our problems, higher taxes here.

There's one other thing here. You've mentioned — and I want to go back to this word that you used, which is "Teflon."

LOTT: Yes.

HANNITY: It seems like only now we're beginning to get a little bit of insight into who Barack Obama is. He's got a controversial pastor that has bestowed a prestigious award on Louis Farrakhan for life-time achievements, for example.

The Weather Underground. His association with this guy William Ayers, a guy that bombed police headquarters in New York, declared war on the United States, admits to being involved in the bombing of our own Pentagon. And Barack Obama's spokesperson this week said that they have a friendly relationship.

You know, I'm wondering, when the American people find out more about things like, this do you think it's going to be a factor?

LOTT: Yes. Well, soaring rhetoric is good, but I don't believe it's enough. At some point you've got to fill in the blanks under that.

For instance, he talks about how he's going to bring us together. And we're going to — he's going to be — we've heard this phrase — a unifier. And while he, again, he was very pleasant, and I had a good relationship with him when we served together in the Senate, I never saw him really, but with maybe one exception, really reach across the aisle.

I watched his voting record. I was the vote counter. I was the whip in the Senate. And I kept waiting for him to show just a little — little break. I mean, certainly, he's not — never votes to amount to anything with somebody like even a Joe Lieberman. But he did not show the ability to work across the aisle the way I think that sometime you have to.

Now, I know John McCain has been criticized for doing that maybe too much. But, you know, the people — the American people do have some things they need. They are struggling with the price of fuel. They are struggling with health-care needs and access to it and affordability of health care.

They see the Congress not getting much of anything done. And they want to see us do some things in areas where the average working man in America, a woman, needs some help. And they don't want increased taxes.

ALAN COLMES, CO-HOST: Senator, it's Alan Colmes. Welcome back to our show.

LOTT: Glad to be with you, Alan, thank you.

COLMES: Given — you know, you were saying once people get a load of what Obama stands for they'll have a different take on him than the euphoria we see surrounding him now.

But if you look at the polls on issue after issue and see how unpopular the Bush administration is, how unpopular Republican positions are on Iraq, the economy, go down the list, why would the American people reward that by reelecting a Republican to the White House?

LOTT: George Bush is not running for a third term. And John McCain has shown independence, not only individually and sometimes from his party but from the administration, too. I mean, he was critical of Rumsfeld when a lot of people were kind of hesitant to do that. He's disagreed with the president. So we're not electing a third-term Bush administration.

And, by the way, the example I cite, I never thought I'd cite France but that Sarkozy, you know, he was of the same party of Chirac, but he didn't run, or he — and he isn't governing like Chirac did.

COLMES: You know...

LOTT: I think that's — that's the one example that McCain might want to emulate.

COLMES: John McCain is not exactly distancing himself from George W. Bush. He's basically supporting the Iraq policy. He's actually said to the Wall Street Journal he doesn't know much about the economy. That's not exactly a ringing endorsement for somebody who's got to deal with the faltering economy as we head toward November.

LOTT: That's not exactly true either. But I think he probably has more experience on economic issues than the likely Democratic nominee will have.

I mean, John has worked on spending issues. He has been involved in tax policies. And I know on at least once, one occasion, you know, he maybe didn't cast the right vote, but he's paid attention to the Fed. He's — actually, I know that he's a friend with Alan Greenspan. This is not a subject that he's not informed on.

And I think you're going to see he's going to come out with some position papers very soon, after working with Phil Graham and Jack Kemp, to think through very carefully where we are and where we need to be economically.

You can't go into a fall campaign this year just talking about foreign policy and defense, even though that's, you know, a top issue for us in terms of security for America. You've got to talk about the economy and how you can best make sure that working men and women in America and all Americans have a growing economy.

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(COMMERCIAL BREAK)

COLMES: We now continue with more of our interview with Senator Trent Lott.

(BEGIN VIDEOTAPE)

COLMES: Senator Lott, in the last segment you were talking about the economy and how important it is. Do you — John McCain hasn't even addressed the economy. Do you have even a sense what John McCain would do about the economy? Because I don't know, and I don't know that I've ever heard him address it.

LOTT: Well, he has, as a member of the Senate. And he's taken some very forceful positions in terms of, you know, huge government bureaucracy and government spending and tax policies. He's been involved in tax policies over the years.

I know he's paid attention to the Fed and interest rate issues and is a friend of Alan Greenspan. I've heard him talk about that.

COLMES: I'm talking about current issues having to do with a stimulus package, people who are faltering on mortgages. The fact that jobs — there are all kinds of problems on all kinds of sectors, consumer confidence. I've not heard him address any of it.

LOTT: He's going to have to do that. I think he needs to do more of it. He did come out and say he thought that the stimulus that did pass pretty quickly through the Congress was OK. He probably had some reservations about it, would like to maybe change it. But it was, at least it was an act, something positive that could help in the economy.

But I do know he's going to be talking a lot more about the economy, what he wants to do in the next year. I know he's going to be meeting very soon with — further with Phil Graham and Jack Kemp and others to think through a policy. And then he'll put out some position papers and talk about it.

The economy, you can't ever have a presidential campaign that you don't talk about the economy, and he will.

COLMES: Sean, in the last segment, mentioned some of the associations alleged to be with Barack Obama, whether it's this Ayers guy, supposedly part of the Weather Underground. He mentioned Obama's pastor at his church in Chicago.

Is that fair game to bring up these associations and try to smear a candidate based on what somebody associated in that — on that level may have said or done in the past?

LOTT: Well, I guess it's who it is and what have they said and what have they done? I personally have not had the time to get into who these people are and what they might have said or not. I guess it will — could become an issue.

But I think John would like for the campaign not to descend into, you know, personal or negative attacks. Howard Dean called John McCain — questioned his integrity, called him a liar. I mean, that's not a good way to — neither one of these people actually have the nomination yet. Could we at least wait until after next week and then let's talk a little substance before we get into the character assassinations?

HANNITY: Senator, let me just defend my position here.

LOTT: No, no, I'm not attacking your position. I don't know what they said.

HANNITY: No, no, I understand that. It's not a smear. A Barack Obama spokesman said that they are friendly. A man that admitted to being a part of bombing the Pentagon.

Now, nobody has asked him about it. I think we deserve an answer. Why would anyone be friendly with somebody that declared war against the United States in the 1970s? That is a legitimate...

LOTT: I think that should be looked into.

HANNITY: Absolutely.

LOTT: And if a person said something like that or was remotely connected in any way, that's fair game.

HANNITY: Absolutely. You know, I want to answer Alan's question through you, Senator, because Senator McCain has addressed the economy. And he has promised no new taxes, which he just made a pledge last week.

LOTT: Right.

HANNITY: He promised to eliminate all earmarks, and he promised to extend the Bush tax cuts to foster further economic growth.

LOTT: And those would be hugely important.

HANNITY: And which is the antithesis of where Barack Obama stands, right?

LOTT: That's right. Barack would go the exact opposite position in each case and has said so.

HANNITY: Yes. You know, for all that, you know, Alan is critical of the president and maybe the associations. You know, one of the criticisms that conservatives have had is that they have disagreed with Senator McCain and said that he hasn't been conservative enough on some issues here.

He — the word "maverick" is often used to describe him. But you know, as low as the president's approval — approval ratings are, you know, Nancy Pelosi and Harry Reid, their Congress has gone as low as 11 percent.

LOTT: Absolutely. Yes. Their approval rating is very, very low.

HANNITY: Yes.

LOTT: And when you look at John McCain's voting record over his career — and obviously, I have disagreed with him some over the years. We've had some real good fights like brothers will do. And we — but we always did it in such a way we could come back and work together the next day.

And so I think that what he's talking about, and the way that he will be leading and voting on the economy, would be the way I would like to see done.

HANNITY: Yes, and one of the things I think maybe we can learn from the way Hillary Clinton has run against Barack Obama is that this Clinton strategy of launching the kitchen sink at him isn't going to work. So, when you advise Senator McCain, would you advise him to just keep it on substance and not personal attacks?

LOTT: Well, I would — I think he would prefer that. And I — that's always good if you can do it. It's hard to do in America now with some of the, you know, the media. Not FOX, by the way.

HANNITY: Of course not.

LOTT: And the blogs and all that goes on. A lot of the nasty stuff that goes on comes not even necessarily from the candidates.

I thought the Clintons made a mistake in the way they handled the situation in South Carolina. I thought it backfired on them. I didn't know what to think about it at the time.

But I think John — and if the nominee is Barack — and he doesn't have it yet — I think they will try to keep it on a higher plain. But it's tough to do these days.

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