This is a rush transcript from "Hannity & Colmes," April 3, 2008. This copy may not be in its final form and may be updated.

ALAN COLMES, CO-HOST: Tonight, Geraldine Ferraro will be here to respond to this emerging controversy. First, we start with our top story tonight. According to reports today, Republicans are feeling pretty good about their chances against Barack Obama. Republican strategists told the Reuters news service today that Barack Obama has a glass jaw and that he may be easier for John McCain to run against than Hillary Clinton. Today's national Gallup tracking poll gives Senator McCain a one point lead nationally over Senator Obama and a 2 point lead over Senator Clinton in a head-to-head race. Joining us now is McCain supporter and former presidential candidate himself, former New York mayor Rudy Giualini Thank you so much for coming.

RUDY GIULIANI, (R) FORMER PRESIDENTIAL CANDIDATE: Alan it's good to be back.

COLMES: What went wrong?

GIULIANI: With my campaign? John McCain beat me.

COLMES: How much times do you play it over in your mind and say I would have done this?

GIULIANI: I don't, not much. A little bit. Right after it's over you think maybe if I did this differently or did that differently. But the reality at this point it's sort of behind me now. I'm looking ahead towards getting John elected.

Watch the 'H&C' interview with former mayor of New York Rudy Giuliani: part 1 | part 2

COLMES: You are not doing a lot of soul searching.

GIULIANI: No.

COLMES: Really?

GIULIANI: A little bit right afterwards but the reality is during the campaign, you may remember on one of the debates, I forget if it was FOX or one of the others, I said that if I wasn't running, I would be supporting John McCain. So I'm not running, I'm supporting John McCain. I'm a man of my word.

COLMES: What is that moment like though when you say, there has got to be that moment when you make that decision I'm out. I'm not going to continue. How do you come to that moment?

GIULIANI: You come to it over a period of time talking to your wife, to your advisors. And then, in my case, it was important to me that I get out at a point in which I could help John get the nomination. Because I thought on our side, next to me, humbly, that he was the best — he would be the best choice. I thought he was the best prepared to be president. And I thought he had the best chance of winning. I still do.

COLMES: Did you think that all along that if it weren't me ...

GIULIANI: Yeah, I did.

COLMES: ... It would be McCain.

GIULIANI: I think I said it at least twice, once during a debate and once during interview. I said if I wasn't running, I'd be supporting John McCain because I feel that John has the background, the experience to handle what I think would be the most difficult thing that we have to handle which is terrorism.

COLMES: You hit him hard a couple of times about the issue of taxes, raising taxes, not supporting the Bush tax cuts...

GIULIANI: He hit me a couple times on other things.

COLMES: So do you —- are those still valid criticisms against John McCain, that he supported, you know, the Bush tax cuts?

GIULIANI: But he now supports the Bush tax cuts. He has a very strong position on that. And then, you know, part of this is you have got to compare John to the Democratic alternative and you got a lightyear of difference. They want to raise taxes, 20, 30 percent.

COLMES: On the very rich.

GIULIANI: Come on. Alan on the very rich is everybody who pays taxes.

COLMES: You also here, you hit him really hard, you also have executive experience as a mayor. He did not and that goes for all the other candidates. Is that also a valid criticism?

GIULIANI: Well, when you look at the comparison between his experience, I think that's going to be the determinant in this election. I think the American people are going to look at John McCain and they look at Barack Obama and they are going to say one has no experience and the other has a significant amount of experience going back to him being in Congress, him being in the Senate, him being in the military, all those things.

SEAN HANNITY, CO-HOST: Mr. Mayor, good to see you again. Thanks for being with us. You look like you've been tanning. You got a lot of color. You've been out resting a little bit.

GIULIANI: I have been resting a little more than I did I when I was running. It's an adjustment. But, you know, I'm back being a lawyer at Bracewell and Giuliani, back at Giuliani Partners, doing all my work. It's great.

HANNITY: There is a lot of rumors you may run for governor of New York considering with Spitzer, this...

GIULIANI: I told you before, I'm not running right now. I'm walking.

HANNITY: You are walking, walking into the governor's mansion.

GIULIANI: I'm just walking. We just got finished with a campaign.

HANNITY: I want to reveal a little secret. We had a one hour sit-down interview with Senator John McCain and it was in Philly. And the first person I saw before I even saw Senator McCain was you with him and that raises a very important question.

GIULIANI: That's the day I did a fundraiser with him and I actually substituted for him because he had a big vote that day in the Senate. So I was in Harrisburg.

HANNITY: He had to get back.

GIULIANI: Yes. I was going to sit in for him also in Philadelphia, but he made it on time.

HANNITY: All right. Whenever a person obviously of your profile, you will be on a short list for vice president. If you got the call from Senator McCain.

GIULIANI: Oh, no.

HANNITY: Well I have to ask you.

GIULIANI: I will give you the same answer that I will give when I was asked that who would you pick as vice president? Who knows? I don't know. I don't know what my answer would be. It's no something you seek. John has a number of terrific choices in our party for vice president and shouldn't make that choice until June or July when you get closer to it.

HANNITY: But if he picked you, you would be very compelled. You would think seriously about it?

GIULIANI: Look. If anybody who is president of the United States or going to be president asks you to do something for them, you would think very seriously about it. I am not a candidate for it.

HANNITY: All right, let's move on and talk a little bit — that was a good answer. Let me ask you what you think is happening with the Democratic process. Did you ever think it would be this nasty, this brutal?

GIULIANI: No. I never thought that. I guess I told Alan before. I thought that eight, 10 months ago that it would be more likely on our side that we would have an extended — than on their side. Who knows how politics is going to turn out. But this is, look, from our point of view Republicans who want to see John elected, this is — we have got to take advantage of this opportunity to get John's message out.

HANNITY: Do you see any problems — and I asked this of Senator McCain when I interviewed him, any problems with him and some of the positions that he has that does not go over very well with the conservative base? Does that hurt him or maybe does that help him with independents?

GIULIANI: I have always thought that John had the best chance of getting elected. I thought I had a good chance at getting elected too.

HANNITY: I did too.

GIULIANI: But I thought John had the best chance of getting elected because of our candidates, he has probably one of the best opportunities to possess the middle and appeal to conservatives at the same time having appeal to moderate voters, having appeal to independent voters and to those older Reagan Democrats in New York City they used to call them Giuliani Democrats. I got a lot of Democratic votes. I think that's how you get elected ultimately. You have to have crossover votes. Ronald Reagan was able to do it, a committed conservative though he was, on the leadership issue. America wanted leadership and a lot of Americans who might not be considered strict conservatives voted for him because they saw him as the stronger leader. I think that will happen with John.

HANNITY: Who do you think is the more likely winner on the Democratic side as of now? I think it's going to be Barack Obama because mathematically I would say things are in his favor.

GIULIANI: I only think it's Barack Obama because that's what all the experts say. I'm not an expert on Democratic politics. But Hillary Clinton is a formidable opponent. I think from our point of view thinking of John and the rest of the party, our Senate races, our House races, I don't know that it makes much difference. Their philosophical positions Hillary Clinton and Barack Obama's are roughly the same, the same differences. And I think John, if people want someone who is going to be steady, strong leader, deal with terrorism by being on offense, then they are going to vote for John McCain. If they want someone who is going to avoid these massive tax increases, avoid high tariffs, given the state of our economy right now, you could have no worse an approach than Barack Obama or Hillary Clinton have. High taxes, high tariffs. Go back and look at economic history.

HANNITY: Will you teach that partner of mine.

GIULIANI: It isn't Democratic or Republican. It's either good economics or bad economics.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

TV AD: There is a phone ringing in the White House and this time the crisis is economic. Home foreclosures mounting, markets teetering. Hillary Clinton and Barack Obama just said they'd solve the problem by raising your taxes. More money out of your pocket. John McCain has a better plan. Grow jobs, grow our economy, not grow Washington.

(BEGIN VIDEO CLIP)

HANNITY: That was Senator John McCain's 3:00 a.m. ad, an obvious response to this ad.

(BEGIN VIDEO CLIP)

TV AD: Home foreclosures mounting, markets teetering. John McCain just said the government shouldn't take any real action in the housing crisis. He would let the phone keep ringing. Hillary Clinton has a plan to protect our homes, create jobs. It's 3:00 a.m., time for a president who is ready.

(END VIDEO CLIP)

HANNITY: And we continue now with former presidential candidate, America's Mayor Rudy Giuliani. You know what I like about what the McCain camp did, they responded within minutes.

GIULIANI: That's the key. You got to almost within the same news cycle.

HANNITY: And similarly, they also went after Howard Dean when he attacked him. I think the comment was something like, you don't want to get into the mud with pigs.

GIULIANI: That's like the Clinton campaign back in 1992. They invented that war room thing, immediate response.

HANNITY: Race has become such a big issue in this campaign. What did you think of when you saw the comments of Reverend Wright?

GIULIANI: Well, I think, you know, I guess it's hard to avoid it because the issues that are being raised on the Democratic side. I think as Republicans we should just stay out of it. I mean, let them fight it out. Let them fight it out.

HANNITY: Don't even talk about it.

GIULIANI: Let them fight about it and then we have to deal with it when we run against one or the other. We will deal with it.

HANNITY: Do you think it's fair to use those issues? For example, Harold Ickes is right now..

GIULIANI: It's fair to use anyting.

HANNITY: Anything is fair?

GIULIANI: In politics, right? Fair is in the eye of the beholder, right?

HANNITY: You know the Clintons pretty well. You have had contact with them over the years. What do you make of Bill Clinton's conduct in this whole campaign. There's a battle going on right now. There is so much anger at Bill Richardson because he endorsed Barack Obama. And why do you think that the people that know the Clintons the best, the Ted Kennedy's of the world, the John Kerry's of the world, the Pat Leahy's of the world. These are her closest colleagues that have known them for all these years. Why are they going against her?

GIULIANI: Boy, I don't know the internal thinking of Senator Kennedy or Governor Richardson or why they made the choices that they made. I would hardly be an expert on that.

HANNITY: But if your closest friends, the people that knew you best were the ones that were coming out against you and hurting your campaign, does that — can we read into that that they know something about the Clintons that we don't know?

GIULIANI: Or they are assessing who they think is going to win in the end or who they think the best candidate is going to be. Maybe it's their assessment that Barack Obama would be a better candidate for their party than Hillary Clinton. I'm not sure that's the case, but.

HANNITY: Here is Barack Obama. I have been upset with, I think he has had very little scrutiny. He's got a thin resume. I don't think he has the experience, the background. He said his idea about Pakistan and that comment early on really scared me. I know he is likeable. But as we discover more about him, his negatives have gone up. What do you think of him as a potential president?

GIULIANI: I think it's the experience factor that will be the major issue against John. There is a world of difference in the seasoning and experience and America, you know, it's not just terrorism. We have got to think about that but also as the economy creates more and more questions, we're going to want a steady hand. We are going to want someone who has been — who really has been there and had to make very tough decisions.

COLMES: Where do you think, Mr. Mayor, John McCain is most vulnerable?

GIULIANI: I don't think John is vulnerable at all.

COLMES: Nowhere? No vulnerability.

GIULIANI: He happens to be a close friend.

COLMES: That's why I asked that question. Where do we hit him? Come on?

GIULIANI: And he is the person I thought was best qualified to be president of the united states other than me.

COLMES: Who is harder to beat, Hillary Clinton or Barack Obama?

GIULIANI: I think it's impossible to say. Look at that poll.

COLMES: If you were running, who would you rather face?

GIULIANI: I never allowed myself to think that. I kept thinking I have no control over that and I got to run against either one. The poll shows it's 1 point difference. John is leading one by one point, the other by two. Philosophically it's going to be the same difference. They want to pull out of Iraq. John wants victory in Iraq. They want to raise taxes. They want to raise tariffs. John wants free trade. John wants to keep taxes low.

COLMES: We keep hearing raise taxes, again this goes into raise taxes against who. We keep hearing victory. What does victory mean? Has this administration for example ever defined what victory is?

GIULIANI: John has defined victory in Iraq as a stable Iraq that's going to be an ally of the United States that we have to have the fortitude and determination to get there and it's in the bigger context of dealing with Islamic terrorism which is something the Democrats — during my phase of the campaign when I was involved in it, I couldn't understand why the Democrats wouldn't even talk about Islamic terrorism.

COLMES: But don't you have to ...

GIULIANI: If you can't face the enemy, I don't know how you compete.

COLMES: We have Shiites and Sunnis going after each other for years and years and years. You got a bunch of different factions, al Qaeda being one of many different factions, estimated to be maybe 8 to 15 percent. Do we know if we can ever have stability there? And what's the path to get there and how do you know when it arrives? How long are we willing to wait?

GIULIANI: I think we are willing to wait until we can get to the point where we have a stable Iraq and an Iraq that will be an ally of ours. One that will work with us, against Islamic terrorism rather than handing over as I think the Democrats want to do a victory to the other side.

COLMES: Is Bush at all responsible for the economy right now and can McCain run on the current economy and what does he do about (INAUDIBLE)?

GIULIANI: John McCain will run on the things that he believes are necessary for the economy, which is to keep taxes low to, reduce government spending. He's got a great record, a great record, much better than either one of these two Democratic opponents on reducing spending.

COLMES: Is the president at all responsible for where we are now with the economy?

GIULIANI: The president has got to take responsibility for everything. We have also had a great economy.

COLMES: Had.

GIULIANI: For a long period of time and we still have a strong economy. We have got problems we have got to deal with.

COLMES: Mr. Mayor, thanks so much for being here. Nice to see you.

HANNITY: Mr. Mayor, good to see you. Thank you.

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