This is a rush transcript from "America's Election HQ," May 6, 2008. This copy may not be in its final form and may be updated.

BILL HEMMER, CO-HOST: FOX News Election Alert now: An exclusive on our program tonight, Rudy Giuliani is here. We want to get his reaction to the following story that broke last night.

The former speaker of the House, Newt Gingrich, and a FOX News contributor, has just delivered a major warning to the Republican Party on the Hill. Gingrich believes the GOP could be headed for a, quote, "real disaster" this fall and is calling on the party to seek real change now to avoid it.

Video: Watch Part 1 of the interview

Video: Watch Part 2 of the interview

Rudy Giuliani in the house tonight. Hello, Mr. Mayor. Good evening to you.

RUDY GIULIANI, FORMER PRESIDENTIAL CANDIDATE: Good evening. How are you doing?

HEMMER: I'm doing just fine. Thank you for your time to coming back here for the second time in two weeks. What do you make of this letter? Is it a potential for disaster in the fall for the Republicans?

GIULIANI: Well, I think it's Newt trying to wake up the party which is a good thing to do, so that there's an agenda laid out and I think he's probably talking more about the congressional races, the House and the Senate, than he is the presidential race, which kind of has a life of its own.

But I think what he wants to see is more of an overall agenda laid out by Republicans of the House and Republicans of the Senate about what they're going to do about energy, about health care, about taxes, about the economy. I think, probably, everyone is laying out in some detail the differences on terrorism (INAUDIBLE).

HEMMER: Your point is again on it right now. You know, Karl Rove is on "Hannity & Colmes" last night, he's point was this. He said, you know, he's surprised right now that McCain is still as close as he is compared to Obama head to head and Hillary Clinton head to head.

GIULIANI: Well, I think — I honestly think that the presidential campaign will have a life of its own. I think there are all different dynamics that create that, including the strong personalities now of the three people. John McCain, a very strong personality; Hillary Clinton, a very strong personality; and Barack Obama has become a very strong personality. And their differences are going to, I think, going to be weighed on their own.

But, I think, from a congressional point of view, I think Newt is correct. There is a lack of clarity on what the issues are, why it is important to have a Republican Congress - just go right to taxes. I mean, if we have a Democratic Congress, there's going to be a real attempt to raise taxes. We're either going to have a Democratic president — I hope not, that's going to actually put those into effect. If we're going to have a Republican president, John McCain is going to have to try to stop it.

Well, we could go down a whole host of issues: on healthcare, privatizing - moving into private direction or moving into government direction; energy; how to deal — how to deal with the war on terror, offense or defense? I think we've got to hear more what the Republican agenda is for Republican Congress, and I think Newt is quite right to make that point.

HEMMER: All right. Mr. Mayor, stick around in a moment here. Much more coming after the commercial break, OK, of Rudy Giuliani here in New York.

(COMMERCIAL BREAK)

MEGYN KELLY, CO-HOST: We're back with our special guest on this election night, former 2008 Republican candidate, Rudy Giuliani. John McCain, folks, in a major speech today on judicial appointments, taking aim at Barack Obama, saying Obama's taste in judges is, quote, "too lofty for Americans," citing Obama's votes against our two most recent Supreme Court justices.

Take a listen to this shot.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN, 2008 GOP NOMINEE: Somehow by Senator Obama's standard, even Judge Roberts didn't measure up and neither did Justice Samuel Alito. Apparently nobody quite fits the bill for an elite group of activist judges, lawyers and law professors who think they know wisdom when they see it, and they see it only in each other.

(END VIDEO CLIP)

KELLY: Well, it didn't take long for Obama's camp to fire right back. At that, we'll get to the Obama campaign reaction in a minute. First, we want to get the mayor's reaction to John McCain's accusation saying that Obama — and he actually took aim at Clinton, too, having an elitist view of judges.

GIULIANI: I would say that's a very legitimate difference, rather than a charge or an accusation. John McCain is going to appoint judges who are conservative. Barack Obama will appoint judges who are left-wing. He will appoint activist judges who are activist judges in the sense of trying to take the Constitution and move it into solving social problems rather than feeling stuck with the words of the Constitution.

KELLY: It's funny you should mention that, Mr. Mayor, because Barack Obama in a statement responding to John McCain's point today said and I quote, "Barack Obama has always believed that our court should stand up for social and economic justice, and what's truly elitist is to appoint judges who will protect the powerful and leave ordinary Americans to fend for themselves."

Why the laughter?

GIULIANI: Well, the laughter because that is not what a judge in the American legal system is supposed to do. That is not a really responsible definition of a judge. The judge is supposed to interpret the law. And the law is written by other people. It's written by members of the Congress. It's written by framers of the Constitution. It's written by the people when they amend the Constitution.

And then a judge has to have a certain, I would say, dedication to trying to interpret what other people mean and sometimes cannot put their social views into action. This is a very fair issue. John McCain would appoint judges who are more, I would call, originalists in terms of trying to define the meaning that other people had.

I think Senator Obama has made the case very strongly that John McCain has made that, he will appoint social activist judges, judges who tend to try to solve social problems rather than trying to figure out what does the law mean?

KELLY: Yes. Remember Mr. Mayor, during the confirmation hearings for Chief Justice John Roberts, one of the Democratic senators asked him, "Will you stand up for the little guy?" And he said, "Only if the little guy deserves to win under the law."

GIULIANI: Of course. It's not about - this isn't about little guy, big guy, small guy or a large guy, it's about the law. It's about what's fair, what's just, what is the law say. A judge is the interpreter of the law in the American legal system, not someone who creates it.

KELLY: Let me ask you.

GIULIANI: If you end up — if you end up making a judge of somebody who creates the law, then you've made a judge into a legislator, and you really have totally distorted our separation of powers.

KELLY: Let me ask you quickly — because John McCain in his speech today sounded a lot more like a conservative than he did a moderate. Do you think that looking at him versus Obama, or him versus Clinton in a general election matchup, the conservatives are going to be comfortable that he's their guy when it comes to judges?

GIULIANI: Oh, absolutely, 100 percent. And there's a world of difference between the two of them. You know, nobody is 100 percent. No one is ever perfect in terms of, you know, whether you're conservative or liberal or something like that.

But in terms of judges, I can't think of a stronger difference. John McCain will appoint conservative judges, the way I defined, the way he defined it. Senator Obama and Senator Clinton will appoint —like Bill Clinton did — judges who tend to create laws in order to fit and solve social problems. That's which I think is a fairest way to say it. Now, a lot of people would not describe it that way, but I think that's a pretty fair description of it.

KELLY: Oh, this is likely to be a huge issue, what Justice (INAUDIBLE) said 88 Supreme Court (ph) justices above 70.

GIULIANI: It will be and it's a fair one. The American people are going to make a choice here.

KELLY: Former mayor of New York, Rudy Giuliani, some call him "America's mayor." Thanks for being here with us in "America's Election Headquarters."

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