This is a rush transcript from "Hannity & Colmes," June 12, 2008. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: I have a record of working with Ted Kennedy on immigration reform, with Russ Feingold on campaign finance reform. You may not agree with my positions on those issues, but every one of those — with Byron Dorgan when we investigated Abramoff. I can name you a long list of Democrats I have worked with for a long time, because I've tried to get things done.

(END VIDEO CLIP)

SEAN HANNITY, CO-HOST: That was more of Senator John McCain's exclusive town-hall meeting, seen only here on the FOX News Channel. Now, the event was also opened to Senator Barack Obama. He declined the invitation, and we also offered his campaign a chance to come on the show and give their analysis. That offer was declined.

Joining us now for reaction is former Iowa governor and former presidential candidate, Tom Vilsack. Well, he does have the record as the No. 1 liberal in the U.S. Senate. Can you cite any evidence at all?

I mean, by the way, I criticized Senator McCain for Feingold and Lieberman and Kennedy that he worked with, but is there any evidence that Barack Obama's reached out to Republicans that you know of, Governor?

TOM VILSACK (D), FORMER IOWA GOVERNOR: Well, Sean, before I answer that question, let me just say one thing about your first segment with the young men from Iowa.

Video: Watch Sean and Alan's interview with Tom Vilsack

HANNITY: Yes, sir.

VILSACK: I really appreciated the fact that you gave a chance for the country to see what I'm so proud of. Those young men did a great job on your show, and I appreciate the fact that you've extend thoughts and prayers to them.

HANNITY: I've got to tell you, for them — these kids acted so bravely, Governor, and they really all came together. And I — you know, I can't imagine the pain of these four families tonight. And they are in our thoughts and prayers.

VILSACK: Well, I appreciate it.

To your question, I think Senator Obama has worked with his colleagues in the Senate, and I think he'll obviously continue to do that as the next president, whether it's on lobbying reform. He certainly has reached across the aisle to work with Republicans to try to make sure that we have a government that we can be proud of. So I have no question that he's capable.

He did it when he was in the state senate in Illinois, as well. He is interested in having a different tone and different direction and different way of doing business in — in D.C., and that's why he was successful in the Democratic primary.

HANNITY: Governor, let's talk a little bit about the issue we were getting into with Dick Morris. I think it's becoming the emerging issue in the campaign, and that is the economy and the high cost of gas prices. I know it's an issue that you care about.

Senator Obama was asked yesterday the very question, so could these high prices help us? And his answer was, "Well, I think that I would have preferred a gradual adjustment," meaning the increase in price here.

Now, he supports a $15 billion windfall profit tax. He has supported higher taxes on coal and natural gas. On top of the other taxes he's supported, the capital gains and others. Doesn't that sound a lot like a policy of Jimmy Carter and George McGovern?

VILSACK: Well, you failed to mention the tax cuts that he wants to provide for middle-income Americans and low-income Americans, which is sorely needed to get the economy going.

I think that Senator Obama has laid out a very aggressive and comprehensive energy plan. This is not just about gasoline. This is about all of the energy needs of this country, and about the need not just to be energy independent from Saudi oil, but also to develop new technologies, new opportunities to build the middle class with new ways to produce energy.

We are capable in this country of becoming energy independent and energy secure. We are capable of producing new jobs. My state is a good example, with wind energy and some of the ethanol production facilities. We've actually seen an addition of manufacturing jobs.

So I have no question, Sean, that America can build a new economy based on a new energy policy, but we have to have an energy policy. We need a president who understands that, and I think Senator Obama will be that president.

ALAN COLMES, CO-HOST: Hey Governor, It's Alan Colmes. Thanks — I think I referred to you as a senator before. There are no thoughts along those lines to make me correct on that?

VILSACK: You know, some people wouldn't necessarily see that as a — as a promotion, Alan.

(LAUGHTER)

COLMES: And by the way, to answer Sean's question earlier, Barack Obama worked with Dick Lugar for the initiative enhancing U.S. efforts to destroy weapons stockpiles and detect them. And he's done other, similar legislation with other Republicans.

You know, he keeps — in my view, his views are misrepresented. We keep hearing that he's going to raise taxes. Wouldn't he lower taxes for most Americans? And he has tax incentives for them, as well?

VILSACK: He recognizes that we need to have a fair tax system, and a system that actually works for the vast majority of Americans who are struggling every day to make ends meet. We obviously have not had enough of that in the previous eight years.

Those at the top of the income bracket have done quite well under the Bush administration. It's now time to essentially call upon all Americans to do their fair share.

COLMES: We also keep hearing — and you know this issue of Iraq, where John McCain thinks he is very strong. Although I would offer that he may be out of touch with what most Americans say they want about this war. And he keeps saying we've got to win, but I've never heard him define what "win" is. And Senator Obama has a plan to get out, not immediately but over a period of about 16 months.

VILSACK: Well, there's obviously a clear distinction on that issue. And I think Senator Obama's position is consistent with what most Americans feel.

We've been over there for, what, six years now. We have spent enormous sums of money. We've lost very valuable lives. We've stretched our National Guard thin. We have really broken the military, which is going to require a great deal of work. We've got veterans that are going to have to be taken care of. There are serious issues. It's time to bring the boys home.

COLMES: Could there be a Vice President Vilsack any time in the near future?

VILSACK: I think Senator Obama has got a lot of choices from the Democratic team. It's a very strong field.

HANNITY: We'll take that as a yes, Governor.

COLMES: That's a very neutral answer. Thank you very much for being with us, Governor. Thanks so much.

VILSACK: You bet.

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