This is a rush transcript from "Hannity & Colmes," July 10, 2008. This copy may not be in its final form and may be updated.

ALAN COLMES, CO-HOST: Welcome to "Hannity & Colmes". Getting right to our "Top Story" tonight.

Everybody still buzzing about the hot mic comments made by Jesse Jackson about Barack Obama.

(BEGIN VIDEO CLIP)

REV. JESSE JACKSON, CIVIL RIGHTS ACTIVISTS: See, Barack's been, um, talking down to black people on this faith based. I want to cut his (EXPLETIVE DELETED) off.

Barack — he's talking down to black people.

(END VIDEO CLIP)

COLMES: Jesse Jackson issued an apology yesterday and Senator Obama accepted it, but the discussion has turned now to the substance of Jackson's comments and what appeared to be substantial differences between the reverend and the senator.

Joining us now with more, former speaker of the House, FOX contributor, and author of "Days of Infamy," Newt Gingrich.

Mr. Speaker, welcome. How are you doing?

NEWT GINGRICH, "DAYS OF INFAMY" AUTHOR: It's good to be with you.

Videos: Watch part 1 of Sean and Alan's interview with Newt Gingrich | Part 2

COLMES: You know, we're going to get to Phil Gramm's comments which — in a moment. He speaks more for McCain and McCain's policies than Jesse Jackson does for Barack Obama and Barack — Barack's policies.

Jackson's not a surrogate for the Obama campaign as Gramm is for McCain, correct?

GINGRICH: That's exactly right. I would say that Reverend Jackson is, in fact, closer in some ways to the hard left of the Democratic Party. I suspect that he resents at one level that Senator Obama has been able to get the nomination, has been able to be a unifying figure for Democrats.

In a sense it's a generational change. Jesse Jackson was a big deal 20 years ago, now he's not, and Senator Obama is now a big deal, and I think that there's got to be a certain level of resentment, and that maybe came out in some very unwise comments.

COLMES: You know everybody talked during the Clinton campaign a number of years ago about his Sister Souljah moment when he stood up to Sister Souljah.

I wonder if this is a — could be similar for Barack Obama that, in fact, helps him?

GINGRICH: Well, you know, you and I discussed this the other night in your radio show and I — I don't think that Obama needs a Sister Souljah moment. I think that he is a much more reasonable and moderate politician. I think he doesn't have to prove that he's free of the left.

I think what he has to prove — and is beginning to fail to do — is that he has a set of clear values and a set of clear policies that he'll stick with. I think that's a very different kind of problem than the ones that Bill Clinton had in 1992.

COLMES: Doesn't Mr. McCain — Senator McCain have a problem with one of his surrogates saying we have a nation of whiners and we have a mental recession?

Does that really reflect — you've got to wonder what John McCain really thinks with Phil Gramm, one of his key economic advisors?

GINGRICH: Well, I would hope that Senator McCain would distance himself rather decisively from that comment, which, I think, it's frankly not true, not accurate, and I'm very surprised that Senator Gramm said that.

When people who live a long way from work, have to pay $4 and $5 a gallon for gasoline, when they look at the collapse in the price of their house, when they look at the credit situation and what's happening to the stock market, when they worry about the rise of China as an economic competitor, I don't think any of those things are whining. I think those are honest, accurate reflections of the legitimate concern the average American has.

COLMES: But Gramm is still a senior advisor. Should Senator McCain dismiss him?

GINGRICH: No, he just ought to tell him to advise him not to advise the country. You know probably — it probably does not help a lot Senator Gramm to go on television and say random things that are both wrong, in my judgment, but also politically destructive.

SEAN HANNITY, CO-HOST: Hey, Mr. Speaker, I don't want to take issue with you here because I agree with a lot of your comments. But let me.

COLMES: Please, go ahead.

HANNITY: I wonder — yes, he wants to see two conservatives fighting.

But in all seriousness here, we haven't had a recession. There is an economic slowdown. I'd share your concern. Everybody I talk to is furious at $4.50 a gallon for gasoline, especially when they know that we have, you know, more resources than the Middle East.

But I want to ask you this — over the course of my life I have met people that grew up under tyranny. I knew people that grew up in the former Soviet Union for fear of speaking out against their government, never had an opportunity to pursue their dreams.

In this country maybe we do — is there a — some truth to the fact maybe we do whine too much? Maybe we don't appreciate this gift that we have of freedom? Maybe we don't take advantage of it?

GINGRICH: No.

HANNITY: Maybe too many of us look to the government to solve every problem we have, health care, et cetera?

GINGRICH: Sean, I have the deepest affection for you.

COLMES: Here we go.

HANNITY: Here we go. But, but.

GINGRICH: That is the least Ronald Reagan-like quote I have heard from you in your entire career.

HANNITY: No, but this is what I mean. No — but let me say I actually think it is Reaganesque in this way. I believe in people. I believe that if you — you take — if you work hard and you play by the rules, you can't fail.

GINGRICH: Right. So.

HANNITY: So?

GINGRICH: So here's my point. Phil Gramm sounded like Jimmy Carter. You don't...

If the American people are complaining, you ought to listen to them and find out why. Now why are they complaining? The price of health care is going up, the price of health insurance is going up, the price of sending their kids to college is going up, the price of gasoline is going up.

HANNITY: Right.

GINGRICH: They fear China as a competitor. They look at a tightening situation. I talked to manufacturers who are seeing dramatic increases in the cost of their — of their raw materials, and they say to each other, this is hard — people for the first time that I can remember, people decline the number of miles they're driving in the last two months...

HANNITY: Yes.

GINGRICH: ...because it is directly affecting their pocketbook.

Now if your customer comes in and complains to you it is not good to say to the customer why don't you quit whining...

HANNITY: No, no.

GINGRICH: ...because then they get to go to a new store.

HANNITY: Maybe we're having two separate discussions. I want to be very clear so you do understand me.

I agree about gas prices, it needs to be solved. We have an answer, drill here, drill now, pay less. I agree with you about taxation, regulation, bureaucracy, government is failing, Washington government is broken.

But here's more of my point. Have we conditioned the American people to look to the government to take care of all of their fears — health care, daycare, college, baby bonds — in other words, that we are maybe — there's been a mind shift away from liberty, freedom, and responsibility towards the government being the answer to everything?

GINGRICH: No. First of all, I don't believe the government is the answer to everybody. You don't, and neither do 95 percent of the American people. I'm talking to you from a home in Omaha.

I talked this evening to somebody who has cleverly put together an ethanol plant producing raw material that is used to feed cattle who produce waste which is now used to create methane which is then used to heat the ethanol plant. They have had a 500 percent increase in their efficiency in producing energy.

HANNITY: Yes.

GINGRICH: Totally entrepreneurial, OK? They would like to have dramatically lower taxes — the opposite of Obama — so that they could afford to invest more...

HANNITY: Right.

GINGRICH: ...in these kinds of creative solutions that help America.

I think what the average American is saying is, when it's broken, fix it. Now that doesn't mean you need a government bureaucracy, but when you're told, for example, that it's government that blocks you from the Rocky Mountains, the Pacific, the Atlantic, the Eastern Gulf of Mexico, Alaska...

HANNITY: Yes.

GINGRICH: ...where we have more energy than Saudi Arabia by a factor of probably 10 to 1, then you do have to change government...

HANNITY: I agree with you.

GINGRICH: ...in order to solve some of these problems.

HANNITY: I actually think we agree on most things, but I do believe there has been a conditioning that has shifted, and there are many, many Americans — and I talk to a lot of them every day — that really believe the government should provide everything for them. That, in other words, that we've gotten away from the concept of.

GINGRICH: Those Americans will vote for Obama.

HANNITY: OK. I agree. See, it just took a little time.

COLMES: And that's why he will win. Why he'll win.

HANNITY: I was wondering if you're going over to his side. All right.

We'll come back, we'll continue with former speaker of the House Newt Gingrich.

(COMMERCIAL BREAK)

HANNITY: We continue now with former speaker of the House, Newt Gingrich.

Mr. Speaker, I want to go back to the Jesse Jackson issue here for just a second.

You know, I would argue that, but for Ayers and Wright, the bitter Americans comment, his wife's comments, that there might be an 85 percent that Barack Obama would be the next president of the United States.

If you look at the issue of race relations in this country, obviously, we have been correcting wrongs and injustices and the evils of the past, and America at — I would argue 90 percent of Americans are not racist and find it — racism repugnant.

With that said, you know, I listen to Jesse Jackson's comments, and Barack Obama — I don't — I think people are judging individuals by the content of their character including Barack, and the only thing that's set him back are issues.

Now we've come far. And in that sense, is Jesse Jackson upset? Is he jealous? Does he feel like America's gone? That — in maybe in one sense if America's not divided, he's not as relevant as he used to be? Am I reading too much into that?

GINGRICH: No, I think you've put your finger on something important. It's a little bit of the speech the Reverend Jeremiah Wright gave at the National Press Club.

I mean Jesse Jackson represents a confrontational guilt-oriented, semi-black male approach to dealing with issues, and he's made — raised an amazing amount of money over the years out of guilt, and now all of the sudden he's faced with a positive, smiling, unifying, much bigger figure.

And I do think there's a certain psychological resentment by Reverend Jackson for the rise of Senator Obama.

HANNITY: What do you think of — what are we to make of —without going through the laundry list of Barack Obama flip-flops, what are we to make about — one of the things I love about you is that you are a historian, and you have read and written extensively about Lincoln.

As a president, he made tough decisions. FDR made tough decisions, Truman, tough decisions, JFK, Reagan, George Bush, whether you agree with him or not.

If he — if Barack Obama changes on every significant issue, is he qualified for that job?

GINGRICH: First of all, he's proving that what he meant when he said he was the candidate of change. It just turned out that the — it turned out the changes were his campaign.

Second, I think what you're seeing is him kind of crumble under pressure, that, as each new issue involves, he's trying to get to the center, but to get to the center, he has to repudiate the left, and then he doesn't want to repudiate the left too much because that will make them too mad.

And so he doesn't — I don't think he and his advisors realize that precisely because he was so remarkable in the early spring as a charismatic, idealistic, bigger-than-politics figure, he now is shrinking with each passing week, and I think you saw that in today's Gallup poll, which shows it's a 44-42 race which is the closest, I think, it's been since Obama clinched the nomination.

COLMES: First of all, Mr. Speaker, you know the polls mean nothing until around Labor Day. That's always been the case. Second — see, you're smiling.

GINGRICH: That is not what you said.

COLMES: You know that to be true.

GINGRICH: It's not what you said.

COLMES: They mean nothing.

GINGRICH: Alan, that's not what you said when Obama was up 12 points.

COLMES: Well, it was in my favor but, look, the fact — wait, look, we — everybody says the polls mean nothing until Labor Day. The experts say — you know it to be true.

GINGRICH: I agree. I actually agree with — I agree with you.

COLMES: OK. Stop this moment. Stop the tape. All right.

So, furthermore, and this comes up every night I sit here and listen to people call Barack Obama a flip-flopper, and I bring up that John McCain has got the same problem so that cancels out, doesn't it?

GINGRICH: It will cancel out except that they very different personalities and they come from a very different background. Senator Obama is a first term senator with a very few years of office, who campaigned as a charismatic, idealistic performer who was above normal politics, and has now declined into normal politics.

John McCain has never claimed to be that. I mean John McCain is a slightly eccentric maverick who has bounced around telling the truth as he knows it and being honest about why he changes. When you asked McCain.

COLMES: But he's not a maverick anymore if he's taking positions that comport with what the Republican platform has been all along. He's no longer the maverick.

GINGRICH: First of all, I think McCain will have plenty of positions that aren't the Republican platform, but second, McCain's position is — when he does change, he does so very directly and very forthrightly.

He said on drilling offshore that there were policies at $1.50 a gallon that made sense. They don't make sense at $4 a gallon. The problem for Senator Obama on energy is he still wants to stick with a no use of U.S. energy, no drilling, no exploration policy, which I think will prove to be, in the next six or eight weeks, unsustainable in public life.

COLMES: Nobody is stopping the oil companies from drilling. Oil companies can drill. They have opportunities, they are drilling, they're exploring, they can explore the 68 million acres they believe that they're not drilling on.

GINGRICH: Right.

COLMES: It's not like Barack Obama gets into office.

GINGRICH: Alan, Alan.

COLMES: . and the oil companies have no ability to look for oil.

GINGRICH: Listen, Alan, give me a break. They can't explore in the Atlantic, they can't explore in the Eastern Gulf of Mexico, they can't explore in the Pacific, they can't develop the shale oil of the Rockies which has three times the amount of oil as Saudi Arabia, and they can't explore in northern Alaska.

Now that's a fact.

COLMES: But they can explore 68 million acres that they're not exploring on right now.

GINGRICH: So they can have the acres that don't have oil, but they can't have the acres that do have oil.

COLMES: Well, we don't know that there's no oil.

GINGRICH: That's very.

COLMES: They haven't looked yet.

GINGRICH: That's perfect liberal thinking, Alan. Congratulations.

COLMES: All right, Mr. Speaker.

HANNITY: Hey, by the way, I'm glad you finally gave it to him. That.

COLMES: Actually, the first segment — it was much more enjoyable for me when the two of you are going at it.

Thank you both very much for being with us.

GINGRICH: Thank you.

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