This is a rush transcript from "Hannity & Colmes," September 24, 2008. This copy may not be in its final form and may be updated.


GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES OF AMERICA: Any rescue plan should also be designed to ensure that taxpayers are protected. It should welcome the participation of financial institutions, large and small. It should make certain that failed executives do not receive a windfall from your tax dollars. It should establish a bipartisanship board to oversee the plan's implementation, and it should be enacted as soon as possible.


SEAN HANNITY, CO-HOST: That was more of President Bush's economic address.

Joining us now to respond, Indiana Congressman Mike Pence and Washington congressman and co-chair of Barack Obama's Washington state campaign, Adam Smith, is with us.

All right, Mike Pence, you've been an outspoken critic of the plan that has been originally proposed. But by all accounts this is pretty much dead. And they're going back to the drawing board here.

Now, Barack Obama is right, and this is the worst financial crisis since the Great Depression, and that Americans' entire financial system could collapse, what is the answer?

REP. MIKE PENCE (R), INDIANA: Well, let me say, first and foremost, I want to acknowledge our financial markets are in turmoil, Sean. And I commend the president last week and tonight for calling for decisive action from here in Washington, D.C.

Video: Watch Sean and Alan's interview with Mike Pence

But I just don't believe that nationalizing every bad mortgage in America is the best answer.

HANNITY: So what's the answer?

PENCE: Well, I think the answer really is for us to do, you know, a small amount of government intervention and support. Maybe in the form of the loan program that Newt Gingrich just described. And maybe one part government and five parts of reforms that will release the entrepreneurial power of this capitalistic society.

We could cut the capital gains tax.

HANNITY: McCain...


PENCE: We could bring about the — bring capital back from overseas. We simply do not need to look to Main Street to gather together $700 billion to transfer to Wall Street.

HANNITY: Adam, we're looking at, potentially, the biggest expansion of government, if we look at this objectively, in U.S. history when we talk about this bailout here.

You are sticking up for Senator Obama. Again, what he said, "the worst financial crisis since the Great Depression, a crisis..."

REP. ADAM SMITH (D), WASHINGTON: And President Bush, too.

HANNITY: "... that will impact every American." He would — now, let me ask a political question, because he has steadfastly avoided debating Senator McCain, even though Senator McCain has offered time and time again at Saddleback, town-hall meetings. He hasn't done it.

If he really believes it's that serious and that grave, where he's out there telling the American people that we've got to act swiftly, that American taxpayers, that our economy, et cetera, et cetera, jobs, people's savings, the economic security are at risk. If he really believes that, why couldn't he put off a debate on foreign policy issues on Friday to get the job done that the treasury secretary says he needs finished by Friday or over the weekend? Why wouldn't he do that?

SMITH: Two reasons. First of all, what Senator Obama wants is he wants to be helpful to the process of getting a solution. He doesn't want to insert himself into the middle of it.

HANNITY: Well, what kind of leader is he then?

SMITH: And I think — well, wait a second. He wants...

HANNITY: He said, "I'll be there if you need me."


ALAN COLMES, CO-HOST: Let me get in here. The fact of the matter is this debate should go on.

SMITH: Can I answer Sean's question. please?

COLMES: Respond, please.

SMITH: Or at least try. Because Senator Obama is a leader who understands that, you know, standing in front of cameras and talking about things isn't the way you solve problems. That's why he called John McCain, kept it private, didn't issue a press release. He's been in constant contact with Secretary Paulson, the leadership in the House and the Senate.

He's not trying to make a big television splash. He's trying to show leadership and help this outside of the political realm. Not to get into political questions, but to actually solve the problem.

And that's why when President Bush called and said, "We need you in Washington," he's going. He's going to be there.

But Senator Obama also believes that the American people have an important choice to make in about 45 days. They ought to see the candidates to have some basis on which to make that choice.

COLMES: As Obama says, he can get on a plane. They've got these big planes that they can fly privately wherever they want. They can get to Mississippi. They can probably work during the day and go to Mississippi at night and have their debate.

The American people, to the tune of 90 percent, according to a poll that just came out today, want to see this debate on Friday night and see where our leaders might be.

PENCE: Alan, I want to — I want to jump in here if I can. I think the American people do have an important decision to make, not in 40 days, but if the timetable of what will be the largest corporate bailout in American history holds, they're going to have an important decision to make in about four days.

And people need to understand that this $700 billion, under the proposal from the Bush administration, would go straight to the national debt. And many of us believe that we need to put the interests of taxpayers first, the working Americans who have been out there paying their bills, paying their mortgage.

COLMES: How do you do that? We've got about 30 seconds here. How do you make that happen?

SMITH: I'd like to address that substance, because I think — I mean, the bottom line on the substance here is what Newt Gingrich has said and what others have said about what we need to do, long-term structure. You talk to people like Jack Welch and others on conservative, liberal, we are in a major financial crisis now. We have to come up with something.

HANNITY: Why debate? Why not fix it now?

PENCE: I'm really not debating that, Adam. I recognize there's a financial crisis.

SMITH: I'm not talking about — let's not talk about...

COLMES: Guys, we just literally — we're literally out of time, but we...

SMITH: Let's talk about the substance.

COLMES: We can't solve it, unfortunately, in the 10 seconds we have left.

PENCE: Solve it with the power of the free market.

COLMES: We thank you both for being here tonight.

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