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

ALAN COLMES, CO-HOST: We get right to our "Top Story" tonight. Last night's debate between Governor Palin and Senator Biden drew nearly 70 million viewers, the highest rated vice presidential debate in American history.

(LAUGHTER)

COLMES: It is funny.

SEAN HANNITY, CO-HOST: It's funny.

COLMES: More than 11 million people watched the debate.

HANNITY: For Joe Biden.

COLMES: ...right here on the FOX News Channel making it the highest rated single broadcast in this network's history.

And we'll hear from Governor Palin in her only interview since the debate. It's a FOX News Channel exclusive, and that's coming up a bit later in the show.

Joining us first, former Democratic pollster, Pat Caddell, and author of "If Democrats Had Any Brains They'd be" — what's that word - "Republicans," Ann Coulter.

So, tell me how great she did.

ANN COULTER, SYNDICATED COLUMNIST & AUTHOR: It was riveting.

COLMES: In your view.

COULTER: It was unbelievable.

COLMES: Unbelievable.

COULTER: No, it was, and you could tell by watching how happy conservatives were right after the debate versus how glum they were over on NBC where they were calling it a tie. That tells you everything you need to know.

COLMES: Well, the pollsters didn't call it a tie.

COULTER: And by the way, Biden is so out of his mind. He is Linden Larouche with hair plugs at this point. He got.

HANNITY: What?

Video: Watch Sean and Alan's interview | Part 2

COULTER: I mean he — I assume you've been going over this on your radio show. Not only the 14 delusional lies that are all over the Internet claiming that we pushed Hezbollah out of Lebanon?

COLMES: Look, I.

COULTER: All that — he doesn't understand what Article 1 is? And he's being arrogant about it? I mean that isn't getting a word wrong like Bozniak.

COLMES: When Sarah Palin says we can extend the powers of the vice presidency, we can do other things.

COULTER: OK, let's compare those.

COLMES: You want — wait, wait, I'll go down the list of things she said that were wrong as well.

COULTER: No, we'll take — let's take that one. Let's take that one. What they both said about the role of the vice president. What she said is absolutely right, exactly what the vice president does is not defined by the...

COLMES: It is not control the legislatures. She picks a tie.

COULTER: What delusional mutt case Joe Biden says — hang on.

COLMES: All right, yes.

COULTER: Which was to say that there are no vice presidential duties in relation to Congress. And then...

COLMES: That's not what he said.

COULTER: ...cites Article 1.

COLMES: That's not what he said.

COULTER: OK. What did he say?

COLMES: He said you break the tie. You break the tie.

COULTER: No, what he said was that is lie.

COLMES: You get to vote in the Senate is what he said.

COULTER: That is a total lie. I will ask if you were to look it up.

(CROSSTALK)

COULTER: He said the vice president has no role in relation to Congress, and then he cited the article...

COLMES: He said the.

COULTER: ...of the Constitution that gives the vice president the role over Congress of which the vice president is the vice president of the Senate every day of his life.

COLMES: He said the only authority — have it right here — the vice president has from the legislative standpoint is to vote only when there is a tie vote, he has no authority relative to Congress.

COULTER: Oh he has no authority relative? But he's...

COLMES: If there's tie vote. That's what he said and that's the truth.

COULTER: He's the president of the Senate every single day.

COLMES: All right, Pat — those were his exact word.

COULTER: ...according to the very article he cited because he's a delusional nut case.

COLMES: I'm going to try if we can hear a person named Pat Caddell here for a second.

Pat, I expect.

PAT CADDELL, FORMER DEMOCRATIC POLLSTER: Yes, I'm the person you never introduced. You don't put me in the introduction.

COLMES: We did put you in the introduction.

CADDELL: I'm the person that never...

COLMES: No, we did. Former Democratic...

CADDELL: I know you did. I'm sorry.

COLMES: ...strategist Pat Caddell.

COULTER: There was a long (INAUDIBLE) introduction.

COLMES: Well, I'll say it louder and slower next time.

CADDELL: Let's get to the (INAUDIBLE).

COLMES: All right, first of all, I want you to answer this.

CADDELL: Go ahead.

COLMES: You're a pollster. The FOX News poll showed Biden won, 61-39, CBS had him — you know, she had 21 percent, he had something like 46 percent.

HANNITY: It's a snap poll.

COLMES: We go down the — FOX News wasn't a snap poll. And CNN had another poll with him ahead. All the polls seemed to indicate that he won, and yet I hear conservative pundits, you know, say otherwise perhaps because they want her to win.

But what do you say?

CADDELL: Well, you know, I think you have to look at the debate. I thought, first of all, basically they both — first of all vice presidential debates are rarely important. It was important this time because of the pressure on her.

Frankly, I thought Biden did his best debate he's ever done partly because he was allowed to. I also think that she, for the second time under great pressure, actually stepped up and hit the ball very hard. If not they would have been in real trouble.

The point of the matter is, they both — there's something missing in both debates. Let me point it out, one is in Biden is in the ghost. The donkey in the room that isn't braying which is Barack Obama. It's — where Palin kept saying McCain is this and McCain's outstanding on this, it was — Biden was his record, he was attacking McCain, but very rarely did you hear the argument Barack Obama is going to be a great president.

It's the same problem I saw in the Democratic convention.

As for her, I don't understand what the McCain campaign is doing. His pulling out of Michigan was stupid, but, I thought they missed their chance on a number of points to — to really attack back.

But, frankly, look, she's a great communicator. I — some of these polls I buy, some of them I don't. The point of the matter is I think that the reaction last night was...

COULTER: See, I could agree with.

HANNITY: Hang on a second, Ann.

CADDELL: ...if she'd done badly and she didn't.

HANNITY: All right, Pat, good to see you, my friend. By the way, let me toss this over to Ann. And by the way, we're going to show in the first interview since the debate last night Governor Palin right here on the FOX News Channel, that's coming up in just a few minutes.

Now — but first I want to say this. She even went as far to say reckless, irresponsible, naive, and dangerous on foreign policy. She took it a step further today.

COULTER: Right.

HANNITY: . when talking about Barack Obama accusing our brave men and women of air raiding villages and killing civilians. When she brings up those issues — he'd speak with rouge dictators, Iran a tiny country.

COULTER: Right.

HANNITY: . not a serious threat, she's now started a narrative last night which was been missing, and that is for those people that — are only now paying attention. This is now going to be for the rest of this campaign the real Barack Obama.

COULTER: Right.

HANNITY: And I think this is going to be devastating to that campaign if I'm correct.

COULTER: Right. No, I think Obama has redefined the Democratic Party. It used to be the party of acid, amnesty, and abortion, and now it's surrender, socialism, and subprime mortgages.

HANNITY: Acid.

COLMES: (INAUDIBLE) plan, by the way.

HANNITY: All right, but.

COULTER: Good work, Obama.

HANNITY: But, now here — what I would suggest if anyone would ever listen to Sean Hannity, it's time — it is time for Barack Obama to have to explain why he's accused our troops of that.

COULTER: Right.

HANNITY: It's time for him to explain that he would, quote, "cut tens of billions of dollars" in defense in a post 9/11 world that Iran is a tiny country.

COULTER: Right. No, she totally nailed that ticket on taxes, and she turned it into a tax debate.

I would agree with Pat Caddell that that was one of Biden's best performances because other than the distance of the missiles they can get from Pakistan, other than Article 1 of the constitution, other than Hezbollah being.

HANNITY: Other than FDR being president in 1929.

COULTER: ...pushed out of Syria — oh no, I'm just going through last night's debate, what he said wrong.

HANNITY: Oh OK. Let me.

COULTER: Other than that restaurant in Delaware.

HANNITY: Let me throw.

COULTER: Which he got wrong.

HANNITY: These are now the McCain campaign — immediately right after the debate, they came out with specificity all what they're calling, and I agree based on their interpretation, the lies that Joe Biden told in last night's debate, and let's roll the tape.

(BEGIN VIDEO CLIP)

JOE BIDEN, VICE PRESIDENTIAL NOMINEE: I've been able to reach across the aisle. John McCain thought that the answer is that tried and true — Republican response, deregulate. Barack Obama did not vote to raise taxes. The vote she's referring to John McCain voted the exact same way.

No one making less than $250,000 under Barack Obama's plan will see one single penny of their tax raised.

Two years ago Barack Obama warned about the subprime mortgage crisis. John McCain said shortly after that, in December, he was surprised there was a subprime mortgage problem.

John McCain has voted 20 times against funding alternative energy sources and thinks, I guess, the only answer is drill, drill, drill.

Obama's offered a clear plan. Shift responsibility to the Iraqis over the next 16 months, draw down our combat troops. Ironically, the same plan that Maliki, the prime minister of Iraq, and George Bush are now negotiating.

That is simply not true about Barack Obama. He did not say he'd sit down with Ahmadinejad.

With regard to Barack Obama not, quote, "funding the troops," John McCain voted the exact same way.

(END VIDEO CLIP)

HANNITY: It's not true, and he said specifically in a debate on NBC that yes, in his first year in office, he would sit down with Ahmadinejad.

Question, Pat Caddell, as we look at that, I think it's fairly devastating when you start getting, you know, the reality check. Joe Biden was wrong on many, many points because he was.

CADDELL: But — yes, but the point, Sean — but the point, Sean, is that's something she should have said. I think the McCain campaign — no, I'll just say this as a political strategist, observer.

They've been very lame on some of this stuff. First of all, once she said he said that McCain voted to cut funding for the troops, I'd have simply looked at the camera and asked is there anyone in America who believes that John McCain would cut funding for the troops?

HANNITY: Yes.

CADDELL: The other stuff is, you know, they never brought up with Biden, the fact of the matter, his judgment. He voted against the '91 war, in fact, said there'd be thousand of body bags coming back.

COULTER: Right.

HANNITY: Well.

CADDELL: The war went.

COULTER: He voted against the 1973 pipeline.

CADDELL: They never said — let me finish, please.

HANNITY: We got to take a break.

CADDELL: Let me — Ann, let me finish my point, please. They never raised the point that he had said that his answer to the surge was to, in fact — to impose a partition on a sovereign country, Iraq...

HANNITY: That's true.

CADDELL: ...into three parts.

HANNITY: Three parts.

CADDELL: Which everyone thought was ridiculous. I don't understand why didn't they raise those points.

HANNITY: Yes. You know what's amazing, too?

CADDELL: If you want to ask the question, you have to nail them in the debate, not afterwards. You have to do it there.

HANNITY: But — and she did nail him a lot, Pat. I mean you got to.

CADDELL: And they didn't

HANNITY: But what's amazing, nobody's raising the question.

CADDELL: She did. And she did. She got — in fairness to her.

HANNITY: What has Obama.

CADDELL: By the way, in fairness to her, I think she was.

HANNITY: What executive decision has he ever made on a multi-million dollar decision?

CADDELL: That's what I would ask.

HANNITY: He's been running for president ever since he got in the Senate. So we'll take a break, we'll come back.

And it is the vote the country's been waiting for. The House today finally passes that bailout bill. The president wastes no time. He signs it shortly thereafter.

So is this the fix that you and your family and your budget's been waiting for? Plus how does it impact the presidential race? We'll have more with Pat and Ann.

And then it is a FOX News exclusive. Governor Sarah Palin speaks with FOX News today after the big debate. We have that interview coming up, straight ahead.

(COMMERCIAL BREAK)

HANNITY: After a rough week on Capitol Hill, the House finally passed the $700 billion bailout bill. The new version of this bill offers more protection for individual investors and small business.

President Bush, he wasted no time. He quickly signed the bill into law after it passed.

We continue now with Pat Caddell and Ann Coulter.

All right, I want to go back to the issue of the economy because this finally was brought out last night. 94 times in his career, Barack Obama raising taxes.

COULTER: Right.

HANNITY: Biden votes for the biggest tax increase in history. They propose capital gain increases, tax rate increases, income tax, eliminate the Bush tax cuts, you know, windfall profit tax.

COULTER: Right.

HANNITY: Finally, somebody explains, Sarah — Governor Sarah Palin last night this impacts everybody.

COULTER: Right.

HANNITY: And how do you respond to the mantra, oh 95 percent of you are not going to be affected, which is a lie?

COULTER: Right. I — I wonder — I mean it's going to be a tough year for Republicans, just because of the 12th year, but I just don't think that argument works in America anymore.

How many times do we have to defeat the Soviet Union? I mean as long as people are making money, they are hiring other people. Oh and by the way, that reminds me of another Linden Larouche-like statement made by Joe Biden last night.

And that's when he claims that — you quickly brushed over just now — that years ago Obama was warning about subprime mortgages.

HANNITY: When?

COULTER: Yes, produce that.

HANNITY: Yes, and Pat — Pat Caddell, I mean.

COULTER: If Sarah Palin had said one of those things, it would be headline.

HANNITY: No, she did — she actually did. She pointed out that John McCain cosponsored a reform bill in 2005.

COULTER: No, she made a mistake like that, I mean.

HANNITY: In 2005 — oh yes, OK, if it was a mistake. Warning that if, in fact, we don't fix Fannie and Freddie, you know, the friends Jim Johnson and Franklin Rains, that now advises him economically, if we don't fix it, we're going to — the American taxpayers on the hook, our financial institutions and the economy as a whole are impacted. They don't listen to Senator McCain.

Why do Democrats still blame Republicans even after that? Pat.

CADDELL: Look, you know, I'm not going to get into that argument. Let me tell you — I want to talk about this because I've been on Fannie Mae, and I'll tell you it has corrupted the Democratic Party, my party, enormously.

But let me just say something about this bill — this bailout. You know, it's really outrageous. We had a bill filled with Christmas trees to buy people off.

HANNITY: It's disgusting.

CADDELL: And this entire crisis, in part, is premised on one notion which is the American people are too stupid to understand, that they are too selfish to care, and that they're too apathetic to speak up.

The fact of the matter is, this bill — if we had a president that wasn't involved in so much supporting a campaign as in doing the job, we would know that the problem is with these bad mortgages is that they in a sense has already been bought.

If you follow Lee Adler on the Fed report, it points out more hundred billions already been shelled out this week alone, and basically those by the Fed, those are covered by these bad, bad mortgages, and the effort is to get them on pass to the taxpayer.

COLMES: This is Bush's bill.

CADDELL: And — the fact is somebody needs to stand up for the country.

COLMES: That John McCain tried to take credit for it.

CADDELL: Yes, I'll tell you what, both sides.

COLMES: And he couldn't get passed last week that he wanted to be able.

CADDELL: . are guilty about this.

COLMES: You know, you know — we'll get into the bill a little later.

HANNITY: Congress stuck in the corner.

COLMES: I want to get further into some of the — you're talking about lies. You're accusing Joe Biden of lying.

COULTER: Yes.

COLMES: I'm not going to accuse Sarah Palin of lying.

COULTER: Well, I actually think he's delusional and not lying.

COLMES: But hold on, let me show you. Let me get the question out. But I'm not going to — not accuse her of being delusional, I'm not going to take the low road, I'm not going to accuse her of having ill intent.

But she did misstate a number of things. For example, thankful the constitution would allow more authority for the vice president.

COULTER: In fact, there is.

COLMES: McCain warned about Fannie and Freddie when he warned about accounting practices, not what led to the meltdown. He had — this idea of voting to raise taxes on people making more than $42,000 a year. There was never a vote on that. It was a resolution that was nonbinding.

(CROSSTALK)

COULTER: But one thing that she.

COLMES: Let me just finish. I'll give you a chance to response. Higher taxes, millions of businesses. That's totally untrue. These were continual misstatements. One after the other, Ann.

COULTER: Hundreds of thousands as opposed to millions.

COLMES: One after the other after other.

COULTER: What you are talking about is the equivalent of Joe Biden calling Bosnians Bosniaks. To make a slip like that, it's not the same thing as everyone — and now I'm not calling him delusional for, I am calling him delusional, and not a liar, when he goes on this long tare about how we united with France and drove Hezbollah out of Lebanon, and he said at that time we need to get NATO in.

I mean he has this entire fantasy that is not even close to claiming falsely that he has been shot at.

COLMES: I don't blame you for not responding to what I just said.

COULTER: Which he also did. I did respond.

COLMES: Because, Pat Caddell, if we want to.

COULTER: I'm giving you actually delusional remarks as opposed to a slip of the tongue or an argument. You are making an argument as what the duties of the vice president are. She's right. You're wrong.

COLMES: I'm making an argument that a number of — please, your finger is very close to my face.

COULTER: It is not.

COLMES: I'm making an argument that.

HANNITY: You're being Coulterized.

COLMES: . so many (INAUDIBLE) misstated by Sarah Palin last night, either because of lack of knowledge, lack of information. She sounded like she was doing it by notes. She memorized a bunch of things, and then she says to the interviewer — to Gwen Ifill, I'm going to answer the questions that I want to answer not these ones that you asked me.

What about that?

CADDELL: Well, good for her. I would have — you know, you got to be in charged with your own debate.

COLMES: So just ignore the moderator.

CADDELL: I mean just let me make point. Look, the point of the matter, you know, look, I told you that Biden has the best debate. I thought she had — she's an incredible communicator. She walked up there under incredible pressure just as she did in the convention.

Now that's some of her own making. Some are just McCain campaign's stupidity in who they — have her do interviews with. But the point of the matter is she performed well last night. I don't care whether she memorized it, she did very well, and I think that she, you know, people like her.

COULTER: You know, the fact that Democrats keep saying.

CADDELL: The point is that she could have ended that campaign last night. And she didn't. Come on, I know this back and forth on facts.

COULTER: ...that she memorized the speech.

COLMES: We got to run.

COULTER: ...that she memorized, A, proved she won. And by the way, she pays her speech writers. Neil Kinnock is still waiting for his payment.

(CROSSTALK)

COLMES: Most of the polls say she did not win.

HANNITY: Check mate.

COLMES: And by the way Biden credited Kinnock every time he gave that speech.

COULTER: He did not.

COLMES: Yes, he did.

HANNITY: He did not.

COLMES: He did. Except for once. And that got him into trouble.

HANNITY: Oops.

COULTER: If Sarah Palin ever said anything that stupid, we'd be laughing.

COLMES: We got to run.

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