This is a rush transcript from "On the Record ," October 8, 2008. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: Good evening. Tonight, is Governor Sarah Palin the victim of a crime? Well, there's breaking news out of Tennessee tonight. A federal grand jury indicts a man for illegally hacking into Governor Sarah Palin's e-mail account last month. But who is the mysterious hacker?

Plus, first lady Laura Bush goes -- first lady Laura Bush goes "On the Record." You will go to the White House, or should we call it the pink house? Mrs. Bush will tell you why she lit up the White House pink last night.

But first, Governor Palin goes "On the Record." We talked to Senator McCain's running mate in Jacksonville, Florida, about Senator Obama's association with Bill Ayers and much more. We caught up with Governor Palin before a campaign rally in Jacksonville.

(BEGIN VIDEOTAPE)

VAN SUSTEREN: Governor, nice to see you.

GOV. SARAH PALIN (R-AK), VICE PRESIDENTIAL CANDIDATE: Thank you. Good to be here.

VAN SUSTEREN: Governor, give me some behind the scenes. You a little bit tired yet?

PALIN: No, not yet. Today's going to be a really busy day, though, zipping all over Florida. Yesterday was jam-packed, too. But no, it was fun. Energizing.

VAN SUSTEREN: Well, the schedule is pretty crazy, though. I mean, it's, like -- it's non-stop.

PALIN: Yes. Like Mario Andretti said, though, if everything's under control, you're going too slow. And we're not going too slow and all is well. No, it's been energizing.

VAN SUSTEREN: I suppose I should say with a lot of children, most mothers out there watching will say, That's just -- in some ways, a mother's schedule is a little bit different, but nonetheless, mothers don't stop.

PALIN: Oh, heck, yes. I know a lot of moms who are busier than I am. They're running all over also. And a lot of these home school moms, too, they're teaching their kids in addition to doing everything else. And no, I'm not unique in this at all.

VAN SUSTEREN: Now, I've been up in Alaska, went up and met a lot of your friends, a lot of people you worked with. And it's a beautiful state. You have a very high approval rating up there. It's a great job. Why do you want this job as vice president? Because being governor of Alaska looked like a great job.

PALIN: It is a great job, great people whom I'm serving. I'm thankful that they hired me. But I want to do that on a national level, then. Same thing that I've done as a governor, bring positive change, kind of take on the good old boys when you have to and shake things up. I did that as a mayor, did it as the governor, ready to do it as VP because I have the best running mate in all this, John McCain, who has a track record of doing the same. So it's a good team, and I look forward to this.

VAN SUSTEREN: If elected as vice president, do you have sort of, like, you know, dreams in terms of what you'd like at the end of the day -- or I guess the end of the term, is the way to say it, is you'd like to say, you know, This is what I did?

PALIN: Yes. A couple of things specifically, energy independence. We have got to get off this foreign supply of energy reliance that we are on, and we can do that. And I get frustrated when I hear people say, you know, if ever we even are able to take steps toward energy independence, that's 10, 20 years from now. And no, it's not. There's so many things that we can do today to start getting us on that path towards energy independent. And it involves conservation and alternative sources of energy being plugged in also.

But we do have the domestic conventional supplies here, not just in Alaska, where we have billions of barrels of oil and hundreds of trillions of cubic feet of natural gas, but energy-producing states all over this nation, waiting for that allowance and that enablement of domestic supplies being tapped into.

So energy independence, reform of government also. Literally, we got to put government back on the side of the people again, a track record as mayor and governor, being able to do that, do that here. And then working with families of kids with special needs -- that's near and dear to my heart. I look forward to working on issues that will help make this world a more welcoming world to our kids with special needs.

VAN SUSTEREN: All right. So let's take those topics. First of all, take energy independence. You're in favor of drilling in ANWR, right?

PALIN: Yes.

VAN SUSTEREN: And I know that Senator McCain isn't. You're going to work on him, I heard you say, because you two will talk about that. How do you handle this issue? There's a lot of people in the lower 48 don't want to drill. People in Alaska do want to drill a lot. How -- as you as vice president, how do you reconcile that? Because the job as governor of Alaska is a little different. You represent people of Alaska. The vice president, it's everybody.

PALIN: Well, remember, too, as VP, you are there to support the president's initiatives and agendas. So that would be my role there, and that's why I say, you know, we'll have some healthy debate and good conversation about where drilling should be allowed.

But the nice thing is, even with ANWR, John McCain hasn't asked me to check my opinions at the door. He does want to discuss that issue and other issues. And we have the "all of the above" approach towards energy independence that we do agree on. He understands, too. We can't have just a little bit of here and there solutions plugged in to get us out of this energy crisis. It does need to be all of the above, with the drilling and offshore, the alternative sources of energy and the conservation all tied in together. And we agree on the big picture there.

VAN SUSTEREN: Why do you think we haven't had more development in the alternatives? Because I remember back in the early '70s, we had gas lines. Everybody knew it was a problem and everyone talked about alternative energy. That was what -- you know, was on every nightly news. But look where we are.

PALIN: Yes. Well, I think America kind of got lax there. Yes, remember in the '70s, when we were conserving gasoline also, and our parents were always on us to turn off the lights and quit wasting electricity. And we got kind of spoiled and lax there, but now it's time to plug in those solutions.

And this nation is so richly blessed in alternative sources. You know, we've got the hydro and the wind and the geothermal and the biomass. It's just a matter now of plugging in with American ingenuity what those solutions will be. Really, we have no choice now also. People are realizing that these non-renewable sources of energy, once they're gone, they're gone. And we do have conserve and we have to start looking at the alternative sources.

But it is still a time off before we have economic and reliable sources of energy that can take the place of the conventional sources. So all the more reason that we have that "all of that above" approach. We're working on this all together comprehensively. And we have no excuse, though, not to go forward with alternative sources of energy at this time.

VAN SUSTEREN: Now, you're steeped in energy because you're from the state of Alaska. People listening at home, when they get -- they get mired down in the details. It gets a little confusing. If you're watching at home and you want to know, OK, well, what's the Senator McCain, Governor Palin difference from the Senator Obama, Senator Biden program on energy, is there sort of, you know, three little bullet points or two little bullet points that people...

PALIN: Well, yes. Obama and Biden say no to all the domestic supplies of energy, the producers that are asking for allowance to tap into sources here. They said no to everything. And we're never going to get there towards energy independence saying no. We have to say yes to the "all of the above" approach.

Otherwise, we're going to keep relying on foreign sources, paying other countries to produce for America, relying on other countries, some with some pretty volatile and dangerous regimes controlling them and controlling energy supplies that don't have America's best interests in mind, of course. So it's a dangerous position that we're in with this continued reliance, and Obama and Biden have said no to putting us on that path towards energy independence.

And it's not just national security that we're concerned with here, but it's our economy. Energy independence will allow our economy to get back on the right track. We're working on that also. And again, it's something that Biden and Obama just haven't seemed to get.

VAN SUSTEREN: Reform government -- that's another thing -- another aspect of what you'd like to see. Everybody always says, Let's throw the thumbs out, every time we sort of hit the skids. Is there some particular area that you'd reform rather than -- I mean, "reform government" is, you know, a great phrase, but what exactly do you want to reform?

PALIN: Well, you have to be willing to take on the good old boys. You have to be willing to take on your party at the right time, if you must do so, which I have done also, which, of course, John McCain has done his entire career, is put the people whom he was serving first before party, before obsessive partisanship. And I so admire him in that.

But transforming government -- let me give you a good example here. When anyone would think that getting our economy on the right track would include raising taxes on businesses and on everyday working Americans' incomes and increasing government growth -- Barack Obama proposing a trillion dollars in new spending -- anybody who would think that that is a solution to the economic woes that we have right now, I question that judgment and I question their ability to come in and transform government the way that it needs to be transformed, to put government back on the side of the people.

Now, that's in contrast to John McCain, who wants to reduce taxes so that our businesses can keep more of what they earn and produce so that they can hire more people. That's how jobs are created. That gets our economy rolling again. That's a good thing. And reining in government growth, government spending, and then allowing our nation to become energy independent.

A ticket like that, McCain's and mine, that supports those types of policies, that's transforming government, putting it back on the side of the people, letting our private sector and our families grow and thrive and prosper, realizing that that's where the answer is. Government's not the answer.

VAN SUSTEREN: Are you then critical of the President Bush administration because the government has grown under President Bush and the deficit has grown under President Bush? Do you completely divorce yourself from that administration or do you embrace any part of it?

PALIN: I think that there have been some mistakes in the administration, but Congress is to blame also and...

VAN SUSTEREN: What mistakes of the administration?

PALIN: Well, I think that they have allowed government growth to just be too rampant, too aggressive, and certainly, that's contributing to where we are today with this deficit. Handing this to our kids, that's unfair. We're going to stop that. And that, though, has to be a commitment to reining in government growth. And we have to have that spending freeze that John McCain is going to plug in also.

So yes, there's been problems there, but also -- there's plenty of blame to go around. Congress also, though. And the Democratically-led Congress in the last couple of years, too -- there's plenty of blame to go around there also where, you know, they hold the purse strings. They craft the budgets and vote for the budgets and the budgets have grown too drastically, and individuals like Barack Obama voting 94 times for higher taxes on Americans -- now, there's some blame to go there, too.

VAN SUSTEREN: All right. Special needs for children. A lot of mothers out there with children who have all sorts of extra needs. What exactly would you do for them?

PALIN: Well, as governor, I've been a proponent and successful also in getting more funding for special needs children in our schools, in public education.

VAN SUSTEREN: That's government growing.

Watch Greta's interview with Gov. Palin: Pt. 1 | Pt. 2 | Pt. 3

PALIN: Not when you prioritize for that. And these children who have special needs, they're not a problem, they are a priority. So as long as we can prioritize, I believe and what a lot of Americans believe is right, you allow equal access to good education and you allow opportunities for kids with special needs, even if that asks to you shift some of the funding that maybe went in another area, maybe growing bureaucracy in a local school district -- instead of that, get that money into the classrooms so that all kids, not just the kids with special needs, so that all kids can benefit from those public dollars, be more accountable and prioritizing better for public dollars in our schools. That's what I've been a proponent of and have affected change there.

(END VIDEOTAPE)

VAN SUSTEREN: Next, Governor Sarah Palin goes on the record about Senator Obama's controversial relationship with Weather Underground's Bill Ayers, Reverend Wright and Father Pfleger.

Plus, another powerful and tireless woman, first lady Laura Bush. First lady Laura Bush goes "On the Record." Most people don't know this, but the first lady met Governor Palin in Alaska before she was tapped as Senator McCain's running mate. Why did they meet? We're going to have to have the first lady tell you.

(COMMERCIAL BREAK)

VAN SUSTEREN: Did you know that Governor Palin is a basketball player? And not just any player, she's a champ. She played on Wasilla High's 1982 state championship basketball team. We asked Governor Palin about Title IX, the 1972 law that was revolutionary for women and girls. Title IX said from that point on, there would be no discrimination based on gender in any public school programs or activities. What did that mean for then high schooler Sarah Heath, now Governor Palin?

(BEGIN VIDEOTAPE)

VAN SUSTEREN: All right, here's an easy one. Title IX.

PALIN: Oh! Title IX, yes!

VAN SUSTEREN: What do you think about...

(CROSSTALK)

PALIN: ... Title IX!

VAN SUSTEREN: What did it do for you?

PALIN: Well, sports changed my life. And had it not been for Title IX, I don't know if I would have had the equal opportunity to be in there participating in sports and other extracurricular educational activities.

Title IX and sports -- it teaches you everything that you need to know. When you're out there on the basketball court or you're out there competing on the soccer field, you're learning about self-discipline and teamwork and leadership and setting goals and learning to win and lose graciously. We don't like to talk about losing so much graciously. Those things that sports teach you.

If it wasn't for Title IX, I don't think we would have been able to capitalize -- me personally -- on opportunities that have been out there. And it's like Plato said, too. You learn more about a person in an hour of play than in a year of conversation. So as more girls, especially the '70s and '80s, got to be involved in sports and got to have that camaraderie and that networking, also -- those girls whom I played sports with back then, they're my best friends today, all these years later. That network, that's -- that family, that team and sports teach you, that's all thanks to Title IX

VAN SUSTEREN: All right. Competition, playing, you mentioned sports. Let's talk about Bill Ayers. And you've been going after Senator Obama pretty aggressively recently. Is that your job?

PALIN: Well, I think it's my job when I'm asked about or read about, as I did in "The New York Times" the other day, this association is pretty significant. And it's kind of telling regarding someone's judgment that they would be working with, associated with a domestic terrorist, who had, you know, campaigned to bomb the United States Capitol and our Pentagon. And this is an unrepentant domestic terrorist. That's the scary part about it.

VAN SUSTEREN: I think he said he was unaware when he first met him. Is that -- do you give him a pass on that?

PALIN: No. It's hard to believe that someone wouldn't have known Bill Ayers, who -- I've known of Bill Ayers way up there in the north, what the association with. No, and I think the significance here, Greta, is truthfulness and judgment and maybe how that is reflected in other issues and other policy calls. That's why the association there and discussing it I don't think is off-limits.

VAN SUSTEREN: How about Reverend Wright and Father Pfleger?

PALIN: Well, I haven't brought that one up. I did respond to a question the other day. Someone asked me what they thought about...

VAN SUSTEREN: All right, I'm bringing it up.

PALIN: You're bringing it up. Yes, you are. That's John McCain's call on that one, also, though, whether he wants to discuss that association and some of the things that reverend has said about our great country.

VAN SUSTEREN: So you take a pass on it right now on that question.

PALIN: Sure.

VAN SUSTEREN: OK.

PALIN: We'll let John McCain take it.

(END VIDEOTAPE)

VAN SUSTEREN: Coming up: What is the most agonizing decision Governor Palin has had to make as governor of Alaska? Plus, Governor Palin is known by most people in Alaska simply as Sarah, but what does she want to us call her? You will hear.

And later, there is breaking news in the Governor Palin e-mail hacking case. A federal indictment has been returned. Who was indicted, and what is thought to be the motive? We have a full report coming up.

(COMMERCIAL BREAK)

VAN SUSTEREN: It's impossible to deny people are interested in Governor Palin. The vice presidential debate drew about 70 million viewers. Now, last night's presidential debate drew seven million less viewers. Now, that's a big deal. We spoke to the governor before one of her large rallies in Jacksonville, Florida.

(BEGIN VIDEOTAPE)

VAN SUSTEREN: How much interaction do you have with Senator McCain? Now, you're both on the road. You're both hitting -- you know, and you got a big crowd today and -- but how much do you guys talk?

PALIN: A lot. A lot. On the phone with him last night. I'll probably be calling him after this interview also before I go on stage with this rally. And we've got a great relationship. There's some kindred spirit there and a world view that is shared in the optimism that we have in regards to this great country and where we believe that this country can head if we have the right leadership.

VAN SUSTEREN: Now, you said that you'd like to go to Michigan and that the campaign has pulled out. Why do you think that the numbers aren't particularly favorable in Michigan for your ticket?

PALIN: I don't know, but I want to get there because I want to speak with especially blue collar, hardworking Americans in that state. I just feel that connection with them also, knowing that the challenges that they face, those are the challenges that Todd and I have faced and still face today with wanting to make sure that, you know, we have job security and that there is an ability there to be provided health care, to pay for our health care, to have an economy that would allow for that, and be able to pay for our kids' college tuition and be able to fuel up our gas tank without it costing us an arm and a leg.

All those things that folks in Michigan are feeling, Todd and I have felt that also all these years. I have a connection with them, and I want to get there.

VAN SUSTEREN: What's -- this is sort of a pop quiz answer -- question, I guess. But what's the hardest decision that you've had to make in your life?

PALIN: I don't know. The best decision was about five weeks ago, though, being asked if I wanted to join Senator McCain in this opportunity -- a challenge, a responsibility, but an opportunity to get to effect positive change that this country is due. Americans are craving this. They're deserving this. And we're committed to being on their side. And that was the best decision that I've made was saying yes.

VAN SUSTEREN: All right. Let me make one last sort of -- of question sort of like that, but what's the most agonizing decision that you had to make as governor, the one that's toughest for you?

PALIN: Whenever an issue has to deal with personnel, whether to keep someone on or whether to ask them to step aside so someone else can come in and take their place because, you know, sometimes it gets personal, sometimes it gets political. But replacing someone in a cabinet, sometimes that's agonizing, but you got to do what you got to do. Putting the people who hired you first, you got to make sure you have the right team around you so that you can best serve.

VAN SUSTEREN: Governor, thank you very much. I know you got a very busy not just day but next 28 days or 27, whatever.

PALIN: Yes. Yes.

VAN SUSTEREN: Thank you, Governor.

PALIN: Thank you so much. Appreciate you.

(END VIDEOTAPE)

VAN SUSTEREN: Now, after the interview, with went with Governor Palin to a rally at the Jacksonville Landing. Thousands of supporters crammed into the complex along the St. Johns River. We caught up to Governor Palin moments after she left the stage.

(BEGIN VIDEOTAPE)

VAN SUSTEREN: Governor? Hey. Now, I know this is serious business. You take it seriously. But you look like you're having fun.

PALIN: It is fun! It is fun. That interview was even fun. Yes.

VAN SUSTEREN: You like to go and talk to the tourists?

PALIN: I do. I do. I like reading their signs. I like hearing that message that they're sending right back to me, and then I get to send that to John McCain also. And what the message has been the last couple of days is, Tell him to take the gloves off. So that's been good.

VAN SUSTEREN: You know, it's sort of interesting that I call you Governor, out of respect, of course, but the crowds that call you Sarah -- everyone in Wasilla calls you Sarah.

PALIN: The do.

VAN SUSTEREN: In Alaska, people here call -- Sarah.

PALIN: So please, call me Sarah. Yes.

VAN SUSTEREN: Governor, I know you're busy. Thank you very much.

PALIN: Thank you so much, Greta. Call me Sarah.

(CROSSTALK)

(END VIDEOTAPE)

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