This is a rush transcript from "The O'Reilly Factor," October 13, 2008. This copy may not be in its final form and may be updated.

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BILL O'REILLY, HOST: Now for the top story tonight: reaction to [Rep. John Lewis' controversial comments]. Joining us from Raleigh, North Carolina, Mary Katharine Ham, and Juan Williams is in Grand Rapids, Michigan. Both are FOX News analysts.

OK, Juan, you know, I don't know what to think about this congressman from Georgia, Lewis. He was involved in civil rights, a brave man, all of that. Got to give it to him. But this was so unfair, so ridiculous to compare the McCain campaign in any way, shape or form to George Wallace and the segregationists. And I'm saying to myself…

JUAN WILLIAMS, FOX NEWS CONTRIBUTOR: It's just a historical distortion. It's exasperating to me as someone who cares deeply about the civil rights movement in this country — and you're right, John Lewis is a hero. He's a guy who's crossing the Edmund Pettus Bridge you know and was bloodied there.

But the fact is there is no way to contrast what George Wallace did in terms of legal oppression, you know, denial of basic rights in this country, right to vote, freedoms, education with what is criticism of one political candidate coming from another political candidate.

The closest that I think that John Lewis could get to answering your question, Bill, would be to say oh, they say that he associated with terrorists and then therefore people say off with his head. And they make racial — they express racial epithets and hatred at some of these events.

But look, you've got to have a political contest. And the connection between Ayers and Obama is one that can be thoroughly discussed. I think it's slight and tenuous, but I'll tell you what, you notice that John McCain has not brought Reverend Wright into this. So in addition to that statement of bravery, which I thought was very brave, you were right. McCain was brave to stand there in the middle of his group and say…

O'REILLY: Sure. It's the easiest thing in the world to do.

WILLIAMS: Obama's a decent guy.

O'REILLY: Tee them up and whack.

WILLIAMS: … and to not use Reverend Wright.

O'REILLY: You got to view this guy.

WILLIAMS: He was restraining himself.

O'REILLY: OK, now what you referred to — what Juan referred to, Mary Katharine, is Sarah Palin's remarks about Obama and terrorists. Let's roll that tape.

(BEGIN VIDEO CLIP)

SARAH PALIN, GOP VICE PRESIDENTIAL CANDIDATE: Our opponent is someone who sees America as imperfect enough to pal around with terrorists who targeted their own country. This, ladies and gentlemen, has nothing to do with the kind of change that anyone can believe in.

(END VIDEO CLIP)

O'REILLY: Anything wrong with that, Mary Katharine?

MARY KATHARINE HAM, FOX NEWS CONTRIBUTOR: Well, I think, you know, she's using some sort of figurative language when she's talking about him palling around. But I think the fact that he is connected to a domestic terrorist is something that's totally fair game.

Anyone raise their hand if they think a Republican connected to an unrepentant abortion clinic bomber would be getting away with that association and not questioned about it. It's insane. People are arguing for a different set of rules for Obama because going after these associations might cause people to have, you know, bad thoughts and be bad citizens about it.

O'REILLY: No, no, no, it's more than that. It's like they objected to palling around with when it, you know, looks like…

HAM: Well, no, but there's…

O'REILLY: But here's what the record shows.

HAM: No.

O'REILLY: Hold it, hold it. Here's what the record shows so everybody knows. No doubt there's an association between Barack Obama and Ayers. No doubt they served on the board at Woods Foundation. No doubt they were involved in legislation in Illinois. And no doubt that Ayers and his wife Bernadette Dohrn, another former terrorist, helped him out in their own home. So, I don't have a problem with palling around. I think it's an overstatement, but you do that in political campaigns all the time.

HAM: Yes, I don't think that's an issue. But here's what the thing is about the Obama campaign and Obama supporters that you saw a preview of how they were going to play the race card when Obama was out there saying they're going to tell you I'm scary, they're going to tell you I don't look like other presidential candidates. And now we see this coming to fruition with, you know, if you associate him with Ayers, a white man, you're being racist. If you associate him with Wright, you're being more racist.

O'REILLY: Well, sure. They're using that as a bulwark against this and everybody knows it.

HAM: Yes, it's a cudgel and it's effective.

O'REILLY: But there is a line there.

HAM: And they're going to use it as long as it works. But here's the thing…

O'REILLY: There is a line.

HAM: Well, I think that's true and I think anybody who goes after McCain for being too aggressive in his attacks on Obama is really off.

O'REILLY: OK.

HAM: And any McCain supporter could tell you that they wish he went harder.

O'REILLY: But there is the line, and it might have been crossed by the Virginia McCain honcho who said…

WILLIAMS: Yes.

O'REILLY: OK, who said — well, Juan, I don't have this on tape. What did he say?

WILLIAMS: Basically, he's got Usama bin Laden and Barack Obama on the same team there. And somehow…

O'REILLY: Because they both associated with terrorists who bombed the Pentagon.

WILLIAMS: Yes, this is ridiculous, and that is incendiary. And I think that goes over the line. The problem here is, you know, I think as I said to you, I think it's a slight connection.

O'REILLY: Well, let me get micro here. You guys are too theoretical tonight.

WILLIAMS: No.

O'REILLY: OK, so the guy says in Virginia there's a parallel between Barack Obama and Usama bin Laden because they both associated with terrorists who bombed the Pentagon. OK. Historically, if you want to parse it, that's true. I think it's ridiculously overblown and almost a cartoon to make that analogy.

WILLIAMS: Come on. That's not sensible. Wait a second, Barack Obama is a kid. He comes to know this guy in a different phase many years later.

O'REILLY: Yes, but the guy's unrepentant, Juan. If the guy had been repentant, I would give you that.

WILLIAMS: Well, fine.

O'REILLY: But the guy's not.

WILLIAMS: But I don't think — Bill O'Reilly, you don't believe for one second…

O'REILLY: No, I don't.

WILLIAMS: …that Barack Obama believes the same things that Bill Ayers believes.

O'REILLY: No, I don't. No, I don't.

HAM: No, but I think…

WILLIAMS: So what are we talking about here?

O'REILLY: All right, let Mary Katharine talk.

HAM: I think it's utterly fair to cast doubt on his judgment due to the fact that he did have something to do with this guy.

O'REILLY: That's right. Judgment is fine.

HAM: Right.

O'REILLY: But the Virginia chief, Mary Katharine, throws in Usama bin Laden's name. That was over the line.

HAM: Yes, I think that's a totally different issue. But the idea…

O'REILLY: Is that over the line, Mary Katharine?

HAM: …that the campaign is endorsing that…

O'REILLY: Was that over the line?

HAM: But the idea that the McCain campaign is endorsing that is just ridiculous.

O'REILLY: Mary Katharine, I got to get you back in D.C. Is that over the line or not?

HAM: I just said it was…

O'REILLY: Because we couldn't hear you.

HAM: …before I finished my sentence.

WILLIAMS: Well, I think it is over the line.

O'REILLY: Last word.

WILLIAMS: But I — you know what? But I don't think — and here's another point that you made in the "Talking Points." It's not to equivocate, you know, one guy's sins with another because if you start talking about off with their heads and he's worthy of death, and you're talking about a black man.

O'REILLY: Nobody says that.

WILLIAMS: Oh look, some of these crowds have been extreme.

O'REILLY: You can't hold candidates for that. You can't hold candidates for that.

WILLIAMS: Bill, if you didn't — if McCain didn't speak to it in the way he did, then I would say that he was allowing it to go forward.

O'REILLY: OK, but that's…

WILLIAMS: And that's kind of dangerous.

O'REILLY: That's right. I got to go. I got to go. But look, I got to go.

HAM: But…

O'REILLY: This is crazy. Mary Katharine, I have to go.

HAM: All right.

O'REILLY: People who watch this show once in a while will do crazy things.

WILLIAMS: Yes.

O'REILLY: There was a murderer in Tennessee who had one of my books in his house. The idiots on the left, the dishonest charlatans somehow blamed me for that.

WILLIAMS: Oh, that's ridiculous.

O'REILLY: That's insane.

HAM: Right.

WILLIAMS: That's stupid.

O'REILLY: It's the same.

HAM: Well…

O'REILLY: I got to go. This is just a soliloquy. It's the same thing.

HAM: All right.

O'REILLY: Mary Katharine, Juan, we'll see you next week.

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