This is a rush transcript from "The O'Reilly Factor," December 11, 2008. This copy may not be in its final form and may be updated.

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BILL O'REILLY, HOST: The top story tonight: a "Factor" exclusive. Back in June of 2002, Rod Blagojevich was running for governor, giving up his seat in Congress, which was taken by Obama's new chief of staff, Rahm Emanuel. At the time, Barack Obama was a state senator in Illinois and embraced "Hot Rod's" candidacy.

Click here to watch the interview.

(BEGIN VIDEO CLIP)

BARACK OBAMA: Right now my main focus is to make sure that we elect Rod Blagojevich as governor. We…

JEFF BERKOWITZ, HOST, "PUBLIC AFFAIRS": You're working hard for Rod?

OBAMA: You betcha.

BERKOWITZ: Hot Rod.

OBAMA: That's exactly right. You know, I think that having a Democratic governor will make a big difference.

BERKOWITZ: So you want to see a Democratic state Senate, a Democratic state House, a Democratic governor.

OBAMA: I'm a Democrat.

BERKOWITZ: Does that balance? I thought we wanted a fair and balanced approach?

OBAMA: I am a Democrat.

BERKOWITZ: Card-carrying Democrat.

OBAMA: Card-carrying Democrat. I really believe that the core Democratic philosophy is one that is, you know, really helps working people. And hopefully, you know, we'll be able to make sure that we carry out a mandate in this next election in November.

(END VIDEO CLIP)

O'REILLY: Well, joining us now from Chicago is a man who conducted that interview, Jeff Berkowitz, host of the cable program "Public Affairs".

You know what that tells me? It just tells me that President-elect Obama back then was a very loyal machine player. And you know the machine better than almost anybody, and that he was going to go along to get along. And now all of the associations have haunted him for the past year. And now Blagojevich comes back and he's right in the middle of it, right?

JEFF BERKOWITZ, HOST, "PUBLIC AFFAIRS": Well, Bill, that's a little unfair. In 2002, we didn't know he would be the kind of guy who would be trading seats, trading Senate seats for exchange for Cabinet positions and so forth, that he would be threatening to fire the folks. There are some editorial people at the Chicago Tribune if they didn't, you know, comply with his wishes or — and that is he would benefit. He would give them help with the Illinois finance authority if they would fire. So we didn't know that about Rod Blagojevich.

But on the other hand, it is interesting that he was working hard, in his words for Rod Blagojevich. It'd be interesting to know how hard. Some people said or say that he was working with David Wilhelm and Rahm Emanuel closely on almost a daily basis. So that…

O'REILLY: Well, I don't think there's any doubt about it that Barack Obama comes out of the machine that is Chicago politics. And the machine is not very good. I mean, it's a corrupt machine, has been for quite some time.

Now, the callers on "The Radio Factor" today said to me, look, we don't — nobody, very few, I shouldn't say nobody, but very few people are saying Barack Obama did anything wrong here. I think the tape exonerates him in the Senate seat brouhaha. But the questions remain how could a president of the United States go along with guys like Blagojevich? Obviously a corrupt guy. Been corrupt for years. Investigated for four years. How could you feel comfortable in a Reverend Wright, Bill Ayers, Blagojevich world? How could you feel comfortable in that world?

BERKOWITZ: Well, I mean, one thing about Barack, I mean, he's — today at his press conference, he talked about Paul Simon and Paul Douglas wing of the Democratic Party, or at least that history, the reformers. And then he talked about pay to play, that wing of the Democratic Party. And I guess he would put himself with Paul Simon and Paul Douglas.

But you know, if you're being objective, you have to say somewhat an accommodator. And so, he's not pay to play. He's not the kind of guy who would do something illegal. But on other — and he went along with daily. He went — he goes along with Blagojevich. So did most of the Democrats in the Democratic Party in 2006.

O'REILLY: OK, is that — in your opinion, sir, does his accommodation — I think you nailed it. It's an accommodation. And I've said this from the jump that Barack Obama made an accommodation to get power by dealing with people that he knew were dubious. That's the best word, dubious, OK. And to not get involved with them closely, but not to challenge them, not to challenge the machine, not to get away from Reverend Wright, but to just be there to use these people for what he could use them for and then go away.

Now it's a character issue. In this society, some people admire that kind of style. Other people are appalled by it. Where do you come down?

BERKOWITZ: Well, look, I'm not appalled by it, because I think Barack Obama is the best combination of a fluency with public policy and a fluency in politics. He combines that.

As you know, Bill, there are a lot of people in politics who know politics well, but can't speak worth a damn. You know, they're not well spoken at all. Barack Obama knows the issues, he is well spoken, he has a vision. That's what he's told me. That's what he's talked about from 2000.

O'REILLY: So the ends justify the means for Barack Obama?

BERKOWITZ: No. It means that if you want to get to be president of the United States, you have to be somewhat of an accommodator. But I don't think for a minute, Bill, he would have accommodated or let go if he knew what Rod Blagojevich was doing and scheming in terms of this...

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

BERKOWITZ: So…

O'REILLY: But you know what's going to be interesting?

BERKOWITZ: ...that's the line.

O'REILLY: You know what's going to be interesting, Mr. Berkowitz? If Blagojevich is charged and indicted by a grand jury, which I believe he will be, and faces 30 years in a penitentiary in Joliet, he's going to flip. He's going to name every name.

BERKOWITZ: Absolutely.

O'REILLY: And he knows where all the bodies are buried in Chicago. Does he not?

BERKOWITZ: I'm sure he does. And if he had something on Barack Obama, I'm sure…

O'REILLY: He'll sell it.

BERKOWITZ: ...he should be concerned.

O'REILLY: He'll sell it.

BERKOWITZ: But as I sit here today, I don't know that he has and I don't think that he has anything on Barack Obama.

O'REILLY: OK. And I would come down on your side. I think Barack Obama is a very smart guy and wouldn't get involved with a slug like Blagojevich. He tried to get him elected, but he knew he was a slug from the jump.

All right. Mr. Berkowitz, thanks very much. We appreciate it. Very interesting.

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