This is a rush transcript from "On the Record ," February 9, 2009. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: Tonight, Sean Hannity goes "On the Record." Now, you know that at 9:00 PM right here on FOX News Channel, Sean asks questions on his own show. Well, it's 10:00 PM, so now he's answering them. He's going "On the Record," and we are live in New York with breaking news coverage of the president's first primetime press conference.

Just moments ago, President Obama took questions.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Last Monday, more than a thousand men and women stood in line for 35 firefighter jobs in Miami. Last month, our economy lost 598,000 jobs, which is nearly the equivalent of losing every single job in the state of Maine. And if there's anyone out there who still doesn't believe this constitutes a full-blown crisis, I suggest speaking to one of the millions of Americans whose lives have been turned upside-down because they don't know where their next paycheck is coming from.

And that is why the single most important part of this recovery and economic investment plan is the fact that it will save or create up to four million jobs because that's what America needs most right now. It is absolutely true that we can't depend on government alone to create jobs or economic growth. That is and must be the role of the private sector. But at this particular moment, which the private sector so weakened by this recession, the federal government is the only entity left with the resources to jolt our economy back into life. It is only government that can break the vicious cycle where lost jobs lead to people spending less money, which leads to even more layoffs. And breaking that cycle is exactly what the plan that's moving through Congress is designed to do.

(END VIDEO CLIP)

VAN SUSTEREN: Earlier today, at a town hall meeting, one question in particular caught our attention. The president fielded a question about none other than Sean Hannity.

(BEGIN VIDEO CLIP)

OBAMA: With respect to Sean Hannity, I didn't know that he had invited me for a beer.

(LAUGHTER)

OBAMA: You know, but I will take that under advisement.

(LAUGHTER)

OBAMA: Generally, his opinion of me does not seem to be very high. But I'm always good for a beer.

(LAUGHTER)

(END VIDEO CLIP)

VAN SUSTEREN: Well, we don't have any beer with us, but this is the next best thing. Sean joins us live. Nice to see you, Sean.

SEAN HANNITY, HOST, "HANNITY": That sounds like a yes to me, don't you think?

VAN SUSTEREN: I think so, but one thing -- who's going to buy?

HANNITY: No, no. Listen, in the spirit of spreading the wealth, I will provide -- if he gives me one interview a year for his four years as president, I'll buy him as much beer as he can drink in that four-year period, and I'll kick in cigars, cigarettes and Nicorette, whatever -- whatever makes him happy.

VAN SUSTEREN: All right, he says you don't -- he says you don't have a high opinion of him.

HANNITY: You know -- you know what one thing I'd love to get out of is making this about him all the time! It's not about him. You know, I love -- I want America to do well. I -- I wish him and his family, his wife and kids -- kids seem like wonderful children -- I wish them all the best. But more importantly, I want what is in the best interests of this country.

What we have tonight with all this fear-mongering and the worst economy since the Great Depression and this outright lie that was spread again tonight that there are no earmarks in this bill -- this is not what is going to bring us economic security in this country. What historically has worked is capitalism, giving people in this country more of their hard- earned money back. We are not undertaxed, we are overtaxed.

VAN SUSTEREN: All right, you -- I can't help but -- you say outright lie about the earmarks, so let's go right to that.

HANNITY: I got -- look, I got five pages...

VAN SUSTEREN: Give me -- give me some examples.

HANNITY: A Frisbee park, a Frisbee golf course?

VAN SUSTEREN: Well, why would he say -- why do you think he's saying that, no...

HANNITY: Well...

VAN SUSTEREN: Why is he saying no earmarks?

HANNITY: This is like an Orwellian speak that I can't really figure out. For example, they say that people that don't pay taxes are going to get a tax cut. I define that as welfare. If they make a Frisbee park or Frisbee golf course -- I don't even know what a Frisbee golf course is.

VAN SUSTEREN: So why do you think he says that? Why -- why...

HANNITY: I don't know. And I don't know why -- and you know, this a woman in Indiana today I thought gave him a tougher question than he had gotten in the entire two years he was running for president, and that was, You said you were going to have the most ethical administration. He wasn't going to have lobbyists. We have lobbyists all over the place. We have one tax cheat after another. We've got conflicts of interest with many of the people that he's putting in his cabinet here. So you know, to go back to this -- this has got to be straightened out. There is pork all over this bill!

VAN SUSTEREN: So I take it you -- I take it...

HANNITY: Listen, take a hog farm and you slaughter it and you can't - - that's all that's in this thing!

VAN SUSTEREN: Is it fair to say -- and think hard on this one...

HANNITY: All right.

VAN SUSTEREN: ... He didn't convince you tonight?

HANNITY: No.

VAN SUSTEREN: Didn't get close.

HANNITY: It's not a matter of convincing me. I am beyond Obama the personality. You know, Rush said this to me in the interview, and I thought that -- that was key. What I want to do is -- I don't believe -- he actually very cleverly, I think, tonight made the argument about big government versus bigger government. I'm arguing that it's actually more profound than that. This is capitalism versus socialism. We've gone away from the more historical traditional arguments about big government, limited government.

But what he just said in your opening clip is, Only government can do this, and he has said this many times. I don't believe that's the case, and he's trying to almost make -- create the impression with the American people that that's our only option, to recklessly spend money like this when the CBO, the Congressional Budget Office, their own analysis -- they're the gold standard in terms of analyzing spending bills in Congress -- when they say that this is not a stimulus, when they point out this is all back-ended money, when they point out that it may be a short-term gain but a long-term loss, that to me is all the evidence that we need that we're heading in the wrong direction.

Why they're not listening to their own economists -- you need to go "On the Record" -- I went to see Greta, by the way. Greta needs to grill - - GretaWire. I think that'll work.

VAN SUSTEREN: Well, you know, there's actually -- speaking of GretaWire, I did notice that Huffingtonpost got a question.

HANNITY: Yes!

VAN SUSTEREN: So why can't GretaWire get one?

HANNITY: I want GretaWire to have one!

VAN SUSTEREN: All right. Here's the question that I was hoping was going to be posed -- would be posed tonight. The thing that (INAUDIBLE) -- I think -- I think everyone can agree with got a problem. You agree?

HANNITY: Sure.

VAN SUSTEREN: Got a big problem. The question is, how do we solve it. And I think everybody wants it really fast. Everybody wants it yesterday, the problems solved. What I don't understand is -- and nobody's answered -- answered it for me is that why a payroll tax cut right now...

HANNITY: (INAUDIBLE)

VAN SUSTEREN: ... Is not the fastest way. We can do it within two weeks. We can flip a switch at the IRS and (INAUDIBLE) and we can even put a -- we can put a ceiling in. People make over $150,000, you can't get that cut or something.

HANNITY: Greta, that's a great idea. Capital gains cut, extending the Bush tax cuts...

VAN SUSTEREN: And some programs! There are some programs that are necessary, right?

HANNITY: I don't have a problem -- if we would make the majority of it tax cuts -- Louis Gohmert is a congressman in Texas. We've interviewed him on my show. I don't know if you've followed his plan. He actually broke down the numbers that if you take whatever version, the House or Senate version, it'll go to conference, it'll be about $820 billion, $1.2 trillion or $1.3 trillion with interest -- but he suggested if we took all that money and we wrote every man, woman and child in this country a check, we could give everybody $2,700.

Now, if we want immediate stimulus, an immediate jolt to he economy, versus in the year 2010 or 2011 or 2012, whatever, quote, "infrastructure" or pork barrel projects that are being spent here, it would be -- it would certainly get us out of -- I don't think government's necessary. I actually believe, with Reagan -- look, he brought that Japan and he brought up FDR tonight. FDR's own treasury secretary, Morgenthau, said that seven years into the New Deal that they spent all this money, records amount of money, and it didn't work.

They had eight separate stimulus plans in Japan, what we now call the "lost decades," it didn't work. Look at the -- look at their stock market then versus where it is now. It is not even comparable by any stretch of the imagination. But we do have an example that did work. This -- and by the way, this is not the worst economy since the Great Depression. Ronald Reagan had 21.5 percent interest rates he inherited...

VAN SUSTEREN: It is lousy. I -- we -- it may not be the worst, but it's lousy...

(CROSSTALK)

VAN SUSTEREN: Yes, it's lousy.

HANNITY: But inflation was rampant. Unemployment -- we had lost 10 million new jobs. We have experienced tough economic times. His answer was to drop the top marginal rates to 70 to 28 percent. We created 21 million new jobs, doubled revenues to the government, and we had the longest period of peacetime economic growth in American history. That is my answer. Go give the money to the American people.

VAN SUSTEREN: Is your thinking, then, that the programs -- because obviously, some economists and his advisers are suggesting a different scenario, the spending scenario, and also the Democratic Congress. Is it that that's some -- is that just a completely different ideology almost of social engineering? Or I mean, what -- you know, why is there such a difference of opinion?

HANNITY: You know, he wants to dismiss -- and I find this a little frustrating as a conservative...

VAN SUSTEREN: Are you a conservative?

HANNITY: Yes, a little bit.

(LAUGHTER)

VAN SUSTEREN: Are you -- I didn't know that!

HANNITY: You know, the first thing -- those two things that drive me crazy. Number one is he says, Well, we can't go back to the old policies that got us here. Well, if we want to understand how we got here, which I think is important -- I want to learn the lessons of the past and the mistakes that we made -- we got here because of social re-engineering. We got here because there was a belief system in Washington that every American should own a home, whether or not they could afford it or not.

When he talked about those risky banks, I was screaming at the television. Government forced banks to make those risky loans. Government made them. Fannie and Freddie and his friends, Raines and Johnson, bought them up and they made $90 million in six years, in one case, and Jamie Gorelick. But then they -- ultimately, the people couldn't pay the money back. It impacted banks, financial institutions, and the economy as a whole.

That was redistribution of wealth. That's what failed. It's not the free market that failed. Free markets -- you unleash the entrepreneurial spirit of the American people, they will never let you down. You increase risk versus -- reward versus risk, they will never let you down. You give people back more of their money, and I'm tell you we will unleash economic prosperity, just like would could duplicate what Reagan did in the 1980s.

VAN SUSTEREN: All right. I promised that he wouldn't be asking the question. He's not. He's telling us exactly what he thinks. He's beating around the bush, though, as usual. Sean, stay here. We'll be right back. We have much more in two minutes.

Plus, a packed line-up for the rest of the night. Donald Trump and Dick Morris are going "On the Record." Stay right here as our breaking news coverage continues.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

OBAMA: My national security team is currently reviewing our existing Iran policy, looking at areas where we can have constructive dialogue, where we can directly engage with them. And my expectation is, in the coming months, we will be looking for openings that can be created where we can start sitting across the table face-to-face, diplomatic overtures that will allow us to move our policy in a new direction.

(END VIDEO CLIP)

VAN SUSTEREN: You may think it's 9:00 PM Eastern hour because Sean Hannity is here, but it's not. It's 10:00 PM hour and it's "On the Record" with our special guest, Sean Hannity.

HANNITY: We only get to talk to each other on satellite, so this is a lot of fun. It's great to see you.

VAN SUSTEREN: All right, why do you think the president had this press conference tonight? And who was he talking to?

HANNITY: It's very interesting because now he's running it as a political campaign. I think he's going over the heads of the American people. What's interesting -- as -- as the American people have become more aware of the pork -- I need to say that -- that's in this bill, support for it has dropped dramatically. So I think he's sort of trying to inoculate himself politically speaking because this is going to be a partisan bill. There's going to be maybe one, two, three senators that support it. I don't think he'll get a single House member. I don't think he'll get a fourth U.S. senator that's a Republican to support this. He may end up with only two in the end.

VAN SUSTEREN: But we're there now. We're already there. We (INAUDIBLE) partisan after last week, and we know it's partisan, the Democrats in the House and in the Senate, they've only got three Republicans. But who's he speaking to? Who was he trying to convince tonight?

HANNITY: Two things. First of all, he's using this tactic of fear, which I find very frustrating because I don't think we should scare the American people into supporting a bill without full, complete debate and thorough examination. Republicans...

VAN SUSTEREN: Do we have time?

HANNITY: Sure, we do! Yes! Why would we rush into mortgaging our children's future, and grandchildren? I use the term "Obamamania," and I define it as the feeling of omnipotent ecstasy and euphoria that people get at the very sight of Barack Obama. Right now, he is right on campaign mode -- bumper stickers, platitudes, slogans. He repeated his mantra, like he did earlier in the day and like the case they've been making. In that sense, he's a very successful politician in selling his plan.

But over time, it's going to be -- the proof is going to be in the pudding. Is this going to get the economy to rebound? Are we going to put massive debt on our children and grandchildren? Does this stifle economic growth and capitalism? Will this unleash credit in the marketplace? So...

VAN SUSTEREN: If he's right...

HANNITY: If he's right...

VAN SUSTEREN: If he's right, he's a hero. If he's wrong, he's finished after four years. Do you agree?

HANNITY: He says that.

VAN SUSTEREN: I realize this is a cost (ph) if he's wrong. But I mean, because -- and because it's so partisan. I mean, he's hanging his hat on this because nobody's going with him from the Republican Party, so he can't say, Well, the Republicans were with me on this. So if he -- he's -- everything...

(CROSSTALK)

HANNITY: He's lowering expectations. Every five seconds, he reminds everybody, number one, A, arrogantly, he won, and -- but so did the Republicans. And B, you know, he -- he goes off on this whole tangent about, you know, I -- he's lowering expectations -- I inherited all of this.

But the proof is going to be in the pudding, ultimately. And does this benefit the American people? Here's his problem. I call this the European socialism act of 2009. Socialism has never been successful. It has never worked. The reason America has enjoyed unbridled prosperity -- we have become the envy of the world, with wealth, hope and opportunity for every American -- is because we had free-market capitalism. We're abandoning it with this bill. His answer that the government is the solution to all our problems I think is fundamentally flawed. It's never worked anywhere else it's been tried.

VAN SUSTEREN: Would you feel better if the balance between the spending programs and the tax cuts -- you're not (INAUDIBLE) all tax cuts as a...

HANNITY: Why not?

VAN SUSTEREN: Well, no, I'm asking you. Is that -- I mean, you would be in favor of 100 percent tax cuts and not just changing the balance between the programs.

HANNITY: Yes. There are worthwhile programs, but I urge you to examine Social Security. We're now on the verge of bankruptcy because they never put that money in the lockbox. Medicare is on the verge of bankruptcy -- government-run programs...

VAN SUSTEREN: By the way...

HANNITY: Nobody would argue education has done a good job, either.

VAN SUSTEREN: Where are we getting this money? I mean, that's -- that's the thing that nobody's really talking about, is, like, you know...

HANNITY: It's a great question.

VAN SUSTEREN: I mean, we're just going to, like, you know, print it.

HANNITY: We're going to -- we will eventually be taxed in the future, down the road, and this debt that we are incurring, with interest, we're going to place on the backs of every man, woman and child in America.

You know, there have been some studies. The Heritage Foundation did a study. The CBO's done their study. They're estimating that for every -- I don't know what this means, to "save" a jobs, but -- and we were talking about this earlier -- or to create a job, but if we go to the high side of his estimates in job creation, 3.7 million, we're paying $300,000 per job created. That seems like an awfully high price. Now, if it's also -- if it's a government program, it's probably has a short life to it. It's not sustainable. If you create a job in the free market...

VAN SUSTEREN: Well, I mean, you can't back out of it. I mean, if we make commitments to create long-term programs, we can't all of a sudden...

HANNITY: (INAUDIBLE) get out of it.

VAN SUSTEREN: We can't -- well, we can't fire the people. I mean, you know, we do make sort of, you know, moral commitments to them, which is another whole other issue, but...

HANNITY: Social Security, bankrupt. Medicare, bankrupt. And the educational system in many districts in the country has been destroyed. Those are government-run programs. They're back-dooring nationalized health care by expanding the SCHIP program in this bill, which I think is a mistake also. And so -- look, you know what I think? I'm going to say one thing...

VAN SUSTEREN: Hold it right there. That'll make the viewers -- the one thing you think...

HANNITY: I have...

VAN SUSTEREN: Hold it! He's got an important thing to say, so stand by because we're not through with Sean yet. Our breaking news coverage of President Obama's first primetime press conference continues.

And Donald Trump will be here, Dick Morris, and Alexis Glick crunches the numbers on the stimulus package. Stay right here.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

MAJOR GARRETT, FOX NEWS CORRESPONDENT: "If we do everything right, if we do it with absolute certainty, if we stand up there and we really make the tough decisions, there's still a 30 percent chance we're going to get it wrong." Since the vice president brought it up, can you tell the American people, sir, what you were talking about? And if not, can you at least assure them it wasn't the stimulus bill or the bank rescue plan, and if, in general, you agree with that ratio of success, 30 percent failure, 70 percent success?

OBAMA: You know, I don't remember exactly what Joe was referring to.

(LAUGHTER)

OBAMA: Not surprisingly. But let me try this out. I think what Joe may have been saying, although I wouldn't put numerical -- I won't ascribe any numerical percentage to any of this -- is that given the magnitude of the challenges that we have, any single thing that we do is going to be part of the solution, not all of the solution.

(END VIDEO CLIP)

VAN SUSTEREN: Do not adjust your television. You're used to watching him at 9:00 PM Eastern, but Sean Hannity is our special guest tonight. And before we get to the thought that he had in the last segment, I want to ask him about Major Garrett's question.

HANNITY: It was a good point.

VAN SUSTEREN: A 30 percent -- we don't know exactly what Vice President Biden meant by the 30 percent, but there's such a high risk in economics. I mean, we don't know -- we never know for sure. If some catastrophic event occurs, then it's going to completely change everything.

HANNITY: Well said.

VAN SUSTEREN: But what's your level of certainty that President Obama is wrong in supporting this bill?

HANNITY: A hundred.

VAN SUSTEREN: Oh, that...

HANNITY: One hundred percent. I've never -- socialism has never worked. And this is what I was going to say before, and I want to say this delicately because I think it's going to be misinterpreted here. And I know there's anchors all over the country right now that are getting tingly feelings running up and down their legs because the anointed one, you know, spoke.

(LAUGHTER)

HANNITY: But -- and I mean this in all sincerity. I believe that on substantive issues here that he's way over his head. What I see about him is I think he's trying to act the role of the president. He's trying to create an air of confidence. I think when you combine -- I find -- Karl Rove was the first to say he has arrogance about him. I saw a little of that the other night in his very partisan speech with the Democrats. You couple that with his areas of dishonesty, like saying there's no earmarks in this bill, and you couple that with what I believe fundamentally are his very radical views -- that he hides, and he hides it because he comes up with a speech or somebody writes a speech for him and he repeats it again and again -- I think it is a very bad combination, and ultimately is going to hurt him in the end politically and in terms of his ability to be successful.

VAN SUSTEREN: Here's -- I mean, here's -- here's what I think, is that -- I think speed is paramount here. We've got to get money into people's hands. And what I don't understand, and what I'm hearing -- you know, I -- look, I've gone through most of the bill, but it's insane to think that anyone can really digest it in a short period of time -- is that so many of the programs, they may be great ideas, but they go so far out into time that I don't think we have the time, which is why I find it attractive to cut the payroll taxes, and some other companion (INAUDIBLE) something else (INAUDIBLE) but -- and for people who make less than $150,000 -- I just picked that as a random number, but so that we're not rewarding the rich because I think, you know, the -- you and I feel differently. I think that -- you know, I think the rich are willing to help out because I don't think they want to live in a gated...

HANNITY: I think the rich are overtaxed. I think...

VAN SUSTEREN: Well...

HANNITY: ... The rich create the jobs.

VAN SUSTEREN: Whatever -- I mean, whatever we -- we need a solution and we need a fast solution. And so I just don't understand how these programs going way off into the future are in any way -- when I think that there's a faster way to do it.

HANNITY: Back-ending -- this is beyond foolish, and it's not a stimulus, and it's not what he originally said it was supposed to be, which is a jolt. So in that -- in that context, you're 100 percent right. But speed versus accuracy? We got to get it right. I mean, to race through this bill without really examining the pork...

VAN SUSTEREN: Let me tell you about the payroll tax, though, because you could throw the switch tonight, and if it's not working in six months, you throw it back. I mean, that's not -- if you create complicated programs, you've got complicated bureaucracy, and you can't reverse it. I mean, that's the -- you know...

HANNITY: Let me tell you where -- I think Obama missed a huge opportunity tonight. Rather than just lie and say there's no earmarks...

VAN SUSTEREN: You're terrible!

HANNITY: No, I'm honest.

VAN SUSTEREN: OK.

HANNITY: They're earmarks, folks, earmarks all over this...

VAN SUSTEREN: Are there earmarks?

HANNITY: There's earmarks and there's a welfare program associated with this. They can use whatever language they want. Rather than do that, if he would have said, We're going to take out the Frisbee perks, the all- terrain vehicle parks, the modernizing of club houses at golf courses -- and I -- look, I've circled the ones that really impressed me the most -- $246 million in tax breaks for Hollywood filmmakers! Like they really need it!

VAN SUSTEREN: Well, I think that -- isn't that -- isn't that, though, to try to attract business to communities so they do the movies in the communities? I mean, that -- I mean, I -- I don't want to be defending some of this stuff, but it's still -- some of this stuff...

HANNITY: But it's pork. It's pork. It's earmarks. It's reckless spending!

VAN SUSTEREN: Well, whatever it is, it's slow!

HANNITY: That, too.

VAN SUSTEREN: That's -- I mean, that's -- you know, that's...

HANNITY: You're right. That's the down side. You're right.

VAN SUSTEREN: That's where I keep getting hung up on is, like, Well, how can we do this quickly? And if we're on the wrong track, how can we quickly reverse it? And if we get something going that's in the wrong direction with some of these complicated programs with huge bureaucracies, then I think we truly are cooked. But I mean, if we can do something quickly that we can reverse it if it turns out to be wrong in six months...

HANNITY: Listen, if this end of the -- if I really believed this had a chance of giving a shot in the arm, if the Congressional Budget Office believed it, if it wasn't going to be $300,000 per job saved, which is madness, or created, I would be all in favor of it. There are people suffering. I am absolutely, positively concerned about their future. They've got mortgages to pay. They've got kids they've got to send to college. They're losing their retirement fund. Wall Street has no confidence as of now in what they are proposing, and that's frightening.

VAN SUSTEREN: The thing that's the most insane to me is how we've let all this money -- and we just throw these huge numbers around and we spend all this money, and we -- we had -- basically, let the banks do whatever they want with the money and we can't -- you know, it's extraordinary.

HANNITY: One last thing, though. The banks, Greta, were forced through government -- government forced them to make these risky loans and lower their standards, and they did it because -- you know, from maybe the best of intentions. They believed that every American...

(CROSSTALK)

VAN SUSTEREN: I'm talking about the TARP money. The TARP money.

HANNITY: But look -- but that's where it all started. It was -- this was necessary because Fannie and Freddie needed a bail-out. This was necessary because government forced banks to lower their standards to make these loans to people that could never pay them back. The financial institutions that bought them up paid a price. The banks paid a price. We're all paying the price because the economy paid a price.

VAN SUSTEREN: Well, and this -- and I just can't imagine a government that can't even count votes is now going to be, you know, watching all this...

HANNITY: That's a great -- that's a great point.

VAN SUSTEREN: We don't even have a senator from Minnesota and we had all those problems in Florida, and we expect to be able to track $800 billion or whatever. But anyway, Sean, nice to see you at 10:00 o'clock.

HANNITY: This was fun. Can I stay?

VAN SUSTEREN: You can stay.

HANNITY: You're getting rid of me? They're throwing me out of here? All right.

VAN SUSTEREN: All right, well...

HANNITY: Greta, thank you.

VAN SUSTEREN: Yes. You will see Sean, though, tomorrow night at 9:00 PM Eastern, his regular time.



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