This is a RUSH transcript from "The O'Reilly Factor," December 4, 2009. This copy may not be in its final form and may be updated.

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BILL O'REILLY, HOST: In the "Impact" segment tonight: This year, there hasn't been as much Christmas craziness as in the past few years. Thank God. But in Chelmsford, Massachusetts, an elementary school has a holiday gift room. But Principal Jane Gilmore has banned all signs of Christmas and Hanukkah from the gift room. Even Santa got the boot. Well, that's not going over real well with some parents, so we sent Jesse Watters up to confront some school officials.

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(BEGIN VIDEO CLIP)

JESSE WATTERS, "FACTOR" PRODUCER: Just had a few questions for you.

ANGELO TARANTO, CHELMSFORD SCHOOL COMMITTEE CHAIR: I just don't appreciate…

WATTERS: Why are you trying to ruin Christmas for the children?

TARANTO: Just…

WATTERS: Angelo, you're banning candy canes from the holiday sale. Don't you think that's crazy? We've been trying to get some comment here from the superintendent about why he's banning candy canes and Santa Claus from the annual holiday gift shop. Apparently he's scared, doesn't want to talk to us. So he's driven into the police station. I think we're very intimidating.

UNIDENTIFIED MALE: My understanding is he doesn't wish to talk to you at this moment. I know at the meetings there is going to be some questions.

WATTERS: OK, we're just trying to help out the kids. You know, he's kind of the Scrooge in this situation.

UNIDENTIFIED MALE: Perfectly understandable. Perfectly understandable.

WATTERS: OK.

Hey, superintendent, why are you ruining Christmas?

(END VIDEO CLIP)

O'REILLY: Well after that polite discourse, school committee chairman Angelo Taranto went to a meeting with angry parents.

(BEGIN VIDEO CLIP)

TARANTO: We, as a school committee, are very cautious of our duty and roles, and we are following the law.

UNIDENTIFIED MALE: They hide behind the statement of under the law. We are not allowed to do anything is garbage.

UNIDENTIFIED FEMALE: The media has made Jane Gilmore look like a nut case, and we should all be very concerned about that.

UNIDENTIFIED MALE: Eighty percent of the people in this country are of Christian denomination. We deserve to be recognized.

UNIDENTIFIED FEMALE: First of all, I want to say that I thank God, and I hate to use the word God here for Dr. Gilmore, because I'm one of the 20 percent in Chelmsford that's not Christian. There are people in town who would have a problem with some of these items being placed in the gift room.

UNIDENTIFIED FEMALE: It's not a big deal. This isn't rocket science. Why don't you let all the parents send in whatever holiday or traditional or cultural items that they deemed worthy? That's it. What's the big deal?

UNIDENTIFIED FEMALE: Unless you dictate to the volunteers, OK, these five will donate something for Ramadan and these five will donate something for Duwali, I just don't see how you can really represent every single religion.

UNIDENTIFIED MALE: As residents and taxpayers, we expect our teachers and administrators to educate, not brainwash our children with political correctness.

(END VIDEO CLIP)

O'REILLY: Well said. With us now, that very mean guy, Jesse Watters. Duwali? What's Duwali?

JESSE WATTERS, "FACTOR" PRODUCER: I have no idea what Duwali is.

O'REILLY: What is that?

WATTERS: I have no idea.

O'REILLY: All right. Now, obviously, the school officials, they didn't want to be held accountable by us. But Angelo baby showed up and had to take the heat from the parents. We did a fair and balanced thing there. But what was the sentiment in the room? Was the sentiment in the room in Chelmsford, Massachusetts, that this is insane?

WATTERS: Yeah, I think 75 percent of the room supported Christmas in the schools, the candy canes are a good thing, the kids have a nice time. But there's this weird 25 percent who I think side with the PTA, who think it's going to be offensive if they even have a menorah and a candy cane and even Rudolph the Red-nosed Reindeer, because they feel like the atheist children are going to be offended and feel left out.

O'REILLY: Now one woman who said, look, I'm one of the 20 percent that's not Christian, and I have some trouble. Did you talk to her? Did you get to talk to her? Because I'd love to know what the trouble is. What is it about Santa Claus that you find offensive, lady?

WATTERS: One of the parents actually compared Santa Claus to a swastika.

O'REILLY: That's reasonable, right?

WATTERS: She said if you're going to have Santa Claus…

O'REILLY: Yeah.

WATTERS: ...it's the same thing as having a swastika, so let's not have either.

O'REILLY: Is — and what was that? I mean, what was the reasoning there? Santa Claus is a tank, that it rolls into Poland? I thought he had a sleigh.

WATTERS: I think they feel like it's a religious symbol, and all religion should be taken out of the classroom, and kids shouldn't be exposed to it whatsoever.

O'REILLY: All right. I understand there may be lawsuits filed against the Chelmsford school, is that correct?

WATTERS: Yeah, the Liberty Council, who's representing these two parents that have spearheaded this lawsuit, they gave them until Wednesday of this week to get back to them about the ban. They have not gotten back to them. There's still negotiations going on. But they said if they do not drop the ban, they're going to file a lawsuit under the First Amendment of the Constitution, saying that they have censored religion in the classroom.

O'REILLY: OK. But really, you know, the secular symbols of candy canes and things like that doesn't have anything to do with religion, does it?

WATTERS: Well, they kind of like kind of dodged the candy cane thing and said that it was because it was food, and they have food allergies at the school.

O'REILLY: Food allergies?

WATTERS: Yeah. So you know, I don't really understand the true rationale behind this.

O'REILLY: Right.

WATTERS: It seems to be changing as time progresses.

O'REILLY: All right. But they loved you up there, right, when you walked in?

WATTERS: Yeah, they're big fans.

O'REILLY: They were chanting, "Jesse, Jesse." See, we don't do that, because we don't want Watters to get a big head. Also, go to FoxNation.com. Watters runs that Web site. Very excellent Web site. Good job, thank you.

WATTERS: Merry Christmas.

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