This is a rush transcript from "Hannity," January 5, 2010. This copy may not be in its final form and may be updated.

SEAN HANNITY, HOST: Now, there is a story in today's Washington Post that former President Bill Clinton and Secretary of State Hillary Clinton sure hope that you missed. Now, it is a story that shows that it pays to have friends in high places.

(BEGIN VIDEOTAPE)

HANNITY (voice-over): He is the ghost of campaign scandals past and now, after eight years of being banned from the United States, Indonesian banker and felon James Riady has returned to the United States.

Now, you may remember that Riady pleaded guilty to a conspiracy to defraud the United States after illegally funneling money to Democrats and the presidential campaigns of Bill Clinton.

Along with his associate John Wong, Riady's dealings became the focus of the 1996 campaign finance scandal investigation, highlighted by fundraisers at Buddhist temples. The now famous iced tea defense of Vice President Al Gore.

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AL GORE, FORMER VICE PRESIDENT OF THE UNITED STATES: There's no controlling legal authority.

HANNITY: And the stonewalling of Attorney General Janet Reno. The scandal was the biggest blemish on the Clinton administration until, well, another scandal.

Now, getting back to Riady. When the dust cleared his company, called the Lippo Group, was fined a record $8.6 million for their illegal behavior. And Riady himself was ineligible to obtain a visa to return to the U.S. during the Bush administration because of a clause denying entry to individuals who have committed crimes of, quote, "moral turpitude."

But as The Washington Post reports today, Riady visited the United States twice during 2009 after receiving a special waiver from the State Department, a State Department that is now run by Hillary Clinton.

A State Department spokesman denies that Secretary Clinton had any knowledge of Riady's return. Maybe the documents were filed along with the Rose law firm records.

(END VIDEOTAPE)

HANNITY: And joining me now from Los Angeles with more on the story is the founder of BigGovernment.com, the one and only Andrew Breitbart.

Happy New Year, sir.

ANDREW BREITBART, BIGGOVERNMENT.COM: Happy New Year to you, too.

HANNITY: All right, Breitbart, Hillary knew nothing. A conspiracy to defraud the U.S. government, you get back in, no problem.

BREITBART: Well, I find it strange that this is coming out after the — what happened with the plane bomber over Christmas. I think what you have here is a case of finger-pointing within the administration. And perhaps some — some turmoil going on between Hillary Clinton and Barack Obama. This is a huge piece. It's written very negatively against Hillary Clinton, and there's innuendo and implications in there that somehow she knew something when it looks like it was the Department of Homeland security that issued this waiver.

HANNITY: I guess the big question I have and I think a lot of people in America have. Why? Why is America resistant to say no to people — look, if we open the — our borders, the world's population would come here.

Why are we resistant to say that, if you did not respect our laws and sovereignty, you can't come in? If you have some type of terrorist ties, you can't come in. Why the resistance?

BREITBART: I don't know. The Clintons end of their presidency on bringing in Marc Rich through Eric Holder, back into the country after — after being a huge, you know — he was a person who fled the country in order not to face the consequences.

You know, something interesting happened today. One of the great military bloggers of our time, Michael Yon, was arrested, you know, because he wouldn't answer a TSA security agent when they asked him, "How much do you make for a living?" And he wouldn't respond.

So we have a military blogger who can't get into the country who's getting arrested. And you have James Riady, who was in charge of the biggest campaign finance scandal in the history of the United States, in which 70 people pleaded the fifth, 17 people fled the country, and 13 people were convicted. And this guy is coming back into the country.

So we've got major problems with our border and with border security and with our homeland security.

HANNITY: Up until today, when I heard Robert Gibbs earlier today and the president later today, we were going to repatriate Gitmo detainees and send them back to Yemen, where you know, a hotbed for terrorist training. That's not going to happen.

Now, the president is standing by Janet Napolitano, "the system worked," although the president now says the system failed. He's standing by Leon Panetta. He's standing by Dennis Blair. He's standing by everybody.

Do you think heads should roll as a result of their reaction to this Christmas bombing? Or attempted bombing.

BREITBART: Well, heads should roll and then a new set of heads will roll back in, who are all similarly politically correct, who aren't willing to announce that Islamic jihad is a problem and that we need to start isolating people using our brains. Not going after grandmas and the like.

I mean, look, it seems like everything is upside down. When Michael Yon is detained for hours and put handcuffs on him in Seattle, and these type of people are getting into the country; when the guy is willing to strap — is able to get over the United States with strapped munitions in his underwear, something is desperately wrong with our system.

HANNITY: Well, I think something is wrong with the system. But here's — here's the big question, and it's a tough one.

Do we have a president that just doesn't have a clue about where we are? That we have an enemy that's out to destroy us? Do we have an administration that's clueless? Do we have an administration that is endangering the American people?

BREITBART: Well, I think the answer is yes to that, but I think that in terms of pure symbolism, this was a guy who was supposed to come in take over where the supposedly inept George Bush, you know, left off.

This is a guy who treated a surf board accident with his kid more seriously than he treated the underwear bomber. He went out to play golf once he found out about, you know, what had occurred. But when he found out that a friend's kid's chin got a cut on it, he quit his golf outing.

HANNITY: Well, all right, so the question is, you know, who is responsible? And, you know, Gibbs wouldn't say earlier today whether or not people should be fired over this.

In your opinion, because I think Napolitano should go. I don't think she has any experience. Leon Panetta doesn't have any experience. You know, I mean, the whole list of people that are not qualified for the positions they have is staggering.

So should anybody be fired? Will anybody be fired? Or are they just tone deaf to the fact that we have a War on Terror?

BREITBART: That's the answer, is that they all come from that basic orientation. I think that, quite frankly, Hillary Clinton, if she were in charge, would actually be a hell of a lot tougher than Barack Obama is. And perhaps that's what this entire article in The Washington Post is about, is that she's been standing off to the side and allowing for these people to hang themselves with their inept behavior.

But at the end of the day Janet Napolitano came into her position and stated the people to fear in the United States were fellow Americans and those people like Sarah Palin...

HANNITY: That's right.

BREITBART: That's a huge problem.

HANNITY: All right. So should the American people be afraid that their government is not taking steps necessary to protect them?

BREITBART: Yes. I mean to say the least. I mean, we now know beyond our wildest imagination that jihad is alive and well in America.

HANNITY: And protected.

BREITBART: And Barack Obama is — his international tour made us — of apologizing about America made us less safe.

HANNITY: All right. Well said. Andrew Breitbart of Breitbart.com. Good to see you.

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