This is a rush transcript from "Hannity," July 26, 2010. This copy may not be in its final form and may be updated.

SEAN HANNITY, HOST: We are less than 100 days away from the 2010 midterm elections. And tonight Democrats are reeling from plummeting poll numbers, major scandals and a resurging Republican Party.

Now meanwhile it seems as if the leader of the Democratic Party is in a world all of his own as of late. And that is our headline this Monday night, "Out of Touch."

Now since his inauguration we have seen President Barack Obama wine and dine with Hollywood elites. We have watched as he has been entertained by some of the most recognizable names in music. He's attended a number of sporting events, even sitting in the most expensive seats in the arena. And we have seen him jet off to ritzy vacation destinations like Hawaii and Martha's Vineyard where, by the way, he plans to spend 10 days next month.

But in a recent interview with ABC News, we all witnessed just how out of touch this man really is with everyday Americans. Take a look at this.

(BEGIN VIDEO CLIP FROM "GMA" ON JULY 23)

PRESIDENT BARACK OBAMA: We're just not that far removed from what most Americans are going through. I mean it was only a few years ago when, you know, we had high credit card balances. We had two little kids that we were trying to figure out how to save for — enough for college.

That we were still thinking about our own retirement then looking at our retirement accounts and wondering, are we going to be able to get enough assets in there to make sure we're protected.

(END OF VIDEO CLIP)

HANNITY: Now I noticed he didn't mention that according to his 2010 financial disclosure form he's now worth up to $7.7 million.

But don't worry, America. He feels your pain.

And joining me now in studio with reaction to this very bizarre interview and much more is former adviser to President Clinton, author of the best seller, "2010: Take Back America." Dick Morris is here.

Come on. Come on. Let's stop the baloney.

DICK MORRIS, FORMER CLINTON ADVISER: Well, last year he made between — my wife told me between $4 and $5 million of income. So it's hard to see that he sympathizes with the average American.

What happens with the president during an economic downturn — and this is a prolonged one of course, he's prolonging it — is that the only person who is the source of new information, of good information, good news, is him. Because the economists are all saying the truth, which is that it's falling apart.

But he's the one that has to be the fountain of good news. And then after a while people begin to say he's just out of touch, he doesn't understand what's happening. Now when George Bush Senior ran into that situation, remember things got such that he had — one day he blurted out his talking points message "I care" because he was getting that flak?

HANNITY: Right.

MORRIS: Now with the Republican, the flak they get is he's insensitive. With the Democrat liberal the flak he's going to get is he's dogmatic and doctrinaire. But the fact of the matter is that the president is always out of touch.

The hardest thing to do in politics, the hardest thing is to be the ultimate insider, but yet think like an outsider.

HANNITY: All right. But there's more to that. He's out of touch in this respect, too. I mean, the vacations, the sports teams, the concerts. I — playing golf all the time. I mean I just — he seems extraordinarily out of touch.

And then he comes up with this statement. And I — if I was a Democrat and I was watching all those going on, I'd be pretty ticked off, saying hey, what about me?

MORRIS: Sure.

HANNITY: I went — I put my neck on the line voting for your radical agenda and, you know, you're not helping us here.

MORRIS: Yes. But it's so interesting that he now feels constrained to make a statement like that. Because the poll numbers must show that he is seen as out of touch. And —

HANNITY: So that was — that was —

MORRIS: That was poll-driven.

HANNITY: OK. You're probably right.

MORRIS: Absolutely. And what happens with these guys is that they take a position you don't agree with. Then they keep at it. And after awhile you impugned it to a personality defect. And then the personality defect lives long on after the recession is over.

HANNITY: That's interesting. All right, now, to what extent — we got Charlie Rangel, his scandal coming up. A lot of NASA and others. To what extent do you think Republicans can make this idea, culture of corruption, you know, add to that the cornhusker kickbacks, Louisiana purchase, the way they've been — not reading bills, all of these things.

MORRIS: Right.

HANNITY: To what extent do you think that narrative sticks heading into the next 99 days?

MORRIS: To a huge amount. In Washington they tend to see the 2010 elections as simply a reflection of Obama's favorability and job approval. The fact of the matter is, it has as much to do with Congress as it does with Obama.

Congress is now at an 11 percent positive job rating. And with Rangel and the litany that you just went through, people are absolutely sick. You know Bismarck once said people should never see a sausage being made or a law being passed because they'll get turned off both.

Well, they watched the law being passed. And the deals that used to be done in secret were now trumpeted in public and they revolt it. They're sickened.

HANNITY: We talk a lot about how he's lost independent voters in Massachusetts, New Jersey and Virginia. But they had this "Netcooks" convention, this what they call Netroots convention, there was a huge amount of anger.

MORRIS: Yes.

HANNITY: By the left against Obama.

MORRIS: Republicans and independents losing him is yesterday's news. He's lost as many as he can. What he's losing now is Democrats. His approval among Democrats in two weeks dropped from 84 to 76 in the Fox News poll.

HANNITY: Does that show up, though? I mean at the end of the day, do those radical leftist, they're not going to vote for a middle-of-the-road candidate. They're not going to vote —

MORRIS: No, but they're going to stay home.

HANNITY: They will stay home.

MORRIS: And staying home is the big enemy. And he's caught in a bind where to get them to come out he's got to ratchet up his rhetoric, particularly over racial issues. And to do that, as he ratchets it up, he narrows his base and loses white votes.

HANNITY: The Washington Post suggested over the weekend that in fact the strategy that they're going to use is no, no, we are the party that's going to raise taxes on those evil rich people.

MORRIS: Yes.

HANNITY: Does that strategy work?

MORRIS: No, it's not. And what's — because people get it. They are not idiots. They get the 30 percent of the consumer spending in the United States is by rich people. So you want to get rid of 30 percent of the demand, how many jobs are going to be left?

But what is so phony right now is the moderate Democrats, your Blue Dogs, are saying I don't want to raise taxes on anybody, which means, I'm going to vote against cutting the rich taxes, you know, against increasing the rich taxes but we won't have 60 votes. And then I'll vote for cutting the poorer taxes.

What the Republicans are doing, which is right, is they're saying you either raise them all or you cut them all. They're not going to raise them on some and not on others. We're not going to play class warfare.

HANNITY: But you can Ken Conrad and Bayh and — Ben Nelson.

MORRIS: But they're all phony because they all know that there won't be 60 votes.

HANNITY: So they'll they won't have it. All right. Interesting because you were in the Clinton administration. You had Harrold Dickies now, you got McAuliffe, you got Carville and Clinton himself. Stop emoting. All — it's interesting because they triangulated —

(CROSSTALK)

HANNITY: This was your whole big —

MORRIS: That's all Hillary for president. It's all beginning to —

HANNITY: Hillary for president in 2012? You think she's — come on.

MORRIS: I think that if Obama continues to crash and burn — and I've told you, Sean, we know that her sense of loyalty and integrity would preclude a candidacy.

(LAUGHTER)

HANNITY: OK, you've convinced me, I'm sold. All right, first of all. I want to say something. My deepest sympathies. We've been friends a long time. You lost your father over the weekend last — at the end of last week. And —

MORRIS: He died three months shy of his 100th birthday.

HANNITY: Yes.

MORRIS: And he was my inspiration. If you want to read his bio or anything about him I put it on my Web site DickMorris.com with a heavy heart. But he had more to do with me.

You know I used to see him right before your show and we'd talk about the latest history and biography that he read, 99-years-old.

HANNITY: So that's where all that information came from?

MORRIS: Yes.

HANNITY: You got it from him. Well, 100 years old —

MORRIS: He stopped teaching law at 96.

HANNITY: Amazing. Wow. That's amazing.

MORRIS: Unbelievable.

HANNITY: Anyway, we're really sorry. And our best. And people should read that column on your Web site, DickMorris.com.

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