This is a RUSH transcript from "The O'Reilly Factor," July 22, 2010. This copy may not be in its final form and may be updated.
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BILL O'REILLY, HOST: In the "Kelly File" segment tonight: Last night we reported that, in addition to her exposition on race, Shirley Sherrod made some political comments to the NAACP audience.
(BEGIN VIDEO CLIP)
SHIRLEY SHERROD, FORMER USDA EMPLOYEE: I haven't seen such mean- spirited people as I've seen lately over this issue of health care. Some of the racism we thought was buried, didn't it surface? Now, we endured eight years of the Bushes, and we didn't do the stuff these Republicans are doing because you have a black president.
(END VIDEO CLIP)
O'REILLY: Now, the Hatch Act prohibits federal employees from politicking while on the job. So did Ms. Sherrod violate the act?
Here now, attorney/Fox News anchor Megyn Kelly. You see her daily on "American Live" at 1 p.m. So what say you?
MEGYN KELLY, FOX NEWS ANCHOR: I say no. The Hatch Act basically prohibits federal employees from engaging in political activity while on duty. So was she on duty here? No, she was at an NAACP event that called...
O'REILLY: Let me stop you. Let me stop you.
O'REILLY: Why was she invited to that event?
KELLY: That doesn't matter. You have to be acting in your official capacity, doing your official job duties, supposedly, supposed to be doing your official job duties.
O'REILLY: So the law is that narrowly drawn?
KELLY: It's very narrowly drawn.
KELLY: The Hatch Act really prohibits only the most egregious cases. What they're trying to get at is stopping someone from using the power of the federal government to pressure other employees or others into donating to a political candidate in particular.
O'REILLY: Right. Like the unions do?
KELLY: Exactly. The unions. It's not meant to prohibit -- it actually has an expressed -- an expressed provision protecting opinions on politics or backing of candidates.
O'REILLY: But if you have people doing what Ms. Sherrod did, how can she possibly do the people's business when there are a lot of Republican farmers who would like aid from her? They might be intimidated to ask because they know where she's coming from.
KELLY: You can probably assume that most of the people working in the Obama administration -- not most but a lot -- support President Obama.
O'REILLY: Well, but she's beyond that. I think that statement was beyond supporting President Obama. That -- that statement was loaded with racial stuff because the Republicans are misbehaving because you have a black president. "We endured eight years of the Bushes." You see what I'm talking about? Federal employees that state -- they're supposed to be...
KELLY: I -- I would venture to say that she's not the only person who feels that way.
O'REILLY: Well, you're justifying bad behavior by pointing to other bad behavior.
KELLY: No. But I'm just saying that that's what happens. I bet if you went back to the Bush administration you'd find a lot of people who would say...
O'REILLY: Well, that's what I asked Laura Ingraham. I mean, you know, is that disqualification? Well, you can go back all the way...
KELLY: It's not. You're allowed in this country -- just because you become a government official doesn't mean you sacrifice your First Amendment right. You are allowed to have opinions.
O'REILLY: As long as it's 4:30, not 4 p.m. You can't -- not -- federal employees usually get off at 4 p.m. That's why I said. So right after they leave they can express anything they want, no matter where?
KELLY: You can't do it in your official capacity. You can't have government, you know...
O'REILLY: Right. So you can't say, "Department of Agriculture. Republicans are idiots." You can't do that.
KELLY: Exactly right. That would have been a problem. This is not a problem.
O'REILLY: All right.
KELLY: This is OK.
O'REILLY: Blagojevich, after saying that he was going to, you know, tell everybody what the real deal was, now he just slinks off into the night.
KELLY: Yes, yes.
O'REILLY: Are you surprised?
KELLY: No. As a matter of fact, I don't believe a word of this. It was a last-minute decision. I think the defense was never intending to put him on the stand. What's their defense going to be? Right? They don't have a defense. They don't want the prosecution to play all those tapes on the cross-examination and listen to this guy try to dance around them.
O'REILLY: But they already played the tapes, the prosecution.
KELLY: Right. But they -- it would only make things worse if you had Rod Blagojevich on the stand trying to justify it.
O'REILLY: The defense was Blagojevich is just a bloviator. He doesn't mean anything.
KELLY: They can make that defense without putting Rod Blagojevich on the stand and try to make him uncomfortable listening to those tapes. I think -- you know, here is the funny thing about Blagojevich, Bill. There's something about him that is weirdly lovable.
O'REILLY: Weirdly lovable?
KELLY: I -- yes. I think the man is a criminal. I really do think that they have the goods on him, that Fitzgerald proved his case. He has been on the most effective jury nullification campaigns since these charges came out.
O'REILLY: Make a prediction.
KELLY: He didn't have to go -- well, I don't know, because I haven't been in the courtroom looking at the jury.
O'REILLY: Holder, Tamara -- Tamara Holder we had on the A block, thinks he's going to walk.
KELLY: She's been watching closely. I wouldn't blow that off. But I have to say, these jurors know Blago. They didn't have to hear him testify. They saw him on Fox News. They saw him on every news outlet.
O'REILLY: Yes, they know him.
KELLY: There's something about him that's somewhat likeable, even though he's a criminal.
O'REILLY: But what difference does it make if he's likeable? If he's a criminal, you convict him.
KELLY: Because you have to ask yourself, does he belong in jail for 415 years, which is what he's facing? Do I want to...
O'REILLY: Can't he get a Lindsay Lohan sentence? Or no?
KELLY: No. Probably not.
O'REILLY: All right. Now...
KELLY: I really don't know what's going to happen in the case.
O'REILLY: ...if the defense doesn't put him on there, the defense has to be pretty confident that the government didn't prove its case.
KELLY: Either that or have to realize that they have no defense. Their only defense is to say...
O'REILLY: Because they didn't call any witnesses.
KELLY: ..."He didn't mean it." Listen, they're going to go out there and say, yes, he had bad language. Yes, he made stupid comments. But he never really followed through.
O'REILLY: Never meant it, right.
KELLY: Nothing direct saying...
O'REILLY: But Blago -- but they were threatening...
KELLY: They can't prove their case. Yes, he had bad language. Yes, he made stupid comments. There is nothing direct saying -- they don't have a picture of him with his hands in somebody's pocket.
O'REILLY: They were threatening to subpoena Rahm Emanuel, all these big shots, and nobody shows up.
KELLY: That didn't happen, exactly. But they -- I think they proved their case. I have to say, given the evidence they have, I think...
O'REILLY: You think the government proved it?
KELLY: This is as strong a circumstantial case of racketeering and corruption…
O'REILLY: If you were on the jury, he's guilty.
KELLY: Except for the fact that...
O'REILLY: He's cute, you like him.
KELLY: Listen, he made statements like this. I love this. I want -- I want the audience to know.
KELLY: I'm sorry, that's how I feel. He says, what's more important? He's talking about what positions he could get. What's more important: Commerce secretary or ambassador to India? Could I be ambassador to India? Wait, what about the Salvation Army? Can I head that up?" he says, "That would be huge but I'd have to wear a uniform. Forget that."
O'REILLY: All right. So you'd acquit him on lovability. I don't think he's that lovable by the way.
KELLY: I know. No one does.
O'REILLY: Real quick, 30 seconds, OK? The DOJ drops charges -- no charges in the U.S. attorney business. Remember how the left-wing press couldn't hear the end of that.
KELLY: Attorney General Gonzales let -- he fired 9 U.S. attorneys.
O'REILLY: No -- nothing happened, no wrongdoing.
KELLY: No illegal wrongdoing, but the -- but the office of the inspector general's findings still stand, that was a...
O'REILLY: Kind of like the Black Panthers. No prosecution.
KELLY: Well, no, it's not like that because under the Bush DOJ this was referred to a special prosecutor. Under the current DOJ, the New Black Panther case is not referred.
O'REILLY: It would have been investigated. All right. Megyn Kelly, everybody, thinks Blagojevich is cute.
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