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This is a RUSH transcript from "The O'Reilly Factor," June 3, 2014. This copy may not be in its final form and may be updated.

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O'REILLY: In "Back of the Book" segment tonight, as we pointed out in the "Talking Points Memo," the Obama administration is now doing inexplicable things. And chaos is in the air.

Joining us now from Washington, Fox News Political Analyst Charles Krauthammer. So, off the top of the program, Bob Woodward said he's in a bubble, that's why these mistakes are being made.

I think there's more to it than that. Do you.

CHARLES KRAUTHAMMER, FOX NEWS CONTRIBUTOR: No, this is not a management problem. This is a problem that's intrinsic with hostage swaps.

Look, Ronald Reagan, who ran a very good administration, very efficient administration, extremely successful administration, slipped and fell and was humiliated over hostage swaps.

Administrations always come out on the wrong end of this. The view I have of this is rather different from yours.

I think a country has two obligations, absolutely iron-clad obligations. Number one, if there's a soldier being held, you get him back. But number two is, if you desert your unit, you are subject to military --

(BEGIN VIDEO CLIP)

-- discipline. I would say you free him and then you try him. That is the only way that you can deal with this.

And no matter how you do the deal, the west, whenever it deals with hostages or prisoners of war, always ends up on the weaker side of the deal. The Israelis got back --

(END VIDEO CLIP)

-- one private, Private Shalit. They gave up over 1,000 terrorists, including many with actual blood on their hands.

The mistake Obama made -- and this is part of his arrogance and, perhaps, also ignorance -- is to celebrate the release with that press conference.

(BEGIN VIDEO CLIP)

When you make the swap, you know that the terms are uneven. You know the five guys that you have on the screen now are going to return. They're going to try to kill Americans.

This is a somber and solemn thing that you do with regret and with sorrow.

O'REILLY: All right.

KRAUTHAMMER: But you do it in the name of a code.

O'REILLY: So, you would have made the swap had you been the president.

KRAUTHAMMER: Yes.

O'REILLY: I would not have.

KRAUTHAMMER: I know.

O'REILLY: I got a letter from a viewer that said, "This is like, in World War II, swapping Patton, Eisenhower and Bradley for Sergeant Schultz, all right.

And I think there's something to that. In war, you have to make very, very tough decisions. And you have to make the decisions about what is best for America, OK.

Totality, all right. And here, these five, all right, are much more - -

(BEGIN VIDEO CLIP)

-- valuable to the enemy. And I understand the code that the United States can't leave anybody behind. But I think you're putting more people in danger, --

(END VIDEO CLIP)

-- I mean, physical danger. And I would, as commander-in-chief, I would not have made the deal. I would have tried to broker another deal.

KRAUTHAMMER: All right. Well, you wouldn't have gotten another deal. You can be sure they've been trying another deal.

The Taliban can sit and wait. We can't sit and wait. We're leaving in two years. We're really leaving at the end of this year.

And the Taliban will be there forever. They know it, we know it. They have the cards, we don't.

I do not disagree with an iota of your analysis. They got the better end of the deal by far. They always do.

You name me one hostage exchange in which the west released hostages and ended up at the upper end of the deal. The reason is, we put a premium on individual human lives the way the other guys don't.

That's the difference between a civilized society and a barbarous society. And we pay a high price for being civilized.

O'REILLY: All right, but we have to protect the nation, you see. And when the nation's protection is put in jeopardy, which it will be now, because these five guys, they're commanders. I mean, these are people --

(BEGIN VIDEO CLIP)

-- who are going to be repatriated back. And they're going to do enormous amount of damage until we kill them. So, I'm making a decision based on what's best for the country.

Now, let's just -- and I respect your opinion. And I could be wrong. But I want to ask one more question in the minute we have left.

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Bob Woodward seems to think that the administration is so isolated, it is just devoid of reality. It's just not in the real world.

I think there's more to it than that because, you know, when you see that Rice go out and do this again, I mean it's almost --

(BEGIN VIDEO CLIP)

-- like she's flipping everybody off, is it not.

KRAUTHAMMER: The Rice thing is inexplicable. It seems to me there's something about Sunday mornings for Susan Rice.

(END VIDEO CLIP)

(LAUGHTER)

O'REILLY: That's right.

KRAUTHAMMER: Apparently, on that half day, she's unable to get within sight, within range of the truth.

O'REILLY: I know.

KRAUTHAMMER: I think she ought to stay home Sunday mornings and let other people speak. Look, that is obviously -- that's ridiculous.

And I also think the way that they presented this as a great triumph is ridiculous. Let me just end with one note.

I respect your view. I can see how someone would refuse to make the deal. It's a tough call.

If a president were to go the other way, I would not attack him on this. But let me just say one thing, the Prime Minister of Israel was toughest guy probably running a government in the world today. And he gave up a thousand killers for one private.

O'REILLY: All right.

KRAUTHAMMER: And he knew that would hurt the security of his country. And it will. But, sometimes, in the west, as a matter of honor, for your country, you have to do it.

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