This is a rush transcript from "Hannity & Colmes," October 19, 2007. This copy may not be in its final form and may be updated

MARK STEYN, GUEST CO-HOST: Hillary Clinton may be embroiled in another scandal. The presidential hopeful has amassed record levels of donations for her campaign, but some of the money is coming from an unexpected source, residents of New York's Chinatown. According to The Los Angeles Times, residents of this building at 88 Broadway and others like it on Manhattan's Lower East Side have been stuffing Mrs. Clinton's pockets with donations.

The Times tried to track down a resident of this building on 44 Henry Street who reportedly donated $1,000 to the campaign. But when the reporters asked residents of the building, they said they'd never heard of him.

The Clinton camp responded, saying, "Our own compliance process flagged a number of questionable donations and took the appropriate steps to be sure they were legally given. In cases where we couldn't confirm that, the money was returned."

Joining us now, FOX News political analyst Kirsten Powers and Republican strategist K.T. McFarland.

Kirsten, what is it about all these dishwashers and waiters in Chinatown who've never voted, never shown any previous interest in American politics, that's got them so enthused about Mrs. Clinton's campaign?

KIRSTEN POWERS, FOX NEWS CONTRIBUTOR: Well, I think it's the fact that she, first of all, as you know, she's a senator from New York, and New York City is in New York. And after 9/11, she was very active in this community, helping them. They were affected by the 9/11 attacks, as Chinatown is in downtown Manhattan, and so she has developed a relationship with them and she's known to them. And the Clintons are, you know, to them the people — former President Clinton is a rock star to them, as for many people. And, you know, I think that she has a longstanding relationship with them.

STEYN: And that accounts for the difference between the $24,000 that John Kerry raised in total from Chinatown in the 2004 campaign and the $400,000 that Mrs. Clinton gets from just one...

POWERS: John Kerry's not from New York, so, you know, we're not talking about a place that Senator Clinton doesn't have a relationship with. She has a relationship with Chinatown because they're her constituents.

STEYN: So you're saying all this with a fabulous poker face. You honestly think there's nothing in the least bit suspicious about minimum wage workers being maxed out on Clinton campaign donations?

POWERS: Well, what are you suggesting? You're suggesting, if a person is a dishwasher, we're supposed to "means test" them, that they're not allowed to give to this candidate?

STEYN: No, no, no. Not at all. I'm all in favor. But generally speaking...

POWERS: I think, honestly, Mark, I'll tell you. I honestly think all this condescension that's been going on, I've been listening to it all day, about these dishwashers, like this is not any kind of, you know, honorable way to be earning a living, I find it a little disturbing.

STEYN: I've got nothing against dishwashers. Minimum-wage workers gave and students gave a lot of money to Howard Dean, for example, but they gave it in small donations.

POWERS: But this is their choice. And the fact is that these people decided that they want to, you know, take money, whether it's their savings or whatever they've done, and give it to Senator Clinton, that is their decision. There's nothing illegal that's been alleged here, so I don't really understand why...

K.T. MCFARLAND, REPUBLICAN STRATEGIST: It doesn't pass the smell test!

STEYN: Everything about the Clintons that hasn't passed the smell test since the '90s in the end hasn't gone anywhere. And Kirsten seems to...

MCFARLAND: It may not go anywhere either, but I think it's symptomatic of a much bigger problem, which is the whole thing is awash with money. Lobbyists are giving money. People in Chinatown are giving money. Is it their money originally? Maybe. Maybe not. But it's just this massive accumulation of money in the hopes of buying favoritism that is just — it turns off the average guy on the street who's just disgusted by this.

STEYN: These are the average guys in the street.

MCFARLAND: I think it doesn't pass the smell test. You know, where are these people getting thousands of dollars to donate to campaigns? I'm not sure. I wouldn't allege anything. I just think it's a little suspicious that someone who makes $10,000, $12,000 a year is going to tithe to Hillary Clinton? I don't think so.

STEYN: Yeah, but isn't the big lesson here — look, the Clintons learned this 15 years ago. If you have one scandal that can destroy you, if you have 1,000 scandals, it becomes part of your personality and nobody cares.

MCFARLAND: It's part of your personality. No, I think that the critical thing to look at Mrs. Clinton about — and the more interesting story in some ways this week was the one about women voters. Republican women voters, are they going to vote for Hillary Clinton? The Democrats claim that a quarter of Republican women...

COLMES: What I'd like to know is, K.T., where's the scandal?

MCFARLAND: The scandal...

COLMES: What's the scandal here? What law was broken?

COLMES: So what are you alleging here?

MCFARLAND: I am alleging that the whole system stinks. And it doesn't...

COLMES: And that's Hillary Clinton's fault?

MCFARLAND: It's everybody's fault.

COLMES: See, but you want to pin it on Hillary Clinton.

MCFARLAND: I want to pin it on everybody.

COLMES: All right. So it really doesn't have anything to do with Hillary Clinton, is that what you're saying?

MCFARLAND: I think that they're the most egregious example of it, yes.

COLMES: Because they're raising the most money? Because they're doing better than any other candidates? Because maybe these dishwashers want health care?

MCFARLAND: The money just disgusts. The average guy in the street is horrified, a billion dollars...

COLMES: All right, but you're talking about a system. We're talking about two different things here. We want to talk about changing the system, something John McCain tried to do...

MCFARLAND: I am completely — absolutely.

COLMES: ... or do we want to say, "Look at this evil person, Hillary Clinton, and how dare people give to her campaign"?

MCFARLAND: They're just exploiting...

STEYN: The latter.

COLMES: And that's what Mark would love...


POWERS: But when you say that it doesn't pass the smell test, then you are alleging something. You are alleging...

POWERS: Just admit that you're alleging something, I mean, when you say it doesn't pass the smell test.

MCFARLAND: I'm alleging, when you see an enormous amount of money coming from someplace where people don't have that kind of money...

COLMES: You're being very vague here. So if you've really got an accusation to make against Hillary Clinton, lay it on the table and tell us what is.

MCFARLAND: I think — and I don't know that Hillary Clinton does it, but a number of candidates are receiving money...

COLMES: Who's the number? Who?

MCFARLAND: I'm not going to name names.

COLMES: We are naming names. We're focusing this on Hillary Clinton. So if you've got an accusation against her, I'd like to know what it is.

MCFARLAND: I have an accusation against the whole system. The whole system is broken. It stinks. It's awash with money. And even if these people are legitimately giving their life savings to Hillary Clinton's campaign, isn't there something wrong with the system for people?

COLMES: Kirsten, you know some of the people mentioned in this "L.A. Times" story. For example, they don't give you the whole story. A key figure, for example, helping to secure Asian support for the Clintons is a woman named Chung Seto, who you happen to know. They don't tell you the whole story about this person.

POWERS: Well, I know her very well. Well, no, no, no, they portray her as this kind of shady person who's like lurking in the background who was born in China. You know, she used to run the New York State Democratic Party. She's run campaigns in New York City. She's a very well-known person. You know, I spoke to her about these fundraisers. I mean, this is not — the way it's being portrayed, so much of that article is so inaccurate, you know, portraying this as like a slum, you know, when in fact...

COLMES: I don't like the raised eyebrow idea that, because if you're not a person of means somehow you're not supposed to give to a campaign, can't give to a campaign. People, what, don't sometimes save up money to get someone in office? And then Hillary Clinton was active in the Chinatown community ever since she's been a senator. She was on top of the SARS case. She has been very involved with the community, one of the few candidates who actually went and visited Chinatown, which is why she's got support there.

MCFARLAND: It's just the whole system, where a candidate — we're going to raise a billion dollars that's going to be spent on this campaign. I mean, I was in Washington a couple of weeks ago, and I went to one of those lobbyist cocktail parties. And you know what happens? The lobbyists hand you a card and say, "If you're going to run for something, let me know, and I'll help."

COLMES: Then let's change the system for everybody, and let's not single out one candidate who's part of a larger system.

STEYN: K.T. is being way too bipartisan there.

COLMES: You don't want her to be. It gets Mark upset when you're bipartisan. He just wants you to slam the Democrats.

MCFARLAND: The Clinton are experts at raising money. And the Clintons are experts at spending money.

COLMES: And you resent that. Now, why should you resent that?

MCFARLAND: I just think the system is broken. And to the extent...

COLMES: What do you want to do to fix it?

MCFARLAND: Well, I can tell you one thing. Hillary Clinton is not working to change the system.

COLMES: She is working to get elected, like every other candidate, like Rudy Giuliani is, like John McCain is, like Fred Thompson is, and like Mitt Romney is.

MCFARLAND: I must say, I really admire John McCain because of the efforts he made to limit campaign contributions.

COLMES: And that's hurt him among Republicans.

MCFARLAND: That has hurt him, but the best system would be to shine the light on all of this. I think the more — it would be really fascinating to say, OK, here's the campaign contribution you take from this industry or that interest group. Where are your votes, Mrs. Senator or Mr. Congressman?

COLMES: All right, so you're praising McCain, who came under fire from Republicans. But, Kirsten, this is a hit piece on Hillary Clinton.

POWERS: Of course it is. No, and everybody — again, I mean, there's all these sort of veiled accusations against her, and they don't want to come out and just say it. And the suggestion is that something illegal happened perhaps? Nothing in that article alleges that anything illegal happened, perhaps?

MCFARLAND: It's just odd. And...


POWERS: It's just like, oh, it's Chinese people and they live in an area that's too poor and they're not allowed to be giving money to candidates...


COLMES: We've got to run. We thank you both very much.

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