This is a rush transcript from "Hannity," May 18, 2009. This copy may not be in its final form and may be updated.

SEAN HANNITY, HOST: As Democrats across the country continue to predict the demise of the Republican Party, poll numbers, well, they are proving them wrong, even in Democratic strongholds like states like New Jersey and Connecticut, and my next guest, well, can take a lot of credit for the GOP resurgence.

Chris Christie is a Republican candidate for governor in the great state of New Jersey. He's joined by the man who recently endorsed him, former New York City Mayor Rudy Giuliani. The poll numbers are phenomenal so far for you.

Good to see you, Mr. Mayor. Thanks for being here.

All right, what's going on? Why — is it taxes? Is it the economy? What's going on in New Jersey?

Video: Watch Sean's interview

CHRIS CHRISTIE, REPUBLICAN CANDIDATE FOR GOVERNOR: Yes. We have the highest burdened tax state in America. It's spreading. It's gone up 50 percent in the last seven years under two Democratic governors, McGreevey and Corzine. The highest unemployment we've had in 16 years. New Jersey is at the bottom of everything.

HANNITY: You were head to head double digits ahead of Jon Corzine, who's been in elected office for statewide how many years now?

CHRISTIE: Nine years.

HANNITY: What do you make about this?

RUDY GIULIANI, FORMER NEW YORK CITY MAYOR: He's also being — he's being modest. He also was a terrific United States attorney and had a great record of prosecuting corruption. Republicans and Democrats. Great record as prosecutor.

HANNITY: He never came after me.

GIULIANI: And terrorism.


GIULIANI: And therefore, I think the people of New Jersey see a leader, and what they have instead is the absence of that.

HANNITY: How — how big can this be? You've got Chris Dodd is in terrible trouble in Connecticut. You've got Biden in trouble in Delaware for the Senate seat. You've got, you know, a number...

GIULIANI: This is how — this is how a political party comes back.

HANNITY: Virginia.

GIULIANI: With candidates. We did it in '94. In '94, Christine Whitman won in New Jersey, and George Allen won in Virginia, and I won in New York.


GIULIANI: And the next year, we took the — we took the House back. This is the way a political party comes back, with good candidates who can win. That's how you shape it. If you try to do it too much like theoretically, you can't do it. You've got to do it with candidates like Chris.

HANNITY: Why do you think — why do you think the northeast has had such a hard time electing Republicans in recent years? What do you think the issue is for Republicans?

CHRISTIE: I think that part of it is tone, and part of it are the candidates, as the mayor said. And I think we have to go forward with people who show they're improving, that they could do something, that they could accomplish things.

I think that's why people are supporting me now. They saw seven years of putting political criminals behind bars, child pornographers. I think that makes a difference. If you have a proven record.

And of course, the tone. I think at times, we've been a little bit too harsh in the Northeast for the ear of the people in states like mine and the mayor's.

But more than anything else, they want to see you accomplish things I think when you show them that, they're willing to get behind you, no matter what party you are.

HANNITY: Where are you on some of the social issues?

CHRISTIE: Pro-life. I'm pro-life. And I believe that protecting the sanctity of human life is one of those things that are very important.

HANNITY: I was telling you before the show, I defended you on my radio show recently. A caller calls in, says, "Would you like that Mayor Giuliani?"

I'm like, yes. You — New York is full of drug dealers, hookers, and the economy was in the tank. And people have written off New York. And you brought the city back. You didn't run on social issues.

GIULIANI: No, I didn't. I didn't, and I governed with a Republican economic philosophy that worked. I cut taxes 23 times, cut taxes more just about the commendation of every mayor in the history of the city.

And nobody thought it would work. The New York Times criticized me every time I cut taxes, certainly at the beginning. And it worked. We turned deficits into surpluses. We ended up with our best economy in years, as well as reducing crime, which had a lot to do with it.

HANNITY: How much is Barack Obama going to be a factor in the 2010, in your election, in Connecticut, in Virginia, in Delaware. And New York governors race. People say that if you get in, you become the governor of New York.

GIULIANI: I think that, sure the president's important. But in New Jersey, what you're looking at are multiple issues. You're looking at what's going on there, and this heavy burden, the taxation and a lack of leadership at the top. And they are — they're looking for a leader.

HANNITY: I follow New York a little bit more, because I'm local in New York. But in these times of economic trouble, when revenues are down dramatically, the governor of the state of New York is raising — spending 9 percent and raising taxes at the same time.

CHRISTIE: Jon Corzine is proposing to raise taxes next year $2 billion while people can't pay their mortgages. They're losing their homes. They're losing their jobs. And he won't cut the state payroll by one person.

Tens of thousands of people losing their jobs in the private sector. He's raising taxes to keep every one of those public sector people employed. Crazy.

HANNITY: What do you think of some of these governors who aren't taking some stimulus money? Governor Palin, Sanford, Bobby Jindal, Rick Perry. What do you think of that?

CHRISTIE: I think it makes sense. If they're going to put strings on that money, then they're going to tie your hands and make you expand programs. And not be able to have the freedom of choice that people elected you for.

Then you should not take the money.

HANNITY: The governor — or the former governor of New York, Elliott Spitzer, has a higher approval rating than the current governor that's raising taxes and increasing spending nine percent.

GIULIANI: Exactly the wrong thing to do in a time of recession.

HANNITY: You know what question I'm going to ask you now.

GIULIANI: I know. That's what I'm trying to avoid. Reality is — what I did in New York is exactly the opposite. I reduced taxes. I reduced spending, and it worked. And I didn't invent that. I wish I did. I borrowed that from Ronald Reagan, John Kennedy, and a lot of Republican governors — Governor Thompson, Governor Engler — all of whom had successes.

HANNITY: See, look, I think the Republican Party needs a very simple message. The party of national security — they'll keep us safe. The party of fiscal integrity, responsibility and limited government. They've got to be free-market solutions to health care and education and energy independence. Those five, they can win everywhere.

GIULIANI: I think — I think we have to stand up for principles. We have to be flexible enough to be a big enough party, but those have to be our core principles. And I think we contrast very well with what's going on in the Democratic Party with this out-of-control spending. At a national level we’re creating national debt that is out of control. No one could ever have imagined a debt like this. And this is going to result in inflation that we're going to have to deal with.

HANNITY: I'll give you the last word.

CHRISTIE: We've got to get back to basics as a party. And we put good candidates up, we talk about our core principles, like the ones you articulated. That's a winning — that's a winning argument, and especially the places like New Jersey where people are suffocating. They're suffocating from taxation.

HANNITY: People are leaving New York, New Jersey, states that — young people can't start out, and old people can't afford to the taxes.

GIULIANI: It's a cycle. It's a cycle that has to be interrupted. You raise taxes, you lose tax base. You lose jobs. You have to raise taxes again.

HANNITY: Guys, good to see you. Thank you for being with us.

Good luck in New Jersey, Mr. Mayor. Good to see you.

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