This is a partial transcript from "The O'Reilly Factor," October 7, 2005, that has been edited for clarity.

Watch "The O'Reilly Factor" weeknights at 8 p.m. and 11 p.m. ET and listen to the "Radio Factor!"

BILL O'REILLY, HOST: Hi, everybody. I'm John Gibson reporting tonight for Bill O'Reilly. Thanks for watching us. The city of New York continues to be on alert after a potential plot to bomb the city's subways is uncovered. That obviously has led to ramped up security today with special attention being paid to backpacks and baby strollers.

The new terror threat has also led to some frayed nerves. A rush hour scare at Penn Station, a major transportation hub here in New York City, prompted an evacuation. The culprit? A soda bottle filled with a suspicious substance. -- It was a false alarm.

Then later in the day, the Washington Monument was evacuated after a bomb threat. And service on two subway lines was briefly suspended in New York City after a package was found on the tracks.

All this comes one day after New York authorities publicized this threat reportedly revealed by an informant in Iraq, who said 15 to 20 terrorists were planning an imminent attack on New York's mass transit system.

Three people have been arrested in Iraq so far. And investigators are looking into a fourth man who may have traveled to New ork.

With us now, terrorist analyst Steve Emerson with The Investigative Project. I know one of the things that's scariest about this threat is the specificity, that is briefcase bombs, baby stroller bombs in the New York City subway and a number of people. What about the credibility issue?

STEVE EMERSON, TERRORISM ANALYST: That's the $64,000 question, John. And nobody really knows. I mean, the reality is even with a lie detector test that apparently was administered with mixed results, with the vetting of some of the information, with the assessment of some of the plausibility, it's still an unknown.

But on the other hand, given the specificity and the fact that there are so many acute details that were alleged to have taken place, I think that law enforcement and the city of New York had no choice but to basically announce this and alert the public.

GIBSON: If you just eliminate the obvious, that is, it was the prudent thing to do to alert the public, how much credibility should authorities give this kind of plot? I mean, seriously in the way they go about looking for the bombers once you get beyond just the public warnings?

EMERSON: Well, the problem here is that they're -- it's a snapshot in place. And so, if I was given or you were given a month to study the credibility of this informant and the information he provided, we could come up with a very detailed scientific conclusion based on assessing his credibility, and pretty much come very close to what the reality is.

But given a snapshot which is basically looking at what he provided at a certain moment in time, and then making an assessment, do we act now, it's a risk. It's definite risk, that you overreact or you underreact.

And I think the fear is that if they underreacted by not disclosing it, they could be accused later on of actually withholding -- withheld information which is the accusation made by families after 9/11.

GIBSON: New York City has a counterintelligence operation that in a lot of ways has rubbed the Feds wrong. Why? Because it's big? Because it's good? Because it doesn't pay attention to what the Feds would like at all times?

EMERSON: Listen, you know, you have a member of the family that suddenly branches out and does his own thing, you know.

GIBSON: That would be New York City.

EMERSON: .there's a little bit of jealousy there. And the fact is New York City has decided to basically create its own intelligence capability to not basically be as dependent as they were on the FBI and other law enforcement federally - law enforcement agencies.

Now the reality is that this sort of was hammered home last night when we saw the reports coming out of Washington by a spokesperson for DHS Homeland Security literally knocking the credibility of this information and deriding New York City officials. I was astounded by the fact that this was an on directed comment.

GIBSON: And I understand that New York City officials were livid about it. Do they have a right to be?

EMERSON: Of course they do. Look, in the end, it's a judgment call and you want to be on the same team. And again, the fact that as the mayor said it's an analyst in Washington who doesn't have the same equity, he's not entrusted with protecting the citizens of New York, the mayor has to make this call. These are the citizens here.

GIBSON: Steve, what about the history? I mean, look, the Feds had information on 9/11. They stove piped it, they kept it from each other, they kept it from New York City. Is what we're seeing now that New York is never going to depend on the federal government's judgment again, and the federal government's judgment is always going to be suspect when it comes to a New York City police commissioner or a New York City mayor because of 9/11?

EMERSON: Well, I don't know that always, because in the end remember the press conference yesterday was with the mayor and the head of the FBI of New York.

GIBSON: New York.

EMERSON: In New York. So that's a federal law enforcement agency. And the reality is the information was gleaned from the military and other agencies in Iraq. It was then transmitted to the United States, to the FBI, where it's vetted. And then it was provided to NYPD.

So in the end, the NYPD was still dependent upon federal authorities for this information. They reacted very seamlessly, which was a great thing until of course, the discordant note from DHS last night.

GIBSON: But I mean, is it -- would New York be on what you would call solid ground saying, hang on, we're the ones who suffered on 9/11, and you're the guys who fumbled the ball, so kindly pipe down?

EMERSON: Well, certainly that probably was the reaction and probably in even less artful phrase uttered in a language that couldn't be used on the air by the mayor and his staff towards DHS.

But I think in all fairness, the reality is it's the city of New York that has to protect itself because it's not an analyst in Washington.

GIBSON: Steve, what about the plot itself? This is what strikes me as odd. You know, this plot is described as people or persons or a person traveling from Afghanistan to Iraq, from Iraq to Syria, from Syria to some place in Europe, and then to New York City. I mean, that sounds like - is the perfect terrorist trail, And anybody who was on that trail would get caught.

EMERSON: It does seem a little bit implausible. And it seems implausible also that somebody would know all of the avenues and all the different pit stops of this type of operation because, as you know, that most of these terrorist plots it's compartmented. So somebody's picked up -- does not know what the others are doing.

So again, that does lead to questions of credibility. On the other hand, there have been bizarre paper trails and travel trails of other terrorists coming to the United States, that if you look back in retrospect you would say this is implausible.

GIBSON: What about the story that there's a fourth person being sought, and that person may already be in New York?

EMERSON: Well, I - you know, I know that those are reports out there. I can tell you that I spoke to a senior NYPD official who said look, he didn't know if there were 19 people involved. That was the report that was bandied about today, but he said that it was a possibility that there were people who are in New York, whose whereabouts they were thoroughly unaware of. They were trying to find them and determine if in fact they were members of a plot.

They couldn't even verify that they were in the United States at this time. Again, a lot of sort of smoke and mirrors here. And we're dealing with intelligence. You can't vet it. You can't prove it. You have to chase it down. And sometimes you basically are chasing, you know, and boxing at shadows.

GIBSON: All right, Steve Emerson. Steve, thanks very much. Appreciate it

Content and Programming Copyright 2005 Fox News Network, L.L.C. ALL RIGHTS RESERVED. Transcription Copyright 2005 eMediaMillWorks, Inc. (f/k/a Federal Document Clearing House, Inc.), which takes sole responsibility for the accuracy of the transcription. ALL RIGHTS RESERVED. No license is granted to the user of this material except for the user's personal or internal use and, in such case, only one copy may be printed, nor shall user use any material for commercial purposes or in any fashion that may infringe upon Fox News Network, L.L.C.'s and eMediaMillWorks, Inc.'s copyrights or other proprietary rights or interests in the material. This is not a legal transcript for purposes of litigation.