This is a rush transcript from "Hannity," June 30, 2010. This copy may not be in its final form and may be updated.

SEAN HANNITY, HOST: Today was day 17 of the Blago corruption trial. Now to date the mainstream media has all but ignored the event, but this is not your run-in-the-mill Chicago political scandal.

Now this trial is different because the players involved all have one thing in common: They are connected to the president of the United States.

Let's take a look.


HANNITY (voice-over): We begin with White House chief of staff Rahm "Rahmbo Dead Fish" Emanuel. Now the defense has called a, quote, "critical witness" in this case. And shocking e-mails uncovered by the AP revealed Emanuel's repeated attempts to trade favors with Blagojevich.

The White House's connection to this trial do not end there.

Valerie Jarrett, now senior adviser to the president, was once a top candidate to fill Obama's Senate seat. And it's alleged that behind the scenes both the president and Rahm Emanuel lobbied on her behalf.

In fact, a union leader has testified that Obama called him the night before the 2008 general election to push for Jarrett's appointment as senator. And perhaps the person involved in this trial with the closest of ties to both Blagojevich and Obama is real estate developer Tony Rezko.

After all, it was Rezko's corrupt dealings with Blagojevich that ultimately landed him behind bars. And his connections to the president run even deeper. Rezko has long been a top Obama donor. In the past Obama has represented a firm owned by Rezko. In 2005 when Rezko was known to be under federal investigation, Obama purchased land from him for well over the assessed value. Obama later apologized for the purchase.

But as this trial continues, can we expect to hear more apologies from even more administration officials?

Only time will tell.


HANNITY: Now all of these connections were supposedly investigated immediately after Barack Obama was elected president. At that time, Obama asked his future White House council Greg Craig to look into any contact members of his staff had with the Blagojevich camp.

At the conclusion of that investigation, Craig released a statement which read in part, quote, "The president-elect had no contact or communication with Governor Blagojevich or members of his staff about the Senate seat."

But the bombshell testimony of union boss Tom Balanoff appears to indicate otherwise. Now Balanoff claims Obama called him and said, quote, "Tom, I want to talk to you with regard to the Senate seat."

Now if that's the case, and then President-elect Obama was making calls to officials with close ties to Blagojevich, he was far more engaged in the process than he has let on.

And joining me now with more is the author of The New York Times best-seller, "Culture of Corruption," Michelle Malkin is back with us.

Michelle, good to see you. Thanks for being with us.


HANNITY: All right. Let's go. The president-elect had no contact or communication with Governor Blagojevich or members of his staff about the Senate seat.

Now we have testimony — sworn testimony under oath in the Blagojevich case — that totally and completely contradicts the president and his council's story. So the question is, one of them is lying, correct?

MALKIN: Well, I think here's the problem. When Greg Craig issued this self-exonerating review of team Obama's dealings with Blagojevich, they were not forthcoming. They were not forthcoming in December 2008 and they're not being forthcoming now about how closely they forged relationships with all of the cast of characters in this long, hot summer of corruption Blagojevich trial.

And I want to give a little bit of little background on Tom Balanoff who was the SEIU official who testified, who is basically laying the groundwork and foundation for a direct tie and link — the phone call, the phone messages — with President Obama.

He is the head of Local One. One of the longest established chapters, SEIU chapters, in Illinois. And back when he was a community organizer, as I reported in "Culture of Corruption" last year, Barack Obama actually worked with Tom Balanoff's SEIU Local One just as with the relationship with Rezko.

These people have known each other a long, long time. And they do not need to spell out in black and white when there are quid pro quos going on. So when of course all of the people who would like to shrug off this trial and say, well, there was no stated quid pro quo involved. They didn't have to state it.

The other connection between Tom Balanoff and Rod Blagojevich, of course, is that Rod Blagojevich had appointed Balanoff to a very powerful committee. It was a state health facility's board which — guess what — Tony Rezko stacked with his own lackeys.

So you connect all the dots and what you get is a huge big puzzle all that comes together of the corruption that Barack Obama was steeped in from the very first day of his political career.

HANNITY: All right. So now we know in the Sestak case that they dispatched Bill Clinton to make the offer to Sestak. We know in the case of Romanoff they dispatched Jim Messina, again, because they didn't want him running against Michael Bennett. So this would not be a stretch to say that they've already applied the Chicago way at 1600 Pennsylvania Avenue.

But — look, this gets to the heart of the question here. Did the president of the United States, through his counsel, lie to the American people, when he said he had no contact with Blagojevich, no contact with his staff?

Now either he's lying or Balanoff is lying. There is no in between here, Michelle. And the question is, will we get to the bottom of this?

MALKIN: Well, I think that we are getting to the bottom of this with every day of this trial. With the new revelations from these taped messages. And the more that we're hearing from these so-called buffers and intermediaries.

And the thing is, that it's a two-way street. You know the Obama administration would like us to think that all of these ideas of pay-for-play were things that were initiated from someone else rather than emanating from the White House. But as you've laid out, Sean, you've got Rahm Emanuel in the middle of this.

Of course Rahm Emanuel completely steeped in the Chicago political machine who himself had forged his own long-term relationships with all of these people. It was just last week, of course, that in the trial it was revealed that Rahm Emanuel, while he was a congressman, had sought favors both ways and reciprocated with Rod Blagojevich.

So — so of course they know when each other is scratching their backs. And there's one other person that really needs to be put on the hot seat, Sean. And that is Valerie Jarrett.


MALKIN: She's a long term friend.


MALKIN: Ally, consigliore of the Obamas.

HANNITY: And I agree with you about Rahmbo, I agree with you about Valerie Jarrett. Here's the problem we have. We're not sure if they're going to ultimately have to testify in this case and I think they're crucial to getting the entire story out if they testify.

Now another figure that needs to be put under oath in this case is Tony Rezko. The judge in this case has requested that both sides not bring Rezko and him up on the stand. Similarly the judge —


HANNITY: The judge just in the last day has halted questioning on the issue of Obama, and the judge ruled that the FBI interview that Obama gave in 2008 in December when he was president-elect, that that's not going to be handed over to the defense either here.

So it seems that there's an effort to stop the public from getting the entire story in this case.

MALKIN: Yes. The hands are really tied by these judicial decisions. But fortunately, there are two ways to adjudicate this culture of corruption trial. One is in the courtroom, and one is outside. And we're doing it by continuing to push and put pressure and ask these questions out loud and continue to.

HANNITY: All right. Michelle Malkin, thanks for being with us, as always.

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