This is a rush transcript from "Hannity," September 21, 2010. This copy may not be in its final form and may be updated.

SEAN HANNTIY, HOST: And with just 42 days remaining until November's midterm elections all eyes are on Delaware's Christine O'Donnell. Now she has been the subject of all the Democratic attacks since she clinched the GOP primary last week. And given the tenor of this election I think that's actually a badge of honor.

And joining me now is the woman the Democrats love to hate, GOP Senate nominee, Christine O'Donnell -- well, one of, I mean, Michele Bachmann is up there, and Sarah Palin is up there.

Christine, welcome to the show. Good to see you.


HANNITY: Thanks. All right. There's a lot of ground to cover.


HANNITY: A lot has happened. Let's start with Mike Castle, your opponent. He had promised he would support the eventual nominee. Last time we spoke he had not called you. He since called you?

O'DONNELL: Right. We spoke on Friday. And he congratulated me. It was a very friendly conversation. And I'm hoping to get his endorsement. It would it mean a lot.

HANNITY: Well, he said he would. It seems to be -- if you look at Lisa Murkowski and a lot of other races, Charlie Crist, as an example, I'm almost calling it the sore loser syndrome. The -- what is your take?

O'DONNELL: Well, I want to give him the benefit of the doubt. He's -- you know, it's only a week since Election Day. Let's give him some time and hopefully he'll come around because we need to unite the party especially here in Delaware. We need to unite the party in order to move forward. And I'm still holding out for hope.

HANNITY: All right. We'll get to more of the establishment-Tea Party stuff in just a second here.

Bill Maher, a friend of yours, obviously. You did his show a lot, apparently.

O'DONNELL: Yes, unfortunately.

HANNITY: All right. He comes up with this tape, it was in 1999 you made an appearance.


HANNITY: Talking, I guess, about a boyfriend when you were a teenager?

O'DONNELL: Right. Right. Right.

HANNITY: OK. Saying that you had dabbled into witchcraft. Why don't you explain for people that may be -- what was that about?

O'DONNELL: Well, teenage rebellion. You know? Some people dabble in drugs to rebel, that's how I rebelled. You know? But who didn't do some questionable things in high school and who doesn't regret the '80s to some extent? I certainly do. And I most certainly regret bringing it up to Bill Maher.

HANNITY: All right. But he's promising, I guess, to keep bringing out old tapes. And others -- other people promising to dredge up old comments that you made. What is your reaction?

O'DONNELL: Well, it's not a promise, it's a threat. And, you know, let them. Because, you know, my focus is on what's important to the people of Delaware. And if he wants to do this, you know, side nonsense, let him.

I'm going to focus on letting the people of Delaware know what I want to do to get jobs back in Delaware to reduce the size of government, to make our homeland strong once again.

We've got serious issues facing our country right now and this type of stuff is a diversion. And I want get back on message. There is a stark contrast between my opponent and me. He's called Harry Reid's pet.


You know?

HANNITY: I read this. I heard that.

O'DONNELL: That's Harry Reid's word. I'm not --


O'DONNELL: You know, I'm not mudslinging here. And you kind of have to wonder what sort of strange conversations went on to lead to Harry Reid calling him his pet.

HANNITY: Well, it seems a lot of issues and one of the things I've noticed is that there is, in this campaign, I don't hear any Democrats running on health care.

O'DONNELL: That's right.

HANNITY: Running on the stimulus, their support for Obama, Reid and Pelosi. So what are we to make of the attacks against you?

O'DONNELL: Well, watch this. Watch how this campaign unfolds. They started their ads this week. And they're attacking me personally. They're not attacking where I stand on stimulus. They're not attacking where I stand on extending if not making permanent the Bush tax cuts.

They are not attacking me because I want to permanently eliminate the death tax or propose a two-year temporary tax holiday on the capital gains tax in order to get the economy back on track.

They're not attacking me on my positions. They're trying to attack me, which is why I'm getting out there and to the people of Delaware, why I cancelled the Sunday shows when churches invited me to attend their services, and people in Delaware invited me to go to their picnics because this race is about what's important to the people of Delaware.

And what's important to the people of Delaware are how we're going to get jobs back, how we're going to reduce the size of government. And they're worried about the tax hikes that are coming in January.

My opponent is wrong on all of these issues.

HANNITY: Let me give -- for example, you're talking about attacks. Let's show -- the Democratic Party has released this ad about you. Let's roll the tape.


UNIDENTIFIED FEMALE: We don't know a lot about Christine O'Donnell. But here's what we do know. She'll fit right in in Washington. O'Donnell spends money she doesn't have. Hired employees she didn't pay. Stiffed businesses. Didn't pay her taxes.


HANNITY: All right. First of all, your reaction? We'll get to the specifics.

O'DONNELL: It's a shame because again, you know, they're taking a play from my opponent's book that -- don't go after her on the issues because she's right on the issues. But specifically, that comment on the taxes. There is no truth in that. I've paid my taxes. They are trying to go after an erroneous tax lien that the IRS admitted was a computer error.

As soon as we brought to their attention --

HANNITY: This is -- the IRS filed a lien in 2010 saying that you owed $11,000 in back taxes and penalties from 2005.


HANNITY: Do you have a letter from the IRS?

O'DONNELL: Yes. I --


O'DONNELL: I was being audited. And I have a letter saying that in the beginning of March we're going to clear this audit and give you a clean bill of health, finalize this thing. But instead of the finalizing letter, I got an erroneous tax lien.

Well, of course I immediately called the Appeals Office. I immediately called the IRS. They went oops, it's a computer error, and they worked very quickly to remove it. I posted all that on my website but my opponents don't care about the truth.

HANNITY: What about the issue of 2008 default on a mortgage on a home in Wilmington that you had?

O'DONNELL: I fell behind on my mortgage. I had a pro bono client that to me was very important. I worked 18 hours a day. It was a disabled woman who the courts ruled to remove her feeding tube.

So it was truly a life or death case. And when her father came to me, he said, I can't pay you, but will you help me save her life? And you can't say no to that. So I worked several months for free. I fell behind in my mortgage. And then I had this opportunity to become the nominee in 2008 to run against Joe Biden.

I had to make a very difficult decision. Either take on another client and get caught up in my bills. But instead, because I thought it was very important that someone oppose Joe Biden, and what he wanted to do in the U.S. Senate, I sold my house to make all my bills right.

I paid off all of my debt. Got caught up. And --

HANNITY: All right, so --

O'DONNELL: Made it through a difficult time.

HANNITY: So is there any truth -- I've heard people say you don't have a job, that you haven't had a job. There's a complaint that you took $20,000 from the campaign. Are any of these issues accurate?

O'DONNELL: No. None of them are accurate. And I'll tell you where they all came from. But again I just want to point out, look at what they're going after me for.

Again, they are not saying she wants to eliminate the death tax. They are not saying she's going to fight to lower our taxes or to extend the Bush tax cuts, or to make sure the economy gets back on track through the private business, not through more spending.

They are not saying she wants to stop the irresponsible spending in Washington. They are trying to attack me personally.

But I take non-profit clients. I do freelance work. And when you're running for a campaign you can't have a multi-client load. You just can't offer them the sort of service. I have one client right now that I'm very proud of. I work part-time for him. He's -- I wouldn't be a good PR person if I didn't plug his Web site, PaulMatthewWhittle.com. A great artist who just donated a statue worth $50,000 to a local church.

These are the kind of clients that I take on and in this economy non-profits are the first ones hit.

HANNITY: We got to take a break. We're going to come back. There's plenty more with Christine O'Donnell coming up straight ahead.


HANNITY: And we continue now with Delaware's GOP Senate nominee and the subject of all the Democrats' recent attacks, Christine O'Donnell is with us.

Governor Sarah Palin tweeted. And I thought she gave you some interesting advice.


HANNITY: And I want to get your take on it. "Christine O'Donnell's strategy, time is limited, use it to connect with local voters who you will be serving versus appeasing national media seeking your destruction."

O'DONNELL: She is absolutely right. Governor Palin is right. That's a great piece of advice and that's exactly what we're doing.

I had some business in New York today, so thank you for having me on. But our focus is Delaware. I'm going immediately back to Delaware. We've got a packed schedule tomorrow and attending a ladies luncheon. And I love it.

HANNITY: Does that mean -- for example, all the talk about well, you've got to do this national show, that national show --

O'DONNELL: No, it doesn't --

HANNITY: Is that off the table for you?

O'DONNELL: It's off the table because that's not going to help me get votes. I instead want to go to as many town hall forums, as many candidate forums, as many church picnics that I can fit into my schedule, so that I can meet the voters.

Delaware has a very unique opportunity that other Senate candidates don't have where I can be in every county, at least every week, but like tomorrow every day. I'm going to be in every county tomorrow.

HANNITY: So you are going to forget the taunting, if you will, of the national media?

O'DONNELL: Right. Let them say what they will.

HANNITY: OK. And you're going to --


HANNITY: It seems Rand Paul went through the same thing.


HANNITY: He started to do a lot of the national media. And then he said, you know, what, I'm sticking with Kentucky. So you're saying no to the national media now?

O'DONNELL: I'm not going to do any more national media because that -- this is my focus. Delaware is my focus and the local media is my focus.

And it's frustrating because I've let the local media know they're my priority but our phones are ringing off the hook, that they can't get to me. So this -- it's actually become an interference with the campaign.

HANNITY: What about debates? I know there was a candidates' forum last night by the Tea Party Movement.

O'DONNELL: That's right.

HANNITY: Your opponent didn't show up.

O'DONNELL: No, he didn't. It's interesting because a liberal Democrat organization has a debate two days after the primary. And that's a long-standing tradition.


O'DONNELL: And I went. I went to that.

HANNITY: And he was there?

O'DONNELL: And he was there.

HANNITY: The beard -- and you called him the bearded Marxist or is that the media saying that?

O'DONNELL: That's the media saying it. But if the media is going to attack me for statements I made in my 20s then that's their game. He made some very anti-American statements, apologizing for America, and calling himself a bearded Marxist.

And that's a shame. Because at that forum he pledged before a liberal audience that he wasn't going to go mudslinging, he wasn't going to bring up what either candidate said in their 20s and that's exactly what's he's doing. And yet he's ducking the difficult forum.

So he'll only go to the friendly forums, but he blew off the Tea Party forum last night. So he knows that he has a record that he can't defend.

HANNITY: A lot of the controversial quote, your statements in the past. Because how many years were you a pundit? Because you were on "Hannity & Colmes" for how many years?

O'DONNELL: I -- Yes.

HANNITY: I mean you were a fairly regular guest. They seem to revolve a little bit around your religious faith and religious issues.


HANNITY: Contraception, condoms and AIDS, gay pride, masturbation.


HANNITY: All -- which you've heard a lot about.

O'DONNELL: Right. Well --

HANNITY: Do you think this is an attack on religion, your religious beliefs? What do you --

O'DONNELL: What they're trying to do is paint me as an extremist so that people won't pay attention to my message. Because again, my opponent is all wrong on the issues that are important to the people of Delaware.

He has a history of raising taxes, went on his former campaign trails, he said he wouldn't, and then he does any way. He's been called Harry Reid's pet. So he's going to promote the big spending, out-of-control agenda of Harry Reid. And he's going to support bills like cap-and-trade that are going to continue to kill jobs.

So they're trying to paint a picture of me. And what those statements were about is in my 20s I had a new found faith and going on these shows, I looked at it as a ministry opportunity.And that was what I did in my 20s.

But that was a long time ago. My faith has matured. And as a U.S. Senate candidate my promise to the people of Delaware is that it is the Constitution by which I will determine how I vote on all legislation coming across my desk.


O'DONNELL: I have my personal beliefs but our Constitution defends our right for the voters to disagree with me. And that's the right that I'm going to defend.

HANNITY: How many debates -- because your opponent apparently is claiming that he offered to debate you a number of times. How many debates are you willing to do with him or what --

O'DONNELL: Well, I'm willing to do as many as I can fit into my schedule. I'm not afraid of debating him. It's interesting, though. The letter that he sent over, he said of the 15 debates that we've been invited to here are the eight that I want to do.

And they were all that forums that were friendly to him. It wasn't the 9/12 Delaware Patriots, it wasn't the Tea Party, it wasn't the First State, it was all the ones that he knew that he'd get the softball questions. And so I challenge him to attend the 9/12 Patriots debate.

HANNITY: You -- a lot people didn't expect that you would win this primary.


HANNITY: And I think there was a poll -- how many points were you down like a week or two before?

O'DONNELL: I was at least maybe 11 to 15 points down in that last week.

HANNITY: And you won by six.

O'DONNELL: Yes. Yes.

HANNITY: So 17 to 20 point swing in a week and a half?

O'DONNELL: Right. Right.

HANNITY: OK. You're down anywhere between 11 to 15 now.


HANNITY: So you find yourself in a similar predicament.


HANNITY: How do you counter that? Especially in light -- and what it's like living under -- you know, being the main focus of every news show? Is it fun?

O'DONNELL: The truth is --

HANNITY: I'm sure you're enjoying it.

O'DONNELL: It's not fun because, you know, like today there was a news crew filming my father raking leaves. I went to a forum last night --

HANNITY: You got to buy him a blower. I mean --


HANNITY: I don't know.

O'DONNELL: He likes it, it relieves stress. And he's under a lot of stress right now.


O'DONNELL: Well, it's interfering with my ability to campaign because even at that Democrat forum we had an unprecedented turnout. And I am normally the last one to leave these events, because I want to meet everyone that came there to meet me and because of the frenzy that these things have become it's interfering.

So I've been talking to some of the people that have invited us to events and we're asking them to not allow media to attend or at least to keep them in the back so that I can meet the voters without them getting pushed.

Because that's the controversy of today, as media were pushing some of the people who are trying to meet me. But regarding the polls, I'm not concerned about that because we're a week after the victory. We still have at least 40 days ahead. We're just getting our staff together. And we've brought on some of the best and the brightest in the business. And we've got a lot of material to go on the offensive.

HANNITY: Are you concerned about some well-known -- we talked about Karl Rove and his comments that were made the night that you won. Are you concerned about some of those statements by some conservatives or Republicans that maybe not -- are not supporting you? Or do you look at that as a badge of honor?

O'DONNELL: Well, I think maybe it's hard for them to see how this is possible. But, again, I hope that they come around because I'd like to unite the party. But we're going to get out there. We've got a winning message. We are right on the issues.

And just like in my primary debate, as my opponent kept attacking me, eventually the voters went, hey, wait a minute, what about her positions? And it began to backfire.

I am fully confident that as I go up there and meet all the people, that they will get sick of that, too. And they can go to my website at Christine2010.com and learn more about what I want to do.

HANNITY: All right. Christine O'Donnell, thank you for stopping by. We appreciate it. Thanks so much for being here.

O'DONNELL: Thank you.

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