This is a rush transcript from "Hannity," August 11, 2010. This copy may not be in its final form and may be updated.

SEAN HANNITY, HOST: All right, so with 83 days to go desperation is becoming something of a theme for the Democratic Party. And in their dire straits Democrats are letting it all hang out.

Now inadvertently, they are giving us a window into their thinking, something I'm sure they'd prefer we did not have. Now while stumping to save his job, Prince Harry Reid delivered some inflammatory remarks to a mostly Hispanic audience.

Take a look at this.


SENATE MAJORITY LEADER HARRY REID, D-N.V.: I don't know how anyone of Hispanic heritage could be a Republican. OK? Do I need to say more?


HANNITY: Now Reid is unapologetic about his statement and here is what he had to say when questioned about it earlier today.


REID: My comment is directed toward how anyone could support what is going on now, especially with my opponent, being in favor of Yucca Mountain, wanting to do away with Medicare, Social Security, Department of Energy and on and on. That's the purpose of my comment.

UNIDENTIFIED REPORTER: Why did you mention Hispanic specifically?

REID: I was -- Hispanic audience, that's where I was.


HANNITY: I guess that's supposed to make it OK? You know, race seems to be something of an obsession for Harry Reid. You may recall he was forced to apologize back in January for making a racially insensitive remark about Barack Obama that was quoted in the book "Game Change."

Now Reid traced "The Anointed One"'s appeal to the fact that he is a, quote, "light-skinned African-American" with, quote, "no Negro dialect unless he wanted to have one."

So what's going on here? Is this just election year desperation or are we getting a look at the soul of the Democratic Party?

Joining me now with reaction is the host of the radio talk show "Morning in America," the one and only, Bill Bennett.

How are you?


HANNITY: Very honored to have you out of exile.

BENNETT: You mean CNN political analyst, you got to say.

HANNITY: Out of exile.

BENNETT: Thank you very much. They treat me well.

HANNITY: Well, we're glad to have you. Thanks for being here.

BENNETT: Glad to be here.

HANNITY: Well, you know, if any of us said that as -- meaning us conservatives, what would -- what would happen?

BENNETT: It would be a firestorm and it would be called racism and it would be called stereotyping and it would be called treating people like a category, which is exactly what he did.

You know, I just would like to introduce him to Marco Rubio. To Sandoval in Nevada. To Susannah Martinez in New Mexico. I mean you have some fabulous candidates. I've talked to them, you've talked to them.

But the idea -- think about it. The demeaning idea that every Hispanic is interested -- what, what is the idea? Comes to this country to get on welfare? Is that it? There are no Hispanics who come interested in free enterprise? There are no Hispanics who believe --


HANNITY: I don't even know how to interpret that.

BENNETT: Yes. Yes.

HANNITY: Except that -- look, I think what's happening -- I think this is a sign of desperation. We got 83 days to go. Democrats are behind in every poll. Right Track, Wrong Track. General ballot.

The president is heading into the 30s. Congress is at 11. He's losing to Sharron Angle out in his state. Every election year the Democrats divide along racial lines, rich versus poor.

BENNETT: That's right.

HANNITY: Old versus young. Tried and true tactic. The question is, will it have any impact this year?

BENNETT: He goes to race and ethnicity and, of course, as you said if we did that we'd be scalded for it. But he goes to race and ethnicity and uses racist and ethnic stereotyping in doing that.

I don't think it will have much appeal. Because a great thing is going on in this country. You're talking to these candidates, I'm talking to these candidates on radio show. This is a different Republican Party. There's a lot of really interesting people out there.

And they are going to get elected and it's going to be great for the party. And it is a very diverse group of people.

HANNITY: What do you think the suggestion is here? Is that -- I mean, what is --

BENNETT: I'll tell you what it is. Because they're dependent people and they need the welfare state. And without us to take care of them.


BENNETT: You know, there's -- the poor things will have no place to go. Imagine, the thought of a Hispanic person, you know, a person of Hispanic origin coming to America, being born in America, maybe two, three generations in America, believing in freedom, free enterprise, accountability, educational standards.

Can you imagine such a thing? Yes, it's true. And when I open up my phone lines those are the people who call me from this country.

HANNITY: Yes, well, it's -- it seems -- and even going back to the Barack Obama comment, light-skinned, you know --

BENNETT: It's ugly. It's ugly.

HANNITY: No Negro -- I -- you know, and Joe Biden, same thing, you know, he goes to -- Hillary Clinton has made these incendiary comment. It never becomes as big a deal in the media as it does -- look at George Allen and macaca.

BENNETT: Sure. Sure.

HANNITY: For example.

BENNETT: No. Exactly right. Content of our character. Not color of our skin. Not our ethnicity.

HANNITY: Simple.

BENNETT: Let's be color blind. Let's say it. Let's be ethnicity.

HANNITY: What do you think is happening in this election? I'm worried about overconfidence.


HANNITY: I'm worried about conservatives taking it for granted. I'm also worried -- look, Republicans can't win -- well, they can win just being anti-Obama, that's not what I want, though.


HANNITY: I want the ideas. I want the promises. I want them on paper. And sooner rather than later -- preferably no later than Labor Day. Good idea?

BENNETT: Yes. September, October. Remember the "Contract with America" was late. People think it was all year. It was late. It was in the fall. And that was timely enough.

I think there are some great ideas out there. You know my guy Paul Ryan. I like to take full credit for Paul Ryan. He was in Empower America.

HANNITY: You take credit for that.

BENNETT: Yes. But he's terrific. And there are other great, terrific people. But, yes, some specifics. But I'll tell you, right now with those independents they don't like the way this country is going. There's a vast amount of dissatisfaction.

HANNITY: Well, he's losing independents I think in the largest numbers. Then we saw that in Missouri last week, and then obviously saw it in Massachusetts, New Jersey and Virginia.

What do you think the overriding issues are, though? Is it economy, economy, economy, stupid? Is it economy, national security? Is it that the country has discovered what I think some of us conservatives tried to warn about? This president is far to the left, far more than he was letting on during the campaign?

BENNETT: All of the above. When I let my audience talk they say it's about government that's gotten too big and is infringing on freedom. When they tick it off, they say, you know, we believe in family, we believe marriage between a man and a woman.

We believe that illegal immigrants should not have an open border to enter this country. Health care was forced on us, we don't like that.

HANNITY: You just mentioned --

BENNETT: A government that is --

HANNITY: -- three things, though. The government is willing to go against the will of the people.

BENNETT: That's right. And you know what it is at the bottom? I think a lot of people believe this government believes they're stupid. That they don't get it. They're not smart enough and they need to hold the people in tutelage and educate them and bring them --

HANNITY: Isn't that the condescension, though, of liberalism that we have talked about --

BENNETT: Yes sir.

HANNITY: -- a lot over the years? They kind of look --

BENNETT: Yes, sir.

HANNITY: -- down their noses at middle America.

BENNETT: Yes, sir. It's called insufferable moral superiority.


BENNETT: And I lived in universities for years and I know it.

HANNITY: Insufferable moral superiority.

BENNETT: You like that?

HANNITY: I like that.

BENNETT: It's all yours.

HANNITY: Yes -- I'm going to take that. You know, speaking -- look, a lot of people know you as a strong advocate for family values.


HANNITY: And -- you know, and also the education of our kids. You're one of the education "czars" in the country. Mouse mind --

BENNETT: Mouse Mail. MouseMail.com.

HANNITY: MouseMail.com. Tell us about that.

BENNETT: Up until now, Sean, there's been no way to prevent texting of a really horrible nature. Sexting some of this stuff is called. Really obnoxious messages being sent from one child to another. No way to block it.

Parents could see it. They could see it after the fact but they couldn't prevent it. Now we can prevent it. And I'm involved in this company and I was delighted to be involved in it. Because our kids, as you know, are being assaulted now in this digital age.

They have cell phones. Seventy-five percent of our kids have cell phones. This program, product is aimed at younger kids. Because kids are getting cell phones, 8, 9, 10 years old.

HANNITY: Yes. So what does it do?

BENNETT: It blocks the messages. You get a list of friends. Those friends you can text with. And anybody else tries to get in, it doesn't get through.

HANNITY: What about if those friends sent you stuff that you don't like?

BENNETT: There -- there's -- it's coded for messages. So certainly vocabulary is used, I mean, track what the kids and how they talk, and how they abbreviate. It's very complicated, very complex but it's a great program.

HANNITY: See, I don't want to get my kids a cell phone until it gets sent simultaneously from them to me.

BENNETT: Yes, well, this --

HANNITY: Then I can see it. I sound like a real hovering parent, but I mean that's what I would like.

BENNETT: But see, this isn't even simultaneously. This blocks them from getting messages they should not get and you can see them. And they don't see.

HANNITY: MouseMail.com.

BENNETT: MouseMail.com. Great. Take a look at it.

HANNITY: Welcome out of exile.

BENNETT: Thank you.

HANNITY: Good to see you.


BENNETT: Coming out of exile.

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