This is a partial transcript from Hannity & Colmes, January 7, 2003, that has been edited for clarity.

SEAN HANNITY, CO-HOST: Undercover agents were dispatched to major cities like New York days before New Year's Eve to search for so-called dirty bombs.

Joining us now, former New York City mayor and the author of the The New York Times best-selling book "Leadership."

Mr. Mayor, good to see you. How are you?


HANNITY: Happy New Year.

GIULIANI: Happy New Year to you.

HANNITY: First of all, this was all part of a plan that we have in place. You know about these plans intimately. Does this happen often?

GIULIANI: Sure, it makes a lot of sense. I mean, you've got to try to do the best thing that you can to anticipate what they're going to do. And it made sense to anticipate the possibility that they would try to disrupt New Year's Eve celebrations.

I was worried about this long before September 11, 2001. I remember the 2000 New Year's Eve celebrations. I think some cities actually canceled theirs, because they were worried about disruptions or threats.

So this has gotten more intense after September 11 of 2001, but this has been a concern for some time.

HANNITY: As a free -- living in a free society, we are always going to be vulnerable.

GIULIANI: Yes, we always are. We're always going to be vulnerable; we're always going to be open to possible attack. The job of the governments, federal, state and local, is to try to anticipate as best they can what can happen and cut off as many possibilities as you can. And then you've got to be ready for the unanticipated.

HANNITY: Is it right for people say, "Well, I'm not going to go to Times Square (search) in New York on New Year's Eve?" Is that a good decision?

GIULIANI: You know, this is all very personal.


GIULIANI: After September 11, my approach was to try to encourage people to come to New York, literally to come to Times Square, to come to Ground Zero (search), basically to say to the terrorists, you can't stop us, you can't affect us. You can't get a psychological victory over us, that you can't achieve on the battlefield.

I mean, the terrorism that we're facing is not like mutually assured destruction during the Cold War (search) or the Nazis during the Second World War. They can't invade us. They can't take us over. They can do sporadic acts of horror.

And so this becomes a psychological war as much as anything else.


GIULIANI: And people should kind of live through this risk and be willing to challenge it.

HANNITY: Let me -- it raises questions about Usama bin Laden (search) in particular and al Qaeda in particular. The people that are really motivated to destroy America, to destroy Israel, destroy freedom-loving people, et cetera.

And then we have a candidate -- even though Usama admitted and took responsibility for that crime on September 11, that, "Well, we've got to try him. We've got to be fair."

What did you think of that when you heard it? The thought of you immediately went through my mind.

GIULIANI: Well, we have to try him.

HANNITY: And then execute him.

GIULIANI: Yes. And I think I offered to the president of the United States once that I'd be willing to do it.

I mean, the reality is that this is not a domestic criminal situation. It doesn't have to be treated as that. This was an attack. It was an attack by a hostile force. It was an act of war, and those are the rules that should apply here.

HANNITY: And it...

GIULIANI: Not as if this is some kind of a trial in a New York court or a federal court.

HANNITY: Let me ask you this question. The president today came out with his new immigration proposal, as you know. And I don't think there's been anybody better in fighting this war on terror than George Bush. I think he's been outstanding, and I've been a staunch supporter.

I think the No. 1 area of vulnerability and susceptibility we have terror-wise is the fact that our borders are wide open. Why would we -- why would the president propose something like this?

GIULIANI: I actually think this proposal is very consistent with George Bush, governor of Texas. This is essentially the same position he took as governor of Texas.

HANNITY: Are we safer with this proposal? Are we safer?

GIULIANI: We are. This is going to happen anyway. If you've been the governor of Texas -- and I think this is probably the position any governor of Texas would have taken for the last 20 or 30 years, Republican or Democrat -- you are used to a large number of workers coming in, working, being an essential part of the economy of Texas. And the more you try to make it underground, the worse you make it.

So if you can regularize it, if you can find out who they are, if you can put it into some kind of process where the -- people who come here to work are not a danger to us. It's the people who come here for other purposes.

PAT HALPIN, GUEST CO-HOST: I agree with you. You go to the South Bronx. You hear a lot of Mexican music. There are a lot of Mexicans who may be here illegally, working in places like the South Bronx, that contribute to our society.

GIULIANI: The more you know about it, the more you can regularize it, the more you can get them out in the open. Then you're going to be able to focus on the people who are a real problem.

HALPIN: So you'd be in favor of the guest worker?

GIULIANI: I think -- I was in favor of it years ago when I was in the Reagan administration, and I've dealt with this issue for 20, 25 years. And this has been -- I agree with it, and this has been the consistent position of just about every governor of Texas, going way back to the '70s.

HALPIN: I've heard your speak eloquently about the contributions of immigrants in New York City, how they've revitalized neighborhoods. Remind Sean that they don't come here to freeload and go on welfare.

GIULIANI: Basically...

HANNITY: No need to remind. I'm a big immigrant supporter. Just legal, that's all I ask.

GIULIANI: The reality is it's appropriate for us to know more, find out more, ask more of people who come into this country. But if they're coming here to work, these are not the people that are going to pose any kind of danger to us.

And the more we put our immigration resources on them, then we don't have the resources to focus on the people who might be terrorists.

HALPIN: I want to come back to this whole issue of a possible dirty bomb or biological attack that might have happened in a place like Times Square.

You know, the report was that scientists, experts were out with small pagers and others that could have protected us. And also there were staging areas off-site, in the event that -- in the unfortunate event that there could have been an attack.

Give us an idea of the kinds of preparation that the city of New York goes through to prepare for something like this.

GIULIANI: I can tell you the preparation for 2000, pre-September 11. We had, I'd say, anywhere from 6,000 to 7,000 police officers.

The preparations began two months before. They included checking everything underground, checking the subways, scrutiny of people, getting lists from the FBI and working from them to try to figure out who's suspicious, who you have to worry about, who might come.

And now you've got to take all that and multiply it by five after September 11. Because we had the first New Year's Eve celebration just a few months after September 11, and that was even more intense than 2000.

And by now, with the increased intelligence that we have, you have to assume that this is going to go on.

I was just in Israel right before Christmas. I spent some time there. And the level of security in Israel is still way beyond anything we have. If you go into a shopping mall in Israel, it's like going on an airplane in the United States.

You go through a magnetometer. They have people there with wands. Every fourth or fifth person is checked even more. They have lists of people that they suspect and are worried about. And they have undercover agents in the shopping mall. And I think the same thing is true of certain selective restaurants or place where teenagers hang out.

HALPIN: But there's no way Americans are going to put up with that.

GIULIANI: We don't have to. We don't...

HALPIN: If we had to, we would, but...

GIULIANI: We have not had what happened in Israel.

I think on September 11 and the couple days after that, we assumed that maybe that could happen, that we could have those suicide bombings. And thank God, up to this point, we've been spared that.

HALPIN: Mr. Mayor, I want to ask you about the Patriot Act. You know, there's a couple cases working their way through the federal courts, before the Supreme Court, where Americans who have been declared enemy combatants and also citizens of other countries like Great Britain have been declared enemy combatants. And they're arguing that they should have the right to counsel and a chance to get to the courts to see the evidence that's been held against them to keep them incarcerated.

What do you think about that?

GIULIANI: Well, I think obviously the courts are going to have to decide this.

I think there's enough room to decide that this was an act of war, that we are, although it's a different kind of war, a war on terrorism, we are at war and the same rules don't apply. And that the government has the discretion to hold people.

Abraham Lincoln during the Civil War suspended habeas corpus, and that was upheld by the courts. So a president and an executive have tremendous discretion when the country is in that kind of jeopardy.

HALPIN: But what about here, where we have literally an American citizen denied counsel. I mean you could be -- well, you wouldn't be. But somebody could be declared an enemy combatant...

GIULIANI: If you assume...

HALPIN: ... and doesn't have a chance to confront the evidence.

GIULIANI: If you assume it's similar to a war, then that would be permissible. In a time of war, you can do that.

The question for the court will be is this similar enough to a war to allow the Justice Department to take that action?

HALPIN: How do you think their...

GIULIANI: I think they'll rule yes, but I have to admit it's a very close question.

HALPIN: It's interesting. The administration just started doing digital scans of fingerprints and also photo imaging of foreign visitors coming into the United States.

GIULIANI: A very good idea.

HALPIN: But there's a big loophole. I want to get your reaction to it. If you're from Europe, if you're a citizen of England, of France, of Germany, you're exempt.

GIULIANI: Yes. I mean, there are exemptions because of reciprocity agreements we have. But even there, if people fall into a certain category and there are questions about them, they're going to have to go through the fingerprint analysis. So even some of those people are going to have to, are going to have to...

HANNITY: Especially the French. That's what I'm thinking.

GIULIANI: But these are the kinds of restrictions that we need now. And I think that these are things where you have to say we need to know more about the people come into this country. We're entitled to know more about them.

And maybe it's a little inconvenient. Maybe there is some loss of privacy. But given the possibilities that can occur with terrorism...

HALPIN: I agree with you, but I think it should apply to everyone coming in.


HALPIN: You could have a terrorist...

GIULIANI: I think the treaties and the reciprocity agreements with certain countries don't allow us to do it to everyone. We have to have a specific reason.

HANNITY: Here, I've got ask you the big political question. And I was a big fan of Rudy Giuliani long before the world really knew about you.

GIULIANI: Before anybody else was.

HANNITY: In your tougher hour as mayor when you were under fire.

GIULIANI: I held a press conference a day.

HANNITY: That's true.

The L.A. Times December 21 says word around New York is former Mayor Rudy Giuliani has decided to challenge Hillary Rodham Clinton when she seeks re-election in 2006.

GIULIANI: That is not correct. I haven't made any decision at all about 2005, much less 2006.

HANNITY: Are you thinking about it?

GIULIANI: No, actually I'm not. I'm not thinking. I'm not going to think about it until after the presidential elections.

My -- I think my focus right now is going to be on doing everything I can to re-elect President Bush and Vice President Cheney. Help around the country to...

HANNITY: You want to run again. You want -- you love politics. It's in your blood.

GIULIANI: I've got plenty of time to make a decision on, you know, do I want to run again, what do I want to run for? Senator, governor who knows? I don't know.

HANNITY: It will all happen. Maybe president?

GIULIANI: You know, that's something you don't really think about when there isn't the possibility of doing it coming up. And right now, my focus is on getting President Bush elected.

HANNITY: I've known you for a lot of years, and I know you've had very keen, astute political instincts.

As you Handicap this presidential year, this race, the economy is turning around. The president has moral clarity and great instincts in the war on terror. Where is areas of vulnerability?

GIULIANI: As to the extent that I'm a political expert, I think the president is in a very, very strong position. To the extent that I'm a friend of the president, a big supporter, and a loyal Republican, I worry about the election.

Because I did it myself. I ran for re-election at a time in which I thought I was in pretty good shape to be re-elected, but I ran as if it was a one-point election. Because you never know what can happen. And I think that's the way the president has to approach it.

And honestly, when you step away from it, you have to look at it that way. Politics changes very, very quickly nowadays. I can't even -- I was listening to your show before. I can't handicap the Democratic race. I mean, right now, Howard Dean looks like he's in a very strong position. But there are a lot of things that can change.

HALPIN: That can happen.


HALPIN: Three hundred days to the election, you're right, a lot could change.

Rudy Giuliani, thanks for being with us.

GIULIANI: Thank you.

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