This is a rush transcript from "Hannity," November 4, 2009. This copy may not be in its final form and may be updated.

SEAN HANNITY, HOST: Now Republicans have reason to celebrate today after taking back the governorships in Virginia and New Jersey. Bob McDonnell beat Democrat Creigh Deeds in Virginia by a whopping 18 points. And perhaps even more importantly, independent voters who went for Barack Obama in 2008, well, they voted for McDonnell over Deeds by a 2 to 1 margin.

In New Jersey the story was much the same. Republican Chris Christie ousted incumbent John Corzine and exit polls showed that independent voters favored Christie over Corzine by a 2 to 1 margin in New Jersey, as well.

Now this trend should sound alarm bells for the Democrats, because it is a reflection on President Obama's performance and a resounding rejection of his agenda. But guess what? They don't seem to think so. They think yesterday was just great.

Nancy Pelosi decided to selectively block out these two glaring losses and focus on the two House sears that the Democrats picked up. Let's take a look.


NANCY PELOSI, D-CA, SPEAKER OF THE HOUSE: (INAUDIBLE) we picked up votes last night. One in California and one in New York.


HANNITY: Wow, she sounds convincing, doesn't she? And joining me now with more of what these Republican victories mean for the GOP and the country at large is the author of "To Try Men's Souls," the one and only Newt Gingrich joins me.

Well, I guess that's a pretty good spin. You've got to give her credit for trying, right?

NEWT GINGRICH, FORMER SPEAKER OF THE HOUSE: She's got to try because she's got a huge vote coming up, trying to pass the gigantic 1,995-page socialist health bill. I think on Saturday they're going to keep them in. And she's desperate to get it through before the country reads the bill and rises in total rebellion against the House.

But, you know, Sean, I was looking at the exit data. The most dangerous thing for the Democrats was that 85 percent of the voters in Virginia and 90 percent of the voters in New Jersey said they were worried about the economy. They were dissatisfied with it.

Now, a year after, Obama was elected, promising real change. When 85 percent of Virginia and 90 percent in New Jersey tell you they don't think things are working very really well. That is potentially an enormous mountain for the Democrats to climb in 2010.

HANNITY: All right, but if we look at -- the numbers that really stood out to me, in New Jersey, from a year ago, it was the 20-point swing because Obama won that state by 15 points, Christie won by 5. It was a 25-point swing in Virginia.

Now Obama campaigned in both states for both Democratic candidates -- nearly half a dozen times for John Corzine -- and he himself said that the New Jersey governor is a key for his own agenda. You know, they sent his team in to help Corzine campaign, so what do you think of their spin today?

GINGRICH: I think when you're desperate, you do what desperate people do. You know, if they had won these two races, they had been out dancing this morning, telling us it was an absolute reaffirmation of the Obama team. But I thought the person who had the best analysis was Governor Haley Barbour who's a Republican Governors Association and Nick Ayers has done such a great job.

And Governor Barbour said, you know it's not that Obama's personally unpopular because people like the president of the United States to succeed. He said it's his policies that were unpopular. And people don't like what they're trying to do. And I think Corzine, of course, had been a terrible governor of New Jersey, was in a deep hole.

And remember he outspent Chris Christie by 4 to 1, $24 million was spent by Corzine of his own money. So you're really talking about an amazing victory for the Republicans in New Jersey. And of course, when you get a 59-42 blowout in Virginia, all this talk the Obama people, had Axelrod and others, that Virginia was now a purple state, I think they just washed all the purple out and they went back to being a solid Republican state last night.

HANNITY: Well, I think this was a total rebuke of President Obama. I think a total rebuke of deficit spending. The huge debt they were accumulating, I think, it's a rebuke of Obamacare, although they don't seem to know it yet.

DNC chair Tim Kaine has actually referred to Virginia as a bellwether state. Howard Dean has said the same thing. You've our debating Howard Dean. What does that say about the state of Virginia? Is that more important than New Jersey, or are they equally important?

GINGRICH: I think they're equally important for a demographic reasons. New Jersey is a much more Democratic state. It's in a much harder state for us to win, and, frankly, Chris Christie got four times the size of a margin tonight that Christie Whitman got in 1993.

People often ask me, is this is a precursor to a 1994-style vote? I want everyone to know, these two victories in Virginia and New Jersey were much bigger than the victories we won in 1993, much more decisive. But there's one other thing, particularly for Republicans and conservatives tonight.

Bob McDonnell is a solid conservative. You couldn't be more solid than he is. But he campaigned endlessly in the suburbs. He campaigned among African-Americans, Hispanic Americans, Asian Americans. He consciously went out and reached out to everybody in the state.

He had positive ideas. He wasn't the opposition party. He was the better solution's alternative party. I think that the McDonnell campaign and the Christie campaign are where Republicans ought to look, because if we could put together the kind of coalitions they put together.


GINGRICH: And put together the kind of positive ideas, we could make Nancy Pelosi leave the speakership and have John Boehner as speaker at the end of the election next year.

HANNITY: I want to get back to that in just a second here. Look, I would like to see another contract with America, myself. I would like to see Republicans say that they're going to abandon all earmarks, be fiscally responsible, move towards energy independence, be the party of national security, and free-market solutions for health care.

I would like them to put their signature on a piece of paper. Would that be a good idea to bring that back up?

GINGRICH: I think it would be. You know Michael Steele, the Republican National Committee chairman, is now working on the idea of a first principle's document. And let me say that the health bill that was introduced by the House Republicans and by John Boehner this week is a very, very good document.

It's solid. It does no harm. It doesn't raise taxes. It solves a number of problems and it does so in a way that would actually be good for America. It's a remarkable improvement over the monstrosity that Pelosi has introduced, that The Wall Street Journal called the worst bill introduced in modern times.

HANNITY: I've got to believe that whether or not the White House will admit it, that the races last night will have an impact on this health care debate, and even the Democrats are talking about pushing this off now until January.

Let me ask you about the New York 23rd. You were the first big interview I've ever had in my career when I was a local radio host in Huntsville, Alabama. We got into this discussion a little bit earlier today, and you had endorsed the Republican, the established Republican Scozzafava, in the New Yorker 23rd district.

So many people wrote to me and said, "You've got to talk to your friend Newt Gingrich. He's on the wrong side of this." I was surprised that you had endorsed her. And ...


HANNITY: I want to give you a chance to explain your thoughts on this and maybe you have regrets, maybe not looking deeper into the fact that she really didn't support any conservative values.

GINGRICH: Well, let me start and say that as you know over the weekend I endorsed Hoffman and I worked very hard to get other people to endorse Hoffman as he was the only candidate who had a chance to win who would vote against Pelosi.

I think the entire Scozzafava was a mistake. I regret deeply that she was chosen by the 11 local county chairs. It's clear that in New York state, the Republicans have to get in the habit of coordinating with Mike Long and the conservatives and that they're not going to win any seats if they don't have a coordinated effort with the conservative party.

That's just an objective fact. And I deeply regret that we got into that kind of a mess, but as a long-term party leader who helped in 1980 with Reagan and in 1994 with the Contract with America, I find it very hard to overruled 11 county chairmen who unanimously voted for her.

I think the nomination was a mistake. I wish that we had gotten involved earlier, and if I had, I would have done everything I could to make sure she had not picked, and she clearly proved in the last few days that she was in no way a loyal Republican.

HANNITY: Yes. Do you -- in some ways, do you think that you were being put in a very difficult position? What do you say...


HANNITY: Let me ask the question a different way. What do you say to conservatives that have always liked Newt Gingrich that are right now angry with you about that particular support?

GINGRICH: I would say they have every right to be angry. I don't blame them. I took a position as somebody who had built national majorities and who really wants to find the last marginal vote to make sure that Nancy Pelosi doesn't stay as speaker, and wants to find the last marginal electoral vote to beat Obama. But I don't blame them for being upset. I think she was the wrong nominee and I think it was a terrible position.

HANNITY: All right, Mr. Speaker, good to see you. As always. Thank you for being with us.

GINGRICH: Good to see you.

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