This is a rush transcript from "Hannity," July 19, 2010. This copy may not be in its final form and may be updated.

SEAN HANNITY, HOST: And this is a Fox News alert. An Obama administration official resigned just a short time ago after she was caught on tape appearing to tell an audience that she had used her position to racially discriminate against white farmers.

Now the woman, Shirley Sherrod, was the Georgia state director at the Department of Agricultural. Now the president's Agricultural Secretary Tom Vilsack just released a statement saying the USDA has a zero tolerance policy against discrimination.

Here's part of the shocking video that ignited this controversy.


SHIRLEY SHERROD, FORMER USDA GA STATE DIRECTOR: The first time I was faced with having to help a white farmer save his farm, he took a long time talking but he was trying to show me he was superior to me.

I know what he was doing. But he had come to me for help. What he didn't know while he was taking all that time trying to show me he was superior to me was I was trying to decide just how much help I was going to give him.


HANNITY: Now details on the official sudden resignation are still coming in. We'll have more on this story including more video coming up in this hour. That's all straight ahead.

But also, meanwhile the debate in Washington raged today over whether or not unemployment insurance should be extended yet again for American struggling to find work. Now earlier President Obama addressed the issue from the Rose Garden.


PRESIDENT BARACK OBAMA: It's time to stop holding workers laid off in this recession hostage to Washington politics. It's time to do what is right. Not for the next election, but for the middle class.

We've got to stop blocking emergency relief for Americans who are out of work. We've got to extend unemployment insurance.


HANNITY: All right, now the president did not bother to mention that the only reason the extension may be necessary is because his stimulus was a complete and utter failure.

Now since the recovery plan was passed more than three million Americans have lost their jobs.

Now this morning the GOP leader in the House came out swinging saying, quote, "The president knows Republicans support extending unemployment insurance and doing it in a fiscally responsible way by cutting spending elsewhere in the $3 trillion federal budget."

But the White House isn't interested in finding a way to actually pay for the extension. It's a whole lot easier to simply drive America deeper into debt.

And joining me now with analysis is the former speaker of the House, Fox News contributor, co-host of the documentary along with his wife Calista, "Nine Days That Changed the World," which you can find at Newt.org, is former speaker of the House, Newt Gingrich.

Mr. Speaker, welcome back.


HANNITY: All right. A lot - a lot obviously going on here. The - this woman on tape saying these racially charged things that she didn't want to help farmers, in particular white farmer. That she said she wanted him to go out and deal with one of his own and she put him in touch with a white lawyer.

Just the latest in a series of racial incidents. What do you think of this?

GINGRICH: Well, let me say, first of all, Secretary Vilsack did exactly the right thing. I mean I often disagree with this administration. But firing her after that kind of viciously racist attitude was exactly the right thing to do. And the fact that we have to be genuinely colorblind.

You know you can't be a black racist any more than you can be a white racist. And I just think it'd be good for those of us who are often critical of the administration to recognize that here's a case where Secretary Vilsack did exactly the right thing, moved very promptly, and fired somebody who frankly shouldn't be serving the American people because they clearly had a set of attitudes inappropriate for a federal official.

HANNITY: All right, my only thing is they weren't the ones that caught it. It was on Breitbart.com and it happened some time ago. So it's interesting that it took the new media to expose this.

Here's my next question, though. There's another twist to the story, and that is that, this was - these comments were made at an NAACP banquet. Now in light of the NAACP accusing the Tea Party of being a racist movement last week, do you think the NAACP should be held to account for the very standard they were demanding from the Tea Party?

GINGRICH: Of course. Clearly the national - and I suspect, Sean, if you contact them - the national leadership of the NAACP - I'm sure will feel honor-bound to apologize for having had that kind of a racist comment said at a meeting I suspect they didn't know about it, just as I suspect Secretary Vilsack didn't.

But now that it's there and it's clearly obvious, because it's on tape, I would hope that national NAACP would apologize for having that kind of racist comment at one of their meetings.

HANNITY: Well, I've tried to reach out to Ben Jealous. He has yet to return my phone call and he's invited on this program if he would like to discuss it. I'd like to have him on.

But it's interesting. A lot of people contacted me last week. Apparently you had sent out a tweet. By the way I'm glad that you are up on tweeting, which by the way, I have a Twitter account as well at @SeanHannity.

But you have your own Twitter account. And you offered to basically broker a meeting -


HANNITY: Well, hang on.

GINGRICH: No, I - no, I didn't say that. That was a misinterpretation by the Huffington Post.


GINGRICH: What I said was -

HANNITY: I didn't read the tweet. Go ahead.

GINGRICH: Right. But what I said was local Tea Party groups - because Tea Parties don't have a hierarchy. They don't have a national organization. Local Tea Party groups ought to reach out to local NAACP chapters and offer to have joint town hall meetings.

For example, about job creation. I mean there's a clear difference between job creators and job killers. It would be great to get Americans of all backgrounds in the same room talking about whether they ought to follow policies that you and I believe in which create jobs.

And I suspect most African-Americans at the local level in the local NAACP chapter would be surprised at how much they have in common with Tea Party members, a number of whom, by the way, are African-American, Latino and Asians. They're not - the Tea Parties are not white organizations. They're open to all Americans.

So my point was, if somebody wants to start a conversation, instead of yelling at them, what if we invite them in the room and let's have a conversation about America's future together.

And I'm told by Adam Waldeck at American Solutions who coordinates this that a number of local Tea Party groups are reaching out to local NAACP chapters on their own to have this kind of a dialogue.

HANNITY: I don't know what the right answer is. But I would find it very hard to sit down with the NAACP back in 2000. They ran this James Byrd ad when George Bush supported the death penalty for the person - the people responsible for that James Byrd dragging death.

You can't have a worse penalty. And that ad was particularly hard hitting. It was as if my father was killed all over again, if you remember that ad. And then in this particular case, this happened with this woman at this NAACP banquet.

I'm not saying not to have a dialogue. I am saying you can also talk about their associations. They've been - Ben Jealous was at a meeting with Louis Farrakhan. Should we not have certain standards prior to any meeting?

GINGRICH: Yes. We can also say let's agree that we should condemn racism wherever it occurs. Now we hope that the NAACP will apply that standard to somebody who is at one of its banquets.

But I think it's good for the country to see that we are not afraid to reach out and talk to people and to try to focus the conversation in a positive way. African-American unemployment is higher under the Obama administration than under any administration in a very longtime.

African-Americans want their schools to work so their children go to college and not to prison. We have lots of things you and I could talk about in local meetings. And I said local meetings where local people get together.

And I think you'd find that at the local level, not the professional, you know, left-wing activist level. At the local level there are an awful lot of very decent people in the NAACP who would suddenly find out they have an awful lot in common with their local Tea Party neighbors.

HANNITY: But I found the chart - the things that were said about the Tea Party so inaccurate, so over-the-top, so lacking in evidence, it is almost hard to begin a dialogue when everything is predicated on false charges and a false statement.

I didn't even bring up the issue of the New Black Panther Party and the Department of Justice and Eric Holder. What did you -

GINGRICH: Well, look -

HANNITY: Go ahead.

GINGRICH: First of all, Eric Holder should resign for national security reasons. He should certainly resign over the racism inherent in the Black Panther case. I mean I'm happy to say that Eric Holder shouldn't be attorney general and is not doing the job correctly.

But I'd certainly go back to your point for a second, Sean. Maybe this makes me different, OK? The New York Times often runs editorials that are totally dishonest. Their attack on the Arizona state law, for example - on immigration - was a totally dishonest attack.

I still talk to New York Times reporters all the time. I think it's important to reach out. It's important to try to be positive.

HANNITY: By the way, just for the record I do not return the calls of anybody from The New York Times. They don't call anymore because I won't return their calls.

GINGRICH: Now our audience - now our audience can see the difference in our two styles.

HANNITY: Yes, well - look, what do I know? I made - perhaps you're right.

Look, I'm not saying we ought not have a dialogue. I think a dialogue is important. But I think a dialogue has got to be - the foundation of which has got to start in a fair way.


HANNITY: And it's almost like if you begin a dialogue with OK, the Tea Party is racist, the Tea Party, you know - the Tea Party members uttered these racial epithets when there's no evidence, seems to me that you're starting out at a decided disadvantage.


HANNITY: If you don't demand honesty up front and an apology before the dialogue begins.

GINGRICH: Well, I like to - I think we have a nice test that came on your show tonight. Do they have the courage - the NAACP - to apologize for the racism in this person's comments at an NAACP banquet? Pretty good test.

HANNITY: All right. We'll come back. We have a lot more with former Speaker of the House Newt Gingrich, coming up after the break.


HANNITY: And we continue now with former Speaker of the House, Fox News contributor, Newt Gingrich is with us.

All right, Mr. Speaker, we had the NAACP. We had what they said about the Tea Party. I think obviously an attempt - they support the Democratic Party - 106 days out of an election to energize the base.

The president. He went out and he'd started referring to the GOP as being the party of the rich because he says Republicans don't want to extend unemployment benefits. The reality is Republicans do support extending unemployment benefits. They want it paid for. They've already supported an extension for 99 weeks.

And by the way, the president doesn't need any Republican votes to pass the bill anyway. So is this - is this what we can expect for the next 106 days?

GINGRICH: Sure. Look, if you watch what Harry Reid is trying to do to Sharron Angle in Nevada. What you're going to see everywhere in the country is desperately dishonest, and I think consistently demagogue attacks, because they know that if there's any kind of a fair fight they're going to get badly defeated.

The president sadly is the opposite of Ronald Reagan. Ronald Reagan led by telling the American people the truth, by rallying them to the facts and by encouraging their better instincts.

The president seems to have a really unusual desire to divide the country and a really deep need to blame somebody else for his own failures. And as a result, you get this kind of Rose Garden comment.


GINGRICH: The fact is, if this president cared about getting money to the unemployed, all he has to agree to is a one percent reduction in his budget across the board and that would pay for -


GINGRICH: - everything he wants to send. But he does - what he wants to do is borrow from your children and your grandchildren so that we will pay interest on the debt forever, so that he can send out money that is unpaid for, that increases the federal deficit even beyond the already gigantic amounts.

HANNITY: All right, so -

GINGRICH: And I think that's just fundamentally, morally wrong.

HANNITY: So what you're saying for the next 106 days we can expect a ton of class warfare rhetoric, demagoguery as you just pointed out, and demonization, et cetera, character assassination, maybe some supportive groups playing the race card because they can't run on their record? That's what's the next 106 days are going to be like? This is going to be all we see?

GINGRICH: Look - I think the Democratic Party counterattack - to use the language you just kind of packaged nicely. If you assume dishonesty, distortion and demagoguery, you have a reasonably good idea what Harry Reid's campaign is going to be like.

Because of the election choice in Nevada at 14.5 percent unemployment is between a job killing Harry Reid record and a job creating Sharron Angle proposal. He's going to get beat so badly that you won't even be able to see him.

Therefore he is - he's raising - he just went to Canada to raise money from trial lawyers in an international meeting.

HANNITY: All right, so -

GINGRICH: This guy is going to pour on negative ads. Every Democrat in the country will imitate Harry Reid.

HANNITY: Yes. I agree and I have a friend of mine running for Congress and he's already experiencing it. Guy votes with Nancy Pelosi 99 percent of the time, the only thing he wants to do is attack you and me and Mark Levin and anybody else, which is interesting.

The question is, will this tactic be successful?


HANNITY: And - and how do you recommend - you're great at politics. How do you recommend Republicans counter that?

GINGRICH: First of all, Sean.


GINGRICH: If you voted 99 percent with Nancy Pelosi -


GINGRICH: Wouldn't you want to be attacking all day every day?


GINGRICH: I mean do you want to defend that record?


GINGRICH: I - I was out last week in - for Brad Zaun in Des Moines. His opponent voted 98 percent with Nancy Pelosi and all he has to say is, you know, San Francisco doesn't deserve an Iowa representative. Iowa needs an Iowa representative. And that's the whole campaign.

HANNITY: I think that's the whole campaign. I agree.

GINGRICH: I believe the key to the fall election is very simple. There are job creators and there are job killers. We absolute proof that from the time Pelosi and Reid took over in January of 2007 the Democratic Congress has been killing jobs. It continues to kill jobs. This economy is not going to recover. We just saw a - we just saw a huge oil rig leave the Gulf to go to Egypt with high paying jobs. We had a company announce over the weekend - think about this quote - "because of political instability in the United States, we are moving our rig to the Congo -


GINGRICH: ...to drill for oil." So the president is exporting jobs. He's doing a great job of creating jobs for China. The president has done a great job creating jobs for Egypt and the Congo. He just isn't doing a great job creating jobs for Americans.

HANNITY: No, we're losing those jobs. All right, but then -

GINGRICH: So that's the choice. You want to be job creator or a job killer. If you want to be a job killer, vote Democrat. If you want a job creator, vote Republican. I think that's the fall campaign.

HANNITY: All right. I agree with you. Don't think that I didn't notice you dropped in Des Moines, Iowa, and your latest trip to the great state of Iowa. And in between I know you snuck in a trip to New Hampshire. And I think I saw your schedule, you're going back to South Carolina.

GINGRICH: I was in South Carolina Friday a week ago -

HANNITY: Now hang on a second. Now wait a minute, we've been friends a long time. You have given more direct answers to people in the liberal media than to me. I want to know what's Newt Gingrich's plan.

GINGRICH: Our plan is for Calista and me to sit down with our family in February or March.

HANNITY: That's not the answer I want.

GINGRICH: And make a decision. But I promise you, Sean -

HANNITY: Well, how come -


GINGRICH: Because they printed the same thing I've said to you for nine months. What can I tell you? But I think it had - because it had AP Des Moines.


GINGRICH: It suddenly got bigger coverage. I mean if it had said AP Long Island it wouldn't had been the same effect.

HANNITY: It would said, Newt and Hannity, it probably wouldn't had been the same. But then again maybe they're mad at me at The New York Times because I don't respond to their phone calls. You do.

GINGRICH: Yes, I guessed that could be the whole problem.

HANNITY: That's could be the whole thing right there. All right.

GINGRICH: But I promise you in February or March, I'll be on the show. We'll talk about it.

HANNITY: And you'll announce here, either way?

GINGRICH: Well I'll certainly talk about it.


HANNITY: I love being able to pin you down. All right. Former Speaker of the House Newt Gingrich.

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