This is a rush transcript from "Hannity," September 28, 2010. This copy may not be in its final form and may be updated.

SEAN HANNITY, HOST: Now the race for Florida's 8th Congressional District is getting pretty ugly. Democratic Congressman Alan Grayson has reached a new low releasing a political ad that equates his Republican opponent Daniel Webster with the Taliban.

Now before we show the ad, let's first look at what Daniel Webster said back in 2009 at a Christian conference. Now these are his words in their entirety.


CONGRESSIONAL CANDIDATE DANIEL WEBSTER, R-FLA.: So write a journal. Second, find a verse. I have a verse for my wife. I have verses for my wife. Don't pick the ones that say she should submit to me. That's in the Bible. But pick the ones that you're supposed to do. So instead, love your wife even as Christ loved the church and gave himself for it. As opposed to wives submit yourself to your own husband. She can pray that if she wants to, but don't you pray it.


HANNITY: Look at how Grayson's campaign is twisting what Webster said.


UNIDENTIFIED FEMALE: Religious fanatics try to take away our freedom in Afghanistan, in Iran and right here in Central Florida.

WEBSTER: Wives submit yourself to your own husband.

UNIDENTIFIED FEMALE: Daniel Webster wants to impose his radical fundamentalism on us.

WEBSTER: She should submit to me. That's in the Bible.

UNIDENTIFIED FEMALE: Webster tried to deny battered women medical care and the right to divorce their abusers.

WEBSTER: Submit to me.

UNIDENTIFIED FEMALE: He wants to force raped women to bear the child.

WEBSTER: Submit to me.

UNIDENTIFIED FEMALE: Taliban Dan Webster. Hands off our bodies.


HANNITY: They took what Daniel Webster said completely out of context and the best part is, Grayson's campaign is sticking by this ad.

Joining me now with reaction is South Dakota Senator John Thune.

Senator, it's always a pleasure. Welcome back.

SENATOR JOHN THUNE, R-S.D.: Good evening, Sean.

HANNITY: All right, so Webster actually says, don't pick the ones that say she should submit to me. That's in the Bible. He said don't pick that. Grayson runs this in the campaign ads. I got to tell you that's right up there with one of the worst ads I've ever seen, one of the most dishonest. Your reaction?

THUNE: I just saw when you put it out that's the first time I've seen it, Sean, but it looks to me like a sign of desperation. This is a losing campaign.

I think you going to see a lot more of this type of advertising over the next four weeks. These are people who are desperately trying to hang on to power and that sort of selective thing and personal attack, there's no place for it in politics.

HANNITY: It seems like though it's really coming from the president himself. I mean, he's been in full attack mode this entire week going after the Republicans. Blaming former President Bush, Republicans are obstructionists, Rolling Stone magazine.

Spinning his agenda or at least the perceived success in his mind on it, what do you think is happening? There's no Democrat in the country running on the bills that they passed, why do you think that is?

THUNE: They are all trying to change the subject. The record that they have to talk about what they've done in 18 months, in the last 18 months is massively expand the government, pass a $2.5 trillion expansion of health care that the American people didn't want, a trillion dollar stimulus bill that we borrowed from our children and grandchildren to do anything to create jobs and continued to add to the federal debt $2.6 trillion since the president took power that's their record, Sean.

That's why nobody wants to talk about it and that's why they are trying to change the subject and create these distractions and these sorts of ads, which are designed to scare voters across this country into voting for them. But I think the American people this year are going to see through this. They know what these guys are about. They know what their agenda has been and I think you are going to see that reflect in the outcome on Election Day.

HANNITY: You know, it has always been a pet peeve of mine the issue of earmarks, but when you really break it down the earmarks are a very small portion of the budget. You know, somebody in the focus group that we aired earlier tonight said our children ought to be allowed to vote in this election because we are bankrupting our kids.

In that sense, I think he made a compelling case. My question to you is, you know how do we balance a budget? Seems like Washington is addicted. This is like crack cocaine to them, spending, in all seriousness. How do you deal with entitlement reform when you have a significant portion of the country, one in seven Americans in poverty right now, 44 million American homes is what that represents. That means families of four making under $22,000 a year. How do you cut back on the size and scope of government when dependency is so high?

THUNE: Well, the American people of course, most Americans at least, families, are having to see their budgets shrink in this economy. What I don't think they like seeing is the federal government's budget expand.

There are a lot of people in country who are hurting. The policies coming out of this administration, the congressional leadership here in Congress aren't doing anything to create jobs that will put people back to work. All they are doing is growing the federal government and you know, the overall government spending in the last two years has grown at 21 percent at a time when inflation in the overall economy was 3.5 percent. That's what the American people are objecting to.

HANNITY: So what are you proposing?

THUNE: Well, I think in this isn't a glamorous subject. Most people's eyes glaze over when I talk about it, Sean, but we have to reform the budget process here in Washington.

We didn't pass a budget this year. We have a $3.5 trillion enterprise called the federal government and we didn't the most fundamental responsibility that we have as stewards of the taxpayers' dollars and that is even to pass a budget. It is dysfunctional, broken. We have 26 committees or subcommittees in Congress that spend money. We don't have any committees in Congress that save money for the American people. I've actually got a plan to reform the budget process. As I said it is not a subject that a lot of people are all that interested in, but it would do more to fundamental change the way that Washington works than anything else.

HANNITY: Maybe you can get Paris Hilton or Lindsay Lohan do an ad for your budget plan and you can help sell it. All right, in all seriousness, there is talk you might consider running for president.

THUNE: Well, I think that right now, what I'm working on is the midterm elections. I think the best thing I can do is try and change the direction of this country by helping elect more Republicans to the House and in the Senate in the midterms.

Then obviously there's going to be discussion about the presidential election. That's obviously a decision that a lot of people around the country are giving some thought and consideration to this are going to have to make at that time. But I think it is premature right now and we'll have time to talk about that after the midterms.

HANNITY: Would you not rule it out in your particular case?

THUNE: Well, I don't think that I'm interested in public service. I'm someone who believes you are in this not to make a career out of it, but to make a difference. If I think I can make a difference that is something I may consider. But at this point in time, it's the midterm election that's our focus and that's what we need to be working for it.

HANNITY: Senator, good to see you. Appreciate you being here once again.

THUNE: Thanks, Sean, good to see you.

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