This is a rush transcript from "Hannity," July 21, 2010. This copy may not be in its final form and may be updated.

SEAN HANNITY, HOST: Both the Department of Agriculture and the White House apologized to former USDA employee Shirley Sherrod earlier today. Now Sherrod was pressured to resign from her position after she was accused of delivering racist remarks at an event hosted by the NAACP.

As it turns out those remarks were seen taken out of context and Sherrod was actually delivering a speech on the virtues of rejecting her racist impulses.

Well, the Department of Agriculture and the White House are now realizing they may have acted prematurely.


TOM VILSACK, AGRICULTURE SECRETARY: I've learned a lot of lessons from this experience in the last couple of days. And one of the lessons I've learned is that these types of decisions require time.

I didn't take the time. I should have. And as a result, a good woman has gone through a very difficult period. And I'll have to live with that for a long, long time.

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: Without a doubt Miss Sherrod is owed an apology. I would do so certainly on behalf of this administration.

I think if we learned - if we look back and decided what we want to learn out of this, I think it is - as I said, everybody involved made determinations without knowing all of the facts and all of the events.


HANNITY: All right, Secretary Vilsack also noted that he offered Sherrod another position at the USDA and said that she is taking the time to think about whether she will accept.

So with the propaganda minister and Secretary Vilsack backing away with their tails between their legs, questions remain. Why did the White House and the Department of Agriculture react in such a manner before having reviewed the full tape?

They claimed it had nothing to do with the sensitive racial issues involved, but do you believe them?

Joining me now with reaction, former Democratic pollster, Fox News contributor, Pat Caddell. Columnist, best-selling author, the one and only, Ann Coulter.


ANN COULTER, SYNDICATED COLUMNIST & AUTHOR: The whole key to this story is that Andrew Breitbart was set up. He was sent a tape as we now know was massively out of context. It didn't look like this woman was saying something racist when she first said oh, it was taken out of context.

Yes, we've heard that before from politicians telling racist jokes. This is the first time in world history it was literally taken out of context. It was a lovely speech. Of course the White House reacted that way. Of course you reacted the way you did. Anyone would have.

I think Breitbart ought to reveal his source because he was set-up. This was a fraud. The person who sent the edited tape has to know what the full speech said.

HANNITY: By sending that to Breitbart.

COULTER: And whoever sent only that segment to Andrew Breitbart is the one who should apologize to Shirley Sherrod. I think - I think she should - I think to make things right they should offer her the job of vice president. And most importantly, I want a one-hour ESPN special in which she announces whether or not she'll take it.

HANNITY: All right. Pat, your reaction?

PAT CADDELL, FORMER DEMOCRATIC POLLSTER: Well, my reaction is that - you know, this was - talk about lack of due process. You know she worked for these people, for the Department. She was a long time employee. She deserved due process. She was thrown under the bus instantly by them. And the White House held a celebration this morning with the - the towel snap, I guess, led by Jim Messina, according to Politico, a meeting where they talked about how happy they were about how they handled the communication process.


CADDELL: This never would have happened, Sean, if she had been part of juiced into the system as one of the key people.

HANNITY: All right.

CADDELL: This doesn't happen to Eric Holder when he does what he does or anybody else.

HANNITY: All right. There -

CADDELL: But it happened to her.

HANNITY: There are a lot of things interesting. This is an important question. I want to get to this. Because she's talking about positions she held 24 years ago. In the tape she does admit that she racially discriminated against a white farmer who has now, by the way, for the record, become a close friend of hers.

She describes how she was torn over, you know, how much help she was going to give him. She admits she didn't do everything she could for him because he is white. Eventually she says all right, he was poor and needed help, and that she got him one of his own kind.

But then she says that she realized she was wrong. But the fact that she held those views 24 years ago, should that be factored in at all?

COULTER: No. The speech is an amazing speech. The only reason we know what her views were 24 years ago -

HANNITY: Because she revealed it.

COULTER: Because it was part of the story. The speech was stunning, it was amazing. And I think - I think the important point to make here is, this is the problem with taking things out of context.

And I can give you three examples off the top of my head of this being done to the Tea Parties - Tea Partiers and the anti-Obama protesters right now that's being perpetrated by the main stream media.

You got the lie about John Lewis and people calling him the anti-Obamacare protesters - the Capitol Hill protesters - calling John Lewis, a great civil rights hero -


COULTER: - the n-word 15 times. That was repeated in a million venues. They're still saying them on MSNBC and CNN. Well, Andrew Breitbart put out a $100,000 reward for anyone who has the tape.

There were camcorders. There were news reporters all over. No one has collected that reward because that never happened. That is a life. There's the context, it never happened.

Another one was shown on "Glenn Beck" the other night. A shocking tape that went up to prove racism at the Tea Party. They have a guy standing up at a Tea Party saying, yes, I'm white racist. I'm a proud white racist.

A, it's obviously a liberal plan.

HANNITY: I was getting booed.

COULTER: And B, you don't see that context of that. You give us 10 more seconds of that tape he's surrounded by Tea Partiers saying go home, we are not racist, you are not one of us, go home. But that's not that what you saw on the Center for American Progress, a George Soros left-wing website. You didn't see that on their website.

HANNITY: All right, Pat. I hear you want to jump in. Go ahead.

CADDELL: Yes. Let me just say - let me just say, race - you know, I'm sitting in the Fort Sumter District. The studio I'm at is Charleston, South Carolina. We nominated - we're electing a black congressman, 68 percent to 32 percent over Strom Thurmond's son.

We have all in the South - I came out of the Civil Rights Movement -we have all overcome. She overcome - Shirley Sherrod overcame. People here overcome. It's not the kind of politics that's being played in Washington where race is used.

And let me tell you something. To play race in any way is not playing with matches. It's playing with nitroglycerin. And as Mary Berry said - the former head of the Civil Rights Commission appointed by Bill Clinton - said that's just being played here, better talk about this than joblessness.

HANNITY: Pat, there's been a lot of issues, though, in the news lately. I mean you've got the NAACP ostensibly accusing the Tea Party movement of racism.

COULTER: But they're all false accusations.

HANNITY: Hang on one second.

COULTER: As this one against - was against Shirley Sherrod. It was false.

HANNITY: Ann, I got - and then we have the New Black Panther Party case where the Department of Justice, and we have a whistleblower on the record, Pat -

COULTER: Well, that was real.

HANNITY: That is saying that in fact there is a two-tier justice system at you our Justice Department under Barack Obama and Eric Holder.

CADDELL: The are stonewalling - Look. As Ann said, the big story of the day is this whole JournoList serv thing thing where the press has been using race. They're talking themselves.

Let me just say, what you have, the Black Panther case, they're stonewalling that and using it. You have the same -

HANNITY: Stonewalling? They got rid of it.

CADDELL: Well, yes, they got rid of it and the person who would testify they won't let testify. The media on this has been unbelievable. The same thing they're doing on this issue on immigration.

They are using this issue politically and it is dangerous and wrong particularly for a man who was going to bring - a president who was going to bring us together.

HANNITY: Coulter?

COULTER: Yes, and that explains why the Tea Partiers are suddenly being called racist by the NAACP more than anything else, to distract. As we know from the journal list, when the Democrats are in trouble call a Republican a racist. Leap out and call us racist.

CADDELL: Yes, and the NAACP -

COULTER: And every one of their examples, when you expand the picture it turns out it is just as fake as Shirley Sherrod.

HANNITY: But isn't it a sign of desperation if the allies of the Democratic Party, the NAACP, they ran a James Byrd ad or the Democratic Party runs an ad on radio in 1998, black churches will burn.


HANNITY: And the president uses the class warfare card and said Republicans are the party of the rich. It shows they can't run on their record so - is there a certain desperation -

COULTER: It not only shows they can't run on their record. It shows that it's great news for America with the entire mainstream media desperately looking for racism among - you know, Tea Partiers according to polls taken by the New York Times and USA Today are a quarter of all Americans.

We're talking about, you know, 70 million people and they can't find one genuine act of racism. They have to keep giving us hoaxes?

HANNITY: All right. We got to -

COULTER: It shows you that we don't have racism in America any more. So just knock it off with the charges of racism.

HANNITY: All right, Pat.

CADDELL: If they want to look for racists, they should look in their own ranks.


CADDELL: Frankly.

HANNITY: All right, Ann Coulter, Pat Caddell, love having you both.

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