Hannity: Here's the real state of the Union

This is a rush transcript from "The Kelly File," January 13, 2016. This copy may not be in its final form and may be updated.

SEAN HANNITY, HOST: And welcome to "Hannity." Coming up tonight, my direct rebuttal to the president and the State of the Union. That's coming up.

But first, 10 U.S. Navy sailors were released from Iranian custody earlier today. Now, yesterday, Iran commandeered two U.S. vessels that American sailors were traveling on in the Persian Gulf. Now, Iran was claiming that the vessels entered its territorial waters.

And after the sailors were back in U.S. custody, the rogue regime in Tehran released a video of when they were seized showing the sailors kneeling, with their hands behind their heads.

But it gets worse. This afternoon, the Iranian Revolutionary Guard put out a video of a U.S. Navy lieutenant apologizing to Iran while he was in captivity.

Now, some say this could be a violation of the U.S. military code of conduct. Watch this.


UNIDENTIFIED MALE: It was a mistake that was our fault, and we apologize for our mistake. The Iranian behavior was fantastic while we were here.  We thank you very much for your hospitality and your assistance.


HANNITY: Clearly coerced.

And earlier today, Secretary of State John Kerry even praised Iran for returning the captured sailors. Really? Take a look.


JOHN KERRY, SECRETARY OF STATE: I also want to thank the Iranian authorities for their cooperation and quick response. I'm appreciative for the quick and appropriate response of the Iranian authorities. All indications suggest or tell us that our sailors were well taken care of, provided with blankets and food and assisted with their return to the fleet earlier today. And I think we can all imagine how a similar situation might have played out three or four years ago.


HANNITY: Here with reaction, State Department spokesman John Kirby is with us. Mr. Kirby, good to see you, sir.

JOHN KIRBY, STATE DEPARTMENT SPOKESMAN: Good to be with you. Thanks very much, Sean.

HANNITY: Simple question. Do you acknowledge that Iran is a state sponsor of terror?

KIRBY: Absolutely.

HANNITY: OK. And a state sponsor of terror -- will you acknowledge that they have assisted in fighting proxy wars, including battles against Israel?

KIRBY: Absolutely.

HANNITY: All right, so they're not really a regime that can be trusted, fair statement?

KIRBY: We've never said that we're in a trust relationship with Iran. Far from it. In fact, we've said quite the opposite.

HANNITY: Why would John Kerry thank them for releasing sailors they never should have taken?

KIRBY: Well, the circumstances of how the sailors fell into Iranian hands is still being investigated, but the reason we thanked them is because they did work quickly on the diplomatic side to secure their release.

I mean, Iran's a government, like many others, that not everybody is operating with the same amount of information. But through his connection with the foreign minister and a relationship that's been forged over the course of so many months, he was able to secure their release, and the foreign minister was able to work with the military elements in Iran to get them released.

I think that's -- you know, that's what we should really be focused on now...

HANNITY: Well, I...

KIRBY: ... that they're safe and they're sound and none of them were hurt.

HANNITY: I think most Americans are looking at these guys with their hands behind their head, and I understand one woman had to cover her hair in a particular video.

KIRBY: Sure.

HANNITY: When I look at this Iranian Revolutionary Guard video, did you get the impression that that was coerced? I got that impression.

KIRBY: Well, I think the Navy's going to investigate that. It very well might have.

HANNITY: What did you think?

KIRBY: Well, I mean, I'm not in a position to judge. I mean, I wasn't there, and I don't know this young officer, but I can tell you that the Navy's going to take a look at that. They're debriefing the sailors right now, and I'm sure they'll get as much information as they can.

HANNITY: All right...

KIRBY: Our focus here at the State Department truly was on trying to work the connection that we had. And before, you know, this Iran deal, we didn't even have that connection. So we wouldn't have been able to secure the release as quickly as possible. I mean, I can almost assure you that had it not been for Secretary Kerry's quick intervention here, those sailors would most likely be in Iranian hands.

HANNITY: Let me -- let me move on...

KIRBY: Our purpose was on getting them out.

HANNITY: Let me move on to this deal which now is apparently going to go into effect. Help me out and my audience out because this is how I see the deal, very one-sided.

KIRBY: Sure.

HANNITY: I see that the Iranians will get $100 billion to $150 billion of frozen assets. I see the Iranians are still allowed to partner with the Russians and build missile defense, which could hurt our allies, Israel if they feel that they're a clear and present danger to their safety and security.

I see that they get to build conventional weapons. I see that they get at least 24 days' notice. In some instance, I've read that they might even have the opportunity to pick the inspectors.

What did America get out of this Iranian deal, where they continue to spin their centrifuges? What did we get out of this?

KIRBY: Well, what we got was an Iran that signed -- you can read it in first page of the document there, Sean, an Iran that has committed to not pursuing a nuclear weapons program. They will not acquire a nuclear weapons program. And if they try over the life of this deal, we'll be able to know because we now have a very, very strict inspection...

HANNITY: But do you believe them? They're a state sponsor of terror.  They fight proxy wars.

KIRBY: It's not...

HANNITY: You believe them.

KIRBY: No, Sean, it's not about belief and this is not about trust, which is why we insisted on a very, very tough inspection regime to be in place...

HANNITY: Why not any time, anywhere?

KIRBY: ... in Iran because we're not going to build this on trust.

HANNITY: Why not any time, anywhere? Why 24 days, and why in some instances, do they pick the inspectors?

KIRBY: Oh, I didn't -- I'm not aware of any ability for them to pick the inspectors. The 24 days -- we talked about this before. That's a maximum.  It's not going to be the norm. And what's important here is that the IAEA -- and they're not there yet, by the way, Sean. They haven't got to implementation day. We think it's going to come soon. But they still have steps they need to take. In any event, the IAEA will be the ones to determine whether or not...

HANNITY: Do you trust them?

KIRBY: ... things need to be looked at -- absolutely, we do.

HANNITY: I don't.

KIRBY: Sure. Absolutely, we do.

HANNITY: All right, let me ask you -- you actually said about Syrian refugees that it is a possibility that ISIS will infiltrate the refugee population. You said that. James Comey has said that.

KIRBY: I did.

HANNITY: The president's envoy, General John Allen, to defeat ISIS has said that. The assistant FBI director has said that.

KIRBY: Sure.

HANNITY: And yet the president is still insisting that we take in at least 10,000 Syrian refugees, probably more over time.

And my question is, you can't -- how do you possibly ascertain whether or not a refugee has aligned itself (sic) in its heart and mind with ISIS?  Because this is part of their strategy. They've been successful in Europe.  They've been successful, apparently, in Turkey. Why -- how do we possibly ascertain whether or not this is an ISIS sympathizer or not when we take them in?

KIRBY: It's going to be very difficult, Sean. And that's why the -- that's why the vetting program in place for refugees, in particular Syrian refugees, is between 18 and 24 months and it requires multiple checks and multiple agencies in the federal government to screen them.

HANNITY: But you don't deny...

KIRBY: Now, look...

HANNITY: ... that they might be able to be trained to break into that population, do you. It's possible they might be able to infiltrate.

KIRBY: We are certainly -- we're certainly mindful of that risk, which is why we're taking it so seriously and why it takes so long.

HANNITY: And if we get it wrong...

KIRBY: And look...

HANNITY: If we get it wrong, Americans might die, so we might be gambling with their lives.

KIRBY: We don't want to ever do that. We take the safety and security of the American people more seriously than anything else, which is why we have this process in place and why it's so hard for a Syrian refugee over so many months to get into the country. But look, it's -- you know, they only have to be right -- a terrorist only has to be right once. We have to be right 365 days a year...

HANNITY: Yes. How about -- why not set up...

KIRBY: ... 24 hours a day, and we try.

HANNITY: ... a system, like Jordan has set up a safe zone. Why not send food, water, medicine, cots, supplies, baby formula and not take the risk that ISIS will infiltrate, as you acknowledge could happen? Why take that risk?

KIRBY: You know, it's funny you should -- it's funny you should ask that because what we're trying to do through the political transition process, the Vienna process on Syria is to make all of Syria a safe zone, to get a government that isn't run by the dictator Bashar al Assad, one that is representative and responsive to the Syrian people. We want all of Syria to be a safe zone. And that's why we're working so hard...

HANNITY: All right...

KIRBY: ... on the political process.

HANNITY: Last question. If you were to take -- if you were communicating with somebody else in the State Department, maybe even John Kerry, and John Kerry said to you to remove the heading and the classification and send it to me, would you do it?

KIRBY: Well, look, I'm not going to get into hypotheticals, Sean. And I - - you know, I'm not going to speak to...


HANNITY: It's not a hypothetical because Hillary Clinton, the former secretary of state, actually requested that of an employee.

KIRBY: I won't get into her past e-mail practices here. That's not our role. Our role is to make those documents public. As you know, Sean, there's some reviews and investigations going on about those practices, and it wouldn't be prudent for me to talk about that or comment.

HANNITY: All right. I do appreciate -- you're, like, one of the few people in Obama's administration that will even talk to me. And that wasn't so hard, was it?


KIRBY: No, I've always enjoyed...

HANNITY: Go ahead.

KIRBY: I've always enjoyed coming on your show, Sean.

HANNITY: All right, we appreciate it. And maybe you tell the president.  Put in a good a word for us, OK?

KIRBY: Yes, sir.

HANNITY: All right, thank you.

And coming up -- President Obama claimed in the State of the Union that it's strong, but that couldn't be further from the truth. We'll set the record straight with my State of the Union response.

Then later, reaction to the president's big speech and Iran releasing 10 U.S. sailors. We'll check in with Lou Dobbs, Frank Luntz and Charlie Hurt.  They're here to weigh in tonight.

Plus, the DNC chairwoman, Debbie Wasserman Schultz, sinks to a new low and claims the Republican Party has a diversity problem because why? They picked Nikki Haley to give the response last night.

That and Tavis Smiley tonight on "Hannity."



HANNITY: Welcome back to "Hannity." So the president made some very bold claims last night in his final State of the Union address, but it's time for a reality check and my comments on the real state of the union.

On the economy the president said this.


PRESIDENT BARACK OBAMA:  Anyone claiming that America's economy is in decline is peddling fiction.


OBAMA: Now, what is true, and the reason that a lot of Americans feel anxious, is that the economy has been changing in profound ways.


HANNITY: All right, reality check. When you look at the numbers, well, Obama is the one peddling fiction about the economy. For example, take a look. During his time in the White House, median household income, when adjusted for inflation, has been completely flat and hasn't actually recovered fully since he's been in office.

The labor participation rate is near a 40-year low and has been under 63 percent now for 21 consecutive months. And instead of putting people back to work, under this president, the number of Americans dependent on government is surging. A near record $45 million Americans currently receive food stamps. That is an increase of 42 percent since January 2009.

As for poverty, the president talks about helping every American get ahead, but this again has not been the case. Since 2008, the poverty rate has shot up 17 percent. 46 million Americans now live in poverty, and the dream of owning your own home has been made a nightmare under Obama for many Americans. The rate of those who own a home has now dropped several percentage points. Now, we also saw record numbers of foreclosures during his presidency. 2011 was the worst year on record for home sales.

And under the president, our national debt has reached very dangerous levels. In January 2009, when he took office, it stood at $10.6 trillion.  Well, it's almost $19 trillion today, a 77 percent increase. By the time he leaves the White House, he will accumulate more debt than every other president before him combined. And because of this massive accumulation of debt, for the first time ever, America's credit rating was downgraded in 2011.

And that's not all. Now, last night, when he wasn't misleading you, the public, the president also took shots at the GOP front-runner Donald Trump and his proposed Muslim ban. Take a look.


OBAMA: We need to reject any politics, any politics that targets people because of race or religion. When politicians insult Muslims, whether abroad or our fellow citizens, when a mosque is vandalized or a kid is called names, that doesn't make us safer. That's not telling it like it is. It's just wrong.


HANNITY: All right, so as Newt Gingrich pointed out on Twitter last night, quote, "As President Obama defends Muslims and mosques, he's being watched by two nuns whose religious liberty he threatens. No word about Christian beheadings, either."

And when you look at the data, it's clear that Obama has become the divider-in-chief. A recent NBC News/Wall Street Journal poll shows that race relations in this country are at a 20-year low. Only 34 percent of you, the American people, think that race relations are good. 64 percent say they're bad.

And politically speaking, the president has not ever been a good leader of his own party. We can't forget when he came into office, he had a filibuster-proof 60 seats in the U.S. Senate and 257 seats in the U.S. House of Representatives. Since winning that election in 2008, get this, the Democrats have lost 11 governorships, 13 U.S. Senate seats, 69 U.S. House seats and over 900 state legislative seats.

Plus, according to the latest CBS News/New York Times poll, just 27 percent of Americans say the country's on the right track, compared to 65 percent of us who say it's on the wrong track.

And the scary thing is this is just the tip of the iceberg. We can go on for days talking about the president's failures and numerous scandals.  Now, that's the real state of the union.

Now, here with reaction to all of this, editor-in-chief of Lifezette.com, FOX news contributor Laura Ingraham. Also Fox News senior correspondent, our friend, Geraldo Rivera.

Geraldo, that's my State of the Union.

GERALDO RIVERA, FOX NEWS CORRESPONDENT: It was quite stirring. I thought you'd be a great leader. You should contemplate running for office.

HANNITY: You want my show? Are you going to take over the slot?


RIVERA: Yes, that's a good idea. You run for president. I'll take the show.

Let me start where I agree, race relations are worse than they have been at any time since the Civil Rights movement. I think that what that portends, though, and the real reason for that is the nation was not ready for a black president. We are absolutely divided. On one side, you have...


HANNITY: But white America voted for him, Geraldo, in huge numbers!

RIVERA: If I had been Barack Obama, I would have taken the mantle, I would have gone with it, I would have been in the neighborhoods, I would have been everywhere, I would have talked about race, rather than trying in an Ivy League way to avoid dealing with the issue.

HANNITY: It's more than that. When he did speak out, it was the Cambridge police, it was Trayvon Martin, it was -- it was...

RIVERA: In very clumsy fashion. But he should -- if I were him, I would have seized the historic opportunity to try my best to lower racial walls.  He has failed utterly in that regard, but he had plenty of help, and I think that it is distressing to me that the Republicans are appealing, basically, to white Christians. There aren't enough white Christians (INAUDIBLE)

HANNITY: I don't agree with that analysis. But let me go to Laura.  Laura, I look at the state of the economy, the president couldn't cite any real success last night -- double the debt, home ownership, people in poverty...


HANNITY: ... people...

INGRAHAM: Sean, listening to your monologue just now, I was thinking to myself, why didn't you deliver the rebuttal to Obama's State of the Union?  That was awesome! OK, that...

HANNITY: Thank you.

INGRAHAM: You just -- you just absolutely leveled it in that monologue.  And that's what we need, right? We need clarity.

This is not about personality. I think most people have nothing personal against President Obama. I think it's great that we had a first African- American president. I don't think there's anything about race or skin color that impacted the economy.

I think what we have is we have a nation that is not working. We have most of the job growth since, frankly, the year 2000 has gone to both legal and illegal immigrants. So they've done actually better, as far as getting jobs, than most native-born people in this country. The CIS (ph) did a great report on that.

So we know that. We know, Sean, that as you pointed out, average median income has gone down about $1,052 since January of 2008. Now, it's not at it's all-time low, but that's still a chunk of change that people are missing out of their wallets because this recovery really didn't reach most Americans. I agree with Bernie Sanders on that...

HANNITY: You know...

INGRAHAM: ... hasn't reached most Americans...


HANNITY: Laura, these are millions of people out of the labor force, millions of people in poverty...

INGRAHAM: 94 million.

HANNITY: ... more people, millions of Americans on food stamps, more than we had. I didn't even talk about "Obama care." I didn't even talk about him ceding Iraq and Syria.


INGRAHAM: Just one more thing, Geraldo, then I'll shut up and you can talk. But it was very interesting. You look back at Ronald Reagan, for whom I worked. Job growth among African-Americans during the Reagan era, 2 million net jobs created for black America. Black business receipts up by -- from $12 billion to almost $18.5 billion. Black entrepreneurship thrived. Black middle class income -- 40 percent of black Americans became middle class during the Reagan years, moreso than the lower tier.

It was -- it was -- it was much a better era, even though I think a lot of black Americans think, Oh, Ronald Reagan didn't like black people -- free market policies, when properly tethered to good trade policies and better immigration policies...

HANNITY: Well said!

INGRAHAM: ... works for all people.

RIVERA: But how about saying that the United States is the envy of the world right now. We have 5 percent unemployment. Yes, there are too many people out of the labor force...

HANNITY: Geraldo...

RIVERA: ... but you can't argue with 5 percent unemployment.

HANNITY: I can -- no, I can...

RIVERA: You can't argue with 292,000...

HANNITY: Geraldo...

RIVERA: ... jobs added in December.

HANNITY: If you use a calculator -- wait a minute! If you use a calculator that doesn't count the chronically or long-term unemployed, I can argue with that and say that those numbers are phony and false and fraudulent and deceptive and lies!

RIVERA: I would love to hear your rebuttal to the George W. Bush final State of the Union. I think it's way too partisan. You can't just...


HANNITY: What did I say that was wrong?

RIVERA: Politics is bad for optimism.

HANNITY: You're not going to dispute any facts!

RIVERA: Politics is bad for optimism.

HANNITY: Listen...

RIVERA: You spin with the people who are out of the job force.

HANNITY: There's no spin!

RIVERA: I say 5 percent is almost full employment. I want to know who doesn't have a job that really wants a job?

HANNITY: Geraldo, 94.5 million Americans out of the labor force!


RIVERA: ... inequality. Why not be in favor of raising...

INGRAHAM: But Geraldo...

HANNITY: ... the minimum wage?

HANNITY: Let me bring Laura back in.


INGRAHAM: Yes, I would say, you know, then why does 65 percent of the country think we're going in the wrong direction? Why do people give President Obama such terrible marks on the economy? Geraldo, you're right, they gave George W. Bush terrible marks on the economy in 2007, 2008.  You're right about that. You know, I spoke about it, and I know Sean talked about it extensively.

So this really isn't partisan. This is about what policies work and what policies don't work. And that's what the country's grappling with. And there's going to be partisanship, of course...

RIVERA: To me, the biggest flaw...

INGRAHAM: ... but that's what people are grappling with.

RIVERA: The biggest flaw in the president's presentation, which wasn't bad -- it wasn't great, but it wasn't bad -- was his kind of passing over or fluffing over the Syrian situation. We have so many dead people. We have chaos in the region. I think the Arab spring stuff -- I would have, were I him, say, You know, something? I haven't been perfect, and where I've failed the worst maybe is in the Middle East and...

HANNITY: Geraldo...


HANNITY: I could have talked about "Obama care." I could have talked about the Web site. I could have talked about the IRS, the bad treatment of vets and the scandal there. I didn't talk about Libya, the red line in the sand with Syria or ceding to ISIS Ramadi, Fallujah, Mosul and Tikrit...

INGRAHAM: Open borders!

HANNITY: ... you know...

INGRAHAM: Open borders.

HANNITY: ... open borders or Crimea and Ukraine, all under his watch. It has been a disaster! And I don't know why you're defending it.

RIVERA: You defend it because I'm trying to be realistic, Sean. The nation today, economically speaking, is far better than it was at the end of George W. Bush's term.



INGRAHAM: ... wages not going up.

RIVERA: ... now we have 5 percent unemployment.

HANNITY: He's not listening!

INGRAHAM: Wages aren't going up, Geraldo.


RIVERA: You can't argue, Laura, about wages not going up and then be opposed to a raise of the minimum wage...

HANNITY: Let me get back to Laura.


INGRAHAM: That wouldn't solve it. That doesn't solve it. I don't have any -- if we want to raise the minimum wage, if that's what really floats your boat, then let's do that and close down the border so we don't have people flooding the country still lowering wages for the working poor and the middle class...


RIVERA: But a lot of it is true. What about what Nikki Haskell (ph) said?

HANNITY: Nikki Haley.

RIVERA: Haley.


INGRAHAM: When she was attacking Trump?


RIVERA: Maybe she's not as big a deal as we think she is.

HANNITY: I was mad at her, too. I was mad at her!

RIVERA: I thought that she was right about some -- when you keep screaming fire in the theater, people at some point are going to say...

HANNITY: You know what, Geraldo?


HANNITY: You have a nice car. You have a nice house.

INGRAHAM: Right. You do well.

HANNITY: But there are millions of Americans out of work, millions of Americans in poverty and food stamps, and he put them there! He's done nothing to help them!

RIVERA: No, Eddie Haskell put them there.


INGRAHAM: And Gerald- and, Sean, I would just say, you know, Nikki Haley is a lovely person, is a lovely woman, but I mean, we have, like, 50 percent of the Republican voters in her state who are right now supporting Trump or Cruz!

HANNITY: Or Cruz, yes.

INGRAHAM: I mean, what's the point of, like, attacking those people as loud or they're somehow anti-immigrant? They're good people! They just want the country to work better.

HANNITY: You can't ban all people from a certain religion and be...

HANNITY: Laura...


RIVERA: ... American values.

HANNITY: Geraldo is going to vote for Trump. I promise you.

INGRAHAM: Oh, totally. Absolutely.

HANNITY: He can't help himself. He's going to do it.

RIVERA: It's a possibility. We'll see.

INGRAHAM: Yes, he loves Trump.

HANNITY: All right, guys. Good to see you both. Happy new year.

And coming up, reaction to the president's State of the Union address, and of course, Iran releasing those U.S. sailors. I'll check with Lou Dobbs, Frank Luntz and Charlie Hunt. They're next.

Plus, DNC chairwoman Debbie Wasserman Schultz in hot water over comments that she made about Governor Nikki Haley and the GOP's, quote, "diversity problem." Kirsten Powers, Katie Pavlich are here to weigh in.

And the one and only Tavis Smiley is here, and we may actually agree tonight. Straight ahead.


HANNITY: And welcome back to "Hannity." So last night, while Iranian forces held 10 U.S. Navy sailors, President Obama made no reference to that outrage during the State of the Union address. Instead, the president praised the Iranian nuclear deal.

Here with reaction, from the Fox Business Network, our friend, Lou Dobbs, pollster Frank Luntz, and from The Washington Times, Charles Hurt. Good to see you all.

Frank, you were focus-grouping last night. I think it's one of the worst deals I've ever seen in my life. I went over that earlier with John Kirby.  What was the reaction of your focus group?

FRANK LUNTZ, GOP POLLSTER: I have to give you credit first. You've been very tough on your guests from time to time, asking them very challenging questions. Sean, I listened to your interview. And you prosecuted this case.

You demonstrated Iran's culpability better than anyone that I've seen, and you deserve tremendous credit because you got the State Department finally to admit the truth. It's one of the reasons I've encouraged people to go see "13 Hours." They have to see that movie about Benghazi because that tells the truth about what happened.

You delivered that in about a five-minute interview better than I've seen anyone do.

HANNITY: I appreciate that.

LUNTZ: In terms of the...

HANNITY: I wish it wasn't going to happen, though. I wish it had more impact, Frank.

LUNTZ: But you know what? You've got what, 2 million, 3 million people who watch you every night. You've got 4 million people, 5 million who listen to you every day. You've got more impact than you realize.

And that interview should be played as often as possible because it teaches people how to get the truth out of this administration. Our audience laughed when Barack Obama talked about Iran giving up its nuclear weapons.

HANNITY: Wow. They laughed last night?

LUNTZ: They laughed. Even some Democrats laughed because they simply don't believe this government. And as that speech is being given, of course, these Americans being taken -- I'll use the word "hostage." It was against their will. No one holds the administration accountable, and nobody demands the truth.

And those two attributes, accountability and the truth, are exactly what the public is looking for. They don't believe they get it from Iran. They don't believe they'll get it from this agreement. And thank you, you just did a tremendous service for the country.

HANNITY: Thank you, Frank. You know, Lou, you know the economy better than anybody I know. You and Neil Cavuto are two people I really count on when I want to know information about the economy.

I just rolled off in my rebuttal to the State of the Union, you know, labor participation rate, poverty rate, unemployment rate, all of these numbers, all of -- all these millions more Americans suffering under this president -- foreclosures, et cetera. How bad is it, in your view?

LOU DOBBS, FOX BUSINESS: It's bad. And you're exactly right. In your response to the State of the Union, you're talking about reality. But whether it's Iran, as you prosecuted the case, as Frank said, so ably, with John Kirby, the former admiral at the State Department as their spokesman - - I mean, there's no answer beyond it's a mess.

There are people in pain. And we can talk about a five percent unemployment rate. The reality is that when you take into account the discouraged workers that you mentioned, the people who have detached themselves from the workforce, given up, I mean, we're talking about a double digit unemployment rate. We're talking about wages that haven't grown in this country for the middle class in the last 30 years.

We have to get to the reality. And we have a president who is creating a new reality. He calls it a fundamental transformation, but whether it's foreign policy, whether it's domestic policy, whether it's economic policy, whether it's Iran, this is nothing more than fantasy.

HANNITY: Let me ask you this. If I'm a CEO, Lou, or CFO of a company, and I decided to do math the way they do in Washington, you don't count the chronically unemployed or the long-term unemployed, why do I think that I would be handcuffed, fingerprinted, perp-walked, and put in jail for a long time? How do they get away with these phony numbers?

DOBBS: Because it has become, you if will, the code, the language and the value structure of both political parties over the course of time. We have two political parties right now that are not buying in the open. We are watching a presidential campaign, in my judgment, Sean, that is the most open, the most revelatory, the most engaging in my career. I don't know what Frank would say to this, but I'll tell you, the American people are watching what is happening up close. They are watching our combativeness over issues that matter, whether it's illegal immigration, whether it's free trade, whether it's Russia, whether it is minority unemployment and the quality of life for all Americans.

I mean, we are watching candidates who can't seem to -- who before couldn't seem to speak the truth who are now being engaged and I think principally, and I'll say it out loud here, principally because Donald Trump brought it, and he means to have a direct, open dialogue. And the nation, if nor nothing else, owes him for that.

HANNITY: And Charles, you've been a support of Mr. Trump, and you cannot deny the numbers. Now it's just a matter of do people show up for him?

CHARLES HURT, THE WASHINGTON TIMES: Yes. And you know, watching the State of the Union address last night, and sort of the -- I found my head exploding after nearly every line, especially when he turned on Republicans and began lecturing them about how they need to put away the voices of their base and start, you know, legislating from a more noble high ground.  It was absolutely mind blowing. And this is why so many people are flocking, I think, to Donald Trump.

But going back to what you said, Sean, not only would you be frog-marched into prison if you ran a company with accounting practices the way these people do, if you ran a retirement fund for people the way these people run Social Security, you would be shut down, put in jail for running a Ponzi scheme.

HANNITY: You're right.

HURT: You'd be roommates with Bernie Madoff right now.

HANNITY: Lou, I was watching you after the last debate. I ran into in the hall and I said you did a great job both pre and post-debate. We'll be watching tomorrow night. Are you going to be there?

DOBBS: I'm going to be there. We'll be kicking it off at 5:00 for the early debate, 6:00 p.m. eastern time. It's going to be a hoot. And 9:00 for the primetime debate, and we'll be in between. We're sort of kind of fielding and finding our way.

HANNITY: Thanks for taking my audience. We really appreciate you taking my audience for the night. Thanks a lot.


DOBBS: We appreciate the borrowing, and it's very generous of you.

HANNITY: No, we're only kidding. You've earned every bit of it. We'll be watching tomorrow night. Thanks, Lou.

And don't forget, tomorrow night Republican debate, Fox Business Network, our sister station, Sandra Smith and Trish Regan kick things off at 6:00 p.m. for the first debate. Then at 9:00 it's Maria Bartiromo and my buddy Neil Cavuto tomorrow night, Fox Business Network. And of course Lou will have all the coverage post-debate.

DNC Chairman Debbie Wasserman Schultz under fire for saying the Republican Party has a diversity problem.

And later tonight, Tavis Smiley is back.


TAVIS SMILEY, PBS HOST: Every leading economic issue, on the major economic issues, black Americans have lost ground in every one of those leading categories. So for the last ten years it's not been good for black folk.


HANNITY: Tavis Smiley holding nothing back on the Obama presidency. He joins us tonight.


HANNITY: Welcome back to "Hannity." DNC Chairwoman Debbie Wasserman Shultz is coming under criticism for saying the GOP has a diversity problem.  Joining us now, author of "Assault and Flattery, the Truth about the Left and their War on Women," Katie Pavlich, and Fox News contributor Kirsten Powers. To say that is so insulting, Kirsten, it's hardly worth mentioning. You wrote the best column I have ever seen. And it's about --


HANNITY: -- how times have changed as it relates to Bill Cosby and Bill Clinton. You know, this allegation is not going away, is it?

POWERS: No, it's definitely not going away. And the point of my column is that during that time period, and I recounted a lot of the ways that women were talked about by Democrats, no less. The dismissal of Paula Jones as essentially trailer trash and things like that. People just aren't going to tolerate that kind of stuff today. And I think that what Debbie Wasserman Schultz said is falling in a similar category. It's no longer OK, thankfully, to say that a woman only is being called on, a governor of a state, is only being called on to do the response to the State of the Union because she's a woman and she's a minority, right. And hopefully we're getting to a point where this is a line that people are recognizing just shouldn't be crossed.

HANNITY: I think Donald Trump has done us all a favor, Katie, by saying you can accuse me of sexism like happens every presidential election? No, I'm putting it right back on you. And it really seems to have silenced the Clintons on this because there's so much vulnerability.

KATIE PAVLICH, FOX NEWS CONTRIBUTOR: Well, I certainly appreciate Donald Trump bringing up the Clintons and especially Bill Clinton's misgivings towards women. I don't know if we can't say that he hasn't had his own war of words on women. But when it comes to the situation --

HANNITY: But Katie, their words, the allegations against Bill -- I'm not talking about the consensual relations, which were numerous. But these are serious charges of assault.

PAVLICH: I am not saying they're equivalent. In fact, I wrote an entire book about this very issue, including an entire chapter on Bill Clinton and Hillary Clinton and how Hillary Clinton essential enabled Bill Clinton and allowed him to get away with sexual assault and accusations of rape against women.

And the bottom line here is this -- progressives have to come to terms with this idea that Hillary Clinton is running on a platform about being all about empowering women. She's running on a platform of standing up for sexual assault victims. It's very difficult to do that when you were engaged not only in the cover-up of what was going on with these women, but you also helped drag them through the mud. Today you have Debbie Wasserman Schultz in charge of the DNC essentially --

HANNITY: Let me ask Kirsten this. Do you agree with Katie on that? Do you agree that Hillary has the big problem in terms of the enabling part?

PAVLICH: Well, I think that, yes, maybe it needs to be proven more, and maybe Katie does this in this book, because people say this a lot, but then a lot of it is hearsay. I know Carl Bernstein had reported in his book about Hillary being very integral to working with Betsy Wright with the so- called bimbo eruptions and things like that. So I think there have been a lot of accusations about Hillary doing that.

But even if she hasn't done that, frankly, she would still have a problem.  And this is what I wrote about in my column. She's tweeting out the standard feminist line now that all sexual assault victims must be believed. What that means is they must be believed even when they've been discredited.

HANNITY: That's a good point. They have a right to be believed.

PAVLICH: And so she's put herself out there taking up this mantel in order to panders to certain voters, frankly, and she's going to hold other people accountable to that, then she is going to have to be accountable in the same way.

HANNITY: All right, good to see you both. Happy New Year.

And up next tonight right here on "Hannity" --


SMILEY: On every leading economic issue, on the major economic issues, black Americans have lost ground in every one of those leading categories.  So for the last 10 years it's not been easy for black folk.


HANNITY: Tavis Smiley not mincing words. We might agree tonight. That's straight ahead. He's in studio.


HANNITY: Welcome back to "Hannity." So race relations under president Obama has been a disaster. As we told you earlier, according to a recent "Wall Street Journal"/NBC news poll, only 37 percent of Americans believe race relations are fairly good or very good.

Here with reaction, author of "The Covenant with Black American Ten Years Later," PBS host Tavis Smiley. Good to see you, my friend.

SMILEY: You, too, Sean.

HANNITY: We go back, we've been friends for a long time. We started our careers together, literally, on some other network. I have great respect for you. I'm glad you're telling this story, because under Barack Obama black America has not done well, nor has the rest of America. But you specific are talking about black America.

SMILEY: First of all, thanks for having me on, as always. First of all, as to the poll, it's unfair to lay race relations worsening at the feet of one guy. No one guy is responsible for race relations.

HANNITY: He did say he'd bring us together. He's been very divisive.

SMILEY: He has a lot of things he did get done and other things he didn't get done. I just don't want to blame all that on one guy. And in some ways we green-screened Obama thinking he could do anything and everything.

HANNITY: Not me.

SMILEY: Many Americans did. He ain't Jesus. He don't walk on water. He can't do everything.

You brought up the book, though. The book came out originally 10 years ago before Obama ever showed up to run for president and win in 2008. So this is not about him per se, but it is true that 10 years after this book black Americans have lost ground in every major economic category, and that's just unconscionable and unacceptable.

HANNITY: Listen, I laid out my response to the State of the Union. It's not good. America's in decline, 94.5 million Americans out of the labor force, 50 million in poverty, 46 million on food stamps, and we're talking about tens of millions more since he became president.

I don't know what your life was like growing up. If I didn't have jobs in the summer when I was kid, I'd be in trouble. I don't know about you.  That would be for me. I always had a job. And 50 percent of black teenagers can't get a summer job. That tells me, what are their options?  They're going to be hanging out with their dopey friends like I would have been hanging out with my dopey friends.

SMILEY: I couldn't agree more. I had a job every summer myself. I know that feeling. We've been raised the same way.

I think the problem is this, that the suffering of black people for too long, even prior to Obama, the suffering of black people has been rendered invisible. Poverty is now threatening our democracy. It's now a matter of national security as far as I'm concerned.

HANNITY: I agree with you.

SMILEY: And so not enough has been done. I judge this president like I judge any other president. So it's not about Obama bashing. For me I judge you by Kingian standard. King talked about what he called the triple threat tearing our democracy apart. What was the triple threat? Racism, poverty, and militarism. Racism, poverty, and militarism. So I look at the president and give his laundry list of things he thinks we ought to judge his legacy on, and he's got a lot done. Don't get me wrong. A lot of headwind, a lot of obstruction, and he got a lot done. But on racism, poverty, and militarism we lost ground.

HANNITY: I tried to sound the call about Obama, because I always thought he was a rigid, radical ideologue, and I think I've been proven correct. I don't believe leftism, socialist, redistribution works either.

SMILEY: You believe Obama is an ideologue?

HANNITY: Radical ideologue. He's an Alinsky disciple. You don't sit in the church of Reverend Wright, the church of "GD America" and say America's chickens have come home to roost after 9/11 and not have radical views.  You don't hang out with Bill Ayers and not have radical views.

SMILEY: I think calling President Obama radical is far off. He's anything but. He's anything but.

HANNITY: He got everything he wanted passed. We didn't have shovel ready jobs. The stimulus didn't work. Healthcare is a disaster.

SMILEY: Did you just say he got everything he wanted passed?

HANNITY: Yes. Hang on a second. He got his health care plan passed. He got his stimulus passed. He got a son of stimulus passed. He promised shovel-ready jobs. We have more American out of the labor force than ever before. We have more people in poverty than ever before.

SMILEY: I can offer you, as you well know, I won't waste the time because you know it, a list just as long or longer of the things Republicans obstructed him on from doing.

HANNITY: When it happens all he does is a rule through executive fiat, executive amnesty.

SMILEY: He's done that on a number of things because the Republicans have not wanted to work with him. Mitch McConnell kept his word from day one.  My job, Mr. President is to defeat you. He's kept his word.

HANNITY: Listen, I am sad I feel I was so right about Obama. I wish I was wrong, because I think fewer Americans would be suffering. Let me ask this question. Are you open to a Republican president? Is there anybody you see running you could support?

SMILEY: I am open to any president who is not pushing an agenda that is antithetical to the best interests of black people. Sadly, not a lot of them are on the Republican side.

HANNITY: If black America has done so poorly under Obama then we have to ask if someone can stimulate the economy, maybe we'd have fairer trade laws in the country. If somebody is going to control the borders where so many illegal immigrants are competing for jobs in this country, won't that be good for everybody in America?

SMILEY: In theory, yes.

HANNITY: In theory? In reality.

SMILEY: In reality, it would be as well as long as the persons were reading this book.

HANNITY: Read the book? It's going to be good? Read the book.

SMILEY: You're being funny. It will be, though, if we take seriously what is in the book. And my point is on health, on education, on the economy, on environmental justice, on reforming the criminal justice system, of the 10 issues in this book there is only one issue that I can see Republicans until now suggesting that they might work with us on, and that is criminal justice reform.

HANNITY: Control the borders, less competition for jobs, increases opportunity and wages. How about that? Do we agree on that, control the borders?

SMILEY: I'm all for controlling the borders, but an anti-immigrant stance, the one Donald Trump is taking?


HANNITY: He said until we can ascertain because ISIS has a plan to infiltrate the refugee population. Until we ascertain who they are, I agree with them.

SMILEY: Good spin.

HANNITY: No spin, truth. All right, good to see you.

SMILEY: Good to see you, Sean.

HANNITY: All right, coming up, we need your help with tonight's "Question of the Day." It's an important one, straight ahead.


HANNITY: It's time for our "Question of the Day." So was it actually appropriate for John Kerry, our secretary of state, to thank the Iranians for releasing our U.S. sailors that they never should have taken? You know my place on that, my position on that. Go to Facebook.com/SeanHannity, @SeanHannity on Twitter, let us know what you think.

That is all the time we have left this evening. As always, thank you for being with us. We'll see you back here tomorrow night.

Content and Programming Copyright 2016 Fox News Network, LLC. ALL RIGHTS RESERVED. Copyright 2016 CQ-Roll Call, Inc. All materials herein are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of CQ-Roll Call. You may not alter or remove any trademark, copyright or other notice from copies of the content.