Updated

This is a RUSH transcript from "The O'Reilly Factor," January 5, 2011. This copy may not be in its final form and may be updated.

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BILL O'REILLY, FOX NEWS HOST: Thanks for staying with us. I'm Bill O'Reilly.

In the "Miller Time" segment tonight, fresh off a long vacation, the "Sage of Southern California" is back. Joins us now from Los Angeles.

So, Miller, you listening to my debate with [CBS News Travel Editor Peter] Greenberg about Mexico. What say you?

DENNIS MILLER, FOX NEWS CONTRIBUTOR: I didn't go to Mexico this year, Billy. I opted for something safer. I took a tour of a machete factory in Port-au-Prince with the Tonton Macoutes.

O'REILLY: All right. Now, they are, of course, the dreaded secret police or were. They threw them out in Haiti.

Now, Arnold Schwarzenegger, pretty funny yesterday. And we're running a poll here about, you know, whether he's a pinhead or a patriot for his governor -- for his public service. But when he left, did you have feelings of sadness? Melancholy? I mean, how did you feel?

MILLER: Well, listen, Billy, I know you don't like bet hedgers. But I've got to do this here: I like Arnold. I'm not trying to act like I'm a great friend of his, because I think a lot of people jump on people as friends. We know each other. He's always treated me and my family so classy and so kind. I worked for him when he ran for governor.

But I have to say in 2005, when he ran that special election, and you find out the people of California look at you and they say, "No, we don't want redistricting. We want a wired game." When they say, "We don't mind if unions brace their union members for political, you know, favors." When you look at them and say, "No, we don't care if a 15-year-old gets an abortion. Why should their parents know?" I think at that point you realize that you are up on the captain's deck, but it is a ship of fools.

Remember that guy who was the coach of the Washington Generals? Red Clots? When they told him, "You're going to lose to the Globies every night. You're a loser." Well, this state is a loser now. I think they took Arnold's heart out in 2005. And I think it's led to a rather desultory last two years.

O'REILLY: Now, that's a very interesting analysis. And I'm not saying that facetiously, because I think that's what happened. Schwarzenegger got elected. He had good intentions. He wanted to do the right thing. And then he found out the folks didn't back him. That even though they voted for him, they didn't back him.

However, what I would have done, Miller -- and maybe you would have done the same thing -- is I would have made that public. I would have said, "Listen, this is what has to happen in this state. This is what I want to happen. But the folks are the folks, and they're going to vote for whoever they want. And I can't force it to happen."

I would have gone a lot more public with it than just do the slow drip, drip, drip. And leave office with a 30 percent approval rating, which is what he did.

MILLER: Here is what he would have had to have done, Bill. And this takes a certain breed of cat. I don't know if I'd be willing to do it. I think -- I would like to think I would, because my favorite history fictional character ever is Howard Roark.

You've got to shoot to leave office in California with a zero percent approval rating. This state needs tough love. It's "Loserville." You've got to step up there and put the caster oil down their throat. And I'm not sure there's a lot of people willing to do that.

O'REILLY: Well, that's true. But I think that Schwarzenegger not having to run again, facing Armageddon as the state slides into bankruptcy and chaos should have done that.

All right. Now, let's get into the new Congress. These people going crazy in Washington. John Boehner crying again today. Nancy Pelosi giving him a big gavel and a hug and blessing him and whatever else she did.

And yesterday -- did you catch yesterday when Nancy Pelosi said that she was all for fiscal responsibility and pay as you go? Did you get that yesterday?

MILLER: Listen, I know that [Dennis] Kucinich, you know, he's just beamed down from the "Planet Kucinichtron." He's not going to trash her. She's a bad dame. And you know what? She is a hack. And I am glad she's out of there.

What else is Pelosi going to do now except stay in the House? Because you know something? If Pelosi wasn't the speaker of the House, third in line to be the president, or second in line to be the President of the United States, whatever it is. There's the president, vice president, then her. Do you know what she would have been? She would have been a realtor out in the San Fernando Valley, pretended to be wide-eyed when you found mold under the sink on the House she was trying to screw you on. And I'm glad she's going back to anonymity.

O'REILLY: I don't know. She comes from money. Long political family in Maryland. I don't know if she would have been a real estate agent. But perhaps you're correct.

Now, what about Boehner?

MILLER: She has no conscience. She has no conscience. She'll look you right in the eye and, guess what? You'll blink first, because she's blinking every three seconds.

O'REILLY: She can't blink with all the stuff she's got in her forehead. All right, so...

MILLER: Get a kick in there, Billy.

O'REILLY: No, I just...

MILLER: Hey, listen, can I say this about Boehner? It was the first time I watched the speaker of the House with the red and white of the flag over his shoulder and thought, "Wow, his skin tone is closer to the red than the white for the first time in the history of this country." I think it's a step forward.

But, as far as a new House goes, meet the name boss, the same as the old -- meet the new boss, same as the old boss. There are 535 people up there. I'd say 35 of them are world beaters, and the other 500 are just looking for a career move.

I don't look for much to change up there. I don't think it breeds great men any more.

O'REILLY: They have to, though. They have to move on "Obamacare." I mean, they're going to do that. They're going to attack him. And I don't know how far they'll take it. Morris thinks they'll take it to the limit, as the Eagles once sang. But they're going to do that. That absolutely will happen.

MILLER: Listen, you know, listen, I love Dick. I think he's as sharp as they come. But he's in the website business. He's going to tell you they're going to take back the Senate, too. And then the day after he's going to say Obama pulled it out. He's going to say this. It takes people to the website.

I'm more listening to [Charles] Krauthammer. If you're going to approach Obama care, you'd better do it in a "Hurt Locker" suit. Because it's going to be like playing that old game Operation: if you touch the side, the buzzer is going off. So I think they best go at this delicately, set the pallet. Two years hence you get a Republican prez, and then you lay it to waste.

O'REILLY: OK. That's how it will have to happen. The only way that gets out is if the president is Republican.

MILLER: You know something, Billy? I'm sorry, but as they pull out things over here, they have to come in with their own empathetic replacements.

This is not about taking 15 percent of the people and saying, "We don't care about you." We do. But you enter the party through the 15 percent room. You don't go through the cocktail party of the 85 percent are happy with it and disrupt that. Let's get over here, isolate it, and fix it.

O'REILLY: All right. Any New Year's resolutions?

MILLER: I made some easy ones this year. I'm going to start smoking and get fat.

O'REILLY: OK. And when does that begin or has it already?

MILLER: I got sick of -- I got sick of falling behind on the other ones. I said I'm going to pick something out this year. I'm going to do that, and I'm going to wear pants in here. Look at that. You know, I usually wear shorts. I'm going to start wearing pants here this year.

O'REILLY: That's a good, good first resolution. Wearing pants when you go to work. That's always a good thing.

MILLER: It's like when the expert said -- it's like when the expert said to David O. Selznick, why should I wear a full hoop skirt in "Gone with the Wind." Nobody will know. He said, "You'll know." And I know now that I'm on "the O'Reilly Factor." That's why I'm wearing pants.

O'REILLY: Howard Roark, by the way, that was "Fountainhead," right?

MILLER: Well, that -- it was "Bridgehead," actually, in Mexico. "Fountainhead" here in the states. "Bridgehead" down in Mexico.

O'REILLY: There you go. Dennis Miller, everybody. Back, first appearance of 2011.