This is a rush transcript from "Hannity," April 6, 2010. This copy may not be in its final form and may be updated.

SEAN HANNITY, HOST: So much for the American nuclear policies of yesterday. Now, there was President Dwight D. Eisenhower's policy of massive retaliation which alerted hostile nations that the United States reserved the right to retaliate against hostile nations at a place and time of its choosing.

There was President John F. Kennedy's notion of, quote, "flexible response," which implied that the country was capable of responding to any provocation, large or small.

Now, President Reagan drastically increased the defense budget, and by forcing the Soviet Union to try and keep up, drove it into bankruptcy.

Well, now comes President Obama, who has turned a blind eye to the lessons of history and embraced a dangerous draw-down in America's defense.

The Obama administration declared yesterday that the president plans to, well, depart from these precedents. Now, Secretary of Defense Robert Gates and Secretary of State Hillary Clinton announced that the president will not use nuclear weapons against any non-nuclear state, even in the event of a chemical or biological attack.

Now, beyond that, the United States will not develop any new nuclear weapons.

Now our enemies must be rejoicing. Could it be any more clear that this president's desire to deter America's enemies pales in comparison to his strive to bring about a nuclear-free world? So just how dangerous is this for the United States and the rest of the free world?

Joining me now with analysis is the former Speaker of the House Newt Gingrich. And by the way, Newt is the co-host, along with his wife Callista, of the brand-new documentary "Nine Days That Changed the World" which is about Pope John Paul's pilgrimage to Poland in 1979.

Mr. Speaker, welcome.


HANNITY: So how about bad is this?

GINGRICH: I think this is the most unrealistic diplomacy since the late 1920s. You have to go back to the Kellogg-Briand Pact to end war, the whole series of disarmament conferences.

In the 1920s the democracies, desperate to avoid dealing with reality, kept designing all sorts of paper documents that were going to end war. And they were going to disarm countries.

And the problem they had was that the Japanese, the Italians and Germans, and the Russians, didn't go along with them. So here you have these diplomats getting together.

And if you notice today, by the way, the Iranians were laughing, literally laughing at the idea of sanctions as they build nuclear weapons.

So you have the president over here in a fantasy. And it's a fantasy. It sounds good. It would be wonderful. It just doesn't fit this particular planet.

And over here you have North Korea, Pakistan, Iran, Al Qaeda, and a whole host of other potential enemies who are just methodically doing their thing. And I think the greatest danger is that we will end up confusing words with reality in a way that some day could get a lot of people killed.

HANNITY: The only effect I see is out of this is that is going to embolden our adversaries. I thought Jennifer Rubin had an interesting take. This president is dangerously obsessed with unilateral gestures and disarmament.

The only thing — look I spoke with Neil Cavuto I'm going to be on his show tomorrow. And I was trying to make the case to him, this — no, Neil, this is the worst president America has ever had on economic policy, on foreign policy. And when I made the case that he was the most radical person ever running for office, you know what? I was attacked.

Now I'm making the case that he's the worst president, that his record — the record now shows. And this is icing on the cake. Do I overstate it? Am I extreme? You're going to urge me to be a little bit more moderate, to stand back? Am I close, am I right? Do you have the same fear inside?

GINGRICH: I think if you were to say he is potentially the most dangerous, because he so completely misunderstands reality. Let me give you a couple examples.

He has recently gone out of his way to offend Karzai, who is the Afghan leader we're relying on. He's gone out of his way to be genuinely, publicly nasty to Netanyahu, who is the Israeli ally we're relying on.

So you get an embrace if you are Hugo Chavez. You get acceptance if you're Ahmadinejad in Iran. But, if you're an American ally, somehow you are not acceptable. You're not — he can bully you.

And I think is a — this is a typical pattern on the left. Jimmy Carter did it to some extent.

But the other thing that Obama does on a scale that Carter never dreamed of is he — he believes, maybe because he believes in his own rhetoric — he believes that words are a substitute for reality.

And so, if you remember, you and I talked about this at the time. He goes to Prague a year ago. He gets up to give a speech on nuclear weapons as North Korea is defying him that morning.

HANNITY: That morning, that day, yes.

GINGRICH: That very day. And you have to think to yourself, isn't there a hint here of the mismatch between the deeds of dictators and the words of politicians in a democracy? And this is very much like the 1920s.

HANNITY: But he said — first of all, go back to what you said. Iran is mocking us. The North Koreans are defying us. He listens to a 15-minute anti-American diatribe by Ortega. He takes an anti-American screed from Hugo Chavez.

And I'm watching as president. So what he's saying here is that the United States will not even in self-defense, if there's a biological, a chemical attack or a crippling cyber attack of some kind, that we're not going to respond. Now, if you're the enemy of the United States...

GINGRICH: First of all, I would — I would love to see a White House reporter ask the simple question. If there was a biological attack, which killed over a million Americans, is this president really saying we would not retaliate?

HANNITY: That's what he said. Wait a minute, that's what he said. Am I to —

GINGRICH: I agree. It's what he said. But I think it is important to push him and push Secretary Gates and to push Secretary Clinton, and to say to them, in the real world, if something truly bad happened, are you genuinely saying you would not retaliate?

HANNITY: Here's my point. I am genuinely now at a point where I've never been in my entire life. I am concerned he is, as you say, dangerous to the country. Economically, I think he's led us down a path to financial — on a financial path that is totally, completely and utterly unsustainable.

Now we got Paul Volcker talking about a value-added tax or a national sales tax that almost has to be a certainty at this point. We — you know, the only two pictures — Rudy Giuliani said this. I thought it was a good line. He'll join us later. The only two people he won't take pictures with at the White House are our allies, Benjamin Netanyahu, and the Dalai Lama.

Every other world dictator seems to get coddled by the administration. So the net result is, is America setting itself up for a dramatic decline economically, and will the world have contempt for America as a sole super power?

GINGRICH: Well, I think the two things are parallel and are part of why I would use the word "dangerous." The fact that they are talking about $10 trillion of additional deficit over the next decade. Must have of it will be owned by the Chinese and the Saudi Arabians. So you have to ask yourself to what extent at an economic level are we going to face a national security crisis.

The fact they are determined to cripple our industry at a time when virtually every American realizes that having national security and energy, keeping the money here at home, creating less expensive energy here is vital to our economic future.

And then you combined with this sort of unilateral disarmament mindset. I think — I think that the term dangerous is a very legitimate term to raise about the policies and the lack of understanding of reality in this administration.

HANNITY: All right. When we come back I want to ask you about the political — this all-important midterm election, what you think about it. We've got a tape of a Harry Reid rally. A hundred people showed up, by the way, Mr. Speaker. And one of them attacking the Tea Party movement, saying they can drop dead. I'm going to get your reaction to that.

We have a lot more with Speaker Gingrich on the other side of the break as "Hannity" continues.


HANNITY: And we continue now with former Speaker of the House Newt Gingrich.

All right, Mr. Speaker, so Sarah Palin shows up in Nevada, draws a huge crowd, anywhere between 10 and 25,000 people. Harry Reid goes to the same location. He got a little over 100. Got to give him credit; big crowd as he's kicking off his re-election. He's now behind all three potential candidates that he would run against.

Anyway, there's been all this talk about the Tea Party movement and now how it's racist, how it's violent. Listen to what happened when he was mocking Governor Palin and then somebody shouts out about the Tea Party movement, they can drop dead. Let's roll this tape.


SENATE MAJORITY LEADER HARRY REID, D-NEV.: I was going to give a few remarks on the people who were here a week ago Saturday, but I couldn't write it all on my hand.

UNIDENTIFIED FEMALE: They can drop dead.


REID: You betcha!


HANNITY: All right. They could drop dead. You betcha!

What do you make of the effort to demonize the entire Tea Party movement?

GINGRICH: Well, I think that having contempt for the people of your own state is very dangerous if you're an incumbent running for election.

I mean, think about it. You talk about these people who were here a week ago. Those were Nevadans. Those are the people who elected him. They were his citizens.

The fact that there were thousands of them, I mean I would think, you know, if he was at all rational, he would be going out trying to find a way to talk with the Tea Party people.

Everywhere I go with American Solutions, we have a Tea Party meeting. And we listen to 10, 15, 20 of the leaders from whatever community we're in. And we're going to be in New Orleans and doing an American Solutions workshop on Thursday. And, you know, we'll meet with those folks.

I find them to be intelligent, serious citizens, deeply concerned about the deficit. And I think if Harry Reid were to actually sit down with people who are his own citizens. I'm not saying bring in Alaskans or Californians. But if he were to sit down with people from Nevada who are in the Tea Party movement and listen to them for a while, he might be shocked how reasonable and how thoughtful they are.

HANNITY: Well, there was a poll that came out, 40 percent of those that are in the Tea Party movement are either independent or Democrat. He has a 53 percent unfavorable rating in his own state in Nevada right now as he's running for re-election.

You've got Charlie Rangel comparing the Tea Party movement to the segregationist movement. You've got another House Democrat comparing them to the KKK. Mr. Speaker, it seems to me that, if 40 percent of Democrats and independents this is not that smart a political move for the Democrats.

GINGRICH: Well, it's also just factually false. I was at the Tea Party meetings, which I remember, when you were in Atlanta and I was in New York in one of the earliest of the Tea Party movements.

HANNITY: April last year.

GINGRICH: The person who introduced me in front of city hall in New York was an African-American. People I've met with in Dallas included Latinos.

And I think it is totally false to suggest that Tea Party people are anything except citizens who are really worried about spending, really worried about the deficits and, frankly, really worried about unemployment.

HANNITY: Let me ask you about the election. I know, for example, you said, in one of the interviews that you gave this morning, you're telling Republicans don't fall for this, you now, circular firing squad mentality that the media wants to create. More specifically, the attacks against the chairman of the RNC, Michael Steele. But you're not there yet.

You said that you would like to see — and I talk about this in my new book. I want to see a new Contract with America, because it was so successful. I think it would reinvigorate the confidence in the Republican Party, especially those that felt disenfranchised. So what is the prescription to get to that magic number to take back the House? You're the only guy that did it in 40 years. How did you — how would you — what do you recommend they do now?

GINGRICH: Well, Kevin McCarthy, who's the brilliant chief deputy whip from California, has been asked by John Boehner, the Republican leader, to organize an effort over the next four or five months to develop a compact or contract, or I'm not sure what the right word is. It doesn't have to be a sequel, per se. And I think he's going to do a good job.

I recommended to him that he talk with Marco Rubio. Because what Marco did when he was running for speaker of the House in Florida, is he developed a program for 100 ideas for Florida's future. And they went around the state holding idea-raisers.

And I think it would be helpful. We're faced with an enormous crisis of government. In that, government's the fourth bubble after information, technology, housing and Wall Street. Government is too expensive, too bureaucratic, the unions have too much power. We need every possible solution to get back to a balanced budget. I think if they would —

HANNITY: I don't want to interrupt you — but you're not there yet. You don't think the Republicans are there in terms of winning back the House and winning back the Senate?

GINGRICH: No, look, I think they are poised to be there. I think Charlie Cook put it well the other day, the analyst who writes for The National Journal, that there are between 25 and 35 seats today. That's an enormous improvement that puts them almost in charge.

They need a couple of breaks between now and the end of the campaign. I'll give you a simple example that I'm exploring as an idea at American Solutions.

One of the things in the health bill is 16,000 additional IRS agents. Now I think the average American doesn't think we need 16,000 health police. They don't think we need a single health police.

And it's interesting that that health bill has more IRS agents than it has doctors or nurses or people who actually do health, in the bill.

I think Republicans this fall, if they were to run as one of their planks, that they will never fund the 16,000 IRS agents, and they will block implementation of the $430 billion in new taxes, and then put it straight to the country. Do you want 16,000 new IRS agents? Vote Democrat. Do you not want 16,000? Vote Republican.

My guess is that, in fact, would be one of the five or six issues that could set the stage for a Republican majority.

HANNITY: Fiscal responsibility, balanced budgets, elimination of earmarks, transparency. Put everything on C-SPAN. You know what? Show that you're going to be the ethical party. Strong national defense, energy independence. And it's — you can't lose. I don't see in this environment how they could lose, especially if they put their John Hancock down on a piece of paper.

Mr. Speaker, good to see you. Thanks for being with us.

GINGRICH: All right. Good to be with you.

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