This is a rush transcript from "Hannity," March 3, 2011. This copy may not be in its final form and may be updated.

SEAN HANNITY, HOST: As the standoff in Libya continues, the world battles with the question of how best to deal with the escalating situation. Now earlier today, France and Great Britain said that if attacks against the Libyan people don't stop that they would push to set up a no-fly zone over the country.

Now the Arab league threatened similar action yesterday but the U.S. remained silent about engaging in a military intervention.


SECRETARY OF STATE HILLARY CLINTON: All of these matters are under active consideration. But, no decisions have been made and for good reason. Because it is not at all clear yet what the situation demands.

U.S. DEFENSE SECRETARY ROBERT GATES: There's a lot of frankly, loose talk about some of these military options. And let's just call a spade to spade. A no-fly zone begins with an attack on Libya to destroy the air defenses, that's the way you do a no-fly zone.


HANNITY: But Senator McCain seems to strongly disagree.


SEN. JOHN MCCAIN, R-ARIZ.: Once we announced a no-fly zone, most of those Libyan pilots wouldn't fly. We are spending $500 billion not counting Iraq and Afghanistan on our nation's defense. Don't tell me we can't do a no-fly zone over Tripoli.


HANNITY: All right. So, what is America's best course of action when it comes to Libya? Here with reaction, nationally syndicated radio talk show host, Fox News contributor, Monica Crowley and the former speechwriter for Condoleezza Rice, Elise Jordan is back with us.

You know, Ruth Marcus, liberal, Washington Post, hardly somebody I often quote on this program, really "day late, dollar short, way behind, no leadership." I mean, you know, you've got Great Britain, and France, and Germany. Where is Obama?

MONICA CROWLEY, FOX NEWS CONTRIBUTOR: Yes, you know, in the realm of international relations very rarely do you get a crystal clear, black, white situation like this.

HANNITY: Simple.

CROWLEY: You've got an enemy state of the United States, a former state sponsor of terror, export of terror and apart from Al Qaeda, the number one killer of Americans over the last 30, 40 years. This is an example crying out for American presidential leadership. And here we've got the secretary of state saying, well, no options are on the table, they are off the table, they're dancing on the table. I have no idea where this administration is coming from.

ELISE JORDAN, REPUBLICAN STRATEGIST: They need to have the no-fly option on the table. But I think it really has to be carefully considered. But I understand their hesitation to say, to launch immediately into the no-fly zone option because it is going to be very difficult with Libya, a huge state, it's going to be a multi-billion dollar operation and we are over stretched with Iraq and Afghanistan. You look at medivacking troops out of Iraq and Afghanistan when their indoor takes at least an hour. We don't have enough air assets necessarily --

HANNITY: But obviously, we're going to have the support of our allies and perhaps NATO. It seems to me that it becomes a no-brainer. In other words, look, here we have a mass slaughter of people going on, and we have military jets bombing innocent civilians. The country is going down the tubes. And Qaddafi obviously has to go. And the U.S. doesn't have the moral authority to lead and it is hesitant and it's slow to react? I'm having a hard time understanding why?

JORDAN: I think it is very difficult -- I mean, it's just, we can't go into this unilaterally and we are over stretched unfortunately with Iraq and Afghanistan.

HANNITY: All these other countries.

JORDAN: Well, they need to move NATO. And they need to move the U.N. into action and then if nothing -- where I really thought the administration is, we aren't doing enough to reach out to opposition leaders, and we are building together the opposition coalition that we need, so that we have the authority when we do enforce a no fly zone.

CROWLEY: First of all, forget the U.N., because if you bring anything to the Security Council, you're going up against China and Russia which will probably block any kind of action. So, it would be a multilateral NATO operation but you know what's bad, Sean, when you've got the Arab league, you've got Libya's own ambassador to the United Nations and we have the French for goodness sakes, being more aggressive about approaching this situation. And look, Sean, Libya is an interest strategically to the United States. We now have a moral interest because there's a humanitarian crisis and a slaughter going on in the ground. And we have a very significant economic interest here because this is a big oil producer.

HANNITY: All right. Let's look at the oil issue, let's look at the price of gasoline. Bloomberg said that oil could go up to $200 a barrel in a very short period of time. That means Americans may be paying higher prices than they've ever paid in their entire lives. There's going to be a shortage. You add to this, the instability in Egypt, the Suez, Strait of Hormuz, you know, at some point even whatever oil is coming out of North Africa or the Middle East, it is going to have a hard time getting to their destinations and it is going to cost a lot more and of course, we do nothing to become energy independent here. Does it have to hit the pocketbook of Americans before we react? We're going to wait until the last minute?

JORDAN: Well, Libya is actually only two percent of the world's oil production. And Europe takes 85 percent of the oil from Libya. So, in terms of.

HANNITY: But that oil comes back to be refined here in the U.S.

JORDAN: Yes. I mean, this is why I'm not opposed to drilling, it's the Gulf or in Alaska...

HANNITY: I'm a drill baby drill guy.

JORDAN: Yes. Exactly. But I mean, separate from that. I just, it is oil at the end of the day. And it looks like, this situation is much more akin to Iraq, Saddam Hussein, Qaddafi built in the same mold. In the Arab media, we are getting hammered into for, you know, we're looking, oh, the Americans just want to come in and colonize again.

HANNITY: I've got to think that people in the Middle East, they know the oil reserves we have here. They must think we are stupid.

CROWLEY: They really astringently question what we are doing in the United States when we have all of these domestic resources that we could be exploiting, but we don't.

HANNITY: It's unbelievable.

CROWLEY: Right, you know what I think is so interesting? Today there was a Libyan rebel. He used to be a soldier. He's now leading the opposition forces who said, bring Bush. Bring Bush and establish the no-fly zone.

And I'll tell you something, Sean, a lot of people have questioned why is Obama being so reluctant to work more aggressively on behalf of the Libyan people. And you know what it is, he's so obsessed with being the anti-Bush, being the anything but Bush that he won't even embrace the agenda that's the right, correct and moral policy for the United States.

HANNITY: I agree, but it is almost like he's frozen at the moment that he needs to make a critical decision. He voted present most of his life --

CROWLEY: He was never an executive.

JORDAN: I'm just very glad that President Bush, we don't have to worry about weapons of mass destruction in Libya. But with this situation, I don't --

HANNITY: There was a report we might have to.

CROWLEY: They still have chemicals, they do have chemicals --

JORDAN: We might have to, but you know, it is very easy to say we need to go in and we need go in and we need to start using our American military might. But in the Cold War we didn't always necessarily do that. In the Hungarian uprising. We had just out of the Korean War where we had lost I think 125,000 troops. It might not necessarily, we have to be cautious.

HANNITY: Guys, good to see you both. Thanks for being here.

Content and Programming Copyright 2011 Fox News Network, LLC. ALL RIGHTS RESERVED. Copyright 2011 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.