This is a rush transcript from "Hannity," October 3, 2012. This copy may not be in its final form and may be updated.

SEAN HANNITY, HOST: Joining us now is the former Republican vice presidential nominee who went head to head with Senator Joe Biden during the 2008 campaign, and that was the VP debate. And that is former Alaska Governor, Fox News contributor, Sarah Palin is with us.

Governor, thanks for being with us.


HANNITY: All right. Let's start with your general observations of the debate.

PALIN: It was so encouraging. This is a great night for anyone who has been longing to know that truly we can turn things around. We don't have to go bankrupt. You know we can -- we can restore all that is good and strong and secure in our private sector and our families, in our small businesses, and the middle class.

Mitt Romney was able to articulate that contrast that so many of us have been desiring to see. This big government agenda, failed social policies of Barack Obama. Do we have to repeat those? Or can we go another direction? And with time-tested truths, rely on those principles that built up this country into the greatest nation on earth. Can we go back to that direction now? And Mitt Romney gave us the reason why now we know we have a clear choice. The contrast was made tonight.

HANNITY: I found the president was stammering. I found the president was on defense, Mitt Romney was on offense the whole night. One moment that was very interesting to me is when President Obama couldn't even explain his own debt. Well, I have a plan to reduce the deficit by $4 trillion, but he's given us $6 trillion in new debt. I wasn't sure that worked very well for him.

PALIN: You know, if you noticed Mitt Romney was able to point out many things like that, promises that Barack Obama had made. For instance, he has said as a candidate that he would cut the deficit in half and instead he more than doubled the deficit and added trillions and trillions to our already mind-boggling debt that is drowning this country.

Mitt Romney was able to point out so many of these points that many of us in the audience, if you will, have been longing to hear Barack Obama be questioned about and have to give answers. Barack Obama did not have the answers tonight. And you know why? He didn't have his buddy, the teleprompter, in front of him writing out -- somebody had written out for him in all these years of being a candidate and the president -- the answers. He finally had to be candid and rely on his own, well, lack of experience and knowledge about how the economy really works to answer these points that Mitt Romney was making.

HANNITY: You know and it's also when the president spoke about the economy he didn't -- he didn't seem to understand basic economic principles. I mean, you know, and even when Governor Romney said $90 billion in Solyndra, and you picked the losers, it was a pretty direct attack, and the president had no answer for any of this or the deficit or the debt or the lack of job creation.

We're showing some video, you saw annoyance, I felt, throughout the night with President Obama. If he wasn't looking down at his notes and looking for Jim Lehrer to kind of bail him out, he was looking annoyed like he didn't want to be on that stage tonight.

PALIN: Because, Sean, Barack Obama is not used to this. He's used to being sheltered. He's used to being coddled by the media and by those surrounding him. Tonight he wasn't able to rely on that kind of comfort zone that he is used to. The reason that he seems so inept tonight and kind of disenchanted and disconnected is he finally has a record that he can be called out on and that is exactly what Mitt Romney was supposed to do and what he did.

He succeeded tonight in calling Barack Obama out on broken promises. Can't wait for the next debate to hear more and more details of these things. And failed policies that obviously Barack Obama just wants to repeat and , you know, again without having that teleprompter in front of him to basically tell him, feed him, what to say. That is why you saw this ineptness tonight.

HANNITY: Yes. Especially he did not have an answer for $716 billion that he took out of Medicare. He didn't have an answer for Social Security. It's not an entitlement. It is -- what was the -- a return on investment, but welfare is in fact an entitlement. On every single substantive point, he lost on points, lost on style. I was actually a little shocked, you know, we're told that the president is this great communicator, but apparently he's only good at delivering speeches that were written by other people on a teleprompter.

PALIN: Anybody can be an actor. Anyone can get up there on a stage and repeat what other people are telling them to say and have written for them. It's a completely different situation when one is forced to be candid and really stand on their record and what their true beliefs are. You saw a manifestation of that tonight. And that's why you saw the truly -- there is a choice for the American voter in which direction America will go under which candidate to be chosen in November. You saw that clear contrast tonight.

Now we have to be aware, though. in the next couple of debates, also, if Mitt Romney continues to gain and gain and gain just by being truthful and experienced and intelligent, that doing a good job as a presidential candidate -- these guys in the Obama camp, they're not going to go down without swinging. They're going to pull something, Sean, and the American public with the media's help, these lap dogs in the media, kind of going along with whatever it is that Obama and his people want to do to shake some things up.

If Mitt Romney continues to do so well, the American public just needs to be aware that they've got to do their own homework.

HANNITY: It's a good point.

PALIN: Don't rely on the filter of the media. And just be aware that something could be pulled here to turn things around if Mitt Romney continues to gain so much ground.

HANNITY: We are -- 34 days out of an election and this president has never been asked about his promise that he'd cut the deficit in half in his first term, but yet gave us $6 trillion in debt, fewer Americans working. He'd never been asked about any of these things because the media has basically sold out the American people and they've not done their job.

But, Governor, great to see you. Thank you for being with us.

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