This is a rush transcript from "Hannity," December 3, 2009. This copy may not be in its final form and may be updated.

SEAN HANNITY, HOST: so with unemployment standing at well over 10 percent here in the U.S. President Obama, the anointed one, called on a handful of business leaders to attend a job summit earlier today at the White House.

Now the administration says the goal of the event was to come up with ideas on how to put Americans back to work. But believe it or not, the host of the forum only found enough time on his very busy schedule to make a brief cameo appearance throughout the day.

Here's part of what the president had to say at the top of the summit.


PRESIDENT BARACK OBAMA: I want to be clear, we won't overcome our unemployment challenge in just a few hours this afternoon. I assure you there is extraordinary skepticism that any discussions like this can actually produce results. I'm well aware o f that. I don't mind skepticism. If I listened to the skeptics, I wouldn't be here.


HANNITY: All right, at the conclusion of his remarks the president made a dash to the doorway saying he would return later to receive an update on the event's progress but was any progress really made or was this simply another White House orchestrated photo op?

Joining me is the studio is the chairman of the Republican National Committee, the one and only, Michael Steele.

How are you?

MICHAEL STEELE, RNC CHAIRMAN: It's great to be back with you, man.

HANNITY: I watched this thing today and I almost want to laugh. A jobs summit?

STEELE: Yes. Yes.

HANNITY: I thought that was supposed to happen with the stimulus.

STEELE: Well, yes. Yes. He gave us the stimulus summit and look what we got, you know, 10.2 percent unemployment and a $1.4 trillion debt. The reality of it is what the president said at the beginning of the summit should have been said the second day he was in office.

If you're serious about recovery from recession, you have to engage small business owners. You have to give them the incentives, you have to encourage them, you have to create that pathway to credit and capital.

This administration hasn't done any of that and now as we get ready to turn and go into 2010, oh gosh, I guess I should start thinking about jobs again because I've got a whole lot of Democrats with their tails on the line.

HANNITY: But isn't that — let's look at this critically. Wasn't that the president when he said we were headed for an economic catastrophe, we've got to pass the stimulus, when we pass the stimulus.

STEELE: Right.

HANNITY: …unemployment won't go above 8 percent. Is it that he really believed that, you know, this big government program would worked, that he believed it, and now he's realizing it's a failure?

STEELE: No, I think absolutely. I think it's part of the core philosophical approach he brings to governing is that governing is the solution and now he's up against the reality that all the spending, all the stimulus has gotten him nothing, and so now he's going to grapple with this idea of bringing small business owners in the room, talking to them and telling them yes, I'll give you a few incentives here and there.

But let's talk about what those incentives should be. How about the capital gains tax, doing away with it? How about the unemployment tax, reduce it? How about creating incentives for small businesses to pull their resources.

HANNITY: But Chairman.

STEELE: … to go and to get that health care that he wants to talk about.

HANNITY: These aren't the authorities that are on the table.

STEELE: Of course not.

HANNITY: They're not.

STEELE: This is why — this is a dog and pony show. To give cover to the fact that oh, gee, the jobless numbers aren't the way they should be.

HANNITY: All right. All right.

STEELE: And he's now looking, Sean, guess what, stimulus two.

HANNITY: Yes, it's there.

STEELE: And so that's what they're down, they're going to gin up. So this is going to be the argument. I've got the small business owners in the room and they told me they need a stimulus two. Well, we've only spent 30 percent of the last stimulus.

HANNITY: Well, and first of all, the Chamber of Commerce, they weren't invited because they're not on the team.

STEELE: Of course not. Of course not.

HANNITY: All right. Same with the National Federation of Independent Business. They weren't invited as well.

STEELE: Right. Exactly.

HANNITY: All right. So the question here is — all right, omnibus, earmarks, record spending, record deficits, health care, banks, car companies, financial institutions dictating pay. That's their economic plan.

STEELE: That's the plan.

HANNITY: So the question is after the victories of the Republican Party in Virginia and these gubernatorial races, and New Jersey, is this next election in 2010 shaping up to a debate in this country about free market capitalism and socialism?

STEELE: Absolutely.

HANNITY: Is that what this is about?

STEELE: Without a hesitation or doubt I think you saw in Chris Christie's win in New Jersey and Bob McDonnell's win in West Virginia, the beginnings, the seedlings of that debate. Because that's what they did. They went out — they talked about health care in the context of job creation. They talked about job creation in the context of how you control your decisions and how you run your businesses.

So the reality of it is you have this classic — I mean as a young man I was thought I wanted to engage in this debate between liberalism and conservatism, between a socialist view of government and control and input to free market enterprise. And I think this is going to be an exciting time for us as a party to engage in this debate.

HANNITY: Is the — all right, every Republican I know has the same feelings as I do, that the Republican Party lost their way.


HANNITY: And it resulted in pretty bad election losses in 2006 and 2008. As chairman, can you assure the Republican base that those conservative Reagan principles are going to be the foundation on which the Republican Party makes its ascendancy or rebuilding?

STEELE: I'll look America in the eye and I'll look at every conservative and everyone who wants to stand with us and say, absolutely. You cannot do this without embracing those principles and applying those principles as Chris Christie did and Bob McDonnell did to the everyday problems that people have.

HANNITY: So that means we're going to balance budgets.

STEELE: Absolutely.

HANNITY: … fiscal integrity. We're going to cut taxes?

STEELE: And — cut taxes and hold leadership accountable. You no longer get to just talk the talk, you've not got to walk the walk with your votes. You've got to walk the walk with how you deal with the issues that come to your table. You cannot have it both ways.

HANNITY: See, I don't think the Republican Party can lose if they run on fiscal integrity, responsibility.

STEELE: Absolutely, Sean.

HANNITY: … balanced budgets, a strong national defense, energy independence.

STEELE: Energy independence. Exactly. I mean, look, we're willing to give $2 billion to other countries to go out and explore off the coast — off their coast, yet we deny our very own energy industries the opportunities to tap into that the $2 billion to do the same here.

So — I mean this is what this debate next year is going to be about. The difference between Barack Obama's world and the world you and I live in every day .

HANNITY: And you think that the Republicans, they can take back the House and win how many Senate seats?

STEELE: I don't — you know, that's what we're looking at right now. I don't know if we can take back the House but we're damn going to try our best to do it because I think the moment is right to have this conversation. I think America is now listening. They're looking to us to see OK, what are you guys going to put on the table?

I think Mitch McConnell and John Boehner have very — definitely approached the Senate and the House leadership in a way that now puts us in the game. And so we're going to go forward, we're going to take their lead, we're going to follow the lead of our governors like Haley Barbour and others like there, who doing a phenomenal job, and show what Republican leadership is all about.

HANNITY: But for the Republicans Party to succeed, it's — for example, those that say there's not a dime's worth of difference between the two parties.

STEELE: I disagree with that.

HANNITY: Stimulus, omnibus, cap-and-tax, health care, major differences?

STEELE: Absolutely. Major differences. Major differences. And I think, you know, you can't look at what happened at the end of the Bush term as a predictor of what we're going to be doing going forward.

HANNITY: All right.

STEELE: This is a very different Republican Party.

HANNITY: Chairman, good to see you in New York.

STEELE: All right, my friend. Nice to be with you.

HANNITY: Appreciate it. Thanks for being with us.

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