White House leak scandal worse than Watergate?

This is a rush transcript from "Hannity," June 15, 2012. This copy may not be in its final form and may be updated.

SEAN HANNITY, HOST: Welcome back to this special studio audience edition of "Hannity" as we focus on the state of emergency that is currently facing the Obama administration.

Now, the national security implications of the White House leak scandal cannot be overstated. In fact, one of my next guests believes that the damage that could cause may be worse than Watergate.

And joining us now to explain this, is the chairman of the Homeland Security Committee, Congressman Pete King, and Fox News National Security analyst KT McFarland.

Let me play comment you made on Fox News radio comparing this to Watergate. Let's roll that tape.

(BEGIN AUDIO CLIP, JUNE 12)

REP. PETER KING, R-N.Y.: Watergate was campaign documents, there was no -- there's no real national security issue involved in Watergate. Scooter Libby, investigators were disgraced because it was leaked unintentional by someone close to the president, not Scooter Libby. And this one goes to the very heart of our national security involving his closest allies.

UNIDENTIFIED MAN: So, this could be -- this could dwarf Watergate, correct?

KING: If the media does the right thing it will, absolutely. This is far more important -- to me, there is no comparison at all.

(END AUDIO CLIP)

HANNITY: We know what happened at the end of Watergate. Explain.

KING: Watergate basically was internal. At its least it was an attempt to seal campaign documents and even the related activities never went to national security issues. It was an abuse of the political process.

Here, we are talking about the most sensitive, classified secrets that we have, leaked openly by the administration. Even Dianne Feinstein said, it's an avalanche of leaks. I don't know if any time in our history, where so much has been leaked, so much devastating information has been leaked at one time and it's obvious it comes from some people close to the president. If you believe the New York Times, which this one time I will do, they talk about all of this comes from people in the White House, the president's closest advisers. He had to know about it.

HANNITY: This is important, because you wrote a piece in The New York Daily News about this. In that piece, you said, it had to come from the White House because it described the president on Tuesdays, talking about specific kill lists and drone strikes where he would make the final decision. So it had to be somebody in that room, right?

KING: In the Oval Office, it also talks about meetings in the situation room which is in the White House. It talks about National Security Council meetings. And everyone knows who is at these meetings. And this is the inner circle of the president. And the president says he's outraged by it. The fact is, he didn't say a word about this until John McCain raised it on the Senate floor and Dianne Feinstein went after him. Until then, he was silent, and going back a month ago, same with the -- plot we had in Yemen, the operation Yemen, that was entirely leaked, entirely leaked. Nobody knew about it except again a small circle around the president. And it was leak to the Associated Press in its entirety. It was the highest penetration we ever had of Al Qaeda and the Arabian Peninsula and the program had to be avoided because it was leaked in total by someone close to the top.

HANNITY: All right. KT, let's go to the comments by Dianne Feinstein. Among the things she said is that American lives have been put in jeopardy and she also said this. Let's roll the tape.

(BEGIN VIDEO CLIP, JUNE 7)

SEN. DIANNE FEINSTEIN, D-CALIF.: This has to stop. When people say they don't want to work with the United States because they can't trust us to keep a secret, that's serious. When allies become concerned, when an asset's life is in jeopardy or the asset's family's life is in jeopardy, that's a problem. The point of intelligence is to be able to know what might happen to protect this country. And we can't do that if the intelligence is no longer kept with strict scrutiny, within the number of people that need to have it.

(END VIDEO CLIP)

HANNITY: I rarely disagree with the senator. She seems very, very on target in this case.

KT MCFARLAND, NATIONAL SECURITY EXPERT: She absolutely is on target. I was in the White House during Watergate. And the kind of leaks that came, not only out of Watergate, but out of the Church committee hearings that happened later, where we turned over very sensitive documents to the United States Congress and names were mentioned, names were leaked. What happened as a result of that? Our station chief in Athens was assassinated. The sources and methods, the foreign intelligence agencies which had been doing business with us stopped because they knew that their agents would be revealed. People who might have turned informant, no longer turned informant. We lost a generation of human intelligence, a generation of spies. A lot of people think that that's why 20 years later, we never saw Al Qaeda coming. We never had anybody on the inside when we needed them.

HANNITY: So, what they're really talking about, especially if, for example, the joint operations cyber warfare with Israel that we are talking about, where we actually, apparently, we were able to penetrate their uranium enrichment program and create chaos for them. Now they have to be aware. If you are the person that walked in that virus into that facility, Congressman, I got to imagine your life is in deep jeopardy right now.

KING: Yes, well, I am on the Intelligence Committee so I can't confirm if we have this program, but if the press reports are accurate, no, those the Iranians right now are looking at all the stories in The Times with a magnifying glass and they are going back and they want to find out who was in those plans, who was at what meetings during the time that we said that that virus was put into the system, absolutely.

HANNITY: Yes, I don't know if they have video surveillance that they might be able to go back to and they might be able to actually catch this -- and that raises the question once again. You know, we have one Pakistani that assisted us in the Usama bin Laden killing and this guy is in jail for 33 years now. Who's going to help us in the future? Who's going to want to infiltrate these groups?

MCFARLAND: And here's why it is so important. You know, during the Cold War, we had spy satellites. We had other ways of finding that with the enemy was doing. We know the enemy, he came from a country. We knew who's training them. We knew what kind of weapons he used. In this long war, the kind of war we are going to be fighting the next 10 or 15 years, intelligence is one of our only weapons and intelligence isn't spy satellites. A spy satellite doesn't see a bunch of guys in a cave in Afghanistan, plotting to bring down the twin towers. You need to have somebody on the inside. We can't put somebody on the inside.

HANNITY: You think this could set us back a generation?

MCFARLAND: Oh, yes, absolutely. You know, this probably has set us back a good 10 or 15 years.

HANNITY: Was this done in both your opinions -- I'll ask quick yes or no -- for the benefit of the president? Was this done to make him look good, stronger? He picks the kill list, he's involved in cyber warfare against Iran? Was this to bolster him for his re-election effort?

KING: Yes. He's the only who's picking targets while he's reading St. Thomas (INAUDIBLE), if you believe the New York Times. No, it's definitely done -- I don't think it was done intentionally hurt the country. I think it was done recklessly and carelessly to help the president's re-election, yes, and with reputation.

MCFARLAND: And the problem is, people are now going to die as a result of this. We are not -- it may not just informants, people who helped us, but what are we not going to see coming next time, for a couple of votes?

HANNITY: Is this -- what did they know and when did they know it? Who knew what, when, where?

KING: I think so. And I think this is an investigation -- the FBI, if this becomes a full investigation, I have faith in the FBI, hopefully these two special counsel who were appointed will have full powers. This should not be that difficult. Because we're talking about a very small circle of people. Just look over the White House logs, find out who was at the meetings the days that these quotes were taken.

HANNITY: All right, guys. Thank you both for being with us. I appreciate it.

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