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MR. STEPHANOPOULOS: Hello again. We begin today with the man who won more than 58 million votes for president.
Senator John McCain, welcome back to "This Week."
SEN. JOHN MCCAIN (R-AZ): Thanks, George. Thanks for having me back.
MR. STEPHANOPOULOS: Absolutely. And there's so much to talk to you about since the campaign, but let's begin with the news of the week. You saw that joke about Governor Blagojevich in Illinois. Fifty Democrats in the Senate have called on him to resign. Do you think he should resign?
SEN. MCCAIN: Oh, I'm sure that he should have. President-elect Obama also called for that. He should. You know, there's a lot of corruption amongst Republicans and Democrats, and this kind of thing doesn't help in these kinds of difficult economic times. So I would hope that he would resign, but we also look - ought to look at systems that breed this kind of corruption, and unfortunately it isn't confined to one city or one state.
MR. STEPHANOPOULOS: The chairman of the Republican National Committee, Mike Duncan, has been highly critical of the way President- elect Obama has dealt with this. He's had a statement every single day saying that the Obama team should reveal all contacts they've had with Governor Blagojevich. He says that Obama's promise of transparency to the American people is now being tested. Do you agree with that?
SEN. MCCAIN: I think that the Obama campaign should and will give all information necessary. You know, in all due respect to the Republican National Committee and anybody - right now, I think we should try to be working constructively together, not only on an issue such as this, but on the economy stimulus package, reforms that are necessary. And so I don't know all the details of the relationship between President-elect Obama's campaign or his people and the governor of Illinois, but I have some confidence that all the information will come out. It always does, it seems to me.
MR. STEPHANOPOULOS: Let me pick up on what you're just saying there, because I remember well back after Bill Clinton won in 1992, Senator Bob Dole said it was his job in the Senate to represent the 57 percent of the country who didn't vote for Bill Clinton. How do you define your role now as President-elect Obama heads to the White House and you're in the Senate?
SEN. MCCAIN: I think my job is, of course, to be a part of and hopefully exert some leadership in the loyal opposition. But I emphasize the word loyal. We haven't seen economic times like this in my lifetime. We haven't seen challenges abroad at the level that we are experiencing, certainly since the end of the Cold War, and you could argue in some respects that they're certainly more complex - many of these challenges. So let's have our first priority where we can work together, where we can - I don't think the average citizen who has either lost their home or is in danger of losing their home, lost their job or in danger of losing their job, cares much about party labels right now. What they care about, I think - I know, I know, because I spent too much time on the campaign trail - for us to sit down and work together. Will there be areas of disagreement? Of course. We are different parties and different philosophy. But the nation wants us to unite and work together.
MR. STEPHANOPOULOS: Well, let's get to some specifics on that.
SEN. MCCAIN: Sure.
MR. STEPHANOPOULOS: President-elect Obama has said his number one priority is an economic recovery package to create 2.5 million jobs. Take a look.
PRESIDENT-ELECT BARACK OBAMA: (From tape.) We need to act with the urgency this moment demands to save or create at least 2.5 million jobs, so that the nearly two million Americans who've lost them know that they have a future. And that's exactly what I intend to do as president of the United States.
MR. STEPHANOPOULOS: He wants the Congress to get to work even before he's inaugurated. The plans are to build roads and bridges, have a new electric grid, energy-efficient buildings. It's likely to cost several hundred billion dollars. Can you sign on to this?
SEN. MCCAIN: Obviously, I want to see the details of it. But we also have to enact some fundamental reforms about the way we do business. The system, now, cries out for reform: elimination of earmarks and pork barrel spending, which have led to corruption, as we all know; a budgetary system that really works; examination of the agencies of government to find out whether they are doing what they were designed to do; defense procurement reform. Defense spending, as far as cost overruns of major weapons systems, is completely broken. There're so many areas we also need - this is an opportunity not only to create those jobs, but this is an opportunity for us to clean up the system.
The American people - what's the approval rating of Congress? What's the right track/wrong track numbers? What are - the American people want not only change in creation of jobs and fixing the economy; they want that very badly, but they also want us to fix the way we do business.
MR. STEPHANOPOULOS: So is there an element of a bargain, here? I know you met with President-elect Obama -
SEN. MCCAIN: Yes.
MR. STEPHANOPOULOS: - right after the election.
SEN. MCCAIN: Yes.
MR. STEPHANOPOULOS: His aides have talked about a commission on corporate welfare. He's talked about spending reform, defense procurement reform. Did he indicate to you that he was willing to sign on to some of that?
SEN. MCCAIN: He has indicated to me clearly that he's wiling to work with me and others - not just with me, but with others to fix this broken system. Look, we've already laid a $10 trillion debt on future generations of Americans. And, yes, we have to stimulate our economy. No one wants another Hoover experience. But at the same time, we've got to look at the long-term consequences of the need for - of the lack of reform. And, also, Social Security and Medicare are two of those that we all know, with $40 trillion in Medicare and $6 trillion or $8 trillion, whatever it is, in Social Security. We have to fix those as well.
MR. STEPHANOPOULOS: And -
SEN. MCCAIN: If we're really going to have change, it means systemic change, not just a short-term attack on our immediate economic difficulties. Because one of the reasons we're in the ditch we're in because of the way we've been doing business.
MR. STEPHANOPOULOS: But to be clear -
SEN. MCCAIN: Sure.
MR. STEPHANOPOULOS: - and President-elect Obama has also said he wants to deal with the deficit in the long term, but he said just last week that in the short term we can't worry about the deficit because we have got to get this investment into the economy right now. Are you willing to sign on to a stimulus package in January?
SEN. MCCAIN: I'm willing to sign on to a package that will help our economy get fixed. But we also can - you know, they're not inseparable. In other words, we can stimulate the economy and get people back to work and create jobs and keep people in their homes, which, by the way, we have failed to do. That was the initial intent or mission of the bailout package.
MR. STEPHANOPOULOS: You think it should be used to help homeowners facing foreclosure?
SEN. MCCAIN: Absolutely, absolutely. But second of all, we can at the same time put in long-term budgetary fixes and reforms to Medicare and Social Security and reforms as far as defense procurement and out-of-control spending. We could do that at the same time. There will never be a greater opportunity -
MR. STEPHANOPOULOS: And you felt President-elect Obama was open to that?
SEN. MCCAIN: I am convinced of it. I am convinced of it.
MR. STEPHANOPOULOS: Another major -
SEN. MCCAIN: And, by the way, it's in any president's interest to have earmark reform, I mean, obviously. But I think that President-elect Obama is sincere about working on long-term reforms to the system.
MR. STEPHANOPOULOS: Another major economic issue you dealt with in the Senate, this week: whether to rescue the auto industry, give them a bridge loan for the next several months. During the campaign, you said we've got to keep the auto industry alive. Yet, last week, you joined the effort to kill that package in the Senate. Why?
SEN. MCCAIN: Because I didn't believe that this fix would keep the auto industry alive. I think it just put them on some life- support system for two or three months, because they didn't make the fundamental changes; i.e., more changes in their costs and salaries and wages and benefits, which would put them in line and make them competitive with foreign manufacturers in the United States - not foreign manufacturers overseas.
MR. STEPHANOPOULOS: Yet Vice President Cheney went and talked to your Senate colleagues on Wednesday -
SEN. MCCAIN: Yes.
MR. STEPHANOPOULOS: - and warned that if you don't get this thing through, the Republican Party is going to be known as the party of Herbert Hoover forever.
SEN. MCCAIN: You know, I appreciate those remarks, but I also point out that what is the point if you just kept at least two of the three alive for another two or three or four months? You end up in the same position, only you've spent an additional $15 billion.
MR. STEPHANOPOULOS: So what should be done now? The White House is considering using money from the TARP, the rescue fund, in order to give a bridge loan, perhaps; maybe to put in a car czar, and implement something like a prepackaged bankruptcy.
MR. STEPHANOPOULOS: Do you believe the White House should step in and use that money to help the auto industry?
SEN. MCCAIN: Certainly wasn't the intent of the package that I voted for. But second of all, I will do, as I said during the campaign, anything to help as long as we are sure that they have made the fundamental changes which will then assure their sustainability as industries. If you just - look, what fundamental changes have been made in the way that the Big Three do business? Very little, as far as I can tell. And each change that they have made, they've been absolutely kicking and screaming every step of the way. If they believe that the taxpayer is going to continue to bail them out, they're not going to make the fundamental changes that will make them truly competitive. The workers are competitive. The technology is there. The brains are there. But the system itself is designed to be so much more expensive than their competitors -
MR. STEPHANOPOULOS: It sounds like you think they need to go into bankruptcy.
SEN. MCCAIN: I think that if not bankruptcy, certainly a bankruptcy-like solution which forces everybody to sit down at the table and redo all these agreements.
MR. STEPHANOPOULOS: You just got back from a major trip overseas: Afghanistan, Pakistan, India, Iraq. Have you had the chance to brief President-elect Obama on that trip?
SEN. MCCAIN: Yes, I talked to him on the phone, and of course, major topic was Afghanistan. President-elect Obama campaigned on the premise that we are going to have to address the issue in Afghanistan. The fact is we need another surge-like strategy, and it's very different, so let's not say it's going to be exactly like Iraq. But I think the fact is that it's going to get worse before it gets better. And the American people need to know that.
MR. STEPHANOPOULOS: But you and the president-elect are in agreement on Afghanistan now.
SEN. MCCAIN: Yes, yes. Depending on how this new strategy evolves, et cetera. The southern part of the country is not under control of the government or our coalition forces.
MR. STEPHANOPOULOS: President Bush just landed in Iraq this morning. This is his fourth trip to Iraq. Basically, a farewell tour for President Bush. Secretary Gates was also in Iraq this week. Not a farewell tour for him because, of course, he's going to be standing - staying on to work with President-elect Obama.
SEN. MCCAIN: And I'm glad he is.
MR. STEPHANOPOULOS: And during that trip, over the course of that trip, he gave a speech where he called out many who had questioned the qualifications of President-elect Obama.
ROBERT GATES (Secretary of Defense): (From tape.) Anyone who thought that the upcoming months might present opportunities to test the new administration would be sorely mistaken. President Obama and his national security team, myself included, will be ready to defend the interests of the United States and our friends and allies from the moment he takes office on January 20th.
MR. STEPHANOPOULOS: Of course, during the campaign, you were one of those who questioned President-elect Obama's qualifications, said he would be tested -
SEN. MCCAIN: Actually, I said that because his running mate said that. (Laughter.)
MR. STEPHANOPOULOS: He did. You did - (inaudible) - statement, you did question his qualifications repeatedly. Are you prepared to revise that judgment now? Do you think he's ready?
SEN. MCCAIN: Look, it's not a matter of whether he's ready or - he has been selected by the American people. We honor that decision. I work - I want to work with him. These challenges are great. Afghanistan, Pakistan is in difficulties. There are still incredible tensions between India and Pakistan. The Afghan government is not the effective government that we had hoped that it would be. There's huge challenges out there, and that's just in that part of the overseas challenges that we face.
So, look, the president of the United States has been selected.
Now it's time for us all to join behind him and help however we can. These are challenging times. You've got two countries right now, India and Pakistan, with heightened tensions, both of them nuclear- armed, and the Indians, at least from their point of view, just having experienced a 9/11, and their people are demanding that they bring these people to justice.
MR. STEPHANOPOULOS: Do you think they should be allowed to -
SEN. MCCAIN: Some of them - (inaudible) - reside in Pakistan, obviously.
MR. STEPHANOPOULOS: Do you think the Indians should be allowed to take action?
SEN. MCCAIN: It's not a matter of being allowed. I would hope that the point - that the Pakistani government - and I met with the leaders of the Pakistani government, except for Zardari - that they should understand that they need to take action to show the government and people of India that they are taking significant action in order to bring those people to justice, and actions that will prevent it from happening again.
MR. STEPHANOPOULOS: This team that President-elect Obama has picked - you've had kind words -
SEN. MCCAIN: Yes.
MR. STEPHANOPOULOS: - for Senator Clinton as secretary of state.
SEN. MCCAIN: Yes.
MR. STEPHANOPOULOS: Jim Jones, General Jim Jones -
SEN. MCCAIN: Yes.
MR. STEPHANOPOULOS: - as national security adviser. Bob Gates as secretary of defense.
SEN. MCCAIN: And Geithner as treasury secretary is also a very good choices, yes.
MR. STEPHANOPOULOS: You look at the national security team; this is a team you could have picked.
SEN. MCCAIN: Sure, sure. Absolutely.
MR. STEPHANOPOULOS: And what does that tell you about the president- elect?
SEN. MCCAIN: Tells me that the president-elect is going to address national security issues with people who he thinks the American people can trust, and that he can place trust and confidence in. Again, I'm not playing Paul Revere, okay? But I am saying that there are enormous challenges throughout the world. We have the situation in Afghanistan. The situation in Iraq is still dangerous. There are efforts by al Qaeda to continue to cause difficulties and launch attacks in different areas of the world. So the Israeli situation is certainly unsettled, as they go through a new election period of uncertainty. So there is - there's incredible national security challenges, which mandates - doesn't argue for, but mandates that we all work together as much as possible.
MR. STEPHANOPOULOS: A bipartisan -
SEN. MCCAIN: Where we have been - the North Korean talks apparently just broke down. So we should work together. Now, that does not mean in any way that we will agree on every issue.
MR. STEPHANOPOULOS: But it sounds like you agree on Afghanistan now -
SEN. MCCAIN: Yes.
MR. STEPHANOPOULOS: - and have the same general approach to India and Pakistan. President-elect Obama himself has said there's a convergence on Iraq. I wonder about Iran. He still says we need tough but direct diplomacy. Are you willing to give that policy a chance?
SEN. MCCAIN: I obviously couldn't do anything to stop it. I would argue, still, that there has to be some action taken on the part of the Iranians which would not then give them an international forum to tout their ambitions and their dedication to the destruction of the state of Israel. Also, there is continued activities in Iraq conducted by individuals and groups and training conducted in Iraq coming into - excuse me - coming out of Iran into Iraq. It's still going on.
MR. STEPHANOPOULOS: You and the president-elect also agree on Guantanamo - closing down Guantanamo.
SEN. MCCAIN: Yes.
MR. STEPHANOPOULOS: And you signed on to a very harsh report out of the Senate Armed Services Committee this week on the torture of detainees across the military prison system. And you said this wasn't just the work of a few bad apples. In fact, you laid direct responsibility on secretary of defense - former Secretary of Defense Donald Rumsfeld. Listen to this: Secretary of Defense Donald Rumsfeld's authorization of aggressive interrogation techniques for use at Guantanamo Bay was a direct cause of detainee abuse there. It conveyed the message that physical pressures and degradation were appropriate treatment for detainees in U.S. military custody. What followed was an erosion in standards dictating that detainees be treated humanely.
His spokesman called these allegations unfounded. How do you respond to that, first of all? And, number two, how should the former secretary of defense be held accountable for this?
SEN. MCCAIN: I don't know. I think history, obviously, will render a very harsh judgment about this whole detainee treatment situation, whether additional action is called for - I think, as a member of the - ranking member of the Armed Services Committee, that we've done our job.
Let me just tell you a brief story. Not that long ago, a year and a half ago, Senator Lindsey Graham and I were in Iraq. We were in the prison. The general, our U.S. general in charge of prison had us in a secluded area and met a former high-ranking member of al Qaeda - one of the toughest guys I've ever seen. I said, how did you succeed so well after the initial American victory? He said, two things. He said, one - he said, there was no control by your troops. It was total lawlessness. There was rape, looting, pillage, murder, settling of old scores. So there was lawlessness. Second, the greatest recruiting tool we had - we were able to recruit thousands of young men, he said, was Abu Ghraib. So you can't underestimate the damage that our treatment of prisoners both at Abu Ghraib and afterwards -
MR. STEPHANOPOULOS: But some look at that and say -
SEN. MCCAIN: - harmed our national security interests.
MR. STEPHANOPOULOS: Some look at that and say because of that there should be a special prosecutor looking into all the crimes that were committed, and no one should be exempted from that.
SEN. MCCAIN: Well, look, that's not my job. If overwhelming evidence indicates that, that's fine. But the point is, I thought, and Senator Levin did, that we should carry out our responsibilities in the Senate Armed Services Committee and do a thorough and complete investigation. I'm not that interested in looking back. What I am interested in and committed to is making sure we don't do it again. We're in this long twilight struggle here, and so America's prestige and image, as we all know, was damaged by these stories of mistreatment. And we've got to make sure the world knows that that's not the United States of America that they knew and appreciated for centuries.
MR. STEPHANOPOULOS: Let me switch to the politics of the Republican Party. You said, after the election that Governor Palin has a bright future in your party. Does that mean that if she does chooses to run for president, she can count on your support?
SEN. MCCAIN: Oh, no. Listen, I have the greatest appreciation for Governor Palin and her family, and it was a great joy to know them. She invigorated our campaign.
She was just down in Georgia and invigorated their campaign. But I can't say something like that. We've got some great other young governors. I think you're going to see the governors assume a greater leadership role in our Republican Party. Pawlenty, Huntsman -
MR. STEPHANOPOULOS: But why not? Six months ago, you thought she was the best person -
SEN. MCCAIN: Sure. Yes.
MR. STEPHANOPOULOS: - to succeed you if something had happened to you?
SEN. MCCAIN: But now we're in a whole election cycle. Have no doubt of my admiration and respect for her and my view of her viability, but at this stage, again -
MR. STEPHANOPOULOS: No endorsements.
SEN. MCCAIN: - my corpse is still warm, you know? (Laughter.) I don't want to get into that right away.
MR. STEPHANOPOULOS: And you're laughing about it right now, but when you do look back, and you know, we now know that the country was in recession throughout all of 2008, job loss every month. Do you think this was a winnable race for you?
SEN. MCCAIN: You know, I'd like to leave that to others to make that kind of judgment. I do know that when the Dow went down 700 points, there's no doubt you can track that in the - in our polling data. But in a way, that would sound like I am detracting from President-elect Obama's campaign. I don't want to do that. There's no - nobody likes a sore loser.
MR. STEPHANOPOULOS: Your friend Lindsey Graham says the Republican Party has to analyze the fundamentals of the party. Do you agree with that, and what's your analysis of what's going on?
SEN. MCCAIN: My analysis is we've got to get back to doing business the way Republicans say they used to. We've got to restrain spending. We have to be conservative in the best way. We have to concentrate on our national security issues. And very frankly, one of the issues that we're going to address very seriously is Hispanic participation in the Republican Party. President Bush got 43 percent of the Hispanic vote in 2004. I got 31 percent.
Now, we're going to - we, Republicans, are going to have to recruit and elect Hispanic candidates to offices, and that - and do a lot of other things because that's a growing part of our population. We also have to reach out to the African-American community. We have to be - broaden our base, and yet stick to the principles of the party of Abraham Lincoln and Theodore Roosevelt and Ronald Reagan. We can do that. In 2004, as you might recall, Republicans had 55 votes in the Senate and we were going for 60. Things can change. We'll come back. We'll come back.
MR. STEPHANOPOULOS: You're smiling. You've gotten right back to work. But everybody knows that running for president is a searing experience. I think of the story of Walter Mondale, after he lost in 1984. He turned to George McGovern, and said, George, when do you get over it? How do you get over it? McGovern says, I'll let you know when I do. How do you get over it?
SEN. MCCAIN: Get busy. Get busy. Get busy and move on. That's the best cure for it. I spent a period of time feeling sorry for myself. It's wonderful. It's one of the most enjoyable experiences that you can have. But the point is, you've got to move on. You've got to move on. Get busy. I'm still a senator from the state of Arizona. I still have the privilege and honor of serving this country, which I've done all my life, and it's a great honor to do so.
MR. STEPHANOPOULOS: Well, Senator McCain, thank you very much for taking some time with us this morning.
SEN. MCCAIN: Thanks, George.