WALLACE: And we're back now with Senator John McCain.
SEN. JOHN MCCAIN, R-ARIZ.: Thank you, Chris.
WALLACE: You just heard Nancy Pelosi talk about these automatic spending cuts, that kick in on March 1st. She wants a mix of cuts and, yes, more taxes, which I know you don't like. On the other hand, if you go to the automatic cuts, sequestration, you get a 13 percent cut over the rest of the year in the Pentagon, which I know you also don't like.
If it comes down to that, higher taxes, or sequestration, the Pentagon cuts, where do you go? Where do you come down?
MCCAIN: Well, obviously, I don't want to see tax increased. But what I would like to see is the president call the leaders over to the White House and say, look, we've got to solve this problem. The sequestration -- Secretary Panetta, outgoing secretary of defense, is one of the most widely respected men or person in Washington, D.C., and he has been saying it will devastate our national security. We are -- Republicans and Democrats are responsible for this new cliff and I'll take responsibility for it for the Republicans.
But we've got to avoid it. We've got to stop it. Our nation's security is --
WALLACE: The president says -- OK, the price of that is more taxes.
MCCAIN: The president is the same person who during the campaign said, "It's not going to happen." Remember that? He just dismissed it.
And a lot of us, Lindsey Graham and Kelly Ayotte and I were traveling around the country warning about what was going to happen as a result of sequestration. And it is devastating.
And the world is very dangerous -- I'm sorry I'm a little emotional about this, but the men and women serving in the military deserve better than what they're giving -- what we're giving them. They don't know what they're going to be doing tomorrow. We just delayed the deployment of an aircraft carrier. The cuts are coming across the board.
The consequences are severe. It requires bipartisanship. Will I look at revenue closers? Maybe so. But we've already just raised taxes. Why do we have to raise taxes again?
WALLACE: In his State of the Union speech, aides say that the president is going to call for new investment/spending on education, and energy and infrastructure and manufacturing to try to boost the economy and to boost the middle class.
Will you go along with that?
MCCAIN: As long as we pay for it. We've seen this movie before. We saw it with the so-called stimulus package, back in the beginning of the administration. And, we saw the longest, most stagnant economy in history and now a debt and deficit, that's $51,000 for every man, woman and child in America.
The size of the government has grown exponentially. We are -- for example, on sequestration, we have a proposal, for every three federal retiree, we hire only one. That would take care of the sequestration problem and there are simple answers to many of these problems that we can address the problem without raising people's taxes.
But, first, we ought to sit down across the table. The president should with us and work it out. All he does is go out and make speeches.
WALLACE: The president's nominee for CIA director, John Brennan, testified in his confirmation hearing this week, faced tough questioning, especially about the administration's targeted killing program for terror suspects, even American citizens.
What do you think of this idea which is gaining some currency on Capitol Hill of what's been called a drone court? Where before the president puts a targeted terrorist and, especially an American citizen, on a "kill list", they have to get approval from a judge?
MCCAIN: I don't agree with it, because I think it is an encroachment on the powers of the president of the United States. But what we need to do is take the whole program out of the hand of the Central Intelligence Agency and put it into the Department of Defense, where you have adequate oversight, you have committee oversights, you have all the things that are built in, as our oversight of the Department of Defense.
Since when is the intelligence agency supposed to be an air force of drones that goes around killing people? I believe that it's a job for the Department of Defense.
WALLACE: But no drone court?
MCCAIN: No. I don't -- there has to be a legitimate oversight by the Congress, and as open a process as possible. And we are in a strange conundrum. You can kill an American citizen overseas. But according to this administration, if you capture him in the United States, they've got to be read their Miranda rights. What's wrong with that picture?
WALLACE: In another hearing this week, you -- I must say you have been making more news as a questioner than I have -- got a surprising admission from both CIA -- rather, Defense Secretary Panetta and the chairman of the Joint Chiefs, General Martin Dempsey. They revealed that along with Secretary Clinton and then-CIA Director Petraeus --
MCCAIN: And now, Director of National Intelligence Clapper.
WALLACE: Right, added to it. That they all, last summer, last fall, supported the idea of arming the rebels in Syria, but, that the president overruled his entire national security team. What do you make of that, and from what we hear from his aide, his continued refusal to intervene in the civil war in Syria?
MCCAIN: I think, they are writing one of the more shameful chapters in American history, 60,000 people have been massacred. I've been to the refugee camps and met these people who -- the atrocious treatment that's going on. It's disgraceful and, by the way, there is a national security component, it would be the greatest blow to Iran, in the last 25 years, if Bashar al-Assad fell, not to mention Hezbollah.
So, it's incomprehensible. And the president of the United States, to say that -- because people are dying in the Congo is a reason not to act in Syria -- it shows to me a lack of experience and knowledge, which is very dangerous to America's national security interests.
And, again, it's shameful that we have let over 60,000 people be massacred and we won't even give them arms, while the Iranians, the Iranian Revolutionary Guard on the ground and Russian continue to supply weapons.
WALLACE: Then there is the president's nominee to be the new defense secretary, former Senator Chuck Hagel. At his confirmation hearing, I think it's fair to say you gave him a real going-over about his opposition to the Iraq troop surge in 2007. Let's take a look at that.
(BEGIN VIDEO CLIP)
MCCAIN: Were you correct or incorrect?
CHUCK HAGEL, DEFENSE SECRETARY NOMINEE: My re --
MCCAIN: Yes or no?
HAGEL: My reference to the surge being dangerous --
MCCAIN: Answer the question, Senator Hagel. The question is -- were you right or wrong?
(END VIDEO CLIP)
WALLACE: I've got a question for you -- how are you going to vote on the Hagel nomination?
MCCAIN: We've still got some more information.
But, again, that wasn't an academic discussion I was having with Senator Hagel. We were losing the war in 2006. And, when the president came around, Bush, who I had been very critical of, came around and sent David Petraeus and the surge, we succeeded in Iraq.
Now, because of the Obama administration's action afterwards we were losing, and it was very badly unraveling. But the fact is, that if we hadn't done that, more American lives would have been lost unnecessarily.
So, for then-Senator Hagel to say, well, he'll let history be the judge, he was there and involved. And I'm sure he is wrong and he knows he's wrong on the basis of the facts of what happened.
WALLACE: So I've got to press it again, because you saw the hearing, you know his record. Are you going to support him for defense secretary?
MCCAIN: I will see the rest of the answers to his question, but, certainly, I have very grave concerns.
WALLACE: Grave concerns?
WALLACE: So, is it fair to say you are leaning against voting for him.
MCCAIN: I think that would be fair.
WALLACE: How do you feel about other Republican senators who are suggesting some procedural move to block the nomination?
MCCAIN: I think we need all the information from Senator Hagel. But the fact is we have never filibustered a cabinet appointee, and that -- I do not believe we should filibuster his nomination.
WALLACE: Or a hold or one of those other --
MCCAIN: I think we need some more information on questions that he hasn't answered. But -- and I hope those question get answered but I don't -- we've never filibustered a presidential cabinet appointee and I don't think we should start here.
WALLACE: Finally --
MCCAIN: Elections have consequences, unfortunately.
WALLACE: You know.
MCCAIN: There you go.
WALLACE: Finally, immigration. You are part of a bipartisan group of senators, eight -- four Republicans, four Democrats -- who have come up not with legislation but the outlines of a plan for immigration reform. The president wants to put the 11 million illegals who are here now on the path to citizenship, and Secretary of Homeland Security Napolitano said this week that she believes the border is -- her word -- the border is secure.
You, on the other hand, your group are talking about linking the path to citizenship to a number of measures to further enforce the border.
Question: will you insist in any immigration package on border enforcement first?
MCCAIN: Yes, I will. And that is basically the agreement. There are 11 million people living in the shadows. I believe they deserve to come out of the shadows. The children who are brought here when they were children, they deserve that kind of consideration as well.
But we do need to have a secure border. We can do it with surveillance capabilities and other capabilities. And I believe we can achieve that. But that's our commitment and I owe it to people who live in the southern part of my state where drug smugglers are coming across their property every single night.
WALLACE: Let me ask you about the flipside of that, though.
WALLACE: Because under your plan, although they wouldn't get the path to citizenship until you got those border enforcement certification, they would almost immediately get what's called probationary legal status, which basically means they could continue to live in this country legally.
Some of your critics on the right are saying that's amnesty.
MCCAIN: Well, I don't think it is amnesty to start with. Second of all, what do you want to do with them? That is the question in response.
And third of all, it's a tough path to citizenship. You've got to pay back taxes. You've got to learn English. You've got to have a clear record. You've got to get to the back of the line behind other people who have come here legally or even waiting legally.
So, I just reject that. But I understand how emotional this issue is, with many of my friends on both left and right. But I think we are making progress, and, we have not come to final agreement on many of the details, some of which you just asked me about.
WALLACE: Senator McCain, thank you. Thanks for coming in today. Somehow, you always find yourself at the center of the action.
MCCAIN: Thank you, my friend.