Interview with George Stephanopoulos on ABC News' "This Week"

STEPHANOPOULOS: You're a superstitious man.

MCCAIN: Let me say that I'm the luckiest man. You know, I don't like to use superstitious. I just feel that I'm very lucky, and I like to have things that make me luckier.

STEPHANOPOULOS: So when was the first moment you let yourself believe "I'm going to be the nominee"?

MCCAIN: I haven't yet.

STEPHANOPOULOS: You haven't yet?

MCCAIN: Well, I think we've got to go through it. I think we've got a very good shot at it. I'm optimistic. But I think the time to do that is when [former Arkansas] Governor [Mike] Huckabee and the party decides that I am the nominee. He's still in the race, and he said he's going to stay in, and I respect that. So we'll compete.

STEPHANOPOULOS: Back in 2005, you said, "I have no doubt that Sen. [Hillary] Clinton would make a good president."

MCCAIN: Well, look, here's -- Sen. Clinton and I are sitting next to each other, and we're asked, "Would she," quote, "be a good president?" She would be a good president in the respect that I think she has integrity, I think she has all of the qualities that are necessary, but she has a very different philosophical view, the liberal Democratic view, than I have, which is conservative Republican.

So when you say "good," she's a good person. But we have strong differences in our views of government. I think she is a very good person. I think that Sen. [Barack] Obama is a good person.

STEPHANOPOULOS: But not good presidents?

MCCAIN: They certainly wouldn't make the kind of president that I would be or I wouldn't be running. You see my point? It's not a, quote, "good." I think they would work hard. I think they would be dedicated to the things that they believe in and stand for. I just have different fundamental philosophical views than they do.

STEPHANOPOULOS: But it sounds like you wouldn't say the same thing today?

MCCAIN: I would say that they would be good in the respect they're people of good character, honesty, integrity, when you look at that. Would they be good from a governing standpoint? Certainly not what I would do for this country.

STEPHANOPOULOS: Sen. Obama focused on you on Tuesday night.

MCCAIN: I heard.

STEPHANOPOULOS: The first issue he raised was Iraq.

OBAMA: I will offer a clear choice. John McCain won't be able to say that I ever supported this war in Iraq, because I opposed it from the start ... Senator McCain said the other day that we might be mired for 1000 years in Iraq... 100 years.

STEPHANOPOULOS: He says the wrong war, the wrong time, not worth the cost in the blood and treasure. You obviously have a very different view.

MCCAIN: Yes.

STEPHANOPOULOS: And the country seems to agree, at least right now, with him. Can you win that argument? And can you win the White House if you don't?

MCCAIN: I am confident that I can convince the American people that the consequences of a date for withdrawal are catastrophe and al Qaeda trumpets that they win.

I believe I can convince the American people that after nearly four years of mishandling of the war that we're now doing the right thing and we're succeeding. I think I can convince the American people that, continuing with this strategy, we will be able to withdraw more troops, we will provide a political and economic stability, along with military stability.

Look, you know, let me just remind you that Sen. Clinton and Sen. Obama both said the surge wouldn't work, OK? They said it wouldn't work. Most objective observers believe that it is.

Then they said that politically there would never be any progress in Iraq. Well, they just passed a series of laws a little bit better than what we do in Washington. They passed a budget.

But more importantly, they're going to have provincial elections. More importantly, they're going to have -- resolving this issue of Sunni integration into the government and society. And they are making progress. So they're wrong again.

They are wrong about...

STEPHANOPOULOS: But if Iraq is meeting those marks, then why not withdraw our troops step by step, as Sen. Obama and Sen. Clinton call for?

MCCAIN: Because it has to be dictated by events on the ground, not by an arbitrary date and not an arbitrary date.

STEPHANOPOULOS: But if we are making progress?

MCCAIN: We are making significant progress. And General [David] Petraeus [commander of coalition forces in Iraq] will come back the beginning of April and he will testify to that, but he will be, I think, the major determining factor, because he has succeeded, as to when and how we would draw additional troops. It can't be done, plucked out of the air, that we're just going to withdraw.

STEPHANOPOULOS: President Bush is also negotiating a long-term status of forces agreement with Iraq. Both Sen. Clinton and Sen. Obama say that agreement has to come to the Congress.

MCCAIN: It wouldn't bother me to bring it to the Congress. I don't think that's a huge deal. We have status of forces...

STEPHANOPOULOS: President Bush says he doesn't want to, though.

MCCAIN: Well, look, if we succeed in Iraq, which I believe we are, the rest of it takes care of itself. We have status of force agreements with a number of countries that have never been approved by Congress; we have some others that have been approved by Congress.

STEPHANOPOULOS: But the big ones, Korea was approved by Congress.

MCCAIN: Yes, but we have some countries -- we're still in Bosnia. We don't have a status of forces agreement there, as I recall. We have -- look...

(CROSSTALK)

MCCAIN: I don't have a problem with going to the Congress, because I think the issue takes care of itself when we succeed. I still say setting a date for withdrawal is chaos, genocide, and we'll be back, because al Qaeda will then succeed.

STEPHANOPOULOS: How about Iran? You said many, many times the only thing worse than war with Iran is a nuclear Iran. Would President McCain come to Congress before taking military action against Iran?

MCCAIN: Unless it was some dire emergency that required -- you know, I mean, they were about to launch or something like that. But under most -- almost all reasonable scenarios.

Of course, George, I really believe that, having been a member of Congress all these years, that we have to have more of a partnership with the Congress. We have to have more consultation. We have to do those things. But there still is only one title of commander-in-chief, one person with that title.

STEPHANOPOULOS: No. 1 issue right now, the economy.

MCCAIN: Yes.

STEPHANOPOULOS: Sen. Obama went at that on Tuesday night, as well.

OBAMA: I admired Sen. McCain when he stood up and said that it offended his conscience to support the Bush tax cut for the wealthy in the time of war...but somewhere along the road to the Republican nomination, the Straight Talk Express lost its wheels because now it is all for those same tax cuts.

STEPHANOPOULOS: He says basically you've sacrificed your principles for the sake of the nomination.

MCCAIN: Well, for a long time I have said that I thought the tax cuts ought to be made permanent. For a long time back, I said, look, we've got to have spending restraint, the way that Reagan did when he restored our economy when it was in the tank, thanks to then-President Carter's mismanagement of the economy, and we entered into a great period of prosperity in America.

Spending restraint is why our base is not energized. Spending restraint is why we are having to borrow money from China, and we've got to have spending restraints, in my view.

But to impose on the American people what essentially would be a tax increase of thousands of dollars per family in America is not something I think -- well, I'm sure would be bad for the economy of this country.

STEPHANOPOULOS: So on taxes, are you a "read my lips" candidate, no new taxes, no matter what?

MCCAIN: No new taxes. I do not -- in fact, I could see an argument, if our economy continues to deteriorate, for lower interest rates, lower tax rates, and certainly decreasing corporate tax rates, which are the second-highest in the world, giving people the ability to write off depreciation in a year, elimination of the AMT.

There's a lot of things that I would think we should to relieve that burden, including, obviously, as we all know, simplification of the tax code.

STEPHANOPOULOS: But under circumstances would you increase taxes?

MCCAIN: No.

STEPHANOPOULOS: How about -- what else would you do right now to get this economy moving again? A lot of people are worried about it. Many Democrats have said and many outside economists have said we're in a recession right now. Do you think we are?

MCCAIN: I think, according to what the experts, Bernanke and others, are saying, we're very close to it, in fact, closer to it than we have been, you know, for some time.

I think it's very important that we send a signal to the American people we're going to stop the earmark pork-barrel spending. Is that a huge part of the budget?

(CROSSTALK)

MCCAIN: Because it's out of control. Well, one reason is, if you -- in the last two years, the president has signed into law $35 billion worth of pork-barrel projects. That would have been $1,000 tax credit for every child in America. Wouldn't it have been better for our economy to give $1,000 tax credit for every child in America, as opposed to a bridge to nowhere in Alaska?

And it also has a confidence impact, a confidence impact that the American people see their tax dollars being frittered away in wasteful and unnecessary spending, which, by the way, Sen. Obama has engaged in heavily and Sen. Clinton has engaged in heavily. They bought in.

They're talking about change? I want change to be stop this waste of American tax dollars.

STEPHANOPOULOS: But is that really the answer to the housing crisis we're seeing right now, the credit crunch we're seeing?

MCCAIN: It is...

STEPHANOPOULOS: The anxiety Americans are feeling?

MCCAIN: Well, I think we've got to -- I'm glad we did the stimulus package. I think we need to have lower interest rates. I think we need to eliminate the AMT. I think we need to have depreciation in one year of business investment.

I think we need to reduce the corporate tax rate, which is the second highest in the world, only exceeded by Japan. I think there's a long series of steps we need to take, and many of them we haven't even contemplated yet, if necessary.

But having the impact of a tax increase is certainly not one of them. And that is what Sen. Obama and Sen. Clinton are saying.

STEPHANOPOULOS: They have also said, both Sen. Obama and Sen. Clinton have said we need a government fund to provide -- to help borrowers who are facing foreclosure on their homes. Good idea?

MCCAIN: I don't think so, yet. We have the FHA working. We have a number of institutions working with them.

But I will be glad to do whatever is necessary to relieve the burden of people who are legitimate borrowers who see their home loan interest payments so high -- mortgage payments so high that they can't afford it anymore.

But I don't want to reward people who engaged in speculation. And I certainly don't want to reward institutions that engaged in the practice of lending people that couldn't afford to pay back the loans.

STEPHANOPOULOS: But you're open to helping homeowners?

MCCAIN: I am open to helping homeowners. I would rely to a large degree on the situation (inaudible) but also people like Secretary of Treasury Paulson, who the financial markets and a lot of us have a great deal of faith in. If more needs to be done, I'm for doing more.

STEPHANOPOULOS: You mentioned earlier that we needed lower interest rates. Do you believe that Ben Bernanke has been too slow off the mark?

MCCAIN: It's hard for me to make the judgment. Usually these judgments are made in the rear-view mirror, as we know.

But I personally would have liked to have seen those rate cuts earlier. A lot of the people that I respect that are advising me, like Phil Gramm and Jack Kemp and so many others that are in our team, on our team, said that they would have liked to have seen it earlier.

So I guess I would have to say I would have liked to have seen faster rate cuts and earlier than they were done by him. That doesn't mean I want him fired; it doesn't mean that I've lost confidence in...

STEPHANOPOULOS: Re-appoint him if you're elected?

MCCAIN: Oh, I think that those terms of office are...

STEPHANOPOULOS: In 2010.

MCCAIN: In 2010, I would have to consider that at the time, obviously.

STEPHANOPOULOS: How about on the issue of climate change? Because you and Sen. [Joe] Lieberman [I-Conn.] have come out for a bill which would have mandatory reductions in greenhouse gases.

MCCAIN: Gradual reductions, yes.

STEPHANOPOULOS: But they are mandatory.

MCCAIN: Yes.

STEPHANOPOULOS: Are you sticking by that?

MCCAIN: What I mean by that is that it's cap-and-trade, that there will be incentives for people to reduce greenhouse gas emissions. It's a free-market approach. The Europeans are using it now. We did it in the case of addressing acid rain -- look, if we do that, we stimulate green technologies. I have great faith in the American industry. General Electric, the world's largest corporation, has announced they're dedicated to green technologies. This will be profit-making business.

It won't cost the American taxpayer. It will make profits, because we'll move forward with the innovation and ability of American industry to address this issue.

STEPHANOPOULOS: How about the broader frame of this election?

HILLARY CLINTON: I have the greatest respect for my friend and my colleague Sen. McCain, but I believe that he offers more of the same. More of the same economic policies. More of the same of the same military policies in Iraq.

STEPHANOPOULOS: Both Sen. Clinton and Sen. Obama are basically saying, "Vote for John McCain, you're voting for a third Bush term."

MCCAIN: Well, they can -- you know, they're free to say most anything they want to. We will wage this campaign on profound and significant philosophical difference. They are...

Sen. Obama -- how am I different? Climate change. Climate change is an issue. Spending is another issue. There's a number of issues. But Sen. Obama was judged by the National Journal as the most liberal senator in the United States Senate. I'm proud of being a conservative Republican.

We will have a respectful but spirited debate, and the same thing with Sen. Clinton. We'll argue about earmarks and pork-barrel projects. Why is it that Sen. Clinton got $340 million of pork-barrel projects? Sen. Obama only $92 million.

But more importantly, we'll argue about whether we should increase your taxes or decrease them. Obviously, I'm for decreases in taxes. Maybe Americans want their taxes increased. We'll argue about...

STEPHANOPOULOS: ... for middle-income Americans, only raise them on the wealthy?

MCCAIN: Oh, yes, sure, the wealthy, the wealthy. Always be interested in when people talk about who the, quote, "wealthy" are in America. I find it interesting.

But, also, health care. They want the government to run the health care system in America. I want the families to make the choice. We're going to have a number of very significant...

STEPHANOPOULOS: They say your plan won't reduce the ranks of the uninsured.

MCCAIN: They can say whatever they would like. But the fact is that if we bring health care costs under control, and give families choices, and have medical malpractice reform, and treat the chronic diseases with outcome-based rewards and payments, and a number of other things, which we hold hours-long health care forums on, we can preserve the highest-quality health care in the world in America, but we've got to make it affordable and available.

If you like Sen. Obama's plan and Sen. Clinton's plan, go to Canada or one of the European countries before you make that decision.

STEPHANOPOULOS: But you've said before that we should be open to importing drugs from Canada.

MCCAIN: Sure. Why not? Wherever it's cheaper. Wherever it's cheaper.

STEPHANOPOULOS: So you have no problem with...

MCCAIN: Wherever it is cheaper and we can be assured it's safe.

STEPHANOPOULOS: George Will argues that that's going to be importing their price controls.

MCCAIN: Well, again, in all due respect, if it's less expensive where they can get it and we know that it's safe and available and affordable, I'm all for it.

STEPHANOPOULOS: How about the situation in your own party right now? Have you quelled the rebellion among conservatives?

MCCAIN: I think we're making progress there, George. You know, primaries are tough to start with, as you well know, and so we've got to heal those up.

And we're making progress in that direction. I've got the Republican leadership in the House endorsement, and you know the things that we've been doing. A number of the, quote, "conservatives" are coming over to our side.

But I've got a lot of work to do to unite the party, and I'm trying to do that.

STEPHANOPOULOS: Rush Limbaugh says he's doing you a favor by not endorsing you.

LIMBAUGH: If I really wanted to torpedo McCain, I would endorse him, if I want to torpedo him because that would send the independents and liberals that are going to vote for him running away faster than anything

MCCAIN: I respect Mr. Limbaugh, but I do not know which direction he heads. Look, I respect him, but I don't have...

STEPHANOPOULOS: He's been tough on you, though.

MCCAIN: But that's his right to do that. He is an influential person in America on talk radio. If that's what he wants to do, that's certainly his right to do it, and I respect his opinion.

STEPHANOPOULOS: Do you need talk radio to get behind you?

MCCAIN: Well, I'd like to, obviously, have every part of our base behind us. And I hope that, if anyone wants to meet with me, I'm certainly willing to meet with them. And we are making -- as I said, we are making progress, and we've got time. But I'm working hard at it.

STEPHANOPOULOS: You've talked a lot about taxes and spending.

MCCAIN: Sure.

STEPHANOPOULOS: And that's what economic conservatives worry about.

MCCAIN: Sure.

STEPHANOPOULOS: Social conservatives are most worried about judges and the Supreme Court. And from talking to them, I get the sense that their biggest fear is that there's going to be another David Souter on the court.

MCCAIN: Well, one of the ways I can reassure them is that the White House will tell you that I was one of those who played an active role in the confirmation of Justices Alito and Roberts. The so-called Gang of 14, which was maligned by some, we were able to get all but two of the president's nominees confirmed by the United States Senate.

I have pledged that I will nominate only people to the bench that strictly interpret the Constitution of the United States. And I hope that I can assure them of that commitment.

STEPHANOPOULOS: Can you name some candidates out there who meet that criteria?

MCCAIN: You know, I can't, George. I don't know any right now, because they're -- you know, there's not an opening on the United States Supreme Court. I know that people like Ted Olson, who are advising me and supporting me, and the Federalists, I would seek their advice and counsel, Jon Kyl, who is on the committee and my close friend in the Senate, and others.

But I have not examined the other candidates, because it just hasn't been topical yet.

STEPHANOPOULOS: How about on the vice presidency?

MCCAIN: We're getting ahead of ourselves.

STEPHANOPOULOS: Do you feel a need -- not that far ahead -- do you feel a need to pick someone who conservatives say right off the bat, "He or she is one of us"?

MCCAIN: Well, I hope that I could nominate someone that all of our party -- I mean, we have a lot of our party that all of our party would feel comfortable with. And that's a process that, again, you've seen before, where we begin a process of looking at the various people.

But, again, I am a little bit superstitious in that I really want to make sure that we have the nomination before I started that process.

STEPHANOPOULOS: So you've done nothing on that?

MCCAIN: No, nothing.

STEPHANOPOULOS: One of the other things you're going to have to deal with the fall -- and we've seen this throughout the primary process -- the enthusiasm gap.

MCCAIN: Exactly.

STEPHANOPOULOS: More Democrats coming out to vote, Democrats raising a lot more money than the Republicans right now, more enthusiasm for their candidates. That's a big barrier to you in November.

MCCAIN: Oh, listen, this is going to be an uphill battle all the way. I can out-campaign them, and I can out-debate them, and I can out-perform them in what I think my vision for America is more in keeping with the majority of Americans.

But I mentioned to you earlier, we've got to reunite the party, and we've got to re-energize the party. And I'm prepared to do that. We've got plenty of time. But I won't waste a day.

And I'd like to mention one other thing: I'll compete all over America. We won't have -- we'll be competing everywhere, including the state of California.

STEPHANOPOULOS: Including California?

MCCAIN: Excuse me, "Cali-for-nia," yes.

STEPHANOPOULOS: We're just about out of time. You know, the last time I was on the trail with you -- I've seen you since then, but the last time I was on the trail with you it was in Iowa.

MCCAIN: I remember.

STEPHANOPOULOS: It was back in June. Your campaign was in a lot of trouble.

George: I talk to a lot of people about your campaign and here's what they say -- the phrase they use when they talk about your campaign -- "dead man walking"

McCain: laughter

STEPHANOPOULOS: How did you come back?

MCCAIN: I think we went and told everybody the truth. We had the town hall meetings. I told you back then I thought I could out-campaign my opponents, because I love it.

I think also that we had kind of a seminal experience. I was in Baghdad over Fourth of July; 688 brave, young Americans re-enlist to remain in the military and fight there that could have gone home.

I was inspired by that. I said, "Look, we're going to take on this surrender that the Democrats want to have." Harry Reid had declared the war lost. They were all saying they were going to set a quick date for withdrawal.

We fought it off. The surge started succeeding, and we started succeeding in our campaign. And I've been very, very lucky and worked hard, and I'm very humble. And I believe that this isn't about personality; it's about serving. And that's what I want to do for a little while longer.

STEPHANOPOULOS: Senator, thanks very much.

MCCAIN: Thanks for having me on again.