Interview with Peter Cook on Bloomberg TV

PETER COOK: Senator McCain, thank you very much for joining us again.

MCCAIN: Thank you, Peter.

COOK: I appreciate it. I want to ask you about some of your economic ideas, but I need to begin by asking you about your competition. Democrats debated last night. I gather you didn't catch much of the debate?

MCCAIN: No, I did not. I obviously heard some of the dissection of it and analysis this morning, but I did not watch it last night.

COOK: Your name, of course, came up several times.

MCCAIN: I am sure. (Chuckles.)

COOK: Let me ask you about one aspect of the debate. Senator Clinton said last night, and maybe you can help Democrats out on this, that Senator Obama's comments about Pennsylvania voters, small-time Pennsylvania voters being bitter about some issues, also his connections to Reverend Wright that have drawn so much attention, that that would be ample ammunition for you in a general election. Is she right? Is that going to be fair game?

MCCAIN: Well, in the case of Reverend Wright, I have expressed in the past that I am sure that Senator Obama does not share the extremist statements that Reverend Wright made. But in the case of Pennsylvania made, I think it's very revealing, a very elitist statement, a failure to recognize history. These are the people from these, quote, "small towns," that went through one of the worst economic periods in America's history called the Great Depression.

And, yet, they're the ones who, when the call came went out - and we call them our greatest generation - went out and made the world safe for democracy and defeated an enemy and served and sacrificed, not because they were depressed by the economic situation nor were they driven to their fundamental faith and values or their respect for the Constitution of the United States, the second amendment, but because they had an ultimate faith and hope and belief in America and its future. Those people still have that. And to attribute our fundamental values and beliefs that these people have, not only in Pennsylvania, but all over America, to some kind of economic circumstances is probably as out of touch as anything I've ever seen.

And I note with some interest that Senator Obama basically defended those statements and continues to do to this day. So, yeah, I think it would be because that really is a fundamental difference between myself and Senator Obama about our faith and confidence and trust in the American people. When you don't have that kind of trust and faith in the American people, then you want government to do things for them. I want the people to do things, not the government.

COOK: Let's talk about the economic circumstances facing Americans right now.

MCCAIN: Sure.

COOK: I'm going to ask you a version of the Ronald Reagan question. You think if Americans were asked, are you better off today than you were before George Bush took office more than seven years ago, what answer would they give?

MCCAIN: Certainly, in this time, we are in very challenging times. We all recognize that. Families are sitting around the kitchen table this evening and figuring out whether they're going to be able to keep their home or not. They're figuring out whether they're - why it is that suddenly and recently someone in their family or their neighbor has lost their job. There's no doubt that we are in enormous difficulties.

I think if you look at the overall record and millions of jobs have been created, et cetera, et cetera, you could make an argument that there's been great progress economically over that period of time. But that's no comfort. That's no comfort to families now that are facing these tremendous economic challenges.

But let me just add, Peter, the fundamentals of America's economy are strong. We're the greatest exporter, the greatest importer, the greatest innovator, the greatest producer, still the greatest economic engine in the world. And, by the way, exports and free trade are a key element in economic recovery. But these are tough times, tough times, and nobody knows that more than American families including in small towns of Pennsylvania. They haven't lost their fundamental religious beliefs, their respect for the Constitution, their right to bear arms. They are still - keep America as a beacon of hope and freedom throughout the world.

COOK: Let's talk about some of your economic ideas. You rolled them out this weekend in Pittsburgh. You're talking about cutting the corporate tax rate; you're talking about expanding the exemption for children, doubling that; you're also talking about repealing the Alternative Minimum Tax on top of -

MCCAIN: Could we - do you want to mention those in order or a larger question? Go ahead.

COOK: I'm going to add to that the biggie and that's making the Bush tax cuts permanent.

MCCAIN: Mm-hmm.

COOK: You're also talking about freezing discretionary spending for a year, removing earmarks. Democrats, even some Republicans that I've talked to can say there's no way you can do all of those things and still balance the budget. You still can't do that without adding to the deficit. Are they wrong?

MCCAIN: First of all, you cannot have declining revenues and severe economic difficulties and balance the budget. We all know that when the economy is worse then revenues decline. We can go back to Jack Kennedy when he cut capital gains and we had economic growth and therefore increased revenues. So all I can tell you is that these are tough things, but it's now time for change. And that kind of change is the action that I'm talking about, including freezing discretionary spending for a year.

I mean, why is it that, as we speak, the United States Senate is going to refuse to vote on a gas-tax holiday for every American to give them a little break this summer when they travel and yet they're adding pork-barrel project after pork-barrel project to the tune of billions to our highway system, which doesn't go to the areas of the greatest need? Now, one of the criticisms is, well, this will harm our ability to restore our basic needs. Well, if we cut out the earmarks, if we cut out the bridge to nowhere, which Senator Obama voted for, if we cut out the bridge to nowhere and the billions of dollars of pork-barrel projects, why don't we move that money to our very vital infrastructure needs as opposed to just adding pork-barrel project onto it. So of course we need to -

COOK: But, sir, a lot of people see earmarks as - perhaps repugnant as those may be to a lot of American voters - that the serious sum of money you're talking about last year was about $20 billion, that it's just not enough to do what you're talking about in terms of tax cuts.

MCCAIN: You know, that's just fundamentally misunderstanding of what's going on in Congress. There were $35 billion total in two years of pork-barrel projects: $35 billion signed into law by the president of the United States. It was an additional $65 billion pork-barrel projects that were put on and the crazy way that we do budgeting, those then became part of the baseline. So we increased spending by some $100 billion that I could eliminate in a New York minute if we had the guts to do it.

Now, $100 billion is not chump change. And then when you look at a freeze in discretionary spending, when you look at reform in defense procurement, which I saved the taxpayers by myself - not by myself, with the help of a lot of wonderful people - of $6 billion, $6.2 billion on a flawed Boeing deal that has sent people to jail. So to somehow believe, well, that's just a small amount - you know what that is, my dear friend? That is a cop-out. That is a cop-out because the American people no longer believe that we are careful stewards of their tax dollars. So when we ask them to reform Medicare and Social Security, while we're spending billions on these wasteful projects, $233 million in most communities in American isn't chump change. That was the cost of the bridge to nowhere.

COOK: Let me ask you about housing because you said you wouldn't play politics with the housing crisis. You also said a month ago - I want to quote you directly here: "It is not the duty of government to bail out and reward those who act irresponsibly whether they are big banks or small borrowers." Yet, now you're proposing, potentially, federal taxpayer help to as many as 400,000 Americans facing the risk of foreclosure including some who got in over their head because of decisions they made. Are you playing politics with this? Is it fair for people to suggest this might be a flip-flop?

MCCAIN: I don't think it's fair, Peter, because I also said in that statement that there are hard-working American families that find themselves in the conundrum of all of a sudden ratcheting up of their mortgage payments, which they had no control of nor were not aware when they signed the document, and they could afford the previous payments.

COOK: So none of the 400,000, sir, are guilty of simply signing - looking at houses they wanted to buy and couldn't afford?

MCCAIN: Well, it has to be a primary residence; they have to provide proof that they could afford the mortgage payments at the time. There are certain parameters. That's why it's 400,000 and not everybody. But I think there are legitimate homeowners who are in their primary residence who should be eligible for a 30-year fixed rate guaranteed by the FHA loan and thereby helping both the lender and the borrower. It seems to me that 400 - relief to 400,000 people who are basically caught up in this crisis is a legitimate role for government. It's not a legitimate role to reward the speculator.

In other words, this has to be primary residence. It is not a reward for greedy people on Wall Street. That is why I have also asked for a Department of Justice investigation of some of these practices on Wall Street. And I find it obscene when some of these executives take major pay packages as a reward when ordinary American families are risking the loss of the American dream, which is their home.

COOK: Sir, there is a debate going on right now whether Alan Greenspan, when he was the Fed chairman, kept interest rates too low, and that is part of the problem we are seeing, not only with the economy, but with the housing situation as well. Do you have a view on that?

MCCAIN: I view Alan Greenspan's stewardship - and I know this may be in contradiction to some people's opinion - I believe his overall stewardship, I believe 20 years as chairman of the Fed, as having been good for America's economy, whether he kept interest rates too low or too high. Look, that is a judgment made by the Federal Reserve, and politicians, by intention, are kept out of it. In other words, unfortunately, Congress does not set interest rates. History, I think, will judge Alan Greenspan rather well.

COOK: If you did, would you be lowering them next week?

MCCAIN: Sure, I would. Is there any politician that wouldn't - (chuckles) - that would say, look, I want you to pay higher interest rates? That is why we put that responsibility in the hands of the Fed, not in the hands of the, may I say, politicians who believe in short-term gratification.

COOK: Let me ask a couple quick issues before we leave you here.

MCCAIN: (Coughs.) Yeah, I'm sorry. Sure.

COOK: Climate change. Yesterday, the president - this is one of the areas you have broken with the president. You have supported mandatory greenhouse gas emission caps. The president signaled for the first time he wants to stop the growth of greenhouse gas emissions by 2025. There is a bill about to hit the Senate floor, which would cap and reduce greenhouse gas emissions about 63 percent by the year 2050. It is being offered by your good friend, Joe Lieberman. Are you going to support that bill?

MCCAIN: I will support if we have a dramatically increased role for nuclear power. The radical environmental groups are still playing too great a role in this legislation. Nuclear power has got to be a very big part of any effective action to reduce greenhouse gas emissions. I am glad that Congress is moving. In due respect of the president, it is not enough, and it is too late.

COOK: All right. Let me ask you about the vice-presidential selection process that you are beginning here. First of all, have you narrowed your choices at all?

MCCAIN: No. (Chuckles.) But we are moving along, we are moving along. But we have found - and I really have and it's unfortunate - anytime anyone's name is mentioned, then immediately they are almost subject to an invasion of privacy. So we are just moving along with the process.

COOK: Should anyone who is considered for the job expect that a vice president under President John McCain would have less authority and power than Dick Cheney has for George Bush?

MCCAIN: Hmm, I don't know. I think that - it has got to be a team, and I think they have got to work together. Certainly I believe in parceling out responsibility, whether it be to the vice president or Cabinet members. I believe in delegating, and I think that that is one of the great aspects of great leaders is delegation of authority and responsibility. But every president achieves a relationship with their vice president.

COOK: Did the vice president exceed the bounds of that office in any way, do you think, during the course of the last seven years?

MCCAIN: It is not so much exceeding the bounds of office. I think some decisions were made - and I'm sure with the president - in the issue of torture that I don't agree with, but I don't know if it quote, exceeded the bounds of his authority. As far as I know, everything that the vice president has done was with the consultation and agreement of the president.

COOK: Final question, sir. Are you looking forward to finally having a single Democratic opponent to take on? And will you know who that person is after Pennsylvania on Tuesday?

MCCAIN: Sure, I am looking forward to getting the campaign cranked up. But I have no clue. You and I were last together in South Carolina. The relationship, as far as Senator Obama and Senator Clinton and their chances, were different than they are today. And I am sure the next time we get together, they may be different again. One thing about this primary season on both sides of the aisle, I think you would agree, it's very unpredictable, including in my case. (Chuckles.)

COOK: Senator McCain, we thank you very much for the time. We appreciate you joining us here on Bloomberg.

MCCAIN: Thank you, Peter.