This is a partial transcript from Your World with Neil Cavuto, May 21, 2003, that was edited for clarity. Click here for complete access to all of Neil Cavuto's CEO interviews.

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NEIL CAVUTO, HOST: Senator John McCain (search) with us right now. He was part of this terrorism hearing on Capitol Hill. Also taking in some comments from News Corp. boss Rupert Murdoch from his position on the Senate Commerce Committee. Also taking in this issue on tax cuts, one of the few Republicans not for this package. So he’s been a busy guy. He joins us now out of Washington.

Senator, always a pleasure. Thanks for coming.

SEN. JOHN MCCAIN, R-ARIZ.: Hi, Neil.

CAVUTO: Let me first off go on the tax-cut package. The way it stands now still not keen on it, right?

MCCAIN: Well, we don’t know the cost of the war. We don’t know the cost of reconstruction.

We know we’re going to have to spend a lot of money on national security just examining the new renewed threats that we have and increased spending for national security. It’s obvious now that there’s going to be a lot more money that needs to be spent on Iraq.

I think at this time that tax cuts are not what’s necessary. A few months from now, once we know what this cost is going to be, then I think it may be necessary but certainly not at this time.

We’ve gone from a $127-billion surplus to a $300-billion deficit, and a lot of people are saying as high as $500 billion. Republicans used to be against deficits. Meanwhile, the pork-barrel spending goes on in the most obscene fashion here in the Congress.

CAVUTO: Isn’t it then more in order to go after the pork-barrel spending than giving people their money back?

MCCAIN: Well, when you go after the pork-barrel spending, then you don’t spend the people’s money. For 2002, we identified $44 billion -- B -- billion in pork-barrel spending earmarks, not to mention the policy changes that were made on appropriations bills without debate and discussion, which also had a bad effect on our economy because a lot of it was protectionism.

CAVUTO: Let me ask you, Senator, all things being equal right now and given the fact that you differ with the president so strongly on this tax cut and on some of these spending issues, would you ever consider challenging him for the Republican nomination next year?

MCCAIN: No, no. But, look, the president and I agree on most issues.  There was a recent study that showed that I voted with the president over 90 percent of the time, higher than a lot of my even Republican colleagues.

This is an honest difference of opinion, but it’s also what I campaigned on. I campaigned on a tax package that had to do with a balanced budget, not to do with massive deficits, and I’m sticking with the principles and the philosophy that I campaigned for president on, albeit I lost.

CAVUTO: All right. The reason why I mentioned the tax-cut issue again, sir, is that there is a feeling at least among most in your party that this is going to be stimulative to the economy because so much of it this time, unlike the tax cut, is front loaded with the retroactive tax cuts, what have you, the child-care credits, and some of the other features that it will actually be good longer term for the same deficits you’re worried about now. What do you say?

MCCAIN: Well, that’s not the view of Alan Greenspan, as far as the dividends are concerned. He said it would take -- have a long-term stimulus.

Many, many economists that I respect and admire say that this is exactly the wrong thing to do, or it, certainly, will have little or no effect, and there are many, many economists that are deeply concerned about -- as far as sheer numbers are concerned -- the largest deficit in history, not as a percent of GNP -- or GDP but as far as percent.

And, also, we have unprecedented challenges as far as national security and homeland security are concerned.

CAVUTO: No way in heck would you consider a tax cut under these circumstances, right? Bottom line.

MCCAIN: Not at this time, certainly. In a...

CAVUTO: OK.

MCCAIN: In a few months, but I’m sure you’ve noticed that there have been terrorist attacks in recent days all over the world, and we just raised our alert again. There are many areas that I know of that need large infusions of money for protection.

And, meanwhile, again, I want to point out this pork-barrel spending is not small chump change. These are tens of billions of dollars that are being totally wasted. I hoped the president would veto some of those pork- barrel bills and send a message to Congress that the days of free spending -- pork-barrel spending is over.

It’s disgraceful and I’m embarrassed.

CAVUTO: Let me ask you about this terrorism threat. How likely do you think it is, Senator, that we will see another terrorist incident, let’s say, of the magnitude of September 11 in this country?

MCCAIN: I only have to trust the word of people like Tom Ridge and our national security people. I don’t have any firsthand knowledge, but they just raised the alert level again. We just lost American -- lives of innocent Americans in Saudi Arabia.

Every expert I know of says the threat is heightened. That’s why we’re at the next highest state of alert. So I can only take their word, and it means that there’s a -- every time that we have to go on heightened alert, guess what, our expenses go up.

CAVUTO: Finally, very, very quickly on talking to Rupert Murdoch today. As things stand now, do you think he should get DirecTV?

MCCAIN: Yes, I think that -- I would rely on the judgment, to some degree, of the FCC and the Justice Department. I think it -- I have concerns about it, but I think it’s probably something that can go through.  I have concerns about media concentration, radio concentration.

But I’ve got to be honest with you. I’m not sure where that level of media concentration becomes a danger. I think there is a danger, but I don’t know where it is. And so I think that this probably works.

CAVUTO: Senator McCain, thank you very much.

MCCAIN: Thanks, Neil.

CAVUTO: We’ll have more after this.

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