"FOX NEWS SUNDAY" HOST CHRIS WALLACE: With partisan warfare escalating this week in Washington, we want to get two different perspectives on what's going on here, first from Senator John McCain, who joins us from Phoenix.

And, Senator, welcome back to "FOX News Sunday."

SEN. JOHN MCCAIN, R-ARIZ.: Thank you, Chris. Good morning.

C. WALLACE: A series of polls out this week show that President Bush's standing with the American people has never been lower. His approval rating is lower than Reagan was during Iran-Contra (search), than Clinton was during the Lewinsky scandal (search).

A majority of those surveyed now say that his presidency is a failure and question his integrity. Question, should he shake up his staff and should he address the nation to try to get past this?

MCCAIN: That's a decision that's up to every president, and I can't make a judgment as to what the president should do.

And by the way, you forgot to mention that Congress's approval ratings are lower than they've been in at least 10 years as well, so it's -- the disapproval is spread pretty widely.

What I think the president has to do, and I think he is doing, is to get back on our agenda. I think that we've got to make progress in Iraq. Obviously, that support there is eroding, which concerns me enormously.

We've got to show some success there, and I think we can, and I think we have, with -- elections are coming up on December 15th, where they'll have their own government functioning, and we are showing some progress in training and equipping the Iraqis. It's long, and it's hard and it's tough, but I think that's showing some progress. But we've got a long way to go.

I think we've got to address energy. Gas prices are still a problem for Americans. I think, clearly, immigration reform is an issue that we have to address. We're going to take that up early next year in the Senate as Majority Leader Frist has announced.

C. WALLACE: Senator, can I just break in?

MCCAIN: Go ahead. Yes.

C. WALLACE: I just want to ask you, though, one more question on the question of the president's problems at this point, and this is more a policy question than a legal question.

If it should turn out that there is any evidence that Karl Rove (search) spoke to reporters about a CIA agent, Valerie Plame (search), should he lose his top-secret security clearance?

MCCAIN: I don't think so. I don't know if that's a reason to do so. I think it would depend on what context he spoke to reporters about it, whether he actually gave away information that was secret or not. So it's hard for me to say.

Look, I agree and admit that right now the president and Republicans are in difficulties, and significant ones, and we've got, thank God, a year to fix it. And we hear the wake-up call, and we're working, and we've got a lot of work to do. I think you're going to see progress. We've got to see progress.

And what the president does with his own staff is a decision that he has to make. Bill Clinton had troubles in his second term. Reagan had difficulties in his with Iran-Contra. They recovered. We can recover as well, but we've got a lot of work to do.

C. WALLACE: Senator, I want to talk to you about a disagreement you're having right now with Vice President Cheney over the treatment of U.S. prisoners. You want to ban -- and let's put this up on the screen if we can -- cruel, inhuman or degrading treatment or punishment of anyone in U.S. custody.

Now, the vice president wants to exempt any prisoners being held by the CIA, and the White House is threatening to veto your measure. How far are you prepared to push this?

MCCAIN: As far as necessary. We had a vote in the senate of 90 to nine. Overwhelming majority of the American people do not approve of this kind of exemption. People ranging from Colin Powell to literally every national security advisor or chairman of the Joint Chiefs have said that we can't do this kind of thing.

And very interestingly, Chris, the Israelis, who literally face terrorist attacks on a daily basis -- their supreme court ruled in 1999 that they wouldn't do that. The Israelis don't do it, and they're very, very effective in countering terrorist attacks on their country.

We need to get this issue behind us. I hope that we can reach some kind of conclusion that would prevent us from ever doing that, and I don't have to tell you or anybody who's watching, our image in the world is suffering very badly, and one of the reasons for it is the perception that we abuse people that we take captive.

C. WALLACE: But, Senator, let's just take the example of one prisoner who is now in U.S. custody, Khalid Sheik Mohammed (search), who was allegedly the architect of the 9/11 attacks and the operational head of Al Qaeda when he was caught.

If you could save American lives, would you want him to know all the things that the U.S. wouldn't do to him as a prisoner, to, in effect, eliminate the fear factor?

MCCAIN: Well, first of all, he doesn't know all the things that we wouldn't do. Second of all, if you decide to torture him, you probably don't get the right information, because torture doesn't work. Third of all, somehow the Israelis and people who are very good at this business will tell you that psychological tactics is what gains information.

And, fourth of all, how many people turn against the United States of America when they hear that we are torturing people? Chris, it's not about them. It's about us and what kind of country we are.

C. WALLACE: New subject. The so-called Gang of 14 (search), of which you are a member, met this week to discuss the nomination of Samuel Alito (search) to the Supreme Court. Senator, what's your best read at this point as to whether or not there's much appetite on the Democratic side to filibuster that nomination?

MCCAIN: My initial read is that each member makes up his or her own mind. A large number of them are favorably disposed and have met with Judge Alito. I believe he's done a great job, and I'm very favorably disposed, but the important thing is the Democrats.

I think they are making up their minds and waiting for the hearings, which is entirely appropriate, but so far -- and I can't speak to them for them. They speak for themselves. But so far, I have not seen any significant concern that might lead to filibuster, but they're certainly reserving all of their options, and I think that's appropriate.

C. WALLACE: And what's your best guess, if they do consider a filibuster, whether the Republican members of the Gang of 14 will break with them and impose the nuclear option to change the rules and cut off filibusters?

MCCAIN: I have not seen an indication of that option, and I think we would have to consider it at the time, but I think that most Republicans -- well, I'm confident most Republicans base this extraordinary circumstances issue on qualifications and judgment, and everything that I've seen of Judge Alito is that he's extremely good.

But again, I don't want to -- and I don't think it would be appropriate for me to speak about other members' views, but I'm confident and let me say I'm very optimistic.

C. WALLACE: Finally, the obligatory 2008 question, Senator McCain, I know you say you have not decided whether or not you're going to run and won't decide until after the 2006 elections, but when you look at the problems that President Bush is having now, that other presidents have had, what have you learned? What would a President McCain do differently?

MCCAIN: Well, I think one thing is if you are re-elected to a second term, you better say hey, guys, look at what happened to all of our predecessors, Republican and Democrat, and we better make sure that we don't fall into this same kind of difficulty.

And we need lobbying reform. We need a lot of reform. We need to reform the way we do business in the Congress because spending is out of control. I think we need a reform agenda to restore some of the confidence of the American people, and I think that was true in the Reagan and Clinton administrations at this time as well.

C. WALLACE: By the way -- and we only have a couple of seconds left -- do you like the ring of that, sir, President McCain?

MCCAIN: Except for the fact that I make my kids hum "Hail to the Chief" every morning, I don't think about it.

C. WALLACE: Senator McCain, as always, thank you. And before we say goodbye, we want to note that you have to new book out called "Character is Destiny." Good luck with that, and thanks again for joining us again, sir.

MCCAIN: Thank you.