This is a partial transcript from "The O'Reilly Factor," November 7, 2005, that has been edited for clarity.

Watch "The O'Reilly Factor" weeknights at 8 p.m. and 11 p.m. ET and listen to the "Radio Factor!"

BILL O'REILLY, HOST: In the "Personal Story" segment tonight, he could be the next president of the United States, Senator John McCain, a Republican from Arizona. The senator is in the middle of the most compelling issues of the day, including how to handle captured terrorists and the war in Iraq.

John McCain is also the author of a brand new book called "Character is Destiny" and he joins us now.

Good book.

SEN. JOHN MCCAIN (R), ARIZONA: Thank you.

O'REILLY: I've been reading it all day long, and it's one of those things when I interview an author, you know, I skim the book. But yours is one I actually want to read.

What he does — what the senator does is for kids, but it's also for adults, obviously.

You pick out certain people to make examples of, of what their character lent to the nation. And we'll get to that in a moment. First, I need to talk to you about some really important stuff. MCCAIN: Go ahead.

O'REILLY: All right. Most Americans, according to the polls, have turned against the Iraq war. How do you read it?

MCCAIN: I read it that there's some understandable frustration. There have been some mistakes made. The job of people like me and the president, and I intend to stay at it, is to convince the American people of the benefits of success and the consequences of failure and to — to withdraw troops until we have the situation under control would be a disaster.

When we left Vietnam, Bill, they didn't come after us. If we leave Iraq, they're coming after us.

O'REILLY: OK. How do you win this war, though? Obviously, Rumsfeld would like to turn it around. Obviously, the Republican Party's reputation. As Lindsay Graham said on this broadcast, the GOP owns this war. How do you turn it around?

MCCAIN: Well, I think one of the things you do, and they're starting to do it now and should have done it long ago, is you go into a place and you control it. You stay there and give the people there a decent life, security, not — don't have to live in fear of attacks or murder or anything else. And then gradually expand that.

The problem that — what we've been doing in the past, we go into a place like Ramadi and we kill insurgents and we leave. And the bad guys come back in again.

O'REILLY: We don't enough people to do that, do we?

MCCAIN: Well, I would have liked to have seen more people. I still would. I don't think it's going to happen, but at least now we've got about 160,000 over there. And I think we could.

And meantime — I forget to mention the other part of the equation — we train up the Iraqi military, so they can take over more and more of these responsibilities.

O'REILLY: We've been doing that for three years.

MCCAIN: I know, and it hasn't gone as well as we wanted to.

O'REILLY: No.

MCCAIN: I will admit freely that we have made mistakes, and I've been critical of those mistakes, but there's too much at stake here, Bill. We cannot lose this. And if we win, that is going to have a tremendous effect. There's a whole lot of despots in the Middle East today that live in fear of the success for democracy.

O'REILLY: All right. Sure. Next door is going to be in trouble.

MCCAIN: The Iranians. Even the house of Saud.

O'REILLY: So you're going to set a course, but I don't think the American can public is going to stay the course, unless there's improvement, too much longer.

MCCAIN: OK, but also, there's another part of this, and that's the political side of it. We're going to have an election now on December 15. It won't be a great election. Sometimes we haven't had great elections in the United States. But they will have a functioning government. And will it be tough? Yes.

O'REILLY: I hope that.

MCCAIN: But they will be able to function, and gradually the Iraqi people, I believe, will support that government.

O'REILLY: I hope so.

MCCAIN: And the fact that the Sunnis, the fact that the Sunnis have now decided to take part in this election, I think will be very important in this.

O'REILLY: We're all praying for U.S. victory, but we've got to see some improvement. I think all the folks know that.

MCCAIN: I think you're going to see some.

O'REILLY: OK. That's all we need to see, progress, just progress.

MCCAIN: Yes.

O'REILLY: Now on terror...

MCCAIN: Yes.

O'REILLY: ... interrogation torture, you've got the bill. And I'm with you, and I think most Americans are. The U.S. military should never, ever, ever torture anybody.

But I want to give the executive, the chief executive officer, commander in chief, the president of the United States, the option if there's a nuclear situation, weapons of mass destruction, bird flu, whatever it may be, that he has the option to use coerced interrogation to get the information he needs. I don't think it's right to handcuff the president of the United States in these times. What say you?

MCCAIN: Well, I think that's a far cry from having a group of prison camps. I think it's a far cry from keeping...

O'REILLY: You wouldn't object to that?

MCCAIN: ... people incarcerated. I think that there may be a time when the president of the United States may have to take responsibility in an immediate situation, which would then mean the president of the United States would stand up and say that he had to do it. But right now, sir...

O'REILLY: But if — he could be impeached.

MCCAIN: No. If, under the scenario that you said, tell me who's going to impeach him? Of course not.

O'REILLY: You know how it is. They will believe it. They'll say he trumped it up.

MCCAIN: Bill, what we're doing now is killing us, literally, and our image around the world.

O'REILLY: I understand.

MCCAIN: The American — the people of this world think that we sanction torture. We can't do it. It ought to be against the law. And to say that, as you just said, militarily we want to do that, but we'll carve out an agency and they're allowed to do it. I'm sorry.

O'REILLY: Just carve out an exception for the president and the bill passes. He's going to veto it if you don't.

MCCAIN: Then he'll get it overridden. The fact is that if we carve out an exemption, we knows what happens to exemptions throughout history. That exemption will be used with abandon.

The argument — I think that Dick Cheney is a loyal, patriotic American. He's been a friend of mine for 25 years. And I think he has the best interests of America at heart. We just have a disagreement here.

O'REILLY: OK.

MCCAIN: Torture does not work, and that's another aspect of this. It doesn't work.

O'REILLY: I would — I agree with you, 85 percent. But I would give the exemption to the president of the United States to use what he had to do to get that information. Gentlemen's disagreement.

All right. Back to your book. Pat Tillman, you write about him as an example of patriotism, and unfortunately, he was killed by friendly too fire. The Army wasn't forthcoming about it. And you mention that in your book. How do you see this whole Tillman case?

MCCAIN: I think it's tragic in many respects, particularly the fact that the investigation went badly and there — initial reports from the field were not accurate. And an investigation was conducted at the insistence of Pat Tillman's mother and the truth came out. And I'm very sorry that he was killed by friendly fire, but it makes him no less of an American hero.

He served his country with honor and distinction. He left an NFL contract of millions of dollars to serve his country with courage.

O'REILLY: Makes him an American hero.

MCCAIN: And the fact is that Pat Tillman would be the last one to say that he was any kind of a hero, which makes him even a greater hero.

O'REILLY: Yes, he was a hero. But you know, the antiwar people, columnists at the "New York Times" exploited this situation.

MCCAIN: I don't think that's right. I think that Pat Tillman's case, an American hero, should be left out of the debate as to whether we should have gone to war in Iraq or not. It's not fitting. It's not fitting for his memory, because he's an example to young people all over America.

O'REILLY: Absolutely.

MCCAIN: And I'm proud of him, and I'm proud to have been in the same football stadium when he was performing.

O'REILLY: That's right, at the University of Arizona.

Well, I recommend the book very highly, "Character is Destiny." And I think character has to be taught to all our young people. It's not something you just acquire. Your father taught it to you. I hope my father — I know he tried to teach it to me. I don't know if he was successful or not.

MCCAIN: Mine didn't take too well at first.

O'REILLY: No, you're a patriot. Everybody knows that. And but I do think that the parents need to read this book and pass it along to their teenage children. Character needs to be taught. And I appreciate you writing the book, Senator.

MCCAIN: Thank you, Bill. And thanks for having me on the show.

O'REILLY: Sure.

MCCAIN: Congratulations on your continued controversy and success.

O'REILLY: OK, well, that will never stop. And next time, we'll do a little bit more border talking when your bill gets up to vote.

MCCAIN: Good we need to.

O'REILLY: We need to talk about the border.

Content and Programming Copyright 2005 Fox News Network, L.L.C. ALL RIGHTS RESERVED. Transcription Copyright 2005 eMediaMillWorks, Inc. (f/k/a Federal Document Clearing House, Inc.), which takes sole responsibility for the accuracy of the transcription. ALL RIGHTS RESERVED. No license is granted to the user of this material except for the user's personal or internal use and, in such case, only one copy may be printed, nor shall user use any material for commercial purposes or in any fashion that may infringe upon Fox News Network, L.L.C.'s and eMediaMillWorks, Inc.'s copyrights or other proprietary rights or interests in the material. This is not a legal transcript for purposes of litigation.