The following is a partial transcript of the Dec. 9, 2007, edition of "FOX News Sunday With Chris Wallace":

"FOX NEWS SUNDAY" HOST CHRIS WALLACE: We're joined now by another of the top Republican contenders, Senator John McCain, who's also on the campaign trail in Florida.

And, Senator, welcome back.

MCCAIN: Thank you, Chris.

WALLACE: Let's start with this report that the CIA destroyed tapes of its interrogation of two terror detainees.

Do you believe that the agency was trying to hide what may have been actions against the law?

MCCAIN: I do not know. But the actions, I think, were absolutely wrong. I'm glad that the attorney general is going to investigate it.

Chris, what this does in a larger sense is it harms the credibility and the moral standing of America in the world again. There will be skepticism and cynicism all over the world about how we treat prisoners and whether we practice torture or not.

Could I just mention to you that in Iraq, I met a former high- ranking member of Al Qaeda? He said two things really helped them in the past several years.

One was the total chaos that existed in Iraq after our military victory, and the second was Abu Ghraib. He said it was the best recruiting tool that they had in motivating people to join their cause to kill Americans.

This destruction of tapes is now going to contribute to the cynicism and skepticism that people have all over the world, and we're in an ideological struggle. This can't help us in the ideological struggle we're in against radical Islamic extremism.

WALLACE: Now, CIA director Hayden says the tapes were destroyed to protect the safety, the identity, of the officers involved in the interrogation in case those tapes should leak out. Do you buy that, sir?

MCCAIN: I think it should be investigated. We certainly want to do everything we can to protect the identities of these brave people who are serving our country in the CIA.

But he was advised not to do it by several people, including, I understand, high-ranking members of the administration. And did the tapes have to be completely destroyed? All of that is going to come out in the investigation.

But we're also setting up a false argument here between torture and moral high ground. That doesn't have to be. We have to keep the moral high ground. We can do it without torturing people.

Torture gives you reliable and unreliable information. That's the reason why most people in the world don't do it. That's why I met with the head of the prisons in Iraq who said the Army Field Manual gives them every tool they need to get the information that they need.

So this idea that you have to torture people in order to protect national security is a false argument, and I reject it.

And at the end of the day, torture can harm us in the big war struggle we're in against radical Islamic extremism.

WALLACE: Senator, let's turn to another intelligence issue. As you well know, the new National Intelligence Estimate was released this week which indicated that all the way back in 2003, they say with a high — with high confidence, Iran halted its nuclear weapons program.

It has continued enriching uranium, but it had halted the weapons program. Does that basically now take the military option off the table?

MCCAIN: The military option is always the ultimate last option, but I don't believe that it's, quote, "off the table."

I would remind you that enrichment is a longer process. Weaponization, which is the other half of the equation, can be done rather rapidly.

Iran remains a nation dedicated to the extinction of the state of Israel. Iran continues to export the most lethal explosive devices into Iraq, killing Americans.

They continue to be a state sponsor of terror in the case of Hamas and Hezbollah. And they intend to — they continue to seek to exert influence throughout the entire region and the age-old ambition of Persian hegemony, including their increasing influence in the Basra area in southern Iraq.

So I think they remain a significant threat and challenge, and so, no, I wouldn't take the option, quote, "off the table," and I'm glad to see some of the European friends are staying in there with us in the need for sanctions.

WALLACE: Well, but let me ask you about that, because even some neocons like Robert Kagan are saying that this is going to have — this National Intelligence Estimate and the fact that Iran has not since 2003 had a weapons program is going to have such a dramatic effect on international opinion that the best thing the U.S. could do now is directly negotiate with Iran without preconditions.

What do you think of that?

MCCAIN: I have the greatest respect for Bob Kagan. I saw the reaction of Chancellor Merkel and President Sarkozy which I think was — that they were very skeptical, and they think that the Iranians still pose a significant threat.

And look. The most overrated aspect of our dialogue about international relations is direct face-to-face talks. BlackBerries work. Emissaries work. There's many thousands of ways to communicate.

The question is are you going to have direct talks, and does that enhance the prestige of the president of Iran, who has said all these things about us, and has announced his country's continued distinction to the extinction of the state of Israel, or does it reach a successful conclusion?

That's the question you have to ask when you talk about, quote, "face-to-face talks."

So anyway, I'd remind you that when we stopped the bombing in Vietnam, we were going to talk in Paris. It took 2.5 years because of the shape of the table. Bombing started of Hanoi. And guess what? Negotiations started again.

WALLACE: Let me turn to another subject. Mitt Romney is putting out a mailer in New Hampshire now that says that you support Social Security benefits for illegals, which is not true.

I want to ask you — I'm going to test your straight talk express.

MCCAIN: Sure.

WALLACE: What do you think of Mitt Romney?

MCCAIN: I think he's a good man. Everything I know about him, which is not a lot — I've only met him on several occasions — is that he is a good man. In straight talk, I do know that he has changed many of his positions from those he held previously.

But that is something he has to explain to the voters, not to me.

WALLACE: And what do you think of this mailer that he's putting out saying that you support amnesty and that you also support giving Social Security benefits to illegal immigrants?

MCCAIN: Of course, neither is true. But maybe it means that he's getting a little concerned about where we're moving in the polls in New Hampshire, which we are pleased about.

WALLACE: Well, let me ask you about that. Let's talk a little bit of horse race in the moments we have left, Senator. You, last time you were on this show, said flatly that you're going to win New Hampshire. Do you stick by that?

MCCAIN: Yes, sir. Yes, sir. And I'm going to convince the voters that I'm the one who understands the challenges of the 21st century, with radical Islamic extremism and two wars. I have the experience and the judgment.

And I'm also going to try to convince them that I'm the conservative that can defeat the Democrat a year from — less than a year from now.

WALLACE: You — and I don't have to tell you — have very limited resources. Are you going to have to make a tough decision in the next few days whether or not to pull the plug in Iowa and to focus your resources in New Hampshire and South Carolina?

MCCAIN: No, I don't think so, Chris. We're going to be out there for a debate, as you know, in just a few days. And we'll be doing some town hall meetings out there.

Look, we're struggling in Iowa. I understand that. I don't support ethanol subsidies and other farm subsidies. I think they need to be phased out.

But there's a lot of good people out there. We've got a great organization on the ground and a lot of support. And you know, we'll keep fighting, my friend.

WALLACE: Finally, one of the keys to your victory over George W. Bush in the New Hampshire primary back in 2000 was the fact that you had a lot of support from independents who in New Hampshire can vote in either party.

This time, you've got a tough race in the Democratic side as well. A lot of independents look and like Barack Obama. Could that conceivably siphon some of the independent support from you, sir?

MCCAIN: I just think that's too early to tell, you know, at this time. In 2000, it was whether it was going to be Senator Bill Bradley or me.

I can tell you that I detect increased enthusiasm at town hall meetings. The turnouts, the stops at the diners, and the restaurants, and the stores and stuff — I can detect it.

Now, whether it's wishful thinking on my part, which probably part of it is — a little straight talk. But I'm pleased with the way things are going, and I'm loving this part of it, because now people are really getting engaged.

And the town hall meetings — they're tough — tough questions. And we're having a lot of fun. This is the part of it that for me is what America and democracy is all about, and I'm loving every minute of it, seriously.

WALLACE: When you see the kind of fluidity that we're seeing in the Republican race, with Huckabee surging from nowhere up to a lead — you drop, now you're coming back up — is it just possible that the base of the Republican Party really isn't all that sold on any of the five frontrunners?

MCCAIN: I think part of it is that there's no establishment candidate. We Republicans, for — since going back to Reagan, we've sort of had the establishment candidate each time.

When you go through them, you know, Bush 1, Dole, Bush 2, et cetera — and there's not one this time. And there's a lot of issues out there.

But have no doubt that our base is angry about spending. Our base is not happy with our performance. I mean, there's no doubt about that.

WALLACE: Senator McCain, we're going to have to leave it there. We want to thank you so much for taking a break from the campaign to be with us, and we hope to see you again soon, sir.

MCCAIN: Thanks again, Chris.

WALLACE: If you're wondering why you haven't seen more Democratic frontrunners besides Hillary Clinton on the show, well, we're wondering, too.

We extended invitations this week, as we have throughout the campaign, to Barack Obama and John Edwards to appear on our program, but they have turned us down every time. We'll keep trying.