This is a rush transcript from "On the Record ," April 3, 2008. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, HOST: First, Senator John McCain. Your ride-along interview with him on the "Straight Talk Express" — it's starting. Does Senator McCain think that Senator Clinton should quit the presidential race? What does he have to say to Senator Obama for smearing him by accusing him of wanting to stay in Iraq for 100 years?

Just hours ago, we caught up with Senator McCain in Jacksonville, Florida, where he returned to in 1973 after five years as a tortured prisoner of war in Vietnam. What was it like to be a POW? Senator McCain could have gotten preferential treatment and gone home out of turn, but he would not. Why? And here's another hot issue — torture. What does he think about torturing prisoners in Iraq?

Video: Part 1 | Part 2 | Part 3

We began by talking about what scares many families tonight and maybe even scares you or someone you know — mortgages, people losing homes, people trying to get homes. We start with a common pet peeve about buying a home.

(BEGIN VIDEOTAPE)

VAN SUSTEREN: When you get a house these days, why do they have to have all that paper? I mean, there's a tremendous amount of paper in this day and age. You just want the house. You just want the loan. I mean, it really is extraordinary. It's so antiquated.

SEN. JOHN MCCAIN, R-ARIZ., PRESIDENTIAL CANDIDATE: Part of it may have to do with if there's different bureaucracies that are all engaged in it. That's why maybe Paulson's idea of some consolidation may have that effect, as well. But a lot of Americans are hurting right now, and we are hearing from them all the time. And in this state of Florida, where you have a house, Arizona, Nevada, Las Vegas, California, a lot of parts of California, where they experienced the housing boom are the ones that are hurting the worst. Florida, ask Charlie.

UNIDENTIFIED MALE: She owns a house here now. She knows firsthand.

VAN SUSTEREN: Can you fix it?

MCCAIN: One of those bottom feeders that came in and...

(LAUGHTER)

VAN SUSTEREN: One of those bottom feeders...

(CROSSTALK)

VAN SUSTEREN: Actually, that was — that's actually the new promo for our show, "The Bottom Feeder."

(LAUGHTER)

VAN SUSTEREN: That's good. So can you fix it? I mean, that's what people want to know, is that when you go to the...

MCCAIN: I think this proposal that's gone to the Senate right now, giving people who don't itemize a deduction, giving the local authorities some money in order to buy some of these mortgages themselves, or to help people afford their mortgages — in other words, give them a break. There's a number of provisions to this.

And look, all we want to do is have it hit bottom now, so it can start up. That's the key to it. If it keeps — again, Charlie will tell you. If this keeps declining, nobody knows where bottom is, so therefore, it has this ripple effect throughout the economy. If we can get established a floor as the value of these homes, then I think you're going to see people coming in and buying those homes. But if they think they're going to buy it and they're not sure how much more it's going to decrease, then that chills the market.

And again, the ripple effect throughout the economy — there's an article I think The Wall Street Journal today, it's going to affect Europe, it's going to affect other — the entire world because of global economy.

I think you saw that article a few weeks ago that startled me that showed that a town in Norway was — they lost some millions of dollars because of a subprime lending crisis in the United States of America. Now, some years ago, you'd have never thought that's possible. There's a town in Japan, I understand, the same way because of the way that these mortgages have been sliced and diced and moved everywhere in the world.

So I think that what we're doing here and with this bill that's going through the Senate will help and shore up confidence, shore up the market, help people — more people afford to make their payments, and maybe we'll start moving forward again.

VAN SUSTEREN: All right. People are concerned about their homes, but also gas prices. Gas keeps going up. You know, people have to commute. They can't live right next to their work. What can you do about gas prices, short-term, long-term?

MCCAIN: Short-term, not a lot. Short-term, we're too dependent on imported oil. Long-term — and I don't see very long — we can develop hybrid cars. We can develop a battery that'll take a car 100 miles. We can re-emphasize and dramatically increase nuclear power. We can do so many things in alternate energy to eliminate our dependence on foreign oil.

I mean, if you — I hear all the time people say, Well, wait a minute, that's going to be more expensive. I don't accept that in a second. The innovative strength and entrepreneurship of America, if you give them the incentives, they're going to go crazy. They're going to be able to — I was at a place with Governor Schwarzenegger not too long ago. You remember how thick solar panels are? Well, this was like a thin sheet of paper for solar panels that you could install. One of the problems with solar panels now, as we found out, the weight of them on a roof. So now they've developed a very thin sheet of solar panels, OK? You could — there's so much you can do.

VAN SUSTEREN: But when you were coming home from being a prisoner of war in 1973, we began this discussion. And it is now 2008. We're still talking about it. Why hasn't something really been done about it? I mean, this is no big surprise, as — you know, as we all woke up today, Oh, my God, we're dependent upon oil. This has been going on.

MCCAIN: Well, I hate to revisit ancient history with you, but we did have this oil embargo and people were in line for three and four hours. Solar panels sprung up all over Florida and all over America and Arizona, and we did all these things and we stimulated innovation. We gave people tax breaks for installing energy-saving devices, et cetera.

And then they dropped the price of oil, if you might recall. So everybody just said, Well, everything's fine now. It's not fine now. And if anybody can draw me a scenario where the price of a barrel of oil is going to go back down, I'd like to hear about it. I just don't believe it. The price of oil, when you've got India and China, two emerging consumers of oil, competing for a finite source, when we're not discovering that many new assets of — sources of oil, then it's a permanent problem. And we have to understand that it's a permanent problem. That's how it's different from the 1970s.

VAN SUSTEREN: Well, what about in the last five or six years, even in the last eight years? This Republican administration with President Bush - - I mean, and that's not ancient history. That's almost yesterday, and still we've done nothing, or virtually nothing.

MCCAIN: A couple of years ago, the president gave — or a year or so ago, the president gave two excellent speeches on energy. They were excellent speeches. We just couldn't seem to penetrate to the American people and American industry, or to the Congress, for that matter. The energy bill that they passed was certainly not the bill that I would have written. But I think the American people are focused now.

Look, Venezuela, this guy Chavez is not a friend of America. We get a lot of oil from Venezuela. Obviously, we're going to have to, for national security reasons. Again, some of that money, of the $400 billion, half of our trade deficit that's going overseas goes to countries that don't like us and ends up in the hands of terrorist organizations. So it was never, I think in the '70s, a national security threat. Now some of that money goes in the hands of terrorist organizations. And that's the opinion of our intelligence agencies, not mine.

VAN SUSTEREN: There's an important part of ancient history that I want to talk about, is that you and I have spoken before and you've talked — and you've sort of quipped about, you know, getting shot down. And you know, the American people have enormous admiration for what you sacrificed. But you could have come home. That's the big sacrifice. You could have come home long ahead of everybody. What was it about you? Why did you say, No, I'm going to wait my turn and not jump ahead of everybody else because your father had influence? Why did you do that?

MCCAIN: One reason, I certainly had no clue the war was going to last that much longer.

(LAUGHTER)

MCCAIN: And second is, our code of conduct was clear, but it was that you go home in order. But that's a piece of paper. The thing that — you know, Everett Alvarez was at a gathering we had at Annapolis yesterday. He'd been there three years before I had. And I'm supposed to go home and leave Everett Alvarez there, our first POW? I just couldn't do that and shave (ph). You know, it was just something that I couldn't do.

VAN SUSTEREN: I think most people sort of thing that, you know, we'd like to do what Senator McCain did, but we might say, Oh, me first, I'll go home and I'll take care of the rest of you. I'll go fix things. I mean — I mean, it really is extraordinary to reach down that deep, at least under those circumstances.

MCCAIN: I really believe that the overwhelming majority of my friends who were there with me in prison would have done exactly the same thing. Yesterday, we were over in Pensacola, and my friend and leader, Colonel Bud Day, who is a Congressional Medal of Honor winner, was there. Charlie knows him. And he was my senior ranking officer. And I love and respect him as much as anybody I've ever known. And I don't think Bud would have respected me if I had taken that other route.

VAN SUSTEREN: Last fall during a Republican debate, Brit Hume, who's the managing editor at FOX News, asked you about torture, and you said you were opposed to the American people — American government torturing people that we pick up, foreign nationals in a time of war. Still feel that way?

MCCAIN: Oh, yes. And my recent trip to Europe reinforced that opinion. Look, I just — let me maybe give you an anecdote. Lindsey Graham and I, last Thanksgiving, were in Iraq. We had the opportunity to meet with a guy who was a former high-ranking member of al Qaeda who's come over to our side. I said, How did you do so well after Americans' initial military success? He said two things. He said, One was the complete lawlessness because you didn't have enough forces here to control Iraq. He said, That gave us a great opportunity. And he said, Second, I see our greatest recruiting tool, where we were able to recruit thousands and thousands of young men to our cause — and I'm sure he meant men and women — he said was Abu Ghraib.

And I don't think there's a clear indication of the fact that this is at heart an ideological struggle and if we do the same thing that our enemy does, then they're not going to be able to differentiate. And so it's also interesting to me that every major military leader that I know, ranging from Colin Powell, to former chairmen of the Joint Chiefs, to others, all share exactly my view. One reason being is that if we torture people that we have under our supervision, what happens in future wars and our young women and men in the military fall into the hands of the enemy, and they know that we have tortured, then they would use that as an excuse to torture our military personnel.

(END VIDEOTAPE)

VAN SUSTEREN: Under the headline "Never dull," actress and well-known anti-war activist Jane Fonda told a cameraman last night she's going to vote for Senator Obama. Because she is so famous for her anti-war comments, many say her support could hurt Senator Obama. So that brings us to tonight's live vote.

Go to Gretawire.com and vote. Tonight's question: What should a presidential candidate do if he or she gets an unsolicited endorsement he or she does not want? First, presidential candidates should do nothing in that instance. Two, presidential candidates should make a statement disavowing that endorsement. Three, neither of the above. So get going, Gretawire.com, and go vote right now.

And coming up: There's more with Senator McCain, including that hot issue, illegal immigration. If he wins, what's he going to do about it? And how about this. Does he think Senator Clinton should get out of the race? And what does he want to say to Senator Obama for distorting his comment about staying in Iraq for 100 years? Stuck around.

(COMMERCIAL BREAK)

VAN SUSTEREN: More from our interview with Senator McCain.

(BEGIN VIDEOTAPE)

VAN SUSTEREN: Immigration is something you've taken a lot of heat for. How do you draw the line in terms of, you know, what you — you know, you've got to get votes, but you've got to be straight. How do you sort of reconcile those?

MCCAIN: Well, I try to give them straight talk, Greta, by saying that I understand the message. They want the border secured first. And we'll work together with the governors in the states, the border states, to secure the borders and have the border state governors certify the borders are secure.

But we need a temporary worker program that is effective, with biometric tamper-proof documents, and we need to address the 12 million people who are here illegally, on the principle that none of them have priority over someone who waited legally or came here legally, but still a humane and compassionate approach. We are a Judeo-Christian-valued nation, and many of these people are simply people who came here to get a job. But they violated the law, but we'll treat it in a humane and compassionate fashion and with an effective temporary worker program and secure borders.

VAN SUSTEREN: All right. Now, strategy. You've got a bus full of people. You've got Mrs. McCain, who we've spent time with, who...

MCCAIN: The most important strategist, yes.

(LAUGHTER)

VAN SUSTEREN: Important strategist. And she and I share an interest in the — we both like the same music. Cream, I might add. Been to a Cream concert in London and...

MCCAIN: Both of you have no taste.

(LAUGHTER)

VAN SUSTEREN: And the only reason (INAUDIBLE) there is because she didn't call.

(CROSSTALK)

VAN SUSTEREN: And Governor Crist is here.

MCCAIN: Yes.

VAN SUSTEREN: And of course, one of my...

MCCAIN: His taste in music is even worse.

(LAUGHTER)

VAN SUSTEREN: I can only imagine! And one of my favorites is up in the front, Mrs. McCain, your mother. Your son is here.

MCCAIN: Yes.

VAN SUSTEREN: Strategy...

MCCAIN: My mother is giving a lecture up front (INAUDIBLE)

VAN SUSTEREN: And I'm sure that everyone is going to get right in line. I know that I would. What do you make of this battle that's on the other side of the aisle? Is this a good time for you as Senator Clinton and Senator Obama are sort of duking it out? Is it — what's your strategy as the attention is focused on sort of the bloodbath that's going on?

MCCAIN: I think it's important for us to run our own campaign and continue laying the groundwork for this — it's a long presidential campaign — laying the groundwork, letting the American people know what I stand for and what I believe in and what my vision is.

I don't know how this spirited contest between Senator Clinton and Senator Obama plays out, but I know either one, I've committed to a respectful campaign and I'll be respectful to them. And that's what Senator Obama said that he would be to me, and then he goes around and distorts this comment of mine about 100 years. And I hope he won't continue that, if he's committed to a respectful campaign.

(CROSSTALK)

VAN SUSTEREN: I actually went back and read on air the entire comment. And you know, you talked about — you compared Korea and Japan. You know, I think it's worthy of reading the whole comment. And there was a lot said on that comment.

MCCAIN: The Columbia Journalism Review just said that, obviously, his charges were false, and so have every other objective observer. After the — after we win the war, clearly — and after we've won in other countries, South Korea, Japan, Germany — some argue Korea was a tie, by the way. But the point is that we've had troops in Kuwait ever since the first Gulf war. And so it's military presence, it's not conflict. What Americans care about are casualties. And this is a long, hard struggle.

VAN SUSTEREN: Which is actually what you said in the comment.

MCCAIN: Yes.

VAN SUSTEREN: As long as Americans weren't being harmed, as I recall. Do you feel tempted just to call — call him up and say, Senator Obama, you know, repeat my entire statement, not just that, you know, phrase from it? Do you feel tempted?

MCCAIN: Well, perhaps a little tempted. But the point is, he knows better. He's a very, very, very smart person, very intelligent, very — he can read a statement without my help. And so he knows better. He knows better.

(END VIDEOTAPE)

VAN SUSTEREN: Coming up, part three of our interview with Senator John McCain. He answered the question, Should Senator Clinton quit?

(COMMERCIAL BREAK)

VAN SUSTEREN: This is the last part of our interview with Senator John McCain on board the "Straight Talk Express."

(BEGIN VIDEOTAPE)

VAN SUSTEREN: In terms of Senator Clinton, there have been a lot of people in her party, and perhaps they're Senator Obama supporters — I don't know, maybe they're Senator Clinton supporters — say she should get out now. Do you agree, or should she take it to the end?

MCCAIN: That's a decision that the Clinton campaign makes, and Senator Clinton. But all I know is that when you and I were in New Hampshire — it seems like ages ago, it wasn't that long ago — all the predictions were that Senator Obama was going to win in New Hampshire. She came back. Texas and Ohio, she came back strong then.

I think the decision is hers. But one thing I've learned in my involvement in American politics, I would not count anyone named Clinton out of a political campaign. I think they're very, very hard-working, very good at political campaigning, and I think they've proved that. But it's - - that's just my observation. What decisions are made are up to Senator Clinton and her team.

VAN SUSTEREN: Fund-raising. In February, according to the numbers, your campaign raised one eighth of the combined of the Democrats. So what's the strategy for — you know, because this is an expensive — this is an expensive contest.

MCCAIN: As you know, we had not gotten the nomination or presumptive nominee yet. We're doing a lot better. We've got a long way to go. They have done very well in fund-raising, and I applaud that. Our party, to some degree, has been very dispirited — 2006 election, spending out of control. So we've got a lot of work to do to re-energize our party.

The party is united now. I mean, when you look at the polling numbers, our party is united. But the energy level, we've got to really crank that up, and that's why I'm going to campaign so hard all across Florida, all across this country. I'm going to go everywhere and contest every part of the country.

VAN SUSTEREN: You've been on the road now for a couple of months. When you go home, do you see all the contributions (ph) in your home? There were two puppies in your kitchen the last time I was there. They're probably, like...

(CROSSTALK)

VAN SUSTEREN: Have you brought any more animals into the house while he's gone?

CINDY MCCAIN, WIFE OF JOHN MCCAIN: No, I haven't. And we've lost one. Our little ferret died of cancer.

MCCAIN: Oh! We lost our ferret!

(CROSSTALK)

VAN SUSTEREN: Oh, that's terrible.

CINDY MCCAIN: Yes. No, it is...

(CROSSTALK)

CINDY MCCAIN: We had him for a long time, so yes.

VAN SUSTEREN: So what is the...

MCCAIN: Rather than alienate the pro-pet constituency, I will remain silent about the loss of our ferret.

VAN SUSTEREN: What do you have at home right now?

MCCAIN: By the way, that ferret was a very cute animal.

CINDY MCCAIN: He really was. He was very cute. We have four dogs, two — three birds, actually, and a fish tank. That's all we have right now. We have no reptiles right now.

VAN SUSTEREN: You're slipping.

CINDY MCCAIN: I know. I am slipping. I haven't been home much, so...

MCCAIN: Don't worry, I'm sure she'll rectify that.

CINDY MCCAIN: But I just bought my best friend a new dog. She lost her dog, so...

VAN SUSTEREN: What'd you get her?

CINDY MCCAIN: A Yorkie, same thing. Her little Yorkie ran away, so I got her a new one.

VAN SUSTEREN: You have a springer.

CINDY MCCAIN: Yes, we have a springer, and then we have...

(CROSSTALK)

CINDY MCCAIN: ... Coco (ph), John's dog.

MCCAIN: Our dear friend and neighbor that lost their dog — I called Cindy at home and I said, Where is Cindy? Well, she's out searching the neighborhood. They had a massive search for how many days?

CINDY MCCAIN: A whole week. A whole week to find the dog. It was terrible!

VAN SUSTEREN: People love their animals, don't they.

CINDY MCCAIN: Yes. Oh, my gosh, yes. It was terrible. We couldn't find her, either, so...

VAN SUSTEREN: (INAUDIBLE) always the greatest, you know, game in Washington is to watch the animals in the White house, the pets in the White house. If it's a McCain presidency, they're going to have to build another wing, an addition to the West Wing.

CINDY MCCAIN: We'll have a lot.

(CROSSTALK)

CINDY MCCAIN: Oh, we have a cat. I forgot our cat. Because she lives in Bridget's room, I forgot our cat, Oreo. Oh, my gosh. How terrible.

VAN SUSTEREN: That is terrible.

(CROSSTALK)

CINDY MCCAIN: That's a terrible thing.

(END VIDEOTAPE)

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