This is a rush transcript from "On the Record ," March 5, 2009. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: A short time ago, we sat down with former presidential candidate Senator John McCain.

(BEGIN VIDEOTAPE)

VAN SUSTEREN: Senator, nice to see you again.

SEN. JOHN MCCAIN, (R) AZ: Thank you, Greta.

VAN SUSTEREN: I like coming to your office. This was Barry Goldwater -- this was at least some of this furniture, right?

MCCAIN: His desk, some of his photographs. He was a great photographer that I have a mementos of a great man who remains to be an inspiration today.

VAN SUSTEREN: Speaking of today, the market has been down about 281 points, and it went up yesterday a slight tick. But can you make us feel better? Is the market going to start going up?

MCCAIN: Well, it is impossible for anyone to predict the market, but I think two things. One, America will come out of this. We will. There is no doubt about it. There have been worse times, not many, and this is a terrible time, but we will come out of it, but I think the market might be reacting because they have not confidence yet that the Obama administration is taking the necessary steps to cure the housing market and to bring about an economic recovery. They do not have confidence that the government is taking sufficient steps early enough that they are sort of playing catch-up.

VAN SUSTEREN: Well, it is not going to be any better, because the steps that are being taken right now are rather strong and aggressive steps, so it is not like things will get better in the next week or two. These steps that are being put in place are going to have long ramifications, so the market may be discouraged by that.

MCCAIN: I think two things. One is that these steps have not been taken early enough. They always seem to be reacting to circumstances rather than anticipating. The second thing is that we are laying a debt on future generations of Americans, which is unconscionable. We are committing generational theft when we just keep spending hundreds of billions and even trillions of dollars at a time.

VAN SUSTEREN: The omnibus bill, and let me go back, and I know your view on this. I know how you feel about earmarks, but I am going to ask what you are going to do about this, because President Obama said at a campaign event June 9, 2008, that on some issues, such as earmarks reform, he agrees with you. He said, as president on September 22, there weren't going to be pork barrel projects or corporate welfare in the laws which he would pursue. In the first presidential debate, he said that while Senator McCain was absolutely right that the earmarks process has been abused. It went on in the second presidential debate, I want to go line by line through every item in the federal budget and eliminate programs that do not work. In another occasion, "When I am president I will go line by line to see that we are not spending money unwisely and absolutely we need earmark reform."

This omnibus bill is full of earmarks. I know your view. What are you going to do about it?

MCCAIN: We will continue to fight. There are 9,000 earmarks in it. Incredibly, the president and his chief of staff and director of his budget of OMD have both said this is last year's business. It is this year's business. It is this is this year's spending, this year's debt and this year's pork barrel projects which breeds corruption, and we have former members of Congress convicted, in prison, and it is all because to a large degree -- because of this earmark, pork barrel spending, which is - just, I cannot describe to you have a terrible it is, and the American people are tightening their belts and having to make tough decisions. Meanwhile, it is business as usual here in the Congress. $2 million for astronomy awareness in Hawaii.

VAN SUSTEREN: What do your colleagues in the Senate say? President Obama apparently, he calls in last year's business, although even President Bush would not sign the bill that was proposed last year. President Obama could veto this one. There is nothing stopping him from vetoing it. What about your colleagues in the Senate? Are they not appalled by earmarks in it?

MCCAIN: I think a lot of them are, but there are appropriators, Republicans, a number of them, who are on the Appropriations Committee, who consistently vote against our efforts to curtail this outrageous spending, and again I want to point out the reason we did not have a bill last year is that the Democrats would not pass these bills last year. They wanted to wait until this year so they could get a better deal, and this bill is eight percent more spending than we did last year in the toughest of times, and there are 9,000 pork barrel projects on it. It is as bad as anything as I have seen around here, given the economy of the country.

VAN SUSTEREN: Have you said anything to President Obama? I know you see him occasionally. Do you ever say to him anything like, this is not last year's business. This is this year's business because you have not even signed it. It is in the current year. It is not last year.

MCCAIN: Well, the president said he wants to work on reform. It is long overdue. We need to work on reform, and he will face some of the greatest resistance from his own party, who have said, majority leader and Congressman Steny Hoyer's said, "We are not going to change. It is our prerogative."

All we are asking is that it go through the kind of process that gets the scrutiny and the hearings that they deserve, rather than just being stuck into an appropriations bill, which is thousands of pages long.

VAN SUSTEREN: The Republicans are up to their eyeballs, as well. Many of them on these earmarks, right? I mean, it's not just the Democrats.

MCCAIN: Forty percent Republican earmarks. Republicans let's spending get completely out of control. We paid a very heavy penalty for it in the last election because we did not stick to our principles.

VAN SUSTEREN: So, I mean, do all these members of the Senate think the American people are just going to look the other way? I know that Senator Schumer said that people do not care about earmarks, which might inbox is not consistent with that thought. We are going to send some people back to the Senate I assume with all these earmarks. Because they are extraordinary.

MCCAIN: I think you are going to see a real revolt out there on the part of the voters. We are seeing an increase in the independent voter registration. Americans are very fed up. Look at new low approval ratings for Congress. We either act or they are going to elect people who will act responsibly.

(END VIDEOTAPE)

VAN SUSTEREN: Coming up, which until you hear what Senator McCain is doing in his spare time. You're not going to be able to guess, but here is the hint, he is not a geek. He is hip. Any guess? Then you will just need to stay right where you are.

And later, a strange way to show love. The inside story of Chris Brown and Rihanna. The story is ugly but we have the affidavit.

Plus, get this. This Caylee Anthony murder investigation ha s just getting more bizarre, we have just learned that one of jailed mother's Casey's friends was wired by the police, and what happened? That is coming up.

(COMMERCIAL BREAK)

VAN SUSTEREN: More with Senator McCain.

(BEGIN VIDEO CLIP)

VAN SUSTEREN: You and Senator Feingold, from the great state of Wisconsin, I might add, and Representative Ryan, also from the great state, now want to have-are pushing the line item veto again.

Why do you think that this time it will now pass constitutional muster, because it has had problems before, which would allow the president to go through and strike a lot of these items?

MCCAIN: It would basically allow the president, with the approval of Congress, to remove objectionable items rather than kill the entire legislation.

I think that Americans are seeing more and more -- we just had the former chairman of the Appropriations Committee, the most senior Republican in the Senate, convicted.

This kind of behavior is angering more and more Americans, and I count on their good judgment to help bring it to a halt.

And when one of the senators, you had mentioned Senator Schumer, they don't care about these porky little projects. We are talking about billions, not millions, but billions of dollars in these, quote, "porky little projects."

VAN SUSTEREN: Here is what I don't understand. I think Americans understand that when they overspend, when they can't make their credit-card bills, they charge too much, and they can't make their mortgage payments, and their businesses go under, they understand is that when they overspend, they go bankrupt.

When we overspend as a government, where is thing going to lead us, because I assume that those who pick up our credit, like China picks up our credit, at some point, they're going to think we are not a great credit risk? At some point--where does this go?

MCCAIN: If we keep this up, two things, I think, are going to happen. At some point the Chinese may stop buying our debt.

The second thing that's going to happen, if we keep printing money, trillions of dollars worth that we don't have, then it is going to cause hyperinflation. And that inflation is the greatest enemy of the middle-income Americans, because they are on a fixed income.

And it has happened in the past. It would not be the first time that governments got into such deep debt that they printed more money, and the currency was debased.

I worry a great deal about it when we are laying these multi- trillion dollar debts on future generations of Americans.

VAN SUSTEREN: Do any of your colleagues every pull you aside and say, senator -- or, John, I imagine they call you, can you put the lid on this squawking about the earmarks, because I really have a project back home, and I have a tough election coming up? I mean, do you get pulled aside at all?

MCCAIN: Not anymore.

VAN SUSTEREN: Why? They know better.

MCCAIN: Yes. They know better.

VAN SUSTEREN: You now Twitter?

MCCAIN: Yes, I Twitter.

VAN SUSTEREN: Thousands of people follow you on Twitter. Our staff follows you on Twitter. The media follows you on Twitter. Why do you Twitter?

MCCAIN: Because it's a way of instantaneously communicating with 135,000 people so far, and it grows by thousands every day.

And I must say that I am a very slow Twitter. I am not a very fast Twitter, like some of the younger people on my staff.

VAN SUSTEREN: Are you actually doing the Twitter yourself.

MCCAIN: Yes, slowly.

VAN SUSTEREN: Slowly. And people, it's unbelievable, you have how many thousands?

MCCAIN: I have 150,000.

VAN SUSTEREN: Well, senator, thank you very much. And we will continue to watch and see what happens with this earmarks stuff, because I can tell you from my inbox, the American people, at least the ones I'm getting, they do not like the earmarks.

MCCAIN: Well, it's disgraceful. And I sure hope that many Americans will communicate that same anger not only to you but to elected officials.

VAN SUSTEREN: Do you think that the omnibus bill is going to get passed in its present form?

MCCAIN: Yes, it will get passed and signed by the president. The president should veto it in a New York minute.

VAN SUSTEREN: Can you call him and tell him to do that.

MCCAIN: Well, I made it very clear on the floor of the Senate that if the president vetoed this bill, it would send the signal that business as usual is over. It would be a tremendous thing for him to do.

VAN SUSTEREN: I guess it's that change.

MCCAIN: Yep. This is not the change that a lot of Americans had expected.

VAN SUSTEREN: We all want the president to do well, we want the country to do well. But I think that this earmark thing has hung up a lot of people, a lot of unhappiness, a lot of fear.

MCCAIN: It is not change. In fact, it is the same corrupt practices that have worsened.

VAN SUSTEREN: Senator, thank you.

MCCAIN: Thank you.

(END VIDEO CLIP)

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