This is a rush transcript from "On the Record," May 26, 2010. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: Tonight: Are the feds gearing up to sue Arizona? Now, Fox News has learned that a team of Justice Department lawyers want Attorney General Eric Holder to sue Arizona over its new illegal immigration law. Now, already, a draft lawsuit has reportedly been drawn up. But it's not a done deal yet.

Republican senator Lindsey Graham joins us live. Good evening, sir.

SEN. LINDSEY GRAHAM, R-S.C.: Good evening, Greta. How're you doing?

VAN SUSTEREN: I'm doing very well. All right, Senator, you're a lawyer and I know that you've studied this issue. What do you think about the Justice Department at least studying whether to go after the new Arizona law?

GRAHAM: Well, it's certainly within their right to do so. I would think it would be a bad idea because the country as a whole understands why the people in Arizona did what they did. I'd rather for the Justice Department, the federal government, the Congress focus on securing our border and fixing illegal immigration, rather than picking on people in Arizona.

VAN SUSTEREN: All right, you raised the issue of securing the border. Twelve hundred troops is what the president has announced he's going to send to the region. It came about -- let me ask you what you think about the way that the president made the announcement. Yesterday, the president met with Republican senators, even discussed the issue of illegal immigration, took questions from them, never mentioned that he was going to send any troops whatsoever. And then everyone goes back to his office or her office, and all of a sudden, there's a press release that there are 1,200. Why?

GRAHAM: Yes. Well, there's one of two things happened. It was in very bad taste to do it, if he knew he was going to do it, because Senator McCain brought up the topic of immigration. I think it would have been very appropriate for the president to tell Senator McCain and the senators from Texas that some help is on the way because it's a big issue for the people in Arizona and throughout the border states. Or he just made up his mind 30 minutes after the meeting and picked 1,200 out of the air.

I think it's the former. I think it was a known deal. He knew he was going to do this, and he didn't share it with us. And that just really makes things more difficult than it should be.

VAN SUSTEREN: Why is he wasting your time, though? Why would he sit there and let you discuss and try to convince, persuade him...

GRAHAM: Right.

VAN SUSTEREN: ... without even letting you know that he either had made a decision or was about to make a decision?

GRAHAM: Right.

VAN SUSTEREN: Why would he alienate Republican U.S. senators and those who think that it might have been even to do it that way a little bit of high school?

GRAHAM: Well, a cynic might say -- and I'm not a cynic, but a cynic might say that he came there, he asked to come, he brought up immigration, knowing we were going to talk about border security, and he challenged us to do comprehensive reform, which doesn't have a snowball's chance in hell of passing until you secure the border. Then he turned around 30 minutes later and said, I'm going to send 1,200 troops. Now help me fix it comprehensively. So I think it was sort of a set-up.

VAN SUSTEREN: Well, no one seems particularly happy -- at least, a lot of members of Congress from that area -- with the 1,200. Senator McCain and Senator Kyl -- both senators from Arizona want 6,000. Governor Brewer has asked for more. So you know, I'm not sure what the 1,200 are going to do or whether or not the 1,200 will work. But what do you think about sending 1,200?

GRAHAM: Well, it's a good first step, but it gets back to this political aspects of this whole deal. Why wouldn't you share that with the conference, Senator McCain in particular? But at the end of the day, 1,200 seems to be an inadequate number, given the size and the scope of the problem. And it's more than boots on the ground. It's unmanned aerial vehicles, it's virtual fences that don't work. There's a lot to be done on the border, and the threats are greater now than they were in 2007, when we tried to pass comprehensive immigration reform before.

VAN SUSTEREN: Why is comprehensive immigration reform dead?

GRAHAM: Well, I think, right now, the problem most Americans have is that they want to see their borders secured. And they don't hate illegal immigrants, but they don't want 20 million more 20 years from now. So we're not going to be able to legalize and allow people who are here illegally to stay on our terms, not theirs, until you convince the American people there won't be a wave of 20 million coming in 20 years.

And that's why, I think, if you tried a legalization program for the 12 million here, until you secured the border first, that the American people wouldn't have confidence that the second wave wouldn't come. So let's restore confidence. Let's secure the border. Then we'll deal with the illegal employment, temporary worker program and the 12 million.

VAN SUSTEREN: All right, so what's the problem with securing the border? Because I hear it from both sides of the aisle. I mean, it's a little bit bizarre how everyone says it...

GRAHAM: Yes.

VAN SUSTEREN: ... but it doesn't seem to get done. In fact, it's not done. I mean, it's weird! What are you guys doing?

GRAHAM: Well, we're spending some money, spending a lot of money. Let's build the fence. The fence that we authorized to be built hasn't been built. So having a fence in certain areas will work. Let's put more surveillance capability down by the border. Let's put...

VAN SUSTEREN: Well, why not done?

GRAHAM: ... boots on the ground.

VAN SUSTEREN: I mean -- I mean, I got the suggestions, but, like, why isn't it being...

GRAHAM: Well...

VAN SUSTEREN: I mean, everyone (INAUDIBLE) and says, This is what we need to do, but why isn't it being done?

GRAHAM: Well, this administration and the last administration didn't robustly do it. But we have authorization to do more. We need to do more. And at the end of the day, 40 percent of the people here illegally never came through the southern border. They over overstayed their visas. So I don't want people listening to your show to think if we just built the fence, our illegal immigration problems going away. We got a visa problem, and the 19 hijackers who attacked us on 9/11 all overstayed their visas from the Mideast. So we got to secure the border and fix our visa problem both.

VAN SUSTEREN: All right, another subject, the Sestak problem, the letter that went out to the attorney general of the United States...

GRAHAM: Yes.

VAN SUSTEREN: ... Eric Holder, saying, How about a special prosecutor? Several U.S. senators signed this letter and say, We don't trust the -- trust the White House to investigate themselves. What's going on with the Sestak issue?

GRAHAM: It's about that simple. I'm one of the seven senators. The allegation by Congressman Sestak is that he was offered a job not to run against Senator Specter in the Democratic primary in Pennsylvania. If that's true, that's a crime. You can't have the White House investigate itself. The Bush administration appointed several special prosecutors, Peter (SIC) Fitzgerald dealt with the Valerie Plame allegation of outing a CIA agent. This makes no sense to the average person. A lot of Democrats are upset with it.

And at the end of the day -- back to the border. The reason we haven't secured it, we haven't shown the will to do it, we need to show the will, to make sure that our national security interests are protected, secure that border. When it comes to making sure the rule of law works, you can't have the people accused of committing a crime investigate themselves.

VAN SUSTEREN: Well, probably one of the dumbest things that I've heard said out of the White House was said by Robert Gibbs. And I confess I've been guilty of saying some dumb things in my life. But on...

GRAHAM: Me, too!

VAN SUSTEREN: On "Face the Nation," he says, I'm told that whatever conversations have been had are not problematic. So it's the world according to Robert Gibbs. We're all supposed to be happy because he's told this and now we're supposed to be satisfied because he's the one, he's -- he's the teller.

GRAHAM: It just doesn't pass the smell test, and I can assure you if the shoe was on the other foot, our Democratic colleagues would be yelling to the high heavens to have an independent investigation. And that's what we should do to clear the air here because the allegation is very serious. It's tampering with our political process.

VAN SUSTEREN: Well, you know, it's interesting. I don't know what's going to happen in Chicago with Governor Blagojevich, but he's accused of selling a Senate seat. I don't know if he did do it or didn't do it, but that's the accusation.

GRAHAM: Right.

VAN SUSTEREN: To try to give someone something in kind, a job, which is cash, in exchange to do something doesn't seem so far off the spectrum of being like that. I -- I don't -- can you compare and contrast those two?

GRAHAM: Well, there's a statute on the books that prevents giving political patronage or political -- rewarding someone for making a political decision. Just play this out. You know, you're in charge of the government up here, the executive branch. You shouldn't be able to use those jobs to affect the political landscape in America by picking the candidates you want, going to one person you don't like or you think's not the best candidate and said, If you won't run, our party will be better off. We'll give you a job, if you won't run. That just can't be tolerated. That is like, basically, selling a Senate seat, in my view, and some Democrats agree with that.

That's why we need an independent investigation. And here's the problem. Congressman Sestak said this twice. Either he is lying or it's not the way he claimed, and if it is the way he claimed, then it could be a crime. I think it would be crime. And I don't think he's lying. I have no reason to believe that he is misrepresenting what happened. I think someone from the White House came to him, as he said, and tried to get him out of that race by offering him a job. And that's just not appropriate in our political system.

VAN SUSTEREN: Well, everyone says he or she is honorable, yet we still don't hear from Sestak and we still don't hear from the White House, except for Mr. Gibbs to say that he's heard that it's not problematic. So go figure. And we get more suspicious the more they don't tell us!

GRAHAM: I think so. I think the American people really do want their government to be on the up and up. And the Bush administration appointed several special prosecutors, and this is not too much to ask of the Obama administration, to have someone outside the White House look into these allegations. And anything short of that will not sell over time.

VAN SUSTEREN: Senator, thank you, sir.

GRAHAM: Thank you. You be good, and I'll see you back in Washington.

VAN SUSTEREN: Very soon.

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