This is a rush transcript from "On the Record," June 7, 2010. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: Tonight, Senator John McCain uncut and "On the Record."

(BEGIN VIDEOTAPE)

VAN SUSTEREN: Sir, nice to see you, sir.

SEN. JOHN MCCAIN, R-ARIZ.: Thank you, Greta.

VAN SUSTEREN: Thank you for letting us come back to your office to talk to you.

MCCAIN: You're always welcome.

VAN SUSTEREN: Thank you, sir. All right, you have gotten the attention of the president of United States with Governor Brewer and with Senator Kyl about the border in Arizona. You've gotten the attention. Are you getting any action?

MCCAIN: Well, apparently, there's going to be 1,200 National Guard sent somewhere. We were told it's just the desk jobs. But I'm glad that's a good first step. But it's very clear that we need 3,000 on the Arizona border. We need more surveillance capability and we need better fences and a complete defense. We can secure the border. They've made great strides in San Diego. They've made great strides in Texas. And they've even made great improvements in the Yuma sector of our Arizona/Mexico border. We have two sectors, Yuma and Tucson, and Tucson sector is still very badly lacking.

VAN SUSTEREN: Why was Tucson sort of left behind in this? Why -- why not the attention there?

MCCAIN: I think it's a combination of factors, including the fact that the most vicious of all the cartels is the Sinaloa drug cartel. It's headed by a guy named Chapo Guzman. I mean, this guy is a remarkable criminal. And they happen to be located just on the other side of the Arizona/Mexico border, and they are very powerful. They are very influential and they're very, very active.

VAN SUSTEREN: I just read this morning -- I mean, these terrible stories in Mexico. There were six dead bodies found, three -- they were all been tortured, three of their hearts cut out. They had a "Z" -- three had a "Z" on their chest for "Zeta," which apparently is the -- is one of the newest cartels. Vicious, vicious, terrible crimes.

MCCAIN: The Zetas are the ex-special forces Mexican military people who -- who are especially vicious. One of the things that people don't understand is how vicious these cartels and human smugglers are and they're -- they're practically one right now, not only what they do to each other, what they do to innocent Mexican citizens, but what they do to people when they bring them to places like Phoenix, Arizona. They hold them in drop- houses under unspeakable conditions. They hold them for ransom.

You know, the number one kidnapping capital in the world is Mexico City. Number two, Phoenix, Arizona. So when I see our secretary of Homeland Security and others say the border is much more secure -- then why is it that Phoenix, Arizona, is the number two kidnapping capital of the world? It certainly means we have a lot of work to do.

VAN SUSTEREN: Well, this is no ordinary Homeland Security chief, though. This is your former governor of Arizona before your current governor.

MCCAIN: I'm very disappointed in the former governor because as far back as 2006, Janet Napolitano asked for additional troops on the border, also asked for the federal government to repay the expenses that are involved with illegal immigration. I guess she proved again that old adage it isn't so much where you stand, it's where you sit.

VAN SUSTEREN: How about the new governor, Governor Brewer?

MCCAIN: She's doing a find job and she's standing up for Arizona, and I'm very proud of work she is doing. This is a tough situation. Arizona would never have enacted this law if the federal government had performed its responsibilities of securing the borders. And I could throw numbers at you -- 1.2 million pounds of marijuana intercepted in the Tucson sector last year, 241,000 illegal immigrants crossed the border. And yes, there have been some improvements, but the people in the southern part of my state are still not living a secure environment. Every citizen has that right.

VAN SUSTEREN: Well, you're just talking about the financial and the drug -- it's the violence -- I mean, those are bad enough, but it's the violence that -- you know, that we're getting over the border and the really horrible stories we're reading about. I'm uncertain why we're not getting more of those. That seems inevitable, unfortunately.

MCCAIN: I think the most underreported stories is the brutality. But by the way, there's also been killings of a lot of media people and reporters in Mexico that have been reporting on these crimes. But 22,000 Mexican citizens have been murdered in the last two or three years.

And also, there's an election coming up in Mexico. If the wrong person were elected, who chose not to fight these drug cartels, as President Calderon, much to his credit, is doing, then I think the implications are very severe.

And finally, could I mention again we ought to be talking about who and what is creating the demand for these drugs, this $65 billion-dollar-a- year business or whatever it is, astronomical numbers. We in the United States are, and we ought to start looking at that aspect of it, as well.

VAN SUSTEREN: Well, from what I'm told, it's the business people who like the cheap labor in this country, who don't want a comprehensive immigration reform. And it's the far left, the other side of the spectrum, who want the -- you know, who don't want to offend a huge population in this country. So it's this giant middle that's screaming for help, but these other two ends are making it difficult to get any sort of reform or security.

MCCAIN: Well, I think that's accurate. I'd also add one additional point. I think there's a political calculation going on that the Democrats may be able to get a solid Hispanic vote in years to come, be it an overwhelming majority of the American people think we have to secure our borders. They understand what Arizona did, and they oppose this outrageous boycott that's going on of our state, which would only hurt 30 percent of our population which happens to be Hispanic.

VAN SUSTEREN: The gulf -- horrible catastrophe going on right there. And just looking at the numbers, about 67 percent of the American people in a recent poll have a negative feeling towards the way the federal government is handling it. Coincidentally, with Katrina at this time, 62 percent had a negative view of how the federal government was handling it. How would you handle it differently?

MCCAIN: I think I would be much more active in coordination and consultation with the local authorities and the governors. Bobby Jindal has raised legitimate concerns, the governor of Louisiana. I'd be working much more closely with the governors and the local authorities.

Now, I have some sympathy for the president because this happened on his watch. That's true that he's getting blame that perhaps he may not deserve. But you've got to give the impression, and not only the impression, but you have to actively solicit the involvement and support of the people who are directly responsible to the voters, even the local sheriff, the parish leaders, the governors. I would be consulting with them every single day because when they criticize, you know, then there's great legitimacy to their criticisms because it's their constituents that are going through this terrible experience.

VAN SUSTEREN: Well, a lot of environmentalists are critical of the president. I don't know what they expect him to do, but he's getting -- he is getting hit from a lot of sides as the people are saying he should be doing more.

MCCAIN: Well, I think the best way to find out what more needs to be done -- talk to the people on the ground there, people who have experience and the knowledge. And again, I refer to the governors, the local authorities in particular. Also, I think, looking back, you could argue that the administration placed too much reliance on BP and gave the impression that BP was going to solve this problem only with the oversight of the government. The government has to take charge. And I think that Admiral Thad Allen seems to be doing a good job.

(END VIDEOTAPE)

VAN SUSTEREN: Next, more with Senator McCain. Did you hear about his duel with Governor Palin? What's going on? Have things changed between them? We'll let Senator McCain tell you.

(COMMERCIAL BREAK)

VAN SUSTEREN: Continuing with Senator McCain and the snubbing of Defense Secretary Gates. Now, Secretary Gates wanted to go to China this month, but the Chinese snubbed him. What does Senator McCain say?

(BEGIN VIDEOTAPE)

VAN SUSTEREN: China -- and our secretary of defense -- apparently, he's not as -- he wanted to visit China, and that's not happening.

MCCAIN: Never in my memory since Nixon went to China can I imagine the scenario where our secretary of defense is told that he's not welcome in China. This is an indication of deterioration of relations. But more importantly, it's a lack of respect that bothers me because Secretary Gates is a very highly respected individual. For the Chinese to say that they don't want them to visit I think is quite an indication of a lowering of our prestige. Also, it's an indication that the Chinese military is still very, very influential in Chinese affairs.

VAN SUSTEREN: Does it have to do with the arms deal to Taiwan? I mean, because Secretary of State Clinton was recently in China.

MCCAIN: There's been arm sales to Taiwan for many, many years, ever since we changed our relations with mainland China, so I don't think that you could say that's the reason for it. I think it's a bit of assertiveness on the part of the Chinese, which they've manifested in other ways, including within the region.

VAN SUSTEREN: But you know, it's interesting that, you know, just two weeks ago, I think, Secretary of State Clinton was there with the expectation, or at least we hoped that she would be able to secure China's agreement to vote for sanctions against Iran. So this is sort of, you know, an interesting twist, to put it lightly.

MCCAIN: It's an interesting twist. It's also an interesting twist that the North Koreans sank a South Korean ship. That's an act of war, and yet the Chinese still will not outright condemn nor take actions to curb North Korean behavior. Remarkable.

VAN SUSTEREN: Well, what do we do? Because I mean, we sort of -- they have their foot on our throats economically. They hold so much of our debt that I think we -- our political muscle is somewhat diluted because we don't have -- we don't have the -- I mean -- I mean, they owe us -- we owe them so much money.

MCCAIN: Well, there's a lot of aspects of this issue, but very briefly, get spending under control. Get our economy going again. We're still the most innovative and productive nation in the world. All the new and great things in the world are still, generally speaking, mostly innovated here in the United States of America.

Get tough with our allies and our erstwhile adversaries. Stand up for America. Stand up for human rights. Stand up for the Dalai Lama and the Tibetan people. Stand up for the persecuted minorities in China. Stand up for the people in Tehran that are risking their lives demonstrating every day against this incredible regime. Stand up for the people of North Korea.

This is what America's all about. That's what Ronald Reagan was all about. We're a great nation, but we're a great nation for many reasons, but one of them is because we're still a beacon of hope. And to go around and apologizing for the United States of America is not the way to do it.

VAN SUSTEREN: Is that what you think we're doing? Do you think -- do you think the president's apologizing?

MCCAIN: I think he does, in some respects. But I think, more importantly, is that we have proven that we can be an inspiration, that we can be a beacon, that during the cold war, we were the inspiration to Lech Walesa and the people on the other side of the Berlin Wall. And we should be standing up for these people.

The day this young woman named Neda bled to death in the street in Tehran was a day that we should have said, We're with you, we're with you and we'll try and help you, the same way we got a printing press to Lech Walesa and the workers in Gdansk. We'll try and help you communicate with one another through the Internet and other means of telecommunications, but we're behind you. The demonstrators in the streets -- in the streets in Tehran were chanting, Obama, Obama, are you with us or are you with them? There should be no doubt in their mind as to whose side we're on.

VAN SUSTEREN: We're talking about the demonstrations a year ago, in the June election in Iran. Was that a missed opportunity for us? I mean, with -- are we going to get another one?

MCCAIN: I think that the flame of hope, of freedom, is still -- is lit in Iran and Teheran, but I think we did pass up an opportunity. But it's not too late. We have passed strict sanctions both through the House and the Senate. We haven't implemented that law for weeks and weeks because the administration wants us to wait until the U.N. acts. Waiting for the U.N. to act requires more patience than I'm capable of.

VAN SUSTEREN: But how can we possibly -- I mean, the U.N. -- do you really think that's going to happen, if -- the U.N. can't happen without China, you agree? That can -- I mean, China can veto it. So I mean, where is the indication China is with us on sanctions against Iran? I haven't seen any indication.

MCCAIN: The best result that I can see the way the administration is handling this is very weak sanctions out of the United Nations, when we could be, with our European allies and through the Congress of the United States, passing some very stiff sanctions. But also, there's got to be more advocacy for human rights, whether it be in Venezuela or Tehran or Beijing or Pyongyang. No matter where it is in the world, we have got...

VAN SUSTEREN: What is that advocacy, though? What do you expect?

MCCAIN: I expect what they expect of us.

VAN SUSTEREN: Like what, though? Give me an example.

MCCAIN: Well...

VAN SUSTEREN: Like, what would you expect...

MCCAIN: Well, an example would be a speech by the president of the United States saying, These are the principles of human dignity that all Americans -- all people, all people, not just Americans, are endowed with certain inalienable rights, and we are with you. And we are going to have a Radio Free Iran. And we are going to try to help you network with one another. And morally, we are with you.

That means so much to them! That means -- ask Nathan Sharansky. When Ronald Reagan mentioned his name, he said it spread through the gulag like wildfire. We are a nation that inspires people, and that's really -- and I'm not talking about arms shipments or anything like that. I'm talking about moral leadership in the world. And unfortunately, that's not been part of our conduct of foreign policy. So much emphasis has been placed on unclenching the fist that we're not standing up for those people that are being brutalized as we speak.

VAN SUSTEREN: Switch topics -- South Carolina, dueling robocalls. You did a robocall for one candidate tomorrow for governor, McMaster, and your former running mate, Governor Sarah Palin, has done a robocall for the woman candidate for governor. And there's another candidate, as well. But what do you make of the dueling robocalls?

MCCAIN: You know, Sarah and I don't agree on everything and every candidate. Henry McMaster is a person that I've admired and respected. He was one of the leaders who brought suit against "Obama care." He's done a good job for families as attorney general of South Carolina. He's a good friend.

VAN SUSTEREN: Going to be a fun race to watch tomorrow.

MCCAIN: What?

VAN SUSTEREN: It's going to be a fun race to watch. They're all fun to watch.

MCCAIN: I think it's going to be fun. And I think that both Carly Fiorina and Meg Whitman are going to win. And that's going to be a dynamic duo. I think we are going to see a Republican governor again and a Republican senator for the first time in a long time for having a good Republican in the Senate.

VAN SUSTEREN: Senator, thank you, sir.

MCCAIN: Thank you.

(END VIDEOTAPE)

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