This is a rush transcript from "On the Record," Sept. 16, 2010. This copy may not be in its final form and may be updated.
GRETA VAN SUSTEREN, FOX NEWS HOST: We went back to Capitol Hill, and earlier, Senator John McCain went back "On the Record."
VAN SUSTEREN: Senator, nice to see you, sir.
MCCAIN: Thank you, Greta.
VAN SUSTEREN: I don't know if I've seen -- even seen you since you won your primary, so congratulations.
MCCAIN: Thank you very much. It was an enjoyable win.
VAN SUSTEREN: More fun to win, isn't it.
MCCAIN: I've done both. I prefer winning.
VAN SUSTEREN: Big news in Delaware. Are you stunned? A lot of -- seems like a lot of Republicans are stunned by the news.
MCCAIN: I don't know if the word is "stunned," but certainly surprised because, obviously, Mike Castle, I think, had won some very large number of elections. He'd been a popular governor. And of course, this was a true grass roots kind of a situation, where people were expressing, in my view, their frustration with Washington and everything associated with it. I faced the same thing in my primary. I faced the same thing in the general.
VAN SUSTEREN: Well, it's sort of interesting because there was a lot of talk about how Democrats didn't realize that there were a lot of unhappy Americans out there, so they were surprised by the town hall meetings and by Scott Brown. Well, now it seems like the Republicans are getting a little bit of a shake-up in Alaska, Utah, Delaware. It seems like you guys are getting a little bit of a message that Americans are a little bit unhappy.
MCCAIN: Yes. And pork, which used to be a good thing for people's diet, has now turned poisonous. They're against the earmarking and pork- barreling spending. And I think that anybody who thinks that incumbency and past service will qualify them for reelection are making a serious mistake.
VAN SUSTEREN: It feels like a very different time, though, doesn't it?
MCCAIN: Well, it's -- it's more different than anything that I've ever seen, and it's based, obviously, in the frustration and anger which is bred by these harsh economic times. Greta, the people in my state -- I can't tell you how badly they are hurting. And then they -- you hear about the, quote, "summer of recovery" and that things are getting better and feel better because it could have been worse. Oh, really? I mean, so there's real anger and frustration out there, and it's being manifested across the board, at Republicans, as well as Democrats.
VAN SUSTEREN: Big issue is the Bush tax cuts and whether they'll be extended to everybody, meaning people that make $250,000 a year or more. Your position on extending them to all -- to everybody or to some?
MCCAIN: Well, first of all, we shouldn't raise anybody's taxes in this kind of a recession. Second of all, a lot of those people we're talking about rich at over $250,000 are small business owners. Half of the income of small businesses -- not half the small businesses, but half their income would be taxed under this, quote, extension of the tax cuts, which really would not be the extension of tax cuts, it would be an Obama tax increase.
VAN SUSTEREN: I guess the thing that's sort of distressing to me as a taxpayer, as a citizen, is the fact that it's getting sort of -- it feels like it's getting shoved at us, this issue, whether you're for it or against it, as we come on election day. So we feel a little bit like -- at least, I do -- like I've just been had because everybody knew it was going to expire. It's not, like, a big surprise. So this could have been debated with great thought, rather than sort of being pushed up against the election (INAUDIBLE) political rather than substantive to help the country, no matter which way it goes.
MCCAIN: Listen, everything around here now is totally political. I mean, they are trying to put provisions on the defense authorization bill, something we never did before last year, when they put hate crimes on the defense authorization bill. Harry Reid says he's going to put the Dream Act on the defense authorization bill. Everything that's being done around here is political, and all it really does is increase the incredible cynicism level in Washington -- out in the countryside about Washington because we -- where are the people's views? All they're talking about is trying to gain some kind of political advantage because of their difficult situation they find themselves in.
And I want to emphasize one other thing. Don't take anything for granted. We will celebrate after the election results are in. Please, let's not anticipate a great victory, and let's give the American people a positive agenda that they can support. By the way, I was pleased at Kelly Ayotte's election, very narrow victory.
VAN SUSTEREN: Next, more with Senator John McCain. In minutes, he goes "On the Record" about his former running mate and the power of Palin. Stay right here.
VAN SUSTEREN: Continuing with Senator John McCain. He went "On the Record" about the Palin -- yes, that's Palin -- effect on this week's elections.
MCCAIN: Last Tuesday night, she again showed that she can really have an impact on an election, particularly in a smaller state where you can galvanize a real good turn-out. There were not a lot of votes in Delaware on Tuesday night, as you know, as compared with other states. But there's no doubt that Sarah Palin has a tremendous effect on elections. She doesn't win them all, but everybody knows it matters.
VAN SUSTEREN: Can Christine O'Donnell win in Delaware? Because I saw an interview with her with Carl Cameron and she -- and a lot of people are counting her out. Even Karl Rove has said now that's not going to be a Republican seat. But she said was, No one thought I could win this. So you know -- so basically, Look out, I can win -- I can win the general. You think she has a shot at winning?
MCCAIN: I think she will do nothing but go up between now and the election. Whether she can win the election or not, I'm not sure about that. And I don't think there's any doubt that if she can pull off a surprise in the primary as she did, then I'd watch out for her in the general.
VAN SUSTEREN: You mentioned the defense authorization act. Senator Reid is going to put on there (INAUDIBLE) understand it, "Don't ask, don't tell." And I know that you have -- I don't know if you've opposed it, but you put the brakes on it. Maybe let me -- I'll let you speak for yourself. What's your -- what is your position on this?
MCCAIN: Let me try to be very clear. I am not opposed to the repeal of "Don't ask, don't tell." But it's a law that's been in for 17 years. And we need to study the effect on battle effectiveness and morale before we orchestrate -- enact a repeal because it really is an important issue, given the different nature of the military and their lives and the way they serve this country.
All four service chiefs -- all four of them -- have said we need to conduct this thorough study that I am supportive of before we repeal "Don't ask, don't tell." Unfortunately, the president of the United States made a political commitment to the gay and lesbian community, and now he has the secretary of defense and the chairman of the Joint Chiefs of Staff who's saying, Well, you know, let's conduct a study on how best to repeal it, not what the effect would be. So what...
VAN SUSTEREN: But (INAUDIBLE) been that -- has that study been accomplished yet?
MCCAIN: No, of course not.
VAN SUSTEREN: I mean, that's -- I mean -- is that...
MCCAIN: No, what they're trying to do is because they're worried about the election results in November and that they may not have enough votes to repeal it then, is rush this thing through. In other words, go ahead and say -- the study has to be completed on how to implement it, and then only the president, the secretary of defense and the chairman of Joint Chiefs of Staff would sign off on it, cutting out all four service chiefs, who are opposed to repeal unless a complete study done.
VAN SUSTEREN: Well, how...
MCCAIN: So believe me, this is -- this is really a serious mistake. And by the way, Harry Reid's piling onto it no secret holds on bills and the Dream Act on a defense authorization bill.
VAN SUSTEREN: Well, the Dream Act is...
MCCAIN: Why? Because of his political agenda.
VAN SUSTEREN: The Dream Act is for the immigration, or people who are here -- who came here to this country...
MCCAIN: Who came here as children, yes. And it may have merits or demerits, depending on how you look at it. But to put it on a defense bill? And so it's really his effort to get reelected. And he's doing that at the expense of this legislation, which is about the men and women who are serving in the military. It's really remarkable.
VAN SUSTEREN: Well, you know, it's always, quote, been done that way, that you put these different topics in a bill. You've got a bill, and so you shove every single topic if it's unrelated onto it. And I think the American people are now sort of seeing it. It doesn't make sense, I mean, to many people. A defense bill should be about defense issues. You know, education should be about education. You know, I'm surprised that, you know, there isn't more backlash when things sort of get pasted on that are dissimilar. Have two different bills, but not the same bill and paste it on.
MCCAIN: Well, interestingly, for many, many years, we never put any extraneous items on the bill because it was so important to defense and we just didn't allow it. Starting last year, Carl Levin and Harry Reid put hate crimes on it, which had nothing to do with it. And now this year, they are continuing that.
What's going to happen is, over time, is it's going to be like the other authorization bills. They're just not going to go anywhere. And that's terrible because these are the policies that care for the men and women who are serving in the military. So it's very clear, and I say this with all seriousness, Harry Reid and Carl Levin have put their political agenda ahead of the welfare of the men and women who are serving in the military today.
VAN SUSTEREN: Senator, thank you. And hope you'll come back soon.
MCCAIN: Thank you.
VAN SUSTEREN: Or I hope I come back soon.
MCCAIN: Thank you.
VAN SUSTEREN: Thank you, sir.