This is a rush transcript from "On the Record," February 27, 2012. This copy may not be in its final form and may be updated.
GRETA VAN SUSTEREN, FOX NEWS HOST: Tonight: Well, get ready because we are only hours away from the polls opening in Michigan, where it is neck and neck and where we could even see some political mischief!
And just a short time after polls open in Michigan, they open in Arizona. Twenty-nine delegates are up for grabs in Arizona. And how important is that? Well, try very! It is winner-take-all in Arizona. Each of the four candidates is looking to pick up much-needed momentum headed towards super-Tuesday. So who's going to get it?
Here's Arizona Senator John McCain.
VAN SUSTEREN: Senator, nice to see you, sir.
SEN. JOHN MCCAIN, R-ARIZ.: Thank you, Greta.
VAN SUSTEREN: Well, it's a big day tomorrow in the state of Arizona. You have endorsed Governor Romney. But I'm curious, with 250,000 early voting, which way you think those early voters went. I know that right now, Governor Romney is leading in the polls there.
MCCAIN: All the indications we have from the early balloting is that Mitt Romney is going to do very well tomorrow. We don't want to heighten expectations because so much of this game is that. But we're confident he'll do well here in Arizona. And from what we hear, he'll do well in Michigan, as well.
VAN SUSTEREN: All right, now, Michigan is a little different because it's a proportional state, is that right? Arizona is winner-take-all?
MCCAIN: Yes, indeed. So it probably matters maybe in some ways a little more than Michigan, although Michigan is a big and important state.
VAN SUSTEREN: What do you think is the bigger issue between -- for the Arizona voters, illegal immigration or jobs?
MCCAIN: Jobs by far, Greta. We were at the top of the crest of the housing wave, you know, and we and Nevada and Florida and to some extent California had the furthest to fall. And we are still a long, long, long way from recovering here in Arizona.
VAN SUSTEREN: Why were you at the top of the housing? Why were you busy building so much down there and selling so much?
MCCAIN: Well, as you know, Arizona is one of those places that people love to retire and also to come and work. And so with the population growth, we had a commensurate housing boom.
People began to speculate. And I'm not exaggerating when I tell that you speculators would buy two or three houses, let them sit vacant for a year or two, and flip them. That's how serious the problem was.
So when it all came crashing down, we were really hurt very, very badly, and still are. Still nearly half the homes in Arizona are, quote, "underwater," less than the value of their mortgage.
VAN SUSTEREN: Well, what can a -- what can a President Romney do for the housing industry, you know, in Arizona? I mean, and how quickly?
MCCAIN: I think quickly is not probably as easy as it would have been at the beginning of the crisis, if we'd have gone in and cleaned up and gotten a fresh start.
Remember when the savings and loan crisis happened back in the '90s? And Arizona again was one of those that was hurt very badly. But they went in, got rid of the bad assets and started over. We didn't do that at the beginning of this crisis.
And now I think the president is on his fourth -- they give them different names, you know, like RAMPs and HAMPs and all these acronyms, and none of them have worked so far.
So I think it's going to be tough. I think it's going to be a stabilization of the overall economy. But one of the things they could do, in my view, again, is looking for relief to people who are close to being able to afford to stay in their houses by reason of income and foreseeable income. We could work on that. But it's still very tough here.
VAN SUSTEREN: I'm always curious, I mean, in terms of what a President Romney, the man that you endorsed, or a President Santorum, or President Gingrich or President Paul -- you know, if you have a Republican House and Republican Senate, you know, you're much more likely to get what you want.
In light of the fact that there's a high probability that it'll be -- that the Senate will remain Democratic, I mean, what difference does it truly make to have a Republican president on something like housing?
MCCAIN: Well, I think, first of all, the federal government can do enormous things, unfortunately, many times without the approval of Congress.
The second thing is the thing that's going to restore the housing most quickly is an economic recovery, and we all know that there is a slow recovery going on now. Why is it slow? Because of businesses' lack of confidence in the future, their unwillingness to invest and hire and create jobs because they don't know when the next regulation is coming down. They don't know what "ObamaCare," the next thousand regulations that are going to be laid on them. They don't know what is going to be the next situation as far as taxing the, quote, "rich" is concerned.
So with a Mitt Romney as president, they would have a certainty of what their economic future would be. One of the things that I know that Romney would do is to cut back on this flood of regulations. We would do everything we could to stop "ObamaCare," repeal and replace it, where thousands of regulations are coming down, and put a business sense back into the economy.
Mitt Romney believes that business creates jobs. Obama clearly believes that it's government that creates jobs. Look at the kind of money that they put into these failed green technologies.
VAN SUSTEREN: Well, I'm sort of -- I mean, all the Republican candidates want to get rid of the regulations. So I'm curious -- now let me ask you to distinguish between the other three and your candidate. I mean, if they -- if they all want to get rid of regulations and if you think that's a good idea, why can -- why could a President Romney do it better than the other three, in your mind?
MCCAIN: Well, I think one reason is that he has the background. Not only did he save the Salt Lake City Olympics, he has been in the free enterprise system. And yes, Bain Capital backed some companies -- bought some companies that failed. They bought some that succeeded. They formed one called Staples with $5 million and a warehouse.
He knows how to create business and jobs. He understands it extremely well. He's also had the experience, obviously, as a governor working with the Democrats legislature, and he got some things done when he was governor of the state of Massachusetts.
And finally, I think he can restore some confidence in the American people that they've got a pretty straight guy here, a guy who's a good family man, he's a fine individual and one that is -- is real -- I think can enhance the prestige of this company -- this country.
VAN SUSTEREN: OK, we're going to have much more with Senator McCain later in the hour.
VAN SUSTEREN: In Egypt Americans are getting ready to stand trial. In Afghanistan U.S. soldiers are murdered in anti-American riots. The United States is facing more than one foreign policy crisis, so what needs to be done? Once again, here's Senator John McCain.
VAN SUSTEREN: You just got back from Egypt. Actually there are 19 American on trial, seven still remaining in Egypt in the embassy compound. Should we get them out of there at all costs, even if it's sneaking in and getting them if we have to?
SEN. JOHN MCCAIN, R-ARIZ.: We can't sneak in, Greta, as you know. But we're going to have to do some more, bring some more pressures to bear I'm sorry to say. I have been in contact with our great ambassador in Cairo. We've had conversations with Egyptian authorities. To sum it all up, I'm very concerned about the situation, and if there isn't some change then I think Congress will have to consider the whole issue of aid.
It just is unacceptable for American citizens who, by the way, were serving the worthiest of causes trying to help the Egyptian people achieve democracy and all of the things that are associated with it -- constitution, voting rights, formation of parties, all those things that go into making a democracy. That's what they were doing. And unfortunately the remains of the Mubarak regime and particularly a woman who was a total Mubarak person has moved to attack these organizations. And by the way, the Muslim Brotherhood has praised these NGOs and the work they do. I think you might find that interesting.
VAN SUSTEREN: All right, $1.3 billion is the amount of aid we have sitting out there for Egypt that some have threatened they are not going to get. You say we can't go in and get them or can't sneak them out. We have done a lot of sneaky things. We snuck in and killed bin Laden. We have a government that has not listened to you or Secretary of State Clinton. And they want to put those Americans on trial.
MCCAIN: Well, first of all, they are in the embassy so they are safe. Second of all, they are not going to go on trial. We will not release them to go up here in a cage somewhere. They proposed that earlier.
I think we can work our way through this with the Egyptian authorities. Look, they are our friends. And by the way, this aid is tied to the Israeli peace agreement. We want democracy to take hold in Egypt. We want a stable relationship between ourselves and Egypt and between Egypt and Israel. So I'm confident we can work our way through this, but it may some take some more pressure.
And unfortunately, if it goes the other way, Greta, you could see all kinds of consequences and things could happen in Egypt which is the heart of the Arab world, and obviously we would like to damp this down rather than have it get much worse.
VAN SUSTEREN: Last week the burning of the Korans sparked protests and has continued escalating problems in Afghanistan. President Obama writing a letter to President Karzai apologizing, which has enraged many. The situation in Afghanistan, you were just there, it appears getting worse, deteriorating. Am I wrong?
MCCAIN: No, you are right. By the way, this Koran, as I understand it, these Korans were used by the inmates in the prison to send messages to each other. So they were in some ways -- if that's true, they were desecrating the Koran by writing in the pages of the Koran.
This is a very serious situation. Obviously our prayers go out to those who were killed, particularly the lieutenant colonel and the major that were shot in the head. Also, we must express our disappointment in Karzai for not taking a stronger stand, especially initially against these demonstrations that are going on. Look, I'll be honest with you, this situation, if not brought under control, can harm all of a lot of our plans.
But it also, I got to tell you, Karzai and a lot in Afghanistan and in Pakistan and the region believe the United States is leaving. When they believe the United States is leaving, they have to make accommodation because they have to stay in the neighborhood.
So part of Karzai's rhetoric is associated with his uncertainty about how long the United States and our allies will be there because the president keeps announcing recommendations against the recommendations of his military advisors. So there's more to this than just this particular incident, is a lack of confidence of the countries in the region that the United States has the staying power to get this thing done or stabilize to the point where we can leave.
And if that happens, then there will be serious, serious -- well, Afghanistan will return to being a cockpit of different competing interests and different nations in the region.
VAN SUSTEREN: Should we be negotiating or discussing peace with the Taliban? Do you in any way think the Taliban is going to change its stripes and Afghanistan is going to be something different than what it was when we went in?
MCCAIN: I would be glad to talk to anybody at any time. But you must be realistic. If of if recently a former high ranking member of the Bush administration was in a meeting with the prime minister of Pakistan, and he said what do you think the chances of peace with the Taliban are? He just laughed. He said why should they? You are leaving.
This cockamamie idea of releasing five high-ranking Taliban from Guantanamo as a, quote, "confidence building measure," is really a sign of the desperation that this administration has to try to get something going. I'm glad to talk to them, but I think the chances are, when they know that he with are leaving, are minimal to -- for success.
VAN SUSTEREN: You use the term "desperation." Is President Obama dead wrong in the direction in the way we are handling Afghanistan right now?
MCCAIN: Well, he announced withdrawals from Afghanistan over the recommendations of the military leaders that he appointed, just as he bailed out of Iraq without us having troops there, which we could have done. Now Iraq is unraveling. And he did that, as I said, over the strong objections of the military that he appointed. And I'm afraid that it sent a signal to the region the United States is leaving. And that was not, in my view, the correct way to go. It should have been dictated by facts on the ground.
There are also two major problems that remain and are still with us and they aren't the president's fault that much. One of them is corruption in the Karzai government, and the other is sanctuary is Pakistan for the Haqqani network and other organizations, serious impediments to achieving final success in Afghanistan.
VAN SUSTEREN: Looking where we are right now, have we had, quote, "success" in Iraq and success in Afghanistan if today is our date of determining success?
MCCAIN: In the words of General Keane, one of the architects of the surge in Iraq, we won the peace and we are losing the war. We should have had and could have it a residual force of some 20,000. The president never wanted that. He said he campaigned on getting out of Iraq. We are out of Iraq. The situation there is unraveling, tragically.
In the case of Afghanistan, I think if he listened to our advisors and kept the troops there for another fighting season the situation would have been much more stable and perhaps Karzai might have been a little more reliable than he's displaying today. It all is based on perception. And victories are won on the battlefield and they're also won psychologically in war. And by the president's continuous pronouncements that we are leaving, it hindered our ability to achieve success in Afghanistan enormously.
VAN SUSTEREN: Can we trust Karzai?
MCCAIN: I think you can understand that Karzai is a person who is not sure where we are going to be a year from now. He's a person who is very concerned about his own safety, personal as well as political future. And I think he is acting in ways that he thinks are in his best interests. I strongly disagree with his in insistence on ending night raise and discharging the inmates from prison there in Afghanistan. I strongly disagree. But I also understand in some ways why he's doing it. But I think by him insisting on these things, he is hurting not only his future, but that of the chances of the people of Afghanistan to have a safe and secure future.
VAN SUSTEREN: Senator, thank you.
MCCAIN: I really believe --
VAN SUSTEREN: Go ahead.
MCCAIN: I really believe that if Afghanistan reversed to a chaotic situation, you will see the return of the Taliban and Al Qaeda to Afghanistan, which would then pose a threat to the United States' national security.
VAN SUSTEREN: Senator, thank you. Nice to talk to you. And all eyes tomorrow on your state to see what happens and of course in Michigan. Nice to see you, sir.
MCCAIN: Thank you.