This is a rush transcript from "On the Record," February 2, 2010. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: Tonight: Cut off the money! Now, that's an idea. It belongs to Republican senator Lindsey Graham. He just introduced a bill to cut off funding for a civilian trial of Khalid Shaikh Mohammed and four others.

Senator Graham joins us live. Good evening, Senator.

SEN. LINDSEY GRAHAM, R - S.C.: Thank you.

VAN SUSTEREN: And of course, before we even get to Khalid Shaikh Mohammed, news tonight that the underwear bomber, for lack of a better description, that he is cooperating with the United States.

GRAHAM: Well, I hope so. But they told us the first time that we got all we needed to know. So the fact that he's talking must mean he has something more to know. But this is not a system, this is blind luck. We need a system that would allow this guy to be interrogated by our military without a lawyer intervening. You can do that under the Law of Armed Conflict. So I hope he is talking. But we need not repeat this mistake again.

VAN SUSTEREN: Well, the interesting thing is, my prior life as a criminal defense lawyer, so -- and sort of my look at this, either he got himself a deal...

GRAHAM: Yes, probably.

VAN SUSTEREN: ... right up front, a good deal, or he's got a lousy lawyer.

GRAHAM: Well, I...

Watch Greta's interview with Sen. Lindsey Graham

VAN SUSTEREN: And I understand his lawyer's good, so he must have gotten some deal.

GRAHAM: I used to be a military lawyer, a defense lawyer. I used to be a definitely lawyer in the civilian world. I wouldn't let my guy talk until I knew it was to his benefit. And that's what's wrong with the law enforcement model. We're not prosecuting crime. This guy was fresh off the battlefield. He's not a common criminal, he's part of al Qaeda. He should have been turned over to the military, questioned about his intelligence, what he knew about the enemy. We're trying to win a war, not fight crime, and that was a mistake to read him his Miranda rights, and if he talks, it's just blind luck.

VAN SUSTEREN: And I guess that the thing we should point out to the viewers, is that in a civilian matter, you get read Miranda rights, and the minute you say you want a lawyer, that's where all the questioning has to stop.

GRAHAM: Yes. Yes. That's right. See, I've been a military lawyer for 25 years, and what military commanders want when they capture an enemy prisoner is not about prosecution, it's about, one, I want him off the battlefield, and two, I want to know what he knows about the enemy so I can protect my soldiers. And if you want to prosecute him, you do that later in a military tribunal.

So this whole criminalization of the war is really going to make us weaker and less safe. And I hope the president will reconsider putting these guys in civilian court. We've never done this in any other war, and it's a bad precedent and it's just -- it's unnerving the nation.

VAN SUSTEREN: All right, other trial -- Khalid Shaikh Mohammed.


VAN SUSTEREN: You introduced a bill today to cut off the funds.

GRAHAM: Yes. You know, I really, in many ways, hate to do that, but we've never put an enemy combatant, an enemy prisoner, non-citizen, enemy combatant in federal court before. German and Japanese prisoners never got federal civilian trials. To give this guy the same constitutional rights as an American citizen is just wrong. He's the mastermind of 9/11. So the only thing Congress can do is stop the funding, and I've gotten bipartisan support to not fund the move of Shaikh Mohammed to New York City or any other venue for a civilian trial. This is not crime we're fighting, it's a war, and he should be in a military legal system.

VAN SUSTEREN: What Democrats signed on with you?

GRAHAM: Jim Webb, who's great, Blanche Lincoln. I think there'll be other Democrats come on board because it's hard to go home and explain to people why you would spend $300 million to take the mastermind of 9/11 back to New York, the scene of this horrible attack on our country, give him the same constitutional rights as an American citizen. It makes no sense. It doesn't make us safer. It doesn't make us more noble.

VAN SUSTEREN: All right. I realize that we're in horrible economic times...

GRAHAM: Right.

VAN SUSTEREN: ... because we talk about this every single night, but...

GRAHAM: Absolutely.

VAN SUSTEREN: ... I'm curious, Is your view of this an economic one, or is it because you think he shouldn't have a civilian trial? That's the second part. And if you don't think he should have a civilian trial but some sort of military tribunal, is the trial significantly different than a civilian one?

GRAHAM: Well, it's very -- it is significantly different. Military tribunals are set up understanding we're at war. There are better procedures to protect classified information in a military tribunal. The blind sheik trial back in the '90s, the guy who tried to blow up the World Trade Center the first time, was put in civilian court. We had to give to the defense the unindicted co-conspirator list as part of civilian law discovery. Usama bin Laden's name was on that list. It wound up in his hand (ph) in the Sudan, and he knew we were following him back in 1995.

In a military tribunal situation, the defendant is given a lawyer, presumed to be innocent, proved beyond a reasonable doubt, but the military judge can protect classified information much better. And so this is the way we've tried other enemy prisoners.

VAN SUSTEREN: All right, now, there have been some tribunals where they -- civilian tribunals, like the trial out in Alexandria, Virginia, in which, you know, they did keep classified information out of the hands of the defendant. But (INAUDIBLE) is the civilian -- is the military tribunal you would like to see Khalid Shaikh Mohammed tried in -- is that identical to the tribunal of someone who's in uniform who, for instance, commits a crime or something?

GRAHAM: That's a very good question. It is very close to the Uniform Code of Military Justice...

VAN SUSTEREN: So if I'm a member of the military and I commit a crime, the person is going to get the same -- essentially the same trial I am?

GRAHAM: Yes. The judge advocate general of the Navy said that he would be proud and OK with any military member being tried in the military commission system. There are some differences. We're talking about enemy prisoners during a war, not one of our guys committing a crime in the military. So there are some differences. But it's virtually almost identically same to a court-martial, and that's what we've been doing for 200 years. We had German saboteurs...

VAN SUSTEREN: What's the major difference, though? I mean (INAUDIBLE)...


VAN SUSTEREN: What is -- what's the biggest different between some court-martial and the tribunal...

GRAHAM: Well, one of the big differences...

VAN SUSTEREN: ... you're talking about?

GRAHAM: ... is when you capture an enemy prisoner, it's during a military conflict. So the idea of saying, I was coerced, is different because all of these guys are captured on the battlefield in shoot-outs. So the military law understands that when you capture somebody as a result of a firefight, you going to have a different standard than if you arrest some American citizen or military member in terms of questioning.

The first thing you do in the military when you capture these guys is you seize them, take them off the battlefield and you try to find out what they know about the enemy. So that's a totally different process than accusing a military member of a crime.

And the Law of Armed Conflict allows for that. And it also allows holding an enemy prisoner without trial. Fifty of the guys at Gitmo, Greta, will never go into a military or civilian court, but they're too dangerous to let go. That's why you want to use the Law of Armed Conflict from the very beginning. An enemy combatant can be tried by military commission, but they don't have to be tried at all. We're not fighting crime, we're fighting a war, and you don't have to let the enemy prisoner go back to the fight.

VAN SUSTEREN: All right, I understand that you're using your bill to cut off funding...

GRAHAM: Right.

VAN SUSTEREN: ... which you've had bipartisan support, some to...

GRAHAM: Right.

VAN SUSTEREN: ... as an effort to stop the trial from going forward in New York. But to what extent is what drives you the cost element, or just because you believe...

GRAHAM: No, it's the system.

VAN SUSTEREN: So it's the system.

GRAHAM: It's the system.

VAN SUSTEREN: And you're using the cost as an effort to achieve that.

GRAHAM: Right. What drives me is my knowledge of the Law of Armed Conflict and my belief that we're at war. When you capture an enemy prisoner, under military law, you can question them without a lawyer to find out what the enemy is up to. Under domestic criminal law, the moment you capture somebody, you have to read them their rights. We're not trying to win a court case, we're trying to win a war, and the Law of Armed Conflict allows you to question prisoners differently. It allows you to hold them without trial if it's in our national security interest, and it provides robust due process.

All the things you can do in military law, you can't do in civilian domestic law, nor should you be able to do them. They're two different systems. One's designed to fight a war, the other is designed to resolve criminal disputes.

VAN SUSTEREN: Senator, nice to see you. Thank you, sir.

GRAHAM: Thank you.

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