This is a partial transcript from "On the Record," November 17, 2005, that has been edited for clarity.

GRETA VAN SUSTEREN, HOST: Amid calls for an immediate end to the war in Iraq, the U.S. Senate passed a bill this week pressing the administration for a plan in Iraq that would move the U.S. closer to withdrawal of troops and demanding regular updates from the White House. Earlier today, we spoke with Arizona Senator John McCain about the war. Plus, he told us about his new book, "Character Is Destiny." I asked him how he came up with that title.


SEN. JOHN MCCAIN, R-ARIZ.: We wanted to write a book that talks about people who have exhibited qualities that determine their character, which determines how we live our lives, and we thought that was a pretty good phrase.

VAN SUSTEREN: And some of the ones you picked out, Pat Tillman, President Eisenhower, Martin Luther King. You took different famous people in time. Have they been an inspiration to you, sir?

MCCAIN: Well, it has been. And when I read again about these people's lives, I mean, many of them you and I were very familiar with. Some of them not so much, like Osceola McCarty, who gave her life's savings that she earned while doing laundry to the Mississippi Southern University, are quite remarkable stories. And the more you read about them, the more you really truly appreciate their greatness. And so yes, I'm inspired by them as I know more about them.

VAN SUSTEREN: And even Pat Tillman, who gave what was seemingly to many young people fame, money, a wonderful career to go off to fight for his country.

MCCAIN: Yes. And you know, Greta, he never gave a press interview. He never was on television. He felt that he needed to serve his country, and he fought in Iraq, as well as Afghanistan. And it's tragic the way he was killed, but it in no way diminishes the fact that he's truly an American hero.

VAN SUSTEREN: You mention Iraq, sir. And there's a lot of discussion going on around the country about Iraq these days. To coin a phrase I think you might know, do you think you got straight talk from the White House in the lead-up time to go to war?

MCCAIN: I think I got straight talk from the information that they had. In other words, it was a colossal intelligence failure. But that failure was shared by the Russian intelligence agency, the Israeli, the French. Every intelligence agency in the world believed that he had weapons of mass destruction. So I think we got straight talk as far as the information that they had, but obviously, we did not because of the failure of intelligence capabilities. And that's something that should concern all of us.

VAN SUSTEREN: Is that a reason to sort of give a pass, for instance, if we went to war on false intelligence, or should we hold people accountable, since this is your job? Your job is to get it right. I'm sorry that it might not have been good intelligence, but that was your job.

MCCAIN: I think we have to hold people accountable. I also think we have to understand that the information they were given was wrong. I think people that were responsible for that information should certainly be held accountable. I just don't believe -- I know that there was not a massive conspiracy composed of every intelligence agency in the world to convince the American people of something that wasn't true. I think it was an intelligence failure throughout the world.

VAN SUSTEREN: So what do we do? The Senate -- which, of course, your party is the dominant party in the Senate -- has now asked that the administration come up with a strategy, a report. Why?

MCCAIN: Well, I don't know why because I voted against both resolutions. We are getting reports all the time. There are many, many reports that come over from the Pentagon about various aspects of the war.

Look, my colleagues are getting nervous, and I understand that. The polling numbers are not good, particularly amongst Republicans. I understand that. We've got to do better, and I hope we will do better and I believe we can do better. But in the meantime, there's a great deal of nervousness, which I think provoked the two competing resolutions, neither one of which I supported.

VAN SUSTEREN: So is the nervousness a fear of not winning the election, or is the nervousness we're doing the wrong thing?

MCCAIN: I think the nervousness is primarily bred by the polling numbers that show that Americans are no longer supporting the conflict. And that, of course, is what I think concerns most of us. And I think we've got to get that confidence back. We're going to have an election on December 15. We've got to make the Iraqi military better. We've got to reduce American casualties. We've just got to make progress there, and it's very long and very hard and very tough.


VAN SUSTEREN: Coming up: John McCain tells us how our military strategy must change in order to make progress in Iraq. Plus, he will tell us what keeps him awake with worry.


VAN SUSTEREN: We're back with more of our interview with Arizona Senator John McCain. He told us what he thinks we need to do in order to make progress in Iraq.


MCCAIN: I think the main thing we need, Greta, is a strategy where we go into some place and we go in and hold it and we control it, and we don't leave. We've had too much of this search and destroy.

Look, we've been into some of these towns three and four times. We leave, the insurgents filter back in. We've got to control it. We've got to expand that control and give the people within those areas a decent life, one that's free of insurgents' attacks, terror, murder, et cetera. And so that's a key element, I think.

And the other key element, of course, is having an Iraqi military that's capable of shouldering most of these responsibilities, that -- plus some economic development. As you know, there's some parts of Baghdad and other places that they have shown no real economic improvements since Saddam Hussein.

VAN SUSTEREN: So but how do we sort of fold into -- so we have a lot of, you know, things on the table. We have more than 170 Iraqi prisoners that may have been tortured. We have the whole issue, the one that you have championed in the Senate, about what we do with detainees. You know, how much force we can use. You're sort of at loggerheads with the vice president, the administration. Then we've got the problem of the budget, and I know that you have harsh words for the, you know, Pentagon's budget. I mean, there seem to be so many variables. You know, what's the strategy you recommend? What's the path we should be on?

MCCAIN: Get on to our agenda, make the kind of progress that I was -- I've already described to you in Iraq. Get a coherent energy policy that will give people confidence that the gas price will come down at the pump and we'll have an independence from foreign oil over time. Reform immunity. Take up that debate as quickly as possible. Stop this wasteful and pork-barrel spending that's mortgaging our children's futures, and several other issues, and get on them and stick on them and show the American people results.

We talk a lot about the president's unfavorable ratings. Have you noticed the ratings of Congress lately?

VAN SUSTEREN: You championed the whole idea of, you know, the pork-barrel spending, the dollars that pour into these campaigns, the campaign finance. But why don't we have an energy policy? Your party's been controlling Capitol Hill and the White House. Why don't we have an immigration policy? You've got the wherewithal because you've got the party.

MCCAIN: Well, on the energy policy, the energy companies just have too much control here. We passed an energy bill that was basically a windfall these large corporations and companies that are involved in oil and gas. And their profits are now at an all-time high, much to the distaste of the majority of the American people.

As far as immigration reform is concerned, we should have taken that up earlier. We shy away from it because it's such a divisive issue within our party. But I'm glad to say that Bill Frist has committed us to take up this issue of immigration reform in its entirety in the Senate early in February, and I'm very grateful that he's put that on the schedule.

VAN SUSTEREN: If you had a magic wand and could get all your colleagues to do what you want, what would you do about energy policy today?

MCCAIN: I'd emphasize going back to nuclear power. I would absolutely encourage whatever is necessary for hybrid cars, moving into hydrogen power. I would address the issue of greenhouse gas emissions. But we have to become less dependent upon foreign oil because we've got two great growing economies, India and China, that are going to take more and more of what is a finite resource. We've got to go back.

And I'd like to mention nuclear power again. Eighty percent of the French energy supply is nuclear power. It's not a technological problem, it's a political problem.

VAN SUSTEREN: How do you get us off the dime on the political problem? How do you move us forward?

MCCAIN: Well, we educate the American people about the advances in technology as far as nuclear power plants are concerned. We make them recognize that if you're worried about climate change, this is the cleanest kind of energy source there is. If you're worried about the price of gas, I mean, this is a great move towards independence towards it. We've got to educate the American people, and that's what leaders are supposed to do.

VAN SUSTEREN: To go back to Iraq for a second. Do you worry about Iraq right now? I mean, I know, I mean, you worry about it in the sense that we're losing lives and -- you know, and a war is always hell. But are we moving in a positive direction, or do you worry that we're not?

MCCAIN: I worry that we're not moving rapidly enough in the right direction, and I worry that we still are doing things wrong there that should never have happened. And I worry every night because if we fail in Iraq, it will have profound adverse consequences that we'll be living with for a very long time.

You know, bin Laden and Zarqawi believe that we've been retreating for a long time, beginning with Vietnam and then Beirut, Somalia, et cetera. And they think they can drive us out. And if they do that, then I think the consequences are very, very severe. But I also understand the frustration that the American people feel.

VAN SUSTEREN: In terms of the discussion or the disagreement you've had over the detention, how we treat prisoners, why is it so important to you on this issue? I mean, is it because our own men and women will be tortured if they're caught? Is that the idea? Is that why it's so important in terms of war?

MCCAIN: I think that's part of it, and I think that's why the uniformed military is so strongly supportive of what we're trying to do here. But more importantly than that is the image of America in the world. There's two wars going on. That's the physical war on terror and in Iraq that we're fighting. The other is the war of battle of ideas. And the approval rating of America has been affected very seriously by this view, correctly or incorrectly, that Americans, government, sanction torture of prisoners. That's not America, and we can't be like that. And it's not about terrorists, it's about us.

VAN SUSTEREN: And the new book, "Character Is Destiny," which should inspire us all to do the right thing. Thank you, Senator McCain.

MCCAIN: Thank you, Greta.

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