This is a rush transcript from "On the Record ," July 16, 2008. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: A short time ago former vice-president Dan Quayle went "On the Record" about the 2008 election, and much more.


VAN SUSTEREN: Mr. Vice President, it's nice to see you, sir.

DAN QUAYLE, FORMER U.S. VICE PRESIDENT: Thank you. It's good to be back.

Watch Part 1 of Greta's Interview with Dan Quayle | Part 2

VAN SUSTEREN: It is always good to see you back in Washington.

QUAYLE: This is actually my first trip to Washington this year. I spend most of my time in New York rather than D.C. these days. But it is good to be here. I saw a few friends at the train station, and it is good to be back in D.C.

VAN SUSTEREN: Let's talk big picture, let's talk about the world- Iran. What are your thoughts about the saber rattling that is going on?

QUAYLE: A couple of things. One, I think it underscores how important it is for Iraq to be settled in a positive way, because if Iraq is settled with a destabilizing effect, chaos, civil strife, that is going to be an invitation to the Iranians to get more involved.

Right now, as we speak, I think Iraq is moving toward stability. Iran is having less of an influence rather than more of an influence. But this really underscores why it is important for Iraq to be resolved properly.

The second thing is the Israelis, because if you are an Israeli, you simply cannot believe that you will survive with Iran having ballistic missile and nuclear capability.

So, therefore, if they continue down this road to testing these missiles, to pursuing a nuclear warhead, and putting the two together, Israel, for their survival, cannot let that happen.

And those are the two big things.

Obviously, you look at the Straits of Hormuz, you look at the energy situation, oil, all of those things. But those are the two key issues I think we ought to be looking at.

VAN SUSTEREN: How do we negotiate this, or deter them, or whatever it is, because this nuclear program they have is quite threatening. Ahmadinejad has said that Israel should not exist.

What can we do? We can, I guess, talk to them until we are blue in the face, but, meanwhile, they are advancing with their program.

QUAYLE: They are. Sanctions have not really been that effective.

In this particular case, I think the key country that could be of help if they wanted to is Russia. And Russia, thus far, has not been, you know, that cooperative. They have given lip service to it, but they have a real influence in Iran. And if they want to, I believe that they can, you know, talk turkey to these guys.

You have got this meeting coming up with the Europeans taking the lead. You know, talk is one thing, but you really need to see actions.

Now, we do not know how close they are. Our intelligence may be accurate, it may not be accurate. But the fact that they are huffing and puffing and saying that there are going to basically annihilate Israel, Israelis can't let it happen, and I do not think they will.

VAN SUSTEREN: All right, let us go to the parlor game here in this Washington, and, actually, across the country, the politics. The vice- presidential choice--if you were helping Senator McCain pick someone, what would be sort of the criteria that you would look at?

QUAYLE: I think both Senator McCain and Senator Obama will use similar criteria. Clearly, the person has to be qualified. Secondly, they will be looking for someone who will be loyal to them, and someone whom they will be comfortable with, because you are going to spend a lot of time together.

Third, they probably will look at what do they bring to the ticket. Is it geography? Is it unifying the party? What is it that they really bring to the ticket?

Those are sort of the key criteria that they will go through, whoever he or she may be on either side.

Now, the difference will be, will be the process. I think both of them have a sort of a vetting process that are set up. But, ultimately, Greta, it comes down to what? A decision of one person.

It is a great game that goes on. Why? Because beyond the polls and the back-and-forth sound-bites, there is nothing really of significance until the convention.

Well, my guess is that Obama, who will go first, will not make his choice made until, perhaps, the weekend before, or, if it happens to be Senator Clinton, which most people think it won't be, he could probably wait until Tuesday at the convention.

And then after he makes his selection, and the Democratic Convention is concluded, then McCain will make his.

VAN SUSTEREN: Strategically, is it better to choose second so that you can size up the choice you make to meet a deficiency or attribute that your opponent has to decide.

So is Senator McCain more in a cat-bird seat because the Democratic Convention goes first?

QUAYLE: Possibly, but if there is any advantage, it is minute. It is not a big difference, because he is not going to say, well, gee, I was going to pick this governor, and then all of a sudden Senator Obama picks this person, so therefore I am going to pick that governor. I don't think it works that way.

But there is a little something there in all probability, but not very significant.


VAN SUSTEREN: Coming up, more of our interview of former Vice President Dan Quayle.

Now, this is very surprising. What has Senator Obama done that the vice president could not do? He respects and admires Senator Obama for it. You want to hear this.


VAN SUSTEREN: We continue now with former Vice President Dan Quayle.


VAN SUSTEREN: The senator Obama/Senator McCain face-off that we have in November, I do not know if any of us really anticipated that one. I think maybe you had been quoted as saying that you thought it would be Governor Romney and Senator Clinton. A lot of us did. Surprised?

QUAYLE: On both counts. I actually thought when the elections started that Senator McCain would probably prevail.

But as the primary season went on, he went through $100 million, he went through all of his staff, and he actually performed best when he was just being John McCain, out there with no staff, sort of wandering around in the wilderness, if you will, in New Hampshire and Iowa and South Carolina.

And he went from first place to, like, fourth place. And I have always said that often one of the fatal mistakes, or something that is fatal in politics, is to be a former frontrunner, which he was, and he went from first to fourth.

But he came back, and he won rather convincingly.

On the other side, I don't think anybody could have picked Senator Obama way out. A lot of people were impressed with him, but, quite frankly, I think the Clinton campaign, they didn't run the same campaign against us.

I have a lot of grudging respect for Senator Obama because he beat the Clintons and we did not. And I think and they are very good. So he has to be fairly good to beat both of them.

And I think it was the inevitability issue, the entitlement issue, that they really didn't take this guy seriously until it was too late.

VAN SUSTEREN: How is the campaign different, Senator Hillary Clinton campaign different against Senator Obama versus the President Bill Clinton against your team in 1992?

QUAYLE: Bill Clinton was somewhat of a fresh face, a younger governor from a small, southern state. He had new people getting into politics for the first time. He had new campaign people that had not really been on the national stage. It is much like the Obama campaign this time.

And so the Clinton campaign in `92, Senator Bill Clinton's campaign is probably more reflective of the Obama campaign in 2008--young, new, people that are running the campaign are from outside of Washington. Clinton ran his campaign in `92 from Little Rock. Obama is running his campaign from Chicago and not D.C.

VAN SUSTEREN: Before you became vice president, before you were elected, were you surprised by the job, the responsibilities? I take it that running for office is a lot different than holding office.

QUAYLE: I have been in Washington for, what? I had been in the Senate for eight years and then the House four years, so 12 years. And I had been around the White House, and I knew what the job was.

What you don't know, which is the new experience, is the security and the Secret Service. And they are great people, both men and women. They are the ones that are putting their lives on the line for you. They will protect your family.

But until you experience that from an individual point of view and from a family point of view, you really don't know what that is. It is hindering. It is restricted. It is a cocoon, and there are times you just want to break out of it, but you can't.

That was the most difficult thing for a personal level of being vice president.

VAN SUSTEREN: Going back to the parlor game for a second and who is going to win in November. Everyone is sort of guess, and we all look at the polls all of the time.

Right now, it looks like Senator McCain is within the margin of error, down to about three points, depending on which poll. What does Senator McCain need to do--I take it he wants to win. What does he need to do?

QUAYLE: Sure he wants to win. He is very competitive, and he knows-

VAN SUSTEREN: He wouldn't be in it if he didn't want to win.

QUAYLE: And he knows he would be a good president if given the opportunity.

I think they're a couple of things. One, they really do need to paint a vision of where they want to take America on a thematic basis, not programmatic basis. Not this is what I am going to do on taxes, this is what I'm going to do on energy, health care, the budget deficit, Iraq.

Thematically, where do they really want to take the country? And tap into some of the character issues that I think are very strong for him.

They have not done that yet. My guess is they are waiting until the convention, and it will be a thematic speech, and that will be the theme of the campaign.

Specifically, breaking it down, I really believe he has to develop a very comprehensive energy plan, because I think that is a winner for the country. It is a winner for the American people. And I think from a political point of view that John McCain can score a lot of political points on this.

Secondly, and this will be difficult for him, he really has to take on the Democrat congress. Look, the Republicans don't run the Congress, they run the White House. But in our separation of powers, checks and balances, the Congress has a lot to say about spending, about initiating legislation. George Bush can't sign anything unless Congress passes it.

He has been there a quite a while, and I think it will be hard for him to really take on the Democratic congress. I hope he does, because I think the American people need to realize that the Democrats are in all probability going to hold Congress.

And, quite frankly, Greta, after years of experience, I think the American people like a divided government. And, therefore, a Republican president and a Democrat congress, to them, it is OK.

VAN SUSTEREN: Do you miss it?


VAN SUSTEREN: But you're doing well? Family is doing well?

QUAYLE: Yes. The family is doing well. I enjoy what I'm doing.

But you always miss it. I had a good run, came close. But I went on to other things. I was fortunate enough to be young enough to go have a second career with business with Servers Capital in New York, and I enjoy it every day.

VAN SUSTEREN: You are still young, from the numbers now in terms of how long people run. So you are still young.

QUAYLE: Thank you. I am going to tell my kids that, because they do not believe it.

VAN SUSTEREN: Thank you, Mr. Vice president.

QUAYLE: Thank you.


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