McCain: We're Facing a Very Disturbing Threat from Iran, Sanctions Have Not Hurt Them Enough

This is a rush transcript from "On the Record," October 13, 2011. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: First, our nightmare. What about Iran? Not only is Iran working on a nuclear weapon, threatening to wipe Israel off the map, but now planning bombings and assassinations on our soil. And so what are we doing about it? Senator John McCain goes "On the Record."


VAN SUSTEREN: Nice to see you, sir.


VAN SUSTEREN: All right, today we learned that the United States had a direct contact with Iran during the course of this investigation of terrorism here in the United States. Direct contact? I thought we weren't talking to Iran.

MCCAIN: Well, a lot of things go on, as you know, and -- that -- whether it was right or wrong, I haven't had a chance to make a judgment. But I -- we should make a judgment about Iran and their activities, not only this latest rather blatant example of their kinds of activities, but their plan throughout the whole Middle East area.

They exported the IEDs into Afghanistan, the most lethal ones that killed Americans. They're fooling around in Bahrain and trying to cause trouble there. They have, obviously, supported Hamas and Hezbollah and other terrorist organizations. They are basically a terrorist state. And they are attempting to, in the long run, restore Persian hegemony in the region, or achieve it, and at the same time do what they can to harm the United States of America and Israel.


MCCAIN: So I guess -- could I just conclude my sentence?


MCCAIN: I think the President of the United States should go on national television and explain all this to the American people so that they can understand what we're up against here in this -- in this -- in an Iranian nation that is really bent on doing very bad things to America's national security interests.

VAN SUSTEREN: But this certainly ratchets it up a bit. And you know, we've been sort of, like, sort of hoping they wouldn't develop a nuclear weapon. But each day, another day passes. And we saw what happened with Pakistan and A.Q. Khan became sort of the Wal-Mart, selling nuclear technology around the world. We see what happens in North Korea. We've got Ahmadinejad saying that he wants to wipe Israel off the map. Israel can't go after Iran by itself. And they're building a nuclear weapon and we're sitting there, having a chat with them! Obviously, it didn't work if they're doing terrorist threats against us.

MCCAIN: Obviously, the chat didn't work. But also, I think one of the seminal moments historians will look back, was early in 2009, the early stages of the Obama presidency. There was a flawed and corrupt election. The people of Iran rose up and they were saying in the streets, Obama, Obama, are you with us or are you with them? And President Obama's answer was, I don't want to jeopardize my chances to negotiate with the Iranian Islamic Republic.

That was a seminal moment and one -- an opportunity that may never come again.

VAN SUSTEREN: All right, so we blew June of '09. The president blew that opportunity (INAUDIBLE) but now we're in October of '11, and we've got a situation where they are working on a nuclear weapon, from everything I hear from everybody here on Capitol Hill and everything I read in the paper, and they're attempting to have an assassination on our land. And we've had some sanctions against them.

I mean, you know -- you know, what's wrong with this picture? At what point do we let them get a nuclear weapon and say, Oh, no, they have a nuclear weapon?

MCCAIN: Well, first of all, there's a lot of reports that the sanctions have really hurt them. I don't believe that. I think it's hurt them some, but not enough to -- to effect any change in their behavior.

I think -- I think that we have to understand that we are facing a really disturbing threat here because if they're willing to do something like this that was just revealed, think of what they're willing to do if they had a nuclear weapon.

So I'm not saying that we take military action against Iran. Don't get me wrong. But I'm saying we've got to examine our policy and figure out what succeeds and what doesn't.

VAN SUSTEREN: Well, I'm not (INAUDIBLE) take nuclear action, either. However, if somebody's doing business with Iran, some countries are doing it -- you know, where are our pals around the world? I mean, this is not - - you know, we can't wait forever. And if you talk to the Israelis, I mean, they are very concerned about it. It seems that this sort of talking, this chatting has only gotten us a terrorist threat at this point.

MCCAIN: Well, there's no doubt that the Russians and the Chinese have been disappointing throughout. They're doing business with the Iranians. And I think we need to put pressure on them.

But I also think we need to ratchet it up, as you mentioned, make it so that their oil tankers don't go into any port. Make sure that anybody who does business with an Iranian bank can't do business with the United States of America. And we should start identifying people like these Quds Forces, who are engaged in terrorist activities, that they'll never get a passport, that nobody in their family will ever be able to travel. I mean, there's a number of other options that we need to try.

VAN SUSTEREN: Why are we so slow at this? I mean, it's so obvious! I mean, the timetable -- I don't -- I don't know when they're going to have a nuclear weapon. I get a different answer from every single person. But once they do get it, that will change all the dynamics in that area and change it all for the worse.

I don't know how much time we have. But why aren't we ratcheting it up? There isn't a good sign coming out of Iran. The signs have been consistently bad.

MCCAIN: Well, perhaps this ham-fisted -- and it was ham-fisted -- effort on their part will alert the American people, our allies and other people throughout the world about how dangerous this regime really is. And certainly, it got the American people's attention.

VAN SUSTEREN: How do we get Russia and China to have the sort of sense of urgency? I mean, you know, China certainly doesn't want Japan to get a nuclear weapon. Japan didn't want North Korea to get a nuclear weapon. I mean, they have -- they must have some sort of sense of how that changes the dynamics in the world.

MCCAIN: China and Russia have to understand that there are consequences for our relationship with them if they continue to condone the behavior of rogue nations.

VAN SUSTEREN: How do we do that?

MCCAIN: Well, I think we have to obviously clamp down. There's many things that both countries want. For example, right now, Russia wants to get into the WTO, the World Trade Organization. We should say, No deal, unless you join us in bringing pressure to bear on the Iranians. I mean, there are many things that they want that the United States can block and have an effect on. They ought to understand that.

VAN SUSTEREN: Why wouldn't we do that? Because we don't want another military action. We don't want another war. Why wouldn't we do that? Because I think everyone's in agreement we don't want a nuclear weapon in Iran's hands. So what's the down side to being more forceful with our friends?

MCCAIN: You're asking the wrong guy because when we pushed the reset button, I wasn't impressed. When they said that Medvedev was the next guy for us to deal with, I knew that Putin -- czarist Putin -- was the real power and would remain the real power. So you're probably asking the wrong guy.

And as far as the Chinese are concerned, they are -- they are posing the possibility of a real confrontation with us and other nations, especially in the South China Sea. So it's a dangerous world we're living in.

VAN SUSTEREN: One last question. And I won't beat a dead horse on it, but is there -- do you have any reason to believe that over time, Iran is not going to get a nuclear weapon? Is there any sign on the horizon that they will not get one?

MCCAIN: There's no sign whatsoever. And we have to face up to that reality.

VAN SUSTEREN: Unless we do something different.

MCCAIN: Unless we are able to change their behavior. And so far, the actions we have taken have had little or no effect on their behavior, their policies, their activities. Look, I -- we should be outraged that they sent into Iraq these copper-tipped IEDs that would go right through an MRAP to kill young Americans. Killed young Americans. It was their responsibility.

VAN SUSTEREN: OK, jobs. Let's turn to jobs. Now, the president's bill failed here in the United States Senate. But you and two colleagues, Senator Rand Paul and Senator Portman, have a jobs bill. Tell me what your jobs bill is and how it's different than the president's.

MCCAIN: Well, our jobs bill is growth -- growth for jobs. And we have a very different philosophy than the president does. Obviously, the president believes that government creates jobs. We believe business creates jobs.

We believe that if you will unleash and unfetter American business, if you will -- for example, one of our proposals is a moratorium on all new regulations. We need to have the corporate tax rate cut and the individual tax rate cut, do away with all the loopholes, have three tax brackets, a number of other measures that will unleash the $1.5 trillion that business and corporations are sitting on in America today to create jobs and improve our economy.

Every young group of business people that I talk to, I say, Suppose that we gave you a tax cut, suppose that we simplified the tax code, suppose we put a moratorium on new regulations, and we did several other things, like open up off-shore drilling, how would that do? Would that motivate you to you hire and invest? And they say, Of course.

Why are they holding back right now with all this money? Because they don't know when the next regulation is coming down. They don't know when the next time that they're going to face a tax increase or be called, quote, "millionaires."

So what we're trying to do is simplify the tax code, cut the corporate taxes, cut individual taxes, a moratorium on regulations and a number of other -- a whole basket of proposals which are pro-growth and job creation.

VAN SUSTEREN: Tell me, where is the objection from the president? Let's take the tax code, for instance. There are between 3,300 and 3,500, for lack of a better word, earmarks in the tax code. If you get rid of those under your plan...

MCCAIN: Absolutely.

VAN SUSTEREN: Those (INAUDIBLE) because somebody had some special interest. That was (INAUDIBLE) somebody got a deal by getting that. So I assume the president would be happy to get rid of those special interests, right?

MCCAIN: I hope that -- I haven't met an American that doesn't want to simplify the tax code. I hope we can sit down with the president and say, OK, let's simplify the tax code. But will the president be willing to cut the tax from 35 to 25? You know that we have the highest corporate tax code in the world, the highest -- 35 percent tax rate for corporate taxes, the highest in the world. That's why this money is -- $1.4 trillion is parked overseas. So give them a tax incentive to come back to the United States and cut the corporate tax from 35 to 25 so they'll stay.

VAN SUSTEREN: All right, regulations. You're asking only for a moratorium. I take it that's sort of a conciliatory position. You'd rather get rid of them altogether, but a moratorium is just to put the lid on it to buy time.

MCCAIN: Yes, and repeal "Obamacare."

VAN SUSTEREN: Well, that you're not going to get from him. I don't think he's going to go for that one.

MCCAIN: Repeal "Obamacare," repeal Dodd-Frank, which has done nothing. By the way, do you believe that these -- any of these financial institutions aren't too big to fail? Of course, they are. The whole -- the whole idea behind Dodd-Frank was to make sure that institutions are no longer too big to fail. Fannie and Freddie are still doing business, which is costing Americans, I don't know, untold billions of dollars. So we have to do those things, as well.

VAN SUSTEREN: All right, let me tell you what's a little frustrating, at least, I think, to the American people. I spoke to Speaker Boehner yesterday, and he said that he doesn't have a dialogue going with the president. The president takes his bill over here to the Senate. It gets shot down here. So now the president's out, you know, complaining about you Republicans and about Congress.

You're 16 blocks away from each other. Actually, you're only -- you're only across the Hill from Speaker Boehner. Why -- you know, what's the impediment for meeting halfway, eight blocks down the street or something, and actually trying to look for this common ground that we hear about?

MCCAIN: We have a plan now. The president was saying -- he kept saying, Where's the Republicans' plan? We've had lots of plans, by the way, and the House has passed many provisions which are, I think, excellent for...

VAN SUSTEREN: Senator Barrasso had a plan. Everybody -- there are plans!

MCCAIN: Yes. But now we've got one that's really a Republican Senate plan, and we want to sit down with the president. We want to negotiate with him on simplification of the tax code, of a payroll tax holiday, perhaps, a whole range of things that I think we could sit down and negotiate on. And I say with great respect, what is the president doing? He's out on the campaign trail beating the daylights out of Republicans, saying, Pass my plan now...

VAN SUSTEREN: Well, it didn't pass.

MCCAIN: ... knowing full well -- knowing full well, as we showed night before last, that he doesn't even have all the Democrats, much less any Republicans.

VAN SUSTEREN: So you're saying that this is just -- that was a phony -- a phony bill (INAUDIBLE) up here?

MCCAIN: Well, I think he has people that could tell him that can count votes, knowing full well that he didn't have sufficient votes even amongst Democrats to pass the legislation.

VAN SUSTEREN: So what would it take for to you get yours passed, or at least, I mean, in some -- in some fashion? I realize that these bills get sort of beaten down and -- by the time they go to vote, but...

MCCAIN: Let's do what we did in 1995 with President Bill Clinton. As you know, we had a big electoral victory. Bill Clinton decided, rather than to go out and campaign against Republicans, to sit down with the Republicans. We enacted a landmark Welfare reform bill, as you may recall. We put ourselves on the path to a balanced budget, and even a surplus. And it was through a series of negotiations and agreements between the president and Republicans.

And I would advise the president to try that route because we in Congress -- you know, we look at the president's approval rating. Have you checked ours lately? Thirteen percent approval. We're down to paid staffers and blood relatives, and if we keep this up, we may be down in the single digits.

VAN SUSTEREN: I sort of get the impression everyone's sort of given up. I mean, I don't -- I don't -- you know, the fact that -- I don't see everybody talking. It's almost like there isn't a search for a solution, but a lot of people have given up on the Hill.

MCCAIN: Well...

VAN SUSTEREN: And with the president, as well.

MCCAIN: Well, let me tell you what he should realize, and that is when agreements are made, presidents get credit. And that to me would seem to be a motivating factor for him to say, OK, I've seen the Republicans' proposal, the package here. There's some things we can agree on. Let's sit down together and see if we can't work something out. I hope he'd do that. I think it'd be good for the country. People are hurting very badly now, Greta, especially in my state.

VAN SUSTEREN: And speaking of your state, "Fast and Furious" is all over your state, pretty much. Your thoughts on -- there's a battle going back and forth between the House committee and the Justice Department, asking for documents from Justice on "Fast and Furious." Justice going to (INAUDIBLE) the answers in a fast fashion?

MCCAIN: I don't know, but I'm glad we have control of the House of Representatives and the subpoena power that's there. That's an appropriate role for Congressman -- Congressman -- Chairman Issa, and I would think that a subpoena has to be complied with. As we all know, it's not the first mistake that causes the most trouble, it's the second.

VAN SUSTEREN: Well, somebody obviously authorized this program. I don't know if it's all (INAUDIBLE) Justice or whether it was out in the field. But you would think that somebody would at least -- you know, let's own up to it so we can all move on, figure out who did what.

MCCAIN: Well, I think we need to find out. We need to know. The widow of a brave young border patrolman would like to know, and her family. I think that when we trace these guns back to these gun cartels that are perpetrating the most horrible crimes that someone has to be held responsible.

VAN SUSTEREN: Plus, I mean, whose judgment was that? I mean, who's - - I mean, you know, that's the other thing, is that if nothing else, we need to find out who had the bad judgment so we can move that person to a different place.

MCCAIN: How often when we see something like this, we say, "We can't make it up?"