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This is a rush transcript from "Your World," May 19, 2015. This copy may not be in its final form and may be updated.

NEIL CAVUTO, HOST: ISIS is in control of Ramadi. Is Baghdad next? The Pentagon today calling it a setback.

Why Senator John McCain has says it did have to be this way. The senator is here and now.

Welcome, everybody. I'm Neil Cavuto.

And this is the scene today in Iraq. These are government forces fleeing Ramadi after a fierce firefight with ISIS and not sticking around to see what happened. Now, the Pentagon is saying that it would be a mistake to read too much into a single fight, something the State Department echoed.

(BEGIN VIDEO CLIP)

JEFF RATHKE, STATE DEPARTMENT SPOKESMAN: We have always known that the fight would be long and difficult, especially in Anbar province. And so there's no denying that this is a setback, but there's also no denying that the United States will help the Iraqis take back Ramadi.

(END VIDEO CLIP)

CAVUTO: The White House, meanwhile, saying that the U.S.-led coalition will continue to use airstrikes on key ISIS targets.

To Arizona Republican Senator John McCain. He's chairman of the Armed Services Committee. He has been fearing just this development for some time. And now those fears come to fruition.

What do you think?

SEN. JOHN MCCAIN, R-ARIZ.: No, it's remarkable. It's remarkable.

Here -- here is Ramadi, the black flags of ISIS flying over. Over 400 brave young Americans, Marines and soldiers, were killed trying to free Ramadi from Al Qaeda, of which ISIS is the son of. And here the secretary of state of the United States of America, with bodies being burned in the street, hundreds killed, thousands fleeing, leaving behind a lot of equipment that we gave them in the form of Humvees and artillery and stuff, says, it was a -- quote -- "target of opportunity."

And the Pentagon saying, oh, don't worry, we will get it back. What about the thousands that have had to flee? What about the hundreds that are being killed? Those -- ISIS goes around just shooting people indiscriminately. I have seen -- I'm no longer surprised, but just so deeply disappointed.

This is a failure of a policy which is not enough of everything. In other words, we do some airstrikes, we do some rearmament.

(CROSSTALK)

CAVUTO: Do you think we didn't do enough airstrikes? Because others have argued, like your friend Lindsey Graham, that there should have been boots on the ground.

MCCAIN: Well, there should be both. But the best way to do airstrikes is to have the forward air controllers on the ground. We don't.

CAVUTO: Yes.

MCCAIN: So you usually can only hit static targets. But I don't want to get too much into that detail.

But my friend Lindsey Graham predicted exactly, unfortunately, what was going to happen in Iraq when the president of the United States, against all logic, withdraw every one of our troops from Iraq and left it to the tender mercies of Maliki.

CAVUTO: So, you don't this Defense Department and these others that they are going to -- they are going to get this land back? Too late, the way they're doing it now?

MCCAIN: Well, I think they may be able to take Ramadi back, but you know who they're going to take it with? The Shia militias, which are Iranian- run, sponsored, trained and equipped, and they are going to go into a Sunni area and they're not going liberate, my friend. The Sunnis will never reconcile with the Shia militias, which are sponsored by the Iranians.

(CROSSTALK)

MCCAIN: It's not Americans that will free, regain Ramadi, the way that this administration is handling it. It will be the Shia militias that go in. And that, of course, will mean a lot more bloodletting.

CAVUTO: Yes. But I'm beginning to wonder whether that happens or what is the -- what happens is what happened to us in Vietnam. This image I'm about to show you, Senator, I'm sure is very familiar to you.

It's the fall of Saigon in 1975, and the Americans hightailing it out of there. Do you think we will see the same in Baghdad if things go in their present trajectory

MCCAIN: It's hard for me to see a scenario where they could take Baghdad.  I think they can do a lot of bombings, a lot of suicide attacks and all that. But it's hard for me to believe that.

But what they can do is that they can keep such a state of unrest that we see the Iranians, with more and more influence and control of the Iraq and Baghdad of what there is. And, by the way, there's still no strategy, there's still no plan for what we do about ISIS in Syria.

They have drawn -- and there's no line between Iraq and Syria for ISIS, but we have done some kind of artificial line. And we refuse to break the influence of Bashar Assad, who continues to kill. And the Iranians are now in four countries, Iraq, Lebanon, Syria, and Yemen.

And they're in control basically in all four of those countries. This is an abject failure. It is -- it is really one of the more unfortunate, in my view, disgraceful chapters in American history. When the secretary of state of the United States of America say, oh, well it was a target of opportunity? The capital of Anbar province, the heartland of the Sunnis.  There's a disconnect there from reality or a willful disconnect. And it's disgraceful.

CAVUTO: Do you think there's a disconnect to, Senator, among the Republicans who want to be your party's nominee for president?

And I only say this to take a look at two different responses to whether we should have gotten involved in Iraq in the first place, and the confusion it seems to have generated, two very different responses just lately with Senator Rubio and Governor Christie. Take a look.

(BEGIN VIDEO CLIP)

CHRIS WALLACE, HOST, "FOX NEWS SUNDAY": I'm asking you, knowing everything, as we sit here in...

(CROSSTALK)

SEN. MARCO RUBIO (R-FL), PRESIDENTIAL CANDIDATE: But that's not the way -- presidents don't -- a president a cannot make a decision on what someone might know in the future.

WALLACE: I understand. But that's what I'm asking you. Was it a mistake?

RUBIO: It was not a mistake for the president to go into Iraq based on the information he was provided as president.

Today, we know if they're -- if we -- if the president had known that there were no weapons of mass destruction at the time, you still would have had to deal with Saddam Hussein, but the process would have been different.

I doubt very seriously that the president would have gotten, for example, congressional approval to move forward with an invasion had they known they no weapons of mass destruction. That does not mean he made the wrong decision.

GOV. CHRIS CHRISTIE (R), NEW JERSEY: I want to directly answer you question, because that's what I do.

I we knew then what we know now and I were the president of the United States, I wouldn't have gone to war, but we don't get to replay history.

(END VIDEO CLIP)

CAVUTO: What do you think of that? Who is right?

MCCAIN: I think they're both right, to a degree. But let me say, let's have an additional question.

Should the president of the United States, after we had won it, at great expense of American blood and treasure, thanks to the surge, which, by the way, I called for the firing of then-Secretary of Defense Rumsfeld, a Republican administration -- should the president of the United States have withdrawn all of the troops from Iraq, thereby setting up the scenario we see today? I think that question ought to be asked, and I think it ought to be asked of Hillary Clinton if she deigns to answer any questions from the media.

CAVUTO: Well, in between, you have Rand Paul, Senator, who says, I think, when Hussein was toppled, we got chaos. We still have chaos in Iraq. I think it emboldened Iran. I think we now have the rise of radical Islam in Iraq as well, so that we're not better off, I think he is saying, with Hussein gone.

MCCAIN: Well, all I can say is that Senator Rand Paul has been wrong on every single issue, and including Libya, including the threat of Iran, including whether -- just literally every issue.

But the point here is that we had it won thanks to the -- thanks to the surge, thanks to the genius of David Petraeus and others, and thanks to the sacrifice of so many brave young Americans.

CAVUTO: So, had we followed through, you, John McCain, are saying, it was worth it?

MCCAIN: If we had kept the -- if we had kept a residual force behind, yes, I believe -- and stabilized Iraq and gotten a chance to have...

(CROSSTALK)

CAVUTO: We'd have nothing to regret today?

MCCAIN: I don't believe so, because I think we would have taken out Al Qaeda and I think we would have had a reliable ally. But it required a -- post-surge actions that would keep that country safe.

CAVUTO: Understood.

MCCAIN: And that would have required a force behind of Americans.

That was the key decision made by the president of the United States, and that's the question that ought to be asked as well.

CAVUTO: John Sununu, who was chief of staff for a while with the first President Bush, and went on to say, when you ask a question, knowing what we now know -- he's telling Martha MacCallum this -- does that include knowing that the bulk of Saddam Hussein's sarin gas went to Syria, where Assad is using it? Does it mean that we know that Obama was going to fail to get a status of forces agreement and pull our forces out and great chaos in Iraq, in other words, that there's a limit to this hypothetical stuff?

Do you agree with that?

MCCAIN: No, I agree there's a limit to it.

But once we were in, and it was very badly mishandled up until 2006, when the president, after losing an election, fired his secretary of defense, called in David Petraeus, and a number of others, and including General Keane, who is on FOX quite often.

CAVUTO: Right.

MCCAIN: They designed the surge. It worked, at a great cost of American blood and treasure. And this president...

CAVUTO: So, why do you think all the Republican counties are afraid of this issue? What should they say? What would you tell them to say?

MCCAIN: I would tell them exactly what I'm -- what I'm saying to you, and that is that, given the information that they had at the time, and his previous actions of using weapons of mass destruction against the Iranians and against his own people -- he had wiped out a number of areas where the Kurds were -- that there was a legitimate reason.

Now, obviously, the information was wrong, but we were there, we went there, and we had an opportunity to have a stable, free, democratic Iraq, if we had...

(CROSSTALK)

CAVUTO: And you, John McCain, thinks the world is better off, even with the results we have seen since, with Saddam Hussein not in it?

MCCAIN: I think the -- I think the world would have been better off if we had not blown the surge, which we -- which cost us so much in American blood and treasure.

CAVUTO: OK.

Do you think that maybe the dust-up that Republican candidates have gotten on this question reinforces Hillary Clinton's strategy of not talking to the press, not talking to anyone?

MCCAIN: Well, I think it probably does in the short-term. The question is, is, how much does everybody, including the media, let Hillary Clinton get away with?

CAVUTO: Do you think there is a double standard?

MCCAIN: Well, do you think -- what if any of those people you just showed refused to answer a single question? I think they would have been -- they would have come down on them like a ton of bricks.

CAVUTO: Well, they have to because there are a bunch of them all vying for the same position. She has got the field to herself so far.

What do you think?

MCCAIN: Well, I'm not sure that that exempts people from answering questions from the media.

CAVUTO: Fair enough. Fair enough.

Do you get a sense, Senator, that the party needs to take advantage of its strong position on foreign policy, but that when so many in the party are saying, this was and is a mistake in retrospect, that it sends just the wrong message to ISIS?

MCCAIN: I think you have to have a clear answer on this. And I think you have got to be clear and concise.

CAVUTO: Who is the clearest to you? Who is the clearest to you?

MCCAIN: Lindsey Graham. Lindsey Graham. Lindsey Graham.

CAVUTO: He's your guy?

MCCAIN: Oh, yes, yes. I think -- and he's the most experienced by far.  He's one that called the shots when we needed the surge.

He went with me. We went on a no surrender tour. We were on the Armed Services Committee when Petraeus and Crocker came before the committee and swayed the Senate with their argument for the surge. He is the one who spent his active duty every Fourth of July and every Christmas either in Baghdad or Kabul. He brings unique credentials to the table.

CAVUTO: Do you think that he is too hawkish? This is a guy who earlier on...

MCCAIN: Do I?

(LAUGHTER)

CAVUTO: I know. I'm talking to the wrong guy.

But the rap against him is that especially when he early on talked about 10,000 groups on the ground, that, justified or no, the appetite in this country is not for American boots on the ground.

MCCAIN: Now 73 percent, according to a FOX poll, say we need boots on the ground, OK, today, and that's because they know that we need some ways of turning this issue around, not with a massive injection of troops, but they -- most Americans believe we need forward air controllers, special forces, other capabilities that the Iraqis do not have.

So, Lindsey Graham, I will say, show me where Lindsey Graham and I were wrong, and then we will have our -- legitimately our credentials questions -- questioned. And I believe that Lindsey Graham has that experience and knowledge, and we have not been wrong.

CAVUTO: Well, would you back any one of these folks?

MCCAIN: Any one of them.

CAVUTO: Even Rand Paul?

MCCAIN: I believe in the Republican Party's process to pick the best qualified nominee, and I would support...

(CROSSTALK)

CAVUTO: So, no matter who it is, you back that person?

MCCAIN: Well, if it's a legitimate process, why should I have any other position?

CAVUTO: I see.

MCCAIN: And I will do anything that I can for whoever that nominee is.

CAVUTO: Did you see the Mitt Romney-Evander Holyfield thing? Why didn't you do anything like that?

(LAUGHTER)

MCCAIN: I don't know.

CAVUTO: Someone told me the fight was fixed.

MCCAIN: I don't know. But I know that my experience in the boxing world was not as successful as...

(CROSSTALK)

CAVUTO: Do you think he is trying to stay relevant or he's trying to stay -- keep the name out there?

MCCAIN: I think Mitt Romney is a wonderful man. He loves his family. He loves his country. And I think he -- I would like to find ways for him to continue to contribute to our party.

(CROSSTALK)

CAVUTO: Do you think we could have a broken convention, because so many guys are running and they all have a lot of money, or at least half-a- dozen? We could get to Cleveland without a nominee.

MCCAIN: I think it's very possible.

CAVUTO: So, they could turn to you, they could turn to Romney?

MCCAIN: I don't think it would be that brokered.

(LAUGHTER)

CAVUTO: Really?

MCCAIN: No.

CAVUTO: Do you think they will have a nominee selected on the first ballot?

MCCAIN: I would hope so. I would hope that we have a nominee selected before the primary is over because we all know what a -- divisions those expose when there's a brokered convention.

CAVUTO: Real quickly, Senator, you are supporting the president's fast track authority, the power to give him that.

MCCAIN: Yes.

CAVUTO: Democrats are not. So, this weird position, Republicans helping the president, Democrats not. Weird.

MCCAIN: I'm a defense hawk. I don't know why those who aren't, aren't called defense doves. But anyway...

CAVUTO: It's a good point.

MCCAIN: ... I believe that this -- that this agreement, this Trans-Pacific Partnership especially, that if we do not pass it, you will then give China supremacy in Asia.

It is that important. It is as important as almost any of our national security issues that -- that we face. We have got to do it, Neil. If we don't, the message is, the United States is out of the game in Asia, and, of course, the same thing we have got to do with Europe.

CAVUTO: Senator, it's always a pleasure, sir.

MCCAIN: Thank you, sir.

CAVUTO: Thank you very much, John McCain.

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