(CNN) -- Republican presidential nominee Sen. John McCain joined CNN's Wolf Blitzer for an interview in "The Situation Room" on Wednesday.
Sen. John McCain says he will consider a second economic stimulus package if he is elected president.
McCain spoke about the financial crisis, his plans for Social Security and the war in Iraq. The full transcript is below.
WOLF BLITZER: Sen. McCain, thanks very much for joining us.
SEN. JOHN MCCAIN, R-ARIZONA: Thank you for having me on, Wolf.
BLITZER: Let's talk about Issue No. 1, as we call it, the economy. Colin Powell was pretty biting in his criticism. He said you were a little unsure of how to deal with the economic crisis. You seem to have, he said, a different approach. He sensed you didn't have a complete grasp of the economic crisis the American people are going through right now. I wonder if you'd like to respond to Secretary Powell.
MCCAIN: Except to say that I'm happy to have the endorsement and support and belief of five former secretaries of state, Henry Kissinger, George Shultz, Jim Baker, Larry Eagleburger and Gen. Al Haig, and over 200 retired military generals and admirals that have supported my campaign.
I respect Gen. Powell, but I respectfully disagree. I especially disagree when he said the comments that he made about Gov. [Sarah] Palin, the most popular governor in America, a governor who knows energy issues, $40 billion pipeline reformer, took on the governor of her own party. And I hope that sometime Gen. Powell will take time out of his busy schedule to meet with her. I know she'd be pleased to meet with him. Watch McCain talk about Powell »
BLITZER: But on the economic issues, his criticism was that you were going back and forth on some of the specific issues, and he didn't like that. He thought that Sen. Obama had a consistency in his approach.
MCCAIN: Well, all I can do is laugh. We've been very consistent about cutting spending, cutting taxes and the fundamentals of our economic message.
Sen. Obama's been all over the place, including wanting to "raise taxes on only the rich," 95 percent -- a tax cut for 95 percent of Americans, when 40 percent of them pay no federal income taxes as it is. You know, whatever it is he's changed with -- look at the positions that he held on tax increases when he was first running in the primary, and look at them now. They're vastly different.
And the fundamental difference -- and maybe Secretary Powell agrees with him; I don't know -- but to spread the wealth around is certainly not something that I would ever do, that I would ever do.
BLITZER: Do you agree with Ben Bernanke, the chairman of the Federal Reserve, who said this week -- he said that it's now a good time for a second economic stimulus package, seeming to join hands with Nancy Pelosi and Harry Reid. Is it a good time to do that, to come up with another $150 billion stimulus package?
MCCAIN: I would be glad to look at anything that could be helpful to our economy. I respect Ben Bernanke. I'm sick and tired, and the American people are sick and tired of the pork barrel spending. Why don't we cancel the $18 billion in pork barrel projects that we put in last year at a minimum and use some of that money to help stimulate the economy as well? Instead of bridges to nowhere and projectors and planetariums such as Sen. Obama asked for -- he asked for nearly $1 billion in pork barrel projects. Why don't we ask him to make sure that money that was given to pork barrel projects back to helping American families? And then I think that Americans would be more likely to support such a thing.
Approval rating of Congress at 9 percent. No wonder. We've got a $10 trillion debt to our kids, $500 billion to China. We don't want to continue that spending practices, and Americans are sick and tired of it.
BLITZER: But you voted for that $700 billion rescue plan, or bailout plan, even though it had another $100 billion or so in unrelated expenditures, some would call pork or earmarks or whatever. Where does the U.S. president draw the line between vetoing that kind of spending bill or accepting it because of the greater good that it also includes, as you decided in the bailout?
MCCAIN: I would have vetoed literally every spending bill, even those that I voted for, if I were president of the United States and made them famous the way Ronald Reagan did.
Let's have no doubt about this situation. We've presided over the largest increase in the size of government in the last eight years than any time in history. So we can take a hatchet, and we can take a scalpel, and we can reduce the spending. And we can start by vetoing the normal appropriations bills.
We all know that we are in a situation of severe financial crisis. And the Democrats shouldn't be proud of adding $100 billion in pork barrel spending. They should be embarrassed.
BLITZER: But you voted for it, too.
MCCAIN: I had to vote for it, obviously, when we were in a situation of huge financial crisis. But we wouldn't be in the crisis we're in if a couple of things hadn't happened.
One, $10 trillion of debt, dramatically overspending, increasing the size of government, and Democrats defending Fannie and Freddie in their outrageous practices which put us into the ditch to start with. The same people that are for the rescue package are the same people that defended Fannie and Freddie, and when some of us proposed legislation to fix it. And so we should have started long ago towards vetoing these bills.
When you are in an extraordinary crisis, obviously you have to take extraordinary measures.
BLITZER: All right. We asked some of our viewers to send us some questions, iReports, as we call them.
We got one from Steve Urquhart of Quincy, Massachusetts. He said he plans to vote for Obama, but he considers himself an independent. Let me read to you what he said.
"Sen. McCain: Don't you think it's hypocritical for you to be accusing Sen. Obama of being a socialist when you also signed on to that $750 billion bailout of our financial system?"
MCCAIN: Well, thanks, Steve.
We all know that we are in a severe financial crisis. And the big mistake that the administration has made now, and the secretary of the Treasury, is not going out and buying up these home loan mortgages that are bad and give them back to the homeowners at a mortgage rate they can afford and stay in their homes.
It was the housing crisis that started this. It's the housing values that are going to start getting us out.
During the Depression -- Sen. Clinton suggested the Homeownership Loan Corporation, which we -- which was an enactment of the Depression era, and we ended up having more money go back to the treasury.
Instead, we're bailing out the banks and other institutions that were complicit in this. So, extraordinary circumstances require extraordinary action.
BLITZER: Because you do want to spend ...
MCCAIN: But it's the failure -- and if we had done what I wanted done and what I fought for, for reform and transparency and fixing Fannie and Freddie, as I did, we wouldn't have been in this situation we're in and I wouldn't have been faced with the decision of whether to vote for it or not. It never should have happened.
BLITZER: Because you want to use $300 billion of that $700 billion to buy up what are called these bad mortgages, and then try to renegotiate them at a reduced price. Is that ...
MCCAIN: Not try to. It's exactly what we did during the Depression. It's not a new invention.
BLITZER: But is that too much federal government involvement in the free market system?
MCCAIN: Of course it is. But we are in an extraordinary crisis. The homeowners are the innocent bystanders in a drive-by shooting by Washington and Wall Street: greed, excess and corruption. So why shouldn't we help?
The first role of government is to help people who are in crisis or need. That's why we have government. But if we had not done what we did to set this whole house of cards up, we wouldn't be faced with these situations we have today.
I'm proud of my record of reform, taking on my own party. Sen. Obama has never taken on his party on any major issue, and that's just a matter of record. And he's the most liberal senator and the biggest taxer and the biggest spender.
That's not the way out. We have stark differences.
BLITZER: Well, let's talk about taxes right now.
BLITZER: It's a key issue. Among other things, you'd like to cut, and correct me if I'm wrong, the corporate tax rate from 35 percent to 25 percent. Is that right?
MCCAIN: Absolutely. Absolutely.
BLITZER: Because what he says and what Democrats, a lot of Democrats say, that would be a corporate bonanza for ExxonMobil. They would get an extra $4 billion.
Here's the question. Should ExxonMobil be excluded from that cut in the corporate tax rate?
MCCAIN: Oh, of course not. We should be cutting corporate tax for every business in America.
You know, Barney Frank just said we're going to take some of that money away from the rich people. That's what Obama's all about. That's what this is about.
Let me tell you -- let me tell you, we tried a windfall profit tax back during the days of Jimmy Carter, OK? We tried it. It didn't work. But the important thing is, if you talk to the CEO of FedEx, Fred Smith, if you talk to the CEO of Cisco, John Chambers, you talk to Meg Whitman, former CEO of eBay, you know what they'll tell you? They'll tell you they pay their full 35 percent.
And you know what else they'll tell you? When they have the ability to go overseas, unfortunately they do go overseas. And you know why?
Because we're paying -- they're paying 35 percent full freight, no evasions or escapes from the taxes. They're paying full freight, and they'll show you their tax returns. And guess what? If they go to Ireland, they're only paying 11 percent.
So where are they going to go where they can create wealth and create jobs? It's simple fundamental economics.
So, to somehow allege that a company or corporation that can be international is not going to go where they pay the lowest taxes and can create the most jobs is just foolishness. The last time we practiced this kind of isolationism and protectionism that Senator Obama espouses on higher taxes was a guy named Herbert Hoover.
BLITZER: All right. We have another question from a viewer, Frederic Lumiere of Doylestown, Pennsylvania. He says he's an independent.
He normally says he votes Republican, but he says you lost his vote this time because of what he called negative campaigning. Here's his question.
MCCAIN: You got anybody who says they've changed their mind and they support me? You got a question from them, Wolf? I'd just love to hear that.
BLITZER: Yes, sir.
Here's his question. He says, "My question to you is about tax cuts. How can you explain to the American people that tax cuts are going to solve our economic crisis, whether it might be for the rich or for the poor, whoever it's for, when they really haven't worked for the last eight years?"
MCCAIN: All I can say to him is that, look at history. Look at history.
You raise taxes during an economic crisis time, as we did in -- back in the time of Herbert Hoover, you send the country into a depression. I'm not going to do that.
We have a fundamental difference of opinion. Some people thing you've got to spread the wealth around, you've got to raise taxes. As I said, Barney Frank and others have said we're going to get those rich people, and we're going to take their money from them. Fine, if that's what they want to do.
And I can hardly -- it's incredible to think of Speaker Pelosi, Harry Reid and Barack Obama with the tax-and-spend policies that they did in the past and that they espouse now and might happen in the future. It invigorates me to keep my campaign going and going hard. I don't want that to happen to America.
BLITZER: Social Security, it's a potential problem out there for our children and grandchildren.
BLITZER: And you've said nothing is off the table as far as coming up with some solutions, long-term solutions to Social ...
MCCAIN: You know, that's funny. That's the way you negotiate, and that's the way you negotiate and get solutions.
BLITZER: Right now, there's a cap at $102,000 for Social Security payroll withholding tax. Are you open, as part of an effort to save Social Security, to letting that cap go up?
MCCAIN: I'm obviously against it. And I want to tell you again, the way you succeed in negotiations -- and I've done it many times across the aisle, whether it be Ted Kennedy or Russ Feingold or Joe Lieberman or anybody else, is you sit down, and you negotiate. You go in with your negotiating positions. I'll go in with my negotiating positions. My position is that I won't raise taxes on anybody.
BLITZER: What about increasing the retirement age from 65?
MCCAIN: I will have things on the table, we will negotiate. Ronald Reagan, Tip O'Neill, 1983, went in, negotiated and came out and saved Social Security. Guess what? That's what the American people want from us. That's what I've done all the time I've been in the Congress of the United States. And so for me to say anything but I'm going to do what I saw two great leaders, Tip O'Neill and Ronald Reagan, do is just foolishness.
BLITZER: So raising the retirement age?
MCCAIN: The Democrats -- the reason why we couldn't get agreement in 2005 is because the Democrats insisted as a precondition that we raise taxes. So guess what? We never sat down at the table together.
The Americans want us to sit down together, Wolf. And so all I can tell you is I'll sit down with them. I've worked with them before. I'll sit across the table from them.
I'm against tax increases. I'm against a lot of the bad things that a lot of the people support. But I'll get a result, and we'll save Social Security.
BLITZER: And how do you feel about raising the retirement age?
MCCAIN: I feel very strongly that I'll sit down with the Democrats and we'll negotiate out something that will save Social Security, because that's our obligation to future generations of Americans. And you can ask me, you know, for the next half-hour if you'd like -- I mean, it would be kind of fun -- and my answer is going to be the same. I will sit down and negotiate the way I have done in the past, which Sen. Obama has never done, whether it be in judicial nominations or whether it be in immigration reform or ethics or lobbying reform. He always went home to the Democrat leadership.
BLITZER: Let's talk a little bit about your support -- and correct me if I'm wrong -- you did support President Bush's plan to overhaul Social Security and allow Social Security recipients to use about 10 percent of their Social Security savings in the stock market. That collapsed, obviously. It didn't go forward.
Knowing what we know now about the volatility of the stock market, is that still a good idea?
MCCAIN: The reason why the talks collapsed is because the Democrats insisted on agreeing to tax increases before we sat down. So let's understand history.
BLITZER: What about Social Security investments ...
MCCAIN: That's what they wanted to do. And all this other stuff was worth negotiating. And I will protect as president of the United States the Social Security benefits of retirees and future retirees. I will protect those benefits, and I'll do whatever's necessary to protect those benefits, and I've said that time over time.
Every even-numbered year, Democrats run out, scare the senior citizens, say they're going to raise your taxes, they're going to destroy Social Security. Same old stuff. I've seen it for more years than I can count.
I'm not scaring any senior. I'm going to preserve their -- protect their Social Security benefits, despite what ads may be run. And the senior citizens, as well as all citizens in this country ...
BLITZER: And the notion of using 10 percent in the stock market?
MCCAIN: ... They know about how I'm going to fix Social Security. And I'm going to make their Social Security the best I can, and we'll preserve the benefits that they have, and I'll protect Social Security.
BLITZER: And the 10 percent?
MCCAIN: And I'll protect Social Security, and I'll sit down at the table with the Democrats. And by the way, we can keep -- you know, this is -- I'll give you -- I'm telling ...
BLITZER: This is an important issue.
MCCAIN: ... I'm going to protect Social Security, and that's what I've done my entire career. And I will do what Ronald Reagan and Tip O'Neill did, and that is save Social Security and make Americans aware that, unfortunately, present-day retirees have -- working Americans today are not going to receive the same benefits as present-day retirees unless we fix it. And I think I can convince the American people that we'll sit down together.
BLITZER: Let's move on and talk about national security.
BLITZER: If you're elected president of the United States, do you believe America's enemies, whether terrorists or hostile governments, would test you during the first six months of your presidency?
MCCAIN: We've already been tested. And I'm astonished and amazed to hear Sen. Obama -- Sen. Biden predict that the untried, untested President Obama will be tested by our enemies, and we may not agree -- his own backers may not agree. Watch McCain say he's been tested »
Look, I've been tested. Sen. Biden referred to the Cuban Missile Crisis. I was there. We came that close, as historians say, to a nuclear exchange. And Sen. Biden expects -- his own running mate expects Sen. Obama to be tested in that way? That's a remarkable statement, and that should concern all Americans.
BLITZER: But usually in a (INAUDIBLE) there are tests early on by hostile powers out there.
MCCAIN: They know I've been tested. They know I've been tested. I've been tested many times.
BLITZER: The U.S. -- the Bush administration ...
MCCAIN: And the thing that probably may encourage them a little is that Sen. Obama has been wrong. He was wrong about the surge in Iraq. He still fails to acknowledge that he was wrong. I mean, remarkable.
He was wrong when he said Georgia should show restrain. He was wrong when he said he would sit down across the table from Ahmadinejad, Chavez and the Castro brothers. He was wrong about those. So I can understand why the American people might be concerned, particularly when his own running mate is going to be tested.
BLITZER: All right.
MCCAIN: I've been tested, my friends.
BLITZER: We've got a limited amount of time, so I just want to get a couple things in before I let you go.
Iraq, a very important issue right now.
BLITZER: We still have 140,000, 150,000 troops in Iraq. The Bush administration seems to be close to what's called a status of forces agreement with the Iraqi government of Prime Minister Nuri al-Maliki.
It calls, the draft agreement, at least, for a complete withdrawal of combat forces from villages and cities by July 30th of 2009, and out of the country by December 31, 2011.
If you're elected president, would you as commander in chief honor this agreement if, in fact, it formalizes?
MCCAIN: With respect, Wolf -- and you know better, my friend. You know better. It's condition-based. It's conditions-based.
And Ryan Crocker, our ambassador in Baghdad, said if you want to know what victory looks like, look at this agreement. So you know better than that, Wolf. You know it's conditions-based, and that's what the big fight was all about.
BLITZER: So you would accept this if it's on the table right now?
MCCAIN: I've always said we would be out based on conditions, and honor and victory, and not defeat. And it's very clear to any observer now that if we had done what Sen. Biden wanted to do, break Iraq up into three countries, if we had done what Sen. Obama wanted to do, which was immediate withdrawal and setting firm dates for it, we would have probably been defeated in Iraq. And the problem there is we would have had increased Iranian influence, we would have had sectarian violence on the increase. And probably, we would have had to go back.
So a big issue. A big issue for the American people. And I understand why it's not on the front pages or the lead on CNN, because we have a relatively secure environment that's getting more secure.
BLITZER: We have to wrap up the interview ...
BLITZER: ... but I was reminded walking in, coming here to Manchester, June of 2007 I moderated one of the early Republican debates. You were up on the stage.
MCCAIN: And you did a great job.
BLITZER: I don't know about that, but there were eight or 10 of you Republican candidates. And at that point it didn't look very good, if you remember, for John McCain. Your poll numbers were not very good, there were some formidable challengers.
MCCAIN: They were in the tank.
BLITZER: But you came back. We only have a few days left to go right now. Can you come back from what the polls are saying and be elected on November 4th?
MCCAIN: Sure, Wolf. And we will, and we are moving up rather significantly. But I think we'll be up. It can be a tough race, but we're working hard. And I'm confident of victory.
And by the way, you still the best and toughest questions more than anybody. So I'm glad to be on with you again.
BLITZER: I'm glad we got through some substantive issues.
Sen. McCain, thanks very much.
MCCAIN: We certainly did.
BLITZER: Good luck.
MCCAIN: Thanks, Wolf.