The following is an excerpted transcript of ABC News' Charles Gibson's interview with John McCain on the final days of the campaign, for "World News With Charles Gibson" in Hanoverton, Ohio, Oct. 31, 2008.
GIBSON: Senator, everybody's focused on Nov. 4.
MCCAIN: Yes. Understandably.
GIBSON: I wonder how much thought and planning you've given to Nov. 5 and what begins then.
MCCAIN: Yeah, I've thought about it and I've talked to my advisers about it. And we lay out a tentative kind of thing. But, frankly, Charlie, Americans don't like for you to measure the drapes. They want you to win first. And that's why we have a period of time between the election and the inauguration. So, of course, I think about it. But for me to start picking my chief of staff or that kind of stuff is something we've got plenty of time for.
But, clearly, I know what the challenges are and I know how to meet them.
GIBSON: Well, there's two scenarios. There's a win scenario and a lose scenario.
GIBSON: So let's talk about both.
GIBSON: There are two scenarios in this. There's a win scenario and a lose scenario. So let's talk about both and start with winning.
MCCAIN: Let's not talk much about the other one.
GIBSON: OK, all right, we won't. But if you win, the overwhelming odds are that you'll face a heavily Democratic Senate and House.
GIBSON: So how does a President-elect McCain reach out to the Democrats and transition from the campaign phase to the government phase?
MCCAIN: What I've done for almost a quarter of a century. I reach across the aisle. I'll sit down with the Democrats, and we will revolve these challenges that face America. My whole record, working with Ted Kennedy or Russ Feingold or Joe Lieberman or Byron Dorgan or Carl Levin -- I have worked across the aisle. And, of course, we've had spirited discussions and, of course, we've had ideological differences, but I have worked and achieved the legislative results that, frankly, are higher than anybody in the U.S. Senate.
And I'm proud of that record. And I saw Tip O'Neill and Reagan sit down together in 1983 and fix Social Security, at least for 20 or 25 years. Now, we have to fix it again.
But there are models for this scenario. And one of them was Ronald Reagan, a very principled conservative that knew how to sit down with the Democrats and work together.
GIBSON: Practical matter. Harder for a President-elect or President McCain to govern than a President Obama?
MCCAIN: I don't think so. I think I have a long record of working with these people. I have a long record of reaching across the aisle. And I have a long record of accomplishment. Look, there are some people on the other side of the aisle and maybe a couple on my side of the aisle that are not personally close to me. But they respect me. And that's what it's got to be all about.
GIBSON: You said irresponsible to measure the drapes. But do you have in mind a spreadsheet of people that you would bring into a McCain administration?
MCCAIN: Oh, sure. Yeah. Yeah. A long list of these or acquaintances and people that I've known for a quarter of a century, but there's also people who are wise people who may not come into the official position -- Henry Kissinger. Henry Kissinger is a man I've admired and respected ever since the day I came out of prison camp in Vietnam. I call Henry all the time.
Now, is Henry and I always in agreement? No. George Schultz, secretary of the Treasury, secretary of state, probably wouldn't want to come back and work in Washington, but I'm in constant contact with him.
GIBSON: But are these new faces we would see in a McCain administration? You've talked about change?
MCCAIN: Well, Democrats as well as Republicans. And if I start going down a list of names -- but they are respected people in America.
GIBSON: But it would be a nonpartisan Cabinet?
MCCAIN: Oh, sure.
MCCAIN: Of course.
GIBSON: More than just a token?
MCCAIN: No, no. A lot of Democrats. But I think the key now, restoring trust and confidence. How do you do that? By having trusted and respected people in your government, people -- Meg Whitman, founder of eBay. People say, gee, that's the person that turned the 10-employee business into one that employs 1.3 million people in America. That's a person -- a woman we can identify with, a leader we can identify. Those kinds of people.
Of course, I would look to Silicon Valley as well. Some of the success stories there. John Chambers, the CEO of Cisco. Fred Smith, who's made a great success out of FedEx. Obviously, I would want the advice of someone like Warren Buffett and Paul Volcker and others who are respected Democrats. Rubin is another one. Others that Americans can say, hey, this will give us some confidence and trust back.
GIBSON: Clean break, though? No holdovers from the Bush administration?
MCCAIN: I think that Secretary Gates, as secretary of defense, has done a fantastic job. And I think that people all agree with that. I'm not sure that he would want to stay permanently. That is one of the toughest jobs in America. But I'd like for him to at least stay on for awhile while we arrange whatever transition may be necessary.
Quietly, he's taken on some of the bad practices in the Pentagon itself. He's quite a guy.
GIBSON: First priority of a -- President-elect McCain.
MCCAIN: Any president. Any president is to ensure America's security. You've got -- that is a first priority of any president throughout our history, particularly, in the 20th and 21st centuries. We're in two wars. We face the existential threats of radical Islamic extremism.
So, obviously, that has to be any chief executives first responsibility. The second -- and, obviously, right now, the highest priority of the American people get the economy out of the ditch and moving again and create jobs. And national security and military security and economic security are not -- they are inextricably tied. No nation in history has had a terrible economy and maintained its military strength.
GIBSON: What would you want out of a lame-duck session of Congress? Second stimulus package?
MCCAIN: No. I'd like to sit down and talk with the members of Congress and find out exactly what's needed. But I'll tell you one thing. I'd lay down the law. No more pork. No more pork. We can't afford it. We -- we can't afford it.
Now, that will be a big fight that I will have with my own party as well as the Democrat Party. But there's a 9 percent approval rating of Congress today. We just had one of our most senior -- the most senior Republican in the Senate convicted by a jury of his peers. OK? We have members of Congress residing in federal prison. There are investigations going on.
And I can tell you what my friend Tom Coburn says, earmarking is a gateway drug. And it leads to corruption and I've seen it. And we've got to stop it. And don't think that it's, quote, always been there. It hasn't. It's grown worse and worse like any other evil that goes unchecked. So we'd take that on right away.
GIBSON: You supported the $700 billion financial rescue plan.
GIBSON: The first installment has been paid to nine rather large banks. Your impression of the way they are indicating they're going to spend it?
MCCAIN: Disappointed in many respects because I think that Secretary Paulson should have set our first priority as the homeownership problem, to keep people in their homes. Take $300 billion, go out and buy up these -- these homes that people have as their primary residence and they can no longer afford the payments.
It was a housing crisis, a subprime lending crisis -- the housing crisis that started us on this path. We've got to keep people in their homes. Now, Homeownership Loan Corporation in the Great Depression, they went out and did exactly that. Over time, the Treasury got more money back. So I think that the -- that the secretary of the Treasury and the administration have failed from a PR standpoint by not putting homeownership first and telling the American people that's first.
And second of all, by not saying we're going to get out of the banking business. We're going to stop these bonuses. We're going to stop this excess and greed that's going on. I pick up the paper all the time and hear about AIG going on a $400,000 executive whatever it is.
MCCAIN: Whatever you want to call it -- junkets or whatever it is. And the American people are not happy about it, I can tell you from these town hall meetings.
GIBSON: These nine banks have said they might use a lot of this money for dividends for stockholders, to give bonuses to executives, solidify their bottom line, perhaps to buy smaller banks. You would say to them?
MCCAIN: I would say to them get your fiscal house in order, number one. Two, knock off the executive bonuses. There was a guy named Iacocca back a number of years ago that you and I remember that took over Chrysler and paid himself a dollar a year. Chrysler got well, then he got well. OK? Then he got some money. But let's start putting the country first before you put this -- keep this economy in the ditch because of this trust and confidence issue.
GIBSON: Was Congress misled? Lied to in any way about how this money would be used?
MCCAIN: I can't say that they were lied to. But I can say that I was under the distinct knowledge when I talked to Secretary Paulson that homeownership would be the highest priority. That was the idea that I had.
And I'm not against doing some of the things they have done because they had to be done. Credit is the most critical item for small businesses in America today. Getting credit. I've met small-business people that say we're doing fine but I can't keep my line of credit. So they had to do that to go with these financial institutions, but they also needed to keep people in their homes.
GIBSON: But unless they put more money into recapitalizing the economy, getting lending flowing again, would you favor withholding a second $350 billion until they do?
MCCAIN: I think we have to judge it on a step-by-step basis. But it's obvious that liquidity and credit is the other major aspect -- one of the major aspects of this crisis. So I think you have to do both.
But why can't these individuals understand that when they say we're going to take these bonuses or we're going to pay these bonuses when they put us in the ditch, how much it harms everything about what we believe in in free enterprise, capitalism, et cetera, et cetera? And we're going to have to have transparency and consolidation of the regulatory agencies, among other things.
GIBSON: You keep talking about your opponent as a redistributor...
GIBSON: ... of income.
GIBSON: He has said he would only be taxing the top 5 percent of this country in terms of wealth. Aren't you overstating the case calling him a redistributor?
MCCAIN: His eloquence is very -- is very excellent. The fact is that 50 percent of small-business income in America -- you can check it -- would be under his tax plan and would be taxed. Sixteen million jobs that are employed by small businesses that would be taxed by him.
In a response to a question from you, he said he was going to raise capital gains taxes even if it decreased revenues because it's a matter of fairness. He has said time after time that we got to have a redistributive scenario in our economy. That's not right. That's the liberal left.
GIBSON: But don't you believe in a progressive tax code?
MCCAIN: I believe in the tax code as it is. But certainly don't believe in anybody's -- anybody's -- any desire to raise taxes now in a bad economy. Of course, I want to simplify the tax code. Of course, I'd like to see two or three tax brackets. That would be a long-term goal of mine.
Of course, the tax system in many ways, is unfair because it's carved full of loopholes. But to say you're going to raise anyone's taxes and, by the way, could I mention it?
MCCAIN: He said 95 percent of people are going to get a tax cut. Forty percent of the American people don't pay federal income taxes. So in itself, that's deceptive to the American people. And thanks to Joe the Plumber, they're beginning it figure it out they wants to redistribute the wealth.
It's not an accident that he's in the far left lane. That's what he's judged as -- the most liberal senator in the U.S. Senate. More liberal than the senator that used to call himself a socialist. That's what his record is.
GIBSON: But you said yourself -- this is a quote back from 2000 when you were running for president before.
GIBSON: You said to a meeting of college students, "We feel, obviously, that wealthy people can afford more." You went on to say, "Here's what I really believe. That when you are -- reach a certain level of the comfort, there's nothing wrong with paying somewhat more."
MCCAIN: And that's what we're doing.
GIBSON: Isn't that his position?
MCCAIN: And I would have added, and I will add, if our economy is in the tank as it is today, to raise anyone's taxes is a terrible thing. And first, I want people – when I say terrible thing, history shows, you raise taxes and practice protectionism, which is also Sen. Obama's position -- he wants to unilaterally renegotiate a trade agreement with Canada and Mexico. He's against a free-trade agreement with Colombia. He's never been south of our border.
And so I, of course, we want Americans to all help this nation. But to raise taxes on anyone in a bad economy, as history shows us, is a repetition of the days of Herbert Hoover.
GIBSON: We talked about the winning scenario. Let's talk briefly about the losing scenario.
GIBSON: Have you given any thought to what it would be like? What you might do after Nov. 5?
MCCAIN: Sure. And all I know is that we fought the good fight. We have fought the good fight. I have served my country all my life. And this has been a humbling experience to be able to have the opportunity to serve. I'm confident we'll win next Tuesday. I think we're going to fool the pundits one more time.
GIBSON: You're getting your last polls in now. I know most presidential candidates are beginning to get their last tracking polls the Friday before election.
GIBSON: What gives you optimism?
MCCAIN: Our tracking polls show us within a point or two or three or four. And public polls do that, also. Now, there's outliers because it's complicated, as we all know, this time because of the voter turnout is so unpredictable and who within that turn out. But I do remember that George Bush was 13 points behind John Kerry according to the Washington Post-ABC, I believe it was, poll back in 2004.
So, look, the pundits have written us off four or five times in this campaign. They're probably going to -- some of them have written me off again. We are coming back strong. I have been in enough campaigns -- I see this kind of enthusiasm and this kind of turnout. I can sense it. I can feel it more than my internal polls, which are very good.
GIBSON: A lot of states you have to hold from the Bush map.
GIBSON: Things look good? North Carolina?
MCCAIN: Yeah. We're doing fine. We're up.
MCCAIN: Tough state. We're coming on, but we've got a lot of work to do there.
MCCAIN: We're in good shape, but it's -- I mean all of these have been moving back and forth within margin of error. And so am I confident? Yes. Are they close? Absolutely.
MCCAIN: Again, it's -- there's 10, 12, 13 states. You and I could go down the list that we are within margin of error or slightly behind. And so what matters? Turnout and who turns out. And, look, I'm very confident. The enthusiasm is there. Whether the turnout will be there, I think you and I will know better on Tuesday night.
But with that kind of enthusiasm, you get very good turnout. I've seen that before.
GIBSON: This is a very divided country in many respects.
GIBSON: And you have very strong adherents, and so does Sen. Obama. People who feel passionately about the two sides and express great concerns about the other guy.
If you lose, what do you do to reach out and try to bind this country together?
MCCAIN: You do what I've been doing all my life. What I've been doing all my life. Serving my country and putting my country first. That has been my record.
Whether it be in service in the military, whether it be in the House of Representatives, whether it be in the U.S. Senate, I've always put my country first. And sometimes that has not made me the most popular in my own party because I have put my country first.
Anybody who puts their country first can heal the wounds of this -- of any political campaign. And right now, America is ready for a united effort to fix our economy and keep our country safe.
GIBSON: One other question about the losing scenario. If you lose, what's the future of your vice presidential choice?
MCCAIN: Oh, look, I think Sarah Palin, so matter whether I had chosen her as my running mate or not, would be a national figure sooner or later. She's a reformer. She took on her own party. She -- she is the most popular governor in America. She's -- look, Sarah Palin, I think, would have emerged on the American political stage whether I happened to have chosen her or not.
It's not a question of whether. It would have been a question of when. And I think she has inspired millions and millions of people. And I'm so proud of her and so happy with her. And any way that I could help her political career along, not because of her political career but because of her ability to serve the nation. And the nation needs people like Sarah.
GIBSON: Win or lose...
GIBSON: First thank you note you write on Nov. 5?
MCCAIN: I think -- I think, obviously, I'd have to send it to the people who have run my campaign and have stood with me through thick and thin.
GIBSON: One other thing I asked your opponent, finish this sentence for me.
GIBSON: On Nov. 5, I'm so glad I won't have to anymore...
MCCAIN: I think that -- I think, frankly, probably ask for money. That's what I'm not very good at. I'm good the asking for votes, support, volunteers. I've just never been really good at asking for money. So I'll ask people to serve, but I won't have to say, hey, can you give me $2,800 or whatever the limit is.
GIBSON: Senator, thank you very much.
MCCAIN: Thank you, Charlie. Thanks for having me on.
GIBSON: Thank you.