TRANSCRIPT: Sen John McCain

MCCAIN: Yes.

STEPHANOPOULOS: ... a war than win a political campaign.

MCCAIN: Yes.

STEPHANOPOULOS: I can't believe you believe that.

MCCAIN: Well, I'm not questioning his patriotism. I'm questioning his actions. I'm questioning his lack, total lack, of understanding. His...

STEPHANOPOULOS: But that is questioning his total...

MCCAIN: I...

STEPHANOPOULOS: When you say someone would rather lose a war, a candidate, that's questioning his honor, his decency, his character.

MCCAIN: All I'm saying is -- and I will repeat -- he does not understand. I'm not questioning his patriotism. I am saying that he made the decision, which was political, in order to help him get the nomination of his party.

STEPHANOPOULOS: So, putting lives at risk for a political campaign -- you believe he's doing that.

MCCAIN: I believe that, when he said that we had to leave Iraq, and we had to be out by last March, and we had to have a date certain, that was in contravention to -- and still is -- the chairman of the Joint Chiefs of Staff, General David Petraeus.

When he never asked to sit down for a briefing with General Petraeus, our commander on the ground, when he waited 900 days to go back again, where young American lives are on the line, I think that's a fundamental lack of understanding. And I think the American people will make the appropriate choice.

STEPHANOPOULOS: But you're questioning his motives.

MCCAIN: I say that it was very clear that a decision had to made. And I made it when it wasn't popular. He made a decision which was popular with his base. And that is a fundamental difference.

And he does not understand, and did not understand and still doesn't understand, that the surge was the vital strategy in us not having to lose a war.

Chaos, genocide, increased influence of Iranians in the region. The consequences of failure would have been severe.

STEPHANOPOULOS: But...

MCCAIN: Now, the benefits are enormous of a stable ally in the region, of a country that is a friend of ours, a brake on Iranian influence -- certainly a brake on al Qaeda and other jihadist organizations.

So, he made the decision that that was the best way to go to get the nomination of his party.

STEPHANOPOULOS: There's also been a flap about Senator Obama's decision in Germany not to visit the troops at Landstuhl. He now says that, based on what he was hearing from the Pentagon, there was no way that wouldn't be seen as a political trip, which is why he decided not to go.

Do you accept that explanation?

MCCAIN: Well, I know this, that those troops would have loved to have seen him. And I know of no Pentagon regulation that would have prevented him from going there -- without the media and the press and all of the associated people -- nothing that I know of would have kept him from visiting those wounded troops. And they are gravely wounded, many of them.

STEPHANOPOULOS: He's done it many times in the past.

MCCAIN: In Landstuhl, Germany, when I went through, I visited -- I visited the hospital. But the important thing is that, if I had been told by the Pentagon that I couldn't visit those troops, and I was there and wanted to be there, I guarantee you, there would have been a seismic event.

And so, I believe he had the opportunity to go without the media. And I'll let the facts speak for themselves.

STEPHANOPOULOS: So, this is...

MCCAIN: It certainly wasn't the Pentagon...

STEPHANOPOULOS: ... (inaudible) campaign (ph).

MCCAIN: That's certainly what the Pentagon spokesman said. There was nothing to prevent him from going, if he went without the press and the media and his campaign people.

But we'll see what happens.

STEPHANOPOULOS: Fair game?

MCCAIN: Well, I think people make a judgment by what we do and what we don't do. He certainly found time to do other things.

STEPHANOPOULOS: Let's talk about the economy.

President Bush in -- and adding some unvarnished talk recently about the economy when he didn't think the cameras were on. I think he said, "Wall Street got drunk, and now we're going through the hangover."

I know you don't want to use language like that, but is his basic take right? Is Wall Street the villain here? And what would you do about it?

MCCAIN: I think that Wall Street is the villain in the things that happened in the subprime lending crisis and other areas where investigations and possible prosecution is going on.

But I also think that Congress is at fault. We didn't restrain spending. Spending got completely out of control. We were ...

STEPHANOPOULOS: But what does that have to do with the mortgage crisis...

MCCAIN: It increases...

STEPHANOPOULOS: ... or with the housing crisis?

MCCAIN: It increases the deficit. We didn't address the energy crisis, which has been building for 30 years. We're now sending $700 billion of Americans' money overseas to countries that don't like us very much.

So, I think there's a lot of blame to go around here. But I also would blame a gridlocked Congress, which is gridlocked as we speak, when we should be doing offshore drilling.

STEPHANOPOULOS: The gridlock...

MCCAIN: We should be moving forward with nuclear power.

STEPHANOPOULOS: The gridlock broke today on the housing bill. It passed, I think, 72 to 13 in the Senate.

I know you couldn't be there. Would you have voted for that bill?

MCCAIN: Yes. But I also see, again, the influence of special interests. They place the responsibilities for trying to help solve some of these problems of people remaining in their homes -- and it is real and significant -- in the hands of the lenders.

I would have liked to have seen the homeowner, the primary residents, go down and get the 30-year FHA guaranteed loan at the new value of their home, and put it in the hands of the borrower, the homeowner. But I'll support...

STEPHANOPOULOS: Then why vote for the bill?

MCCAIN: Because it's better than nothing. It's better than -- it may give relief to several hundred thousand homeowners. Or if it gives relief to one, it's a -- but I think it can provide some relief.