TRANSCRIPT: 'On the Trail' with Sen. John McCain

Of course, George, I really believe that, having been a member of Congress all these years, that we have to have more of a partnership with the Congress. We have to have more consultation. We have to do those things. But there still is only one title of commander-in-chief, one person with that title.

STEPHANOPOULOS: No. 1 issue right now, the economy.

MCCAIN: Yes.

STEPHANOPOULOS: Sen. Obama went at that on Tuesday night, as well.

OBAMA: I admired Sen. McCain when he stood up and said that it offended his conscience to support the Bush tax cut for the wealthy in the time of war...but somewhere along the road to the Republican nomination, the Straight Talk Express lost its wheels because now it is all for those same tax cuts.

STEPHANOPOULOS: He says basically you've sacrificed your principles for the sake of the nomination.

MCCAIN: Well, for a long time I have said that I thought the tax cuts ought to be made permanent. For a long time back, I said, look, we've got to have spending restraint, the way that Reagan did when he restored our economy when it was in the tank, thanks to then-President Carter's mismanagement of the economy, and we entered into a great period of prosperity in America.

Spending restraint is why our base is not energized. Spending restraint is why we are having to borrow money from China, and we've got to have spending restraints, in my view.

But to impose on the American people what essentially would be a tax increase of thousands of dollars per family in America is not something I think -- well, I'm sure would be bad for the economy of this country.

STEPHANOPOULOS: So on taxes, are you a "read my lips" candidate, no new taxes, no matter what?

MCCAIN: No new taxes. I do not -- in fact, I could see an argument, if our economy continues to deteriorate, for lower interest rates, lower tax rates, and certainly decreasing corporate tax rates, which are the second-highest in the world, giving people the ability to write off depreciation in a year, elimination of the AMT.

There's a lot of things that I would think we should to relieve that burden, including, obviously, as we all know, simplification of the tax code.

STEPHANOPOULOS: But under circumstances would you increase taxes?

MCCAIN: No.

STEPHANOPOULOS: How about -- what else would you do right now to get this economy moving again? A lot of people are worried about it. Many Democrats have said and many outside economists have said we're in a recession right now. Do you think we are?

MCCAIN: I think, according to what the experts, Bernanke and others, are saying, we're very close to it, in fact, closer to it than we have been, you know, for some time.

I think it's very important that we send a signal to the American people we're going to stop the earmark pork-barrel spending. Is that a huge part of the budget?

(CROSSTALK)

MCCAIN: Because it's out of control. Well, one reason is, if you -- in the last two years, the president has signed into law $35 billion worth of pork-barrel projects. That would have been $1,000 tax credit for every child in America. Wouldn't it have been better for our economy to give $1,000 tax credit for every child in America, as opposed to a bridge to nowhere in Alaska?

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