Transcript: Sen. John McCain

STEPHANOPOULOS: And you felt President-elect was open to that?

MCCAIN: I am convinced of it. I am convinced of it.

STEPHANOPOULOS: Another major...

MCCAIN: And, by the way, it's in any president's interest to have earmark reform, I mean, obviously. But I think that President- elect Obama is sincere about working on long-term reforms to the system.

STEPHANOPOULOS: Another major economic issue you dealt with in the Senate, this week, whether to rescue the auto industry, given them a bridge loan for the next several months. During the campaign, you said, "We've got to keep the auto industry alive." Yet, last week, you joined the effort to kill that package in the Senate. Why?

MCCAIN: Because I didn't believe that this fix would keep the auto industry alive. I think it just put them on some life-support system for two or three months, because they didn't make the fundamental changes, i.e. more changes in their costs and salaries and wages and benefits, which would put them in line and make them competitive with foreign manufacturers in the United States -- not foreign manufacturers overseas.

STEPHANOPOULOS: Yet Vice President Cheney went and talked to your Senate colleagues on Wednesday...

MCCAIN: Yes.

STEPHANOPOULOS: ... and warned that, if you don't get this thing through, the Republican Party is going to be known as the party of Herbert Hoover forever.

MCCAIN: You know, I appreciate those remarks, but I also point out that, what is the point if you just kept at least two of the three alive for another two or three or four months? You end up in the same position, only you've spent an additional $15 billion.

STEPHANOPOULOS: So what should be done now? The White House is considering using money from the TARP, the rescue fund, in order to give a bridge loan, perhaps, maybe to put in a car czar, and implement something like a prepackaged bankruptcy.

STEPHANOPOULOS: Do you believe the White House should step in and use that money to help the auto industry?

MCCAIN: Certainly wasn't the intent of the package that I voted for. But second of all, I will do, as I said during the campaign, anything to help, as long as we are sure that they have made the fundamental changes, which will then assure their sustainability as industries. If you just -- look, what fundamental changes have been made in the way that the big three do business? Very little, as far as I can tell. And each change that they have made, they've been absolutely kicking and screaming every step of the way. If they believe that the taxpayer is going to continue to bail them out, they're not going to make the fundamental changes that will make them truly competitive. The workers are competitive. The technology is there. The brains are there. But the system itself is designed to be so much more expensive than their competitors...

STEPHANOPOULOS: Sounds like you think they need to go into bankruptcy.

MCCAIN: I think that if not bankruptcy, certainly a bankruptcy- like solution, which forces everybody to sit down at the table and redo all these agreements.

STEPHANOPOULOS: You just got back from a major trip overseas -- Afghanistan, Pakistan, India, Iraq. Have you had the chance to brief President-elect Obama on that trip?

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