Transcript: National Security Adviser Gen. James Jones and Sen. John McCain, R-Ariz.

JONES: Well, I think - as I said, this is illustrated by the fact that this is a very sensitive issue and it has to be discussed over time and it has - all sides have to be heard. But I think most of us who have served in the military believe that the standards of conduct is what determines the good order and discipline. So as long as conduct by all members of the military is not detrimental to the good order and discipline, then you have cohesion in the ranks.

But there is ...

STEPHANOPOULOS: But that gets to the heart of the problem. I mean, if you're saying any kind of homosexual act is conduct ...

JONES: I'm saying that it applies - it has to be a uniform policy for all members of the military in order to function as a military has to function. We will have long discussions about this. It will be thoughtful. It will be deliberative. The president I know will reach out to fully understand both sides or all sides of the issue before he makes a decision.

STEPHANOPOULOS: But it will be overturned.

JONES: I don't know. We'll have to - the president has said that he is in favor of that. We'll just wait - we'll have to wait and see - as a result of the deliberations and as a result of the - in the months and weeks ahead. We have a lot on our plate right now. It has to be teed up at the right time so - to do this the right way.

STEPHANOPOULOS: Let me ask you one final question. Prime Minister Netanyahu of Israel is coming to the United States next week. He will be here next Monday and the Israeli newspaper "Haaretz" reported on a telegram, reporting on a meeting between you and a European foreign minister.

Let me show you what that said. It said that, "according to this telegram you told the foreign minister, 'The new administration will convince Israel to compromise on the Palestinian question. We will not push Israel under the wheels of a bus put we will be more forceful toward Israel than we have been under Bush.' Jones is quoted in the telegram as saying that the U.S., E.U. and moderate Arab states must redefine a satisfactory end game solution."

Does that mean you're going to press Prime Minister Netanyahu to full accept a two-state solution?

JONES: I think it means that this administration is going to engage fully. That is to say, using all aspects of the interagency process to make sure that the security of Israel is not compromised, that the issue of Palestinian sovereignty also has its place at the table. There are many expectations around the world, in the Arab World and in the European community that we are at a moment where we can make progress with regard to the Middle East. It's going to take American leadership and American involvement and I think the signal is going to be that all levels of our government we're going to do everything we can to encourage this longstanding problem to gradually come to - show clear progress that we're intent on ...

STEPHANOPOULOS: Is there any way to make progress if Israel doesn't say they're clearly for a two state solution.

JONES: I think obviously Israel has said it's for a two state solution, at least...

STEPHANOPOULOS: The prime minister hasn't said that yet.

JONES: That was the position of the former government. And we understand Israel's preoccupation with Iran as an existential threat. We agree with that.

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