KING: Former Republican presidential candidate, Senator John McCain, is weighing in on the California governor's race, backing former eBay boss, Meg Whitman.

They both join us now live from Fresno, California.

Senator McCain, let me begin with you.

And thank you to both of you for joining us in THE SITUATION ROOM.

Meg Whitman obviously was an important person in your campaign -- helped you win support, helped you raise money.

Is this a simple I owe you one or can you give me a reason why you think Meg Whitman, with no political experience, is uniquely qualified to be the governor of a state that is quite a mess right now?

SEN. JOHN MCCAIN (R), ARIZONA: You just -- quite a mess right now. Quite a mess right now -- a fiscal crisis of almost unprecedented proportions that needs the kind of leadership -- you mentioned that Meg does not have political background. She has leadership background. She's one of the great American success stories. She knows how to run a business. She'll know how to run California, if anybody can. KING: Meg Whitman, please come in on that very point, because it's a different calculation when you're running a business -- a painful decision sometimes, but you have to lay off workers. You have to maybe close a factory, something like that.

When you're the governor of a state, you're deciding whether maybe to cut scholarships, maybe whether to cut funding to a home -- a program for the homeless.

How do you take -- I'm not saying a business leader doesn't have to be compassionate, but I guess I'm saying a governor maybe needs to be more compassionate.

How do you make that jump?

MEG WHITMAN (R), CALIFORNIA GOVERNOR CANDIDATE: Well, as a CEO, you have to be compassionate, as well as a governor you have to be compassionate. But we need to run the State of California just a bit more like a business. This is not energetic and efficient government. This is a government that is not spending the taxpayers' money well at all.

And what has happened is people become convinced either you have to cut services or raise taxes. And no one, until very recently, thanks to those propositions last week, is talking about how can we run this government more efficiently.

And I'll give you a couple of examples. We've got to cut the bureaucracy. There's 345,000 people that work for the state. We should eliminate 10 percent of that. We've got to look at deploying technology to deliver the same services at lower cost. And I know this can be done.

So I would argue the experience I have in creating jobs, in building large businesses, in helping to balance budgets and those kinds of things are going to be useful given the economic crisis that we face.

KING: And Meg, let me ask you this, you mentioned the mess out there and the political problems and the decisions you think have been kicked down the road or not handled appropriately.

How much of the blame is Governor Schwarzenegger's, for not cutting the payroll, for not asking for deeper cuts in spending?

He is a Republican governor.

Does he share a sizable amount of blame?

WHITMAN: I think there is, you know, plenty of places that the state has gone wrong. I have a lot of respect for Governor Schwarzenegger. He's done a number of good things -- workman's compensation help, the redirecting initiative that was passed in November.

But the fiscal crisis has occurred on his watch and I think, you know, political leaders have to be accountable. So I think he will share some responsibility for this, along with the legislature.

And my belief is, actually, we can lead our way out of this, but it's going to take a very different approach. And it's going to take leadership and conviction that is going to have to redefine the governor in California.

KING: Senator McCain, you're trying to help a candidate in a state where more than a third of the electorate is Latino. You struggled with Latino voters, even though you had hoped to do better, because of a climate that, frankly, is simply not favorable to your party right now. I don't think it was personal, it was more of a backlash against the Republican Party.

The president has nominated the first Latino nominee for the Supreme Court and you have heard Newt Gingrich, Rush Limbaugh labeling her racist.

Number one, is that out of bounds?

And number two, what does it do to a deeper problem, that a candidate John McCain seeking re-election, a Meg Whitman seeking the nomination and perhaps the governorship of California, how much does it poison the water?

MCCAIN: Well, John, to start with, Judge Sotomayor should be judged on her qualifications and whether she is suited to be a Supreme Court justice and on nothing else. We have had not a hearing. We've not had a meeting. So let's withhold judgment until we have a chance to examine her record. And we should have adequate time to do that.

You're right, the Hispanic -- Latino vote is very important. We've been losing it. We have to recruit and elect Hispanics to public office. We have to make it clear that in our desire to secure the border, it is not an anti-Latino attitude that we have. And we have to welcome them into our party. And there is a recognition now -- a growing recognition, particularly in my part of the country, that without that vote, we will not regain majority status.

KING: And -- and Meg Whitman, there have been some criticism of a speech she gave, actually, out there in Berkeley, California, where she said that she thought her experience as a woman and as a Latina would make her better suited to make certain decisions than a white man.

Have you ever been in a corporate boardroom where you said, you don't understand this, gentlemen, I get this better because I'm a woman?

WHITMAN: I haven't said that. But I agree with John. You know, I actually went to college with Judge Sotomayor. And she is very well qualified, from an academic point of view. She has had 17 years of experience on the bench. And I think we ought to turn our attention to her judicial opinions, what she's written.

And I have a lot of confidence that the Senate Judiciary Committee will put her through her paces and look carefully at what she has written and what she has talked about.

But I am delighted, actually, that she is a Latina. I think that is a step forward. And now what we have to look for is her judicial record.

MCCAIN: And, John, could I just mention, what -- what we sometimes forget, elections have consequences. She would not have been my nominee, most likely. But the fact is that the president won. He has the obligation and duty and privilege to nominate.

We, in the Senate, also have the obligation to advise and consent. I think we need to go through that process and it will start soon.

KING: I want you to listen, Meg Whitman, to something Governor Schwarzenegger has said about Prop 8. As you know, California voters last year decided to ban same-sex marriage. There's an effort now to put it back on the ballot in 2010, when you hope to be on the ballot running for governor. There's also a federal lawsuit challenging that ban on same-sex marriage.

Governor Schwarzenegger, on "The Tonight Show," said he thinks this will ultimately pass.

Let's listen.

(BEGIN VIDEO CLIP FROM "THE TONIGHT SHOW WITH JAY LENO," COURTESY NBC)

GOV. ARNOLD SCHWARZENEGGER (R), CALIFORNIA: This is not over, this decision, because I think they're going to be back. There will be -- in a year or two, they will be back again with another initiative trying to get it...

JAY LENO, HOST: Right.

SCHWARZENEGGER: You know, and eventually it's going to be overturned. I'm sure of that.

(END VIDEO CLIP)

KING: He says eventually, Meg Whitman, it will be overturned.

Would -- I know you supported the will of the people. You have issued statements saying the people voted for this, therefore it is the right thing -- the majority voted for it.

Do you support the ban personally?

And do you think that California policy should be so dictated by these referendums?

WHITMAN: So you're right, I did vote yes on Proposition 8. I am pro-civil union, but against gay marriage. And so I supported Proposition 8. And I think the Supreme Court of California made the right decision recently by supporting the will of the people. I think this will continue to -- I agree with Governor Schwarzenegger. This will continue to be an issue. It will continue to bubble up. But I think the court came down in the right place.

And propositions in California are a double-edged sword. But this was a proposition that was put to the people. It was a fair election. And I think we have to be thoughtful about overturning the will of the people.

KING: Senator McCain, do you think this should be dealt with on a state by state basis like this, or do you think, ultimately, if five states have supported same-sex marriage now, others are pushing for it, does it need a federal answer?

MCCAIN: No. I believe it should be decided within the states. And we should respect that. And the Defense of Marriage Act that the Congress passed some years ago articulated that exact position.

KING: Let me ask you about the political climate out in the State of California.

First, more of the governing climate. The appetite in Washington -- probably the answer is no.

But if you were governor, Meg Whitman, do you foresee any circumstances where you might have to come to Washington and say, we're the most populist state, we're essentially the world's 12th largest economy, we need help from Washington in the short-term?

WHITMAN: No. And I think it's exactly the wrong thing for California. We have to put our fiscal house in order. And in many ways, the vote of last week is a forcing function for the legislature, the governor and the people of California to put in place a government we can afford.

And while it's tempting to think about asking the federal government to bail out California, it's the wrong thing, because we can't kick the can down the road to another year, another generation. We've got to solve our problems now.

And, by the way, I think it's a pretty bad precedent, because if California has their hand out, there's, you know, 30 or 40 other states that, while they are not as big as California, they face similar challenges. And I think there's only so much the government can do.

And my personal point of view is the federal government is overextended by a remarkable amount. And this is the last thing the federal government needs to be involved in.

KING: Senator McCain, what are your thoughts on, in the largest state in the country, you received only 37 percent of the vote -- again, not all personal. It's been very tough for national Republicans out in California for some time.

What does the lady to your right have that you think makes her special in not only helping her win governor, but making your party competitive in the nation's largest state?

If you can't be competitive in California, it certainly leaves you at a big disadvantage.

MCCAIN: It certainly does. I...

KING: What are the issues to deal with that?

MCCAIN: I think among the other issues are a broad-based party, is what we discussed before -- embracing people who may have specific differences, but share the same values.

Look, I think that what Meg Whitman does is what other governor Republicans have done in other states, but especially here -- a successful role model for young people, a person who will give them hope and confidence that they will get the state out of this fiscal mess and restore it to its greatness.

The fact that she has the charismatic and dynamic capabilities, I think, is going to make her a very special candidate. And having said that, I understand very well the difficulties facing any Republican candidate in the State of California.

KING: Let me fast forward.

Meg Whitman, if you were the governor of California and you had what was going on right now along the U.S./Mexican border -- the drug cartels, the violence, the kidnappings -- what would you do through your own executive powers and what would you demand Washington do, because the border is federal?

BORGER: Well, it's a very serious issue. And you're right, immigration is a federal issue. It is not a state issue.

But as the governor of the largest state of California, what should happen, Governor Schwarzenegger today should make sure that his point of view is well-known in Washington.

We absolutely have to secure this border. What is going on in San Diego is just remarkable, the level of violence and what's happening there.

So we have to secure the border. We have to put more people there. And I would be thinking very hard about what can we do to shore up the situation in the border right now.

Longer term, we've got to not only secure the border, but I believe we've got to hold employers accountable for hiring only documented workers. I think you can build a fence 60 feet high, but if the lure of good jobs is here, people will try to come, especially given the state of play in Mexico right now.

So I think there's lots that California can do. But we have got to make our voices much louder -- heard much louder in Washington on this issue, because we are the state that is affected most deeply.

KING: Meg Whitman, candidate for governor, Republican of California.

Senator John McCain endorsing her today out in California.

We thank you both for joining us from Fresno.

MCCAIN: Thanks, John.

WHITMAN: Thanks a lot, John.