GREGORY: First, here they are, Secretary of Defense Robert Gates, Secretary of State Hillary Clinton.

Welcome, both of you, back to "Meet the Press."

GATES: Thank you.

CLINTON: Thank you.

GREGORY: So much of the heat of this debate this week was not about the going in, but about the getting out. This is what the president said about the scope of this mission.

(BEGIN VIDEO CLIP)

PRESIDENT BARACK OBAMA: These additional Americans and international troops will allow us to accelerate handing over responsibility to Afghan forces and allow us to begin the transfer of our forces out of Afghanistan in July of 2011.

(END VIDEO CLIP)

GREGORY: Secretary Gates, is this a deadline?

GATES: It's the beginning of a process. In July 2011, our generals are confident that they will know whether our strategy is working, and the plan is to begin transferring areas of responsibility for security over to the Afghan security forces with us remaining in a tactical and then strategic overwatch position, sort of the cavalry over the hill.

But we will begin to thin our forces and begin to bring them home. But the pace of that, of bringing them home, and where we will bring them home from will depend on the circumstances on the ground, and those judgments will be made by our commanders in the field.

GREGORY: Regardless of the circumstances, though, what you're saying is that withdrawal will take place at that point.

GATES: It will begin in July of 2011. But how -- how quickly it goes will very much depend on the conditions on the ground. We will have a significant number of forces in there for some considerable period of time after that.

GREGORY: You both, of course, this week have taken tough questions about this issue of a deadline and whether that's a bad thing to signal up front.

Three years ago, Secretary Gates, you were asked on Capitol Hill about another war, another debate, another timeline. That was about Iraq. And, Secretary Clinton, you were asked, as senator back in 2005, the same question about Iraq and timelines for withdrawal. This is what you both said back then.

(BEGIN VIDEO CLIP)

SEN. LINDSEY GRAHAM, R-S.C.: Do you believe, if we set timetables or a policy to withdraw at a date certain, it would be seen by the extremists as a sign of weakness, the moderates would be disheartened and it would create a tremendous impediment to the moderate forces coming forward in Iraq?

GATES: I think a specific timetable would give -- would essentially tell them how long they have to wait until we're gone.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

CLINTON: We don't want to send a signal to the insurgents, to the terrorists, that we are going to be out of here at some, you know, date certain. I think that would be like a green light to go ahead and just bide your time.

(END VIDEO CLIP)

GREGORY: That was about Iraq. Why are your views different when it comes to Afghanistan?

CLINTON: Because we're not talking about an exit strategy or a drop-dead deadline. What we're talking about is an assessment that in January 2011 we can begin a transition, a transition to hand off responsibility to the Afghan forces. That is what eventually happened in Iraq.

You know, we're going to be out of Iraq. We have a firm deadline, because the Iraqis believe that they can assume and will assume responsibility for their own future. We want the Afghans to feel the same sense of urgency. We want them to actually make good on what President Karzai said in his inaugural speech, which is that by five years from now they'll have total control for their defense.

GREGORY: But this is a time certain.

Secretary Gates, you just said that the withdrawal will begin regardless of conditions, the pace of withdrawal could be affected. This is a date certain. And when it came to Iraq, you thought that was a bad idea.

GATES: I was opposed to a deadline in Iraq and, if you'd listen to what I said, that that was a date certain to have all of our forces out of Iraq.

I'm opposed to that in Afghanistan as well. But I believe that there is an important element here of balancing, sending a signal of resolve, but also giving the Afghan government a sense of urgency that they need to get their young men recruited, trained and into the field partnering with our forces and then on their own. And so I think that the beginning of this process in July 2011 makes a lot of sense, because the other side of it is open.

GREGORY: What kind of casualties should Americans be prepared to suffer in Afghanistan with this new strategy?

GATES: Well, the tragedy is that the casualties will -- will probably continue to grow, at least for a time being. This is what we saw in the surge in Iraq. But it's because they're going into places where the Taliban essentially have controlled the territory and upsetting the apple cart, if you will. And what -- what happened in Iraq is what we anticipate will happen here; we'll have an increase in casualties at the front end of this process, but over time it will actually lead to fewer casualties.

GREGORY: Secretary Clinton, what happens if the strategy isn't working in 18 months' time?

CLINTON: Well, first, David, we obviously believe that it will work. We've spent a lot of time testing all the assumptions, our commanders have a -- a lot of confidence that it will work. But the president has said, and we agree, that we will take stock of where we are every month. We're not going to wait, we're going to be looking to see what's happening.

Now, we've had the Marines that were sent in -- remember, this president inherited a situation where we had basically lost ground to the Taliban. The war in Afghanistan, unfortunately, was lost in the fog of the war in Iraq.

And the president put in troops when he first got there and then said, "But let's make sure we know kind of where we're headed and how to get there." And so we're going to continue to evaluate as we go. But the Marines went into Helmand province last July and, you know, Bob can tell you that the reports are that they're making real headway. So we have confidence in this strategy.

GREGORY: The -- the issue of what was inherited came up this week. The president very pointedly said, Secretary Gates, that reinforcements that were requested of the Bush administration on your watch were not provided, and that he provided them when he came into office. Is that true?

GATES: There was, there was, throughout my -- my time as secretary of Defense under President Bush, an outstanding request from General McKiernan. And as Admiral Mullen, the chairman of the Joint Chiefs of Staff, testified repeatedly, we just -- because of the commitment of forces in Iraq, we did not have the -- the ability to meet the resource needs in Afghanistan.

GREGORY: So you don't have any problem with that statement?

GATES: I -- no, there was an outstanding troop request, and on my watch.

GREGORY: Let's talk about the mission, and I want to chart a little bit of the evolution of the president's public statements about this. Going back to July of 2008, during the campaign, when he talked about America's commitment to Afghanistan. Watch this.

(BEGIN VIDEO CLIP)

OBAMA: The Afghan people must know that our commitment to their future is enduring, because the security of Afghanistan and the United States is shared.

(END VIDEO CLIP)

GREGORY: And yet Tuesday when he spoke to the country, he seemed to dismiss the notion of what he called an open-ended commitment or an "enduring commitment" to Afghanistan, saying this.

(BEGIN VIDEO CLIP)

OBAMA: Some call for a more dramatic and open-ended escalation of our war effort. I reject this course, because it sets goals that are beyond what can be achieved at a reasonable cost and what we need to achieve to secure our interests.

(END VIDEO CLIP)

GREGORY: Secretary Clinton, has the president concluded, as president now, that in Afghanistan the war on terrorism needs to be downsized?

CLINTON: No. And -- and I think, David, there is no contradiction between the two statements you just played. We will have an enduring commitment to Afghanistan. We're going to be putting in combat troops. We are going to be joined by 42 partners. We just got a commitment of an additional 7,000 troops from our NATO-ISAF allies. And we will most likely be continuing once our combat responsibilities have ended in whatever support for the Afghan security forces in terms of training, logistics, intelligence, that will enable them to do what they need to do.

At the same time, we will have an ongoing civilian commitment to Afghanistan. So yes, we don't have an open-ended combat commitment. We think we have a strategy that will create the space and time for the Afghans to stand up their own security forces and take responsibility. But we're not going to be, you know, walking away from Afghanistan again. We -- we did that before, it didn't turn out very well. So we will stay involved, we will stay supportive, and I think that's exactly the right approach.

GREGORY: But if you have a situation where you're going to begin the withdrawal of troops regardless of conditions on the ground, some critics see that as weakness and a bad sign to the enemy.

One of your former colleagues, the former vice president, Dick Cheney , said this to Politico this week about the president's speech: "Cheney said the average Afghan citizen `sees talk about exit strategies and how soon we can get out, instead of talk about how we win. Those folks begin to look for ways to accommodate their enemies,' Cheney said. `They're worried the United States isn't going to be there much longer and the bad guys are.'"

And if you look at some of the response from Pakistan, the very country we need to get to the baddest of the guys who are over in their country with Al Qaida, there's this, as reported by The New York Times. "Washington's assertion that American troops could begin leaving in 18 months provoked anxiety in Afghanistan and rekindled long- standing fears in Pakistan that America would abruptly withdraw, leaving Pakistan to fend for itself. Both countries face intertwined Taliban insurgencies. `Regarding the new policy of President Obama, we're studying that policy,' Pakistani Prime Minister Yousaf Gilani said. `We need more clarity on it, and when we get more clarity on it we can see what we can implement on that plan.'"

Is what former Vice President Cheney's warning about, is that already starting to take place in terms of the attitude in Pakistan?

GATES: Well, first of all, we're not talking about an abrupt withdrawal. We're talking about something that will take care -- take place over a period of time. We -- our commanders think that these additional forces and one of the reasons for the president's decision to try and accelerate their deployment is -- is the view that this extended surge has the opportunity to make significant gains in terms of reversing the momentum of the Taliban, denying them control of Afghan territory and degrading their capabilities.

Our military thinks we have a real opportunity to do that. And it's not just in the next 18 months, because we will have significant -- we will have 100,000 forces, troops there, and they are not leaving in July of 2011. Some, handful, or some small number, or whatever the conditions permit, will begin to withdraw at that time.

The piece of this people need to keep in mind that's different from Iraq is our need to communicate a sense of urgency to the Afghans of their need to begin to accept responsibility. The Iraqis, after it was clear that the surge was working, clearly wanted us out of the country as fast as possible.

In the case of the Afghans, there are those -- not everybody, and not a lot of the people -- but there are those who would love to have the United States Army stay there in this very rough neighborhood indefinitely. And we want to communicate the message we will not provide for their security forever. They have to step up to that responsibility.

GREGORY: The -- it seems to be an important point. Beyond July of 2011, there's going to be a significant amount of -- of U.S. troops there. There's going to be about 100,000 once this surge is finished. How many more years should Americans expect to have a significant force presence in Afghanistan?

GATES: Well, I think that, you know, again, I don't want to put a deadline on it, OK?

But -- but I think that just picking up on President Karzai's statements in his inaugural address, he talked about taking over security control in three years of important areas of Afghanistan, and all of Afghanistan in five years. I think that we're in that, we're in that neighborhood.

GATES: Two to three to four years. But again, during that period we will be, just as we did in Iraq, turning over provinces to Iraq -- Afghan security forces, and that will allow us to bring the number of our forces down in a steady but conditions-based circumstance.

GREGORY: We are also, in a more covert way that's not very well kept as a secret, at war in Pakistan as well. The real Al Qaida figures, Osama bin Laden, Mullah Omar, the Haqqani network, the baddest of the bad are in Pakistan and not Afghanistan.

What are the Pakistanis prepared to do to destroy them?

CLINTON: Well, David, I think what we've seen over the course of this year is a sea change in attitude by the Pakistanis.

If we'd been sitting here a year ago and you'd asked what they were going to do, there wouldn't be much of an answer. Now we can say they're beginning to go after the terrorists who are threatening their very existence as a sovereign nation. They've had two military campaigns in the space of the last eight months, and they are making real progress. What we are discussing and consulting with them over is how all of these groups are now a threat to them. There is a syndicate of terrorism, with Al Qaida at the head of it.

So we're doing everything we can to support them in what is a really life or death struggle. I mean, they just blew up -- the terrorists just blew up a mosque in Rawalpindi filled with military officers. These terrorists, with Al Qaida's funding, encouragement, training, equipping, is going right at the Pakistani government.

GREGORY: Can -- can a mission be accomplished without capturing Osama bin Laden?

CLINTON: Well, I -- I really believe it's important to capture and/or kill Osama bin Laden, Zawahiri, the others who are part of that leadership team. But certainly, you can make enormous progress absent that.

GREGORY: I want to talk a little bit about history, a history you know well, Secretary Gates, with your work in this region going back decades.

This was the editorial in The New York Times days after the Soviet invasion in 1979, I'll put it up on the screen: "Moscow's Backyard Quagmire. By intervening so strongly on behalf of a wobbly Afghan client, the Soviet Union appears to be sinking deeper into a backyard quagmire."

A lot of questions about the Afghan client today. You have said, along this process, you were worried about putting more troops in. You said the Soviets had 110,000 committed there and they couldn't win.

Why is it different now? Isn't this mission impossible?

GATES: It's pretty straightforward. First of all, the Soviets were trying to impose an alien culture and -- and political system on -- on Afghanistan. But more importantly, they were there terrorizing the Afghans. They killed a million Afghans. They made refugees out of five million Afghans. They were isolated internationally. All of those factors are different for -- for us, completely different.

We have the sanction of the U.N. We have the sanction of NATO. We have the invitation of the Afghan government itself. We have 42 military partners in Afghanistan. We are supporting and protecting the Afghan people. One of the central themes of General McChrystal's strategy is to reduce and keep civilian casualties low. And, and so it's a -- it's a very different situation.

And what General McChrystal persuaded me of was that the size of the footprint matters a lot less than what they're doing there. And the new strategy that he's put in place, in terms of how we deal with the Afghans and how we behave, I think will make a big difference.

GREGORY: I want to bring it back home and ask you a very important political question, Secretary Clinton. You have heard the reaction from the Democratic Party; liberals using terms like "echoes of Vietnam," that this is risky, that this is a gamble.

Vietnam War protester Tom Hayden talked about the immorality of fighting for regime like -- that is currently in place in Afghanistan. You've been on the campaign trail running for president, you're a former senator, you know the politics of your party well. What is the message of this president to those Democrats who are not on board?

And can you effectively prosecute this war without the base of the party behind it?

CLINTON: Well, David, I think it's clear that anyone who has followed this that President Obama has done what he thinks is right for the country. He is well aware of the political concerns raised that you have just described. I think he deserves a lot of credit for not only delving into this and asking the hard questions, but coming to a decision that has both political and economic costs, but which he has concluded is in our vital national security interest.

I think that we have to look more broadly at what has gone on in Afghanistan. Yes, are there problems with the current government? Of course there are, as there are with, you know, any government. We deal, we deal with a lot of governments that are hardly poster children for, you know, good governance.

But look at what has happened. When President Karzai came into office, there were about a million kids in school and they were all boys. There are now seven million and they're 40 percent girls. There's all of a sudden a wheat harvest because of better seeds and fertilizer that is giving people, once again, income from their land. There are so many positive examples of what has changed. Of course there's a lot of work to be done. I mean, good grief, this country was devastated by three decades of the most brutal kind of war. It's recovering. And as Bob as said, you know, they really do want a different future.

GREGORY: But is the -- the politics of this, the cost of this, will there have to be a war tax?

What will you do to keep the Democrats in line on this?

CLINTON: Well, the president has said he will make sure that the cost of the war is accounted for in the budget. Of -- it is -- it is an additional expense. Everybody knows that. And we have so many important demands here at home. We would not be pursuing this strategy if we did not believe it was directly connected to the safety of our people, our interests, our allies around the world.

And I just hope that a lot of my friends who are raising questions, Bob and I heard them when we were up there testifying, will really pay attention to, you know, the rationale behind the president doing this.

GREGORY: Secretary Gates, you are a hard-nosed realist about this region and about this struggle, going back decades. Is failure an option in Afghanistan?

GATES: No, I don't think it can be, given the -- the nature of the terror network that Secretary Clinton referred to. But we will be monitoring our progress and -- and be willing to adjust our strategy if there are -- if there are issues. We're not just going to plunge blindly ahead if it, if it becomes clear that what we're doing isn't working.

I mean, there are some other alternatives. We, frankly, didn't think that the outcome of the long discussions that we had was that those -- those outcomes were probably less likely to work than what we've chosen. We think and recommended to the president a strategy that -- that he has decided on, that we believe, all of us -- including the uniform military and our commanders in the field -- offers the very best chance for our success. And we're -- and that's what we're going to count on.

GREGORY: But you say failure's not an option. The president has said, "We will fight this fight and fight it hard only up to a certain point."

GATES: And then we begin to transfer the responsibility to the Afghans.

GREGORY: Right.

GATES: And a lot can happen in 18 months.

GREGORY: You said, when you were last on this program back in March, that you considered it a challenge, the notion that you might stay on for the entire first term as secretary of Defense. What do you say now?

GATES: I'd say that's a challenge.

GREGORY: Will you see this war through, the withdrawal of troops through?

GATES: I -- I think that's probably up to the president.

GREGORY: All right, thank you both very much.

CLINTON: Thank you, David.

GREGORY: Our special hour on Afghanistan continues. Up next, an exclusive interview with a ranking member on the Armed Services Committee, Republican Senator John McCain . Then analysis on what it all means with Bob Woodward of The Washington Post and Tom Friedman of The New York Times, right here on "Meet the Press."

(COMMERCIAL BREAK)

GREGORY: Our special hour on Afghanistan, the war plan and beyond, continues with Senator John McCain after this brief commercial break.

(COMMERCIAL BREAK)

GREGORY: We're back with Senator John McCain .

Welcome back to the program. A lot to discuss here, a lot to react to. Let's get to your big issue this week, the issue of withdrawal. You heard Secretary Gates say here today, July 2011 is a date certain for the beginning of the withdrawal.

Do you have a problem with that?

MCCAIN: Yes. But let me also say, David, I support the president's decision. I think it's the right decision. I think that it can lead to success. It's a tough decision on his part to send young Americans into harm's way.

As Secretary Gates said, casualties will go up, tragically. But I think he made the right decision, and I think that he is -- the reality is he's not only tough decision to send young Americans into harm's way, but his -- significant elements of his own party are -- are opposed. So I strongly support the decision.

The problem with the date certain now is that not only there's a problem with that itself, but there's a -- a significant contribution between what Secretaries Gates and Clinton were saying and what the president's spokesperson...

(CROSSTALK)

GREGORY: Contradiction?

MCCAIN: Contradiction between what -- and what his spokesperson said just a couple of days ago when he said the president said -- he said -- I'm directly quoting the president, that "withdrawal date is engraved, chiseled in stone, and I am the chiseler."

Now, that's pretty straightforward. So what has that done? It has caused reaction such as you saw with the prime minister of Pakistan. Policymakers throughout the region -- Pakistan, India, Iran, as well as Afghanistan -- are now trying to figure out whether they can really go all in and support this effort, or do they have to accommodate?

Because if we leave, they have to stay in the region. So it needs to be resolved. It needs to be resolved in this way, that we will not leave on a date certain. But we have every confidence -- I do, I have every confidence within a year to 18 months we can achieve significant success. We were able to do that in Iraq.

And we will leave and not allow the Taliban to make comments like Taliban prisoners are saying, "You've got the watches and we have the time." We don't want to send that message.

GREGORY: But the president responded to -- to this week, privately and during -- during his address to the nation, saying if you'd just use that logic, then that's the rationale for forever war. Then you don't ever leave.

MCCAIN: Well, the rationale for war is to break the enemy's will. That's the whole rationale for war. Do you break the enemy's will by saying, "We're going to be there," or send a message we're going to be there for a year and a half or so and then we're going to begin to leave, no matter what the circumstances are?

Or do you tell them, "We're going to win and we're going to break your will, and then we're going to leave"? That's -- that's -- that's a huge factor in the conduct of war...

GREGORY: All right...

(CROSSTALK)

MCCAIN: ... especially when you're conducting counterinsurgency.

GREGORY: Earlier this fall, I did an interview with you here in Washington on this topic. And I want to show you what you said at that point and ask you about it.

(BEGIN VIDEO CLIP)

MCCAIN: I am convinced we could start to see signs of success in a year to 18 months.

GREGORY: And if we don't, at that point?

MCCAIN: Well, then, I think we have to make a decision at that time as -- if -- if we don't.

(END VIDEO CLIP)

GREGORY: How is that different from what you said to what the president is saying now?

MCCAIN: Well, I'm saying that we have to make a decision as to what adjustments we need to make to win. The -- if we are not succeeding with one strategy, then obviously we have to adjust that strategy.

But as I said, I am confident, as I said in our interview then, a year to a year and a half, at great tragic loss of brave young Americans, we will be able to succeed and we will be able to prevent Afghanistan from returning to a base of -- of Al Qaida and attacks on the United States of America and our allies; not to mention what the Taliban subject to the -- the Afghan people, too, which is immense cruelty.

GREGORY: Americans knew why they were going to war in Afghanistan after 9/11.

MCCAIN: Yes.

GREGORY: Today it's -- it's really much more of a question mark, if you look at the polling.

MCCAIN: Yes.

GREGORY: Americans do not support this.

MCCAIN: Yes.

GREGORY: What is the likelihood...

MCCAIN: Could I -- could I just interrupt?

GREGORY: Yes, yes.

MCCAIN: The president, as I expected, with a very effective speech and an appropriate venue at West Point, I think, has also moved those numbers in -- more favorably in the right direction.

GREGORY: What is the likelihood of another terrorist attack on America from that region, Afghanistan, Pakistan, as things stand now?

MCCAIN: I think that the areas around Pakistan-Afghan border is still a place where Al Qaida and other Islamic extremist elements can hang out. But I think they're on the defensive, and it's a far different situation than if we left and allowed them to restore these safe havens without any threat being mounted against them. And not to mention the Pakistani nuclear inventory and all the implications of that.

GREGORY: To those who oppose this war, there are challenging a couple of assumptions. The assumption that Hamid Karzai, the president of Afghanistan, who the United States says is corrupt, who stole the election, who has not proven capable of standing up a security force, who cannot secure most of the country, s somehow going to become a different leader, and that Afghanistan becomes a different country. That Pakistan, which supported the Taliban for years, which is still apparently hedging its bet about going after the Taliban and the baddest of the bad in the tribal areas, somehow becomes a different country.

Why do you assume those two things happen? MCCAIN: Well, first of all, because when we started the surge, Maliki was -- there was serious talk about having to replace him. They -- he -- there was no government in Iraq when the surge started, it was just sectarian violence. Governments succeed with success. When you are able to provide an environment of security to clear -- the clear, hold and build strategy, then governments do improve. They're not all perfect.

One of the reasons why we have the problems we have is because of the corruption, and one breeds the other.

As far as Pakistan is concerned, as Secretary Clinton pointed out, Pakistanis have been doing much better. Much better. They've been doing everything we want? No. But they've been improving, much better.

There are really internal, domestic politics that frighten me, in a way, because of the -- the lack of Zardari's immunity expiring and, and, and all of those aspects of it.

But I believe if we send a clear signal, we're going to do what's necessary, we are not leaving until we succeed -- and that does not mean an open-ended commitment, it means we will adjust our strategy over time. But to send the message that you are going to leave at a certain date is not the way to convince the enemy that you're there to beat them.

GREGORY: You talk about Pakistan. Secretary Gates says it has been years since there has been solid intelligence about the whereabouts of Osama bin Laden.

How important is he to getting to getting this mission? Why don't we have better intelligence?

And is it the Pakistanis' fault? Do they know where he is, and are we not finding out about it because of that?

MCCAIN: Look, I -- I know as much as you do, OK?

I -- everybody that I know and every time I'm in the region, I ask that question of people who are knowledgeable. They say that he moves back and forth. They say he has concentric circles of people who -- who warn him. If you look at that terrain, it's the most difficult and rugged terrain in the world.

But he is also unable to establish a base for training and equipping people who would come to -- and do -- make attacks on the United States and our allies. Yes, I think it's important to get him. I think we need to get him, but don't think that Al Qaida could not flourish without him if we give them a safe haven in Afghanistan or Pakistan.

GREGORY: More broadly, when you evaluate the president's performance and his approach to this, do you agree with some who say he's made a decision to downsize the war on terror, and does that make you uncomfortable? MCCAIN: I don't -- I don't have any indication of that. As I said, I respect the decision and support the decision he made. It's behind us now.

GREGORY: Right.

MCCAIN: But that long, drawn-out process was not helpful to our friends and our enemies, or to -- or to...

GREGORY: Do you think that helped the enemy, that it took as long as it did?

MCCAIN: Oh, I don't -- I don't think it -- I think it -- it made our -- because I heard from them all the time, it made our allies very uneasy as to what we were going to do.

And it wasn't just the length of time; the leak of secret cables from our ambassador in Kabul saying we shouldn't send reinforcements, that leads to a certain turmoil. But look, that's behind us. The president made the decision, I support it.

GREGORY: I want to, if we could, do an express round of the Straight Talk Express on some other news items. So if we can just hit these things rather quickly, because there's a lot of other news as well. Is there a jobs bill that you could support?

MCCAIN: If it has to do with tax cuts and small business creation, corporate tax cuts, small business tax cuts, absolutely. And the housing -- any effort we can towards reducing the problems of -- in the housing -- home loan mortgage market. Forty-eight percent of the home loan mortgages in my state of Arizona are underwater. That's unacceptable and it's a failure on the part of TARP.

GREGORY: Is stimulus working?

MCCAIN: No. Course not.

GREGORY: You don't think it is?

MCCAIN: Well, I mean, I guess if you throw enough money at anything there's some result, but it's certainly not -- look, by their own figures, the administration said unemployment would be at 8 percent.

It's now at 10, it's at 10 percent. I hope it's going to recover. But we have to -- I think it's been a active generational theft that we have laid on our children and our grandchildren.

GREGORY: OK, a few more. Are you -- do you support Ben Bernanke for a second term as Fed chief?

MCCAIN: I -- I want to examine it some more. I had a good meeting with him, but I'd like to examine the record. I'm very disappointed in what's happened with some of their proposals, because now Wall Street's doing great, billions in bonuses, all kinds of things. And Main Street, I guarantee you -- come with me to Phoenix, Arizona, Flagstaff, Yuma. I'll tell you, Mr. Bernanke's policies have not helped the businesses in my state.

GREGORY: Will health care reform pass with a public option?

MCCAIN: I don't know. I don't know. The American public opinion is swinging more and more against it. We're fighting a good fight. We are not delaying, but this is one of probably the most interesting domestic discussions I've ever been in my career in the United States Senate. And frankly, it's been vigorous and it's been enjoyable.

GREGORY: Do you think he'll get it, though? You think he'll get reform in some capacity?

MCCAIN: I don't know. I don't know the answer. He's still counted all up and down. If he can -- if Senator Reid, who's very good at his job, gets 60 votes, then he has 60 Democrats. But I am hopeful that American public opinion will be heard in the United States Senate.

GREGORY: Now time for your political analyst hat on. Do you think that the -- Sarah Palin 's brand of conservatism is what the Republican Party needs to regain power in the midterms and ultimately in 2012?

MCCAIN: I think that Sarah Palin is a -- has earned herself a very big place in the Republican political scene. I'm proud of her. I am entertained every time I see these people attack her and attack her and attack her. She's irrelevant, but they continue to attack her. I am so proud of her and the work that she is doing and...

GREGORY: You thought her book was fair?

MCCAIN: Oh, sure. Yes. I -- I enjoyed her book. I -- look, if...

(CROSSTALK)

GREGORY: She, kind of, felt like she was thrown under the bus by the McCain campaign at some level.

MCCAIN: Look -- oh, listen, we have a wonderful relationship, Todd and Sarah and I. Just saw her recently. And I'm -- I'm very proud of her. And -- and we need vigorous discussion and debate in the Republican Party. She's going to be a big part of that discussion and debate in the future.

GREGORY: All right, Senator McCain, as always, thank you for being here.

MCCAIN: Thank you, David.

GREGORY: Appreciate it very much.