John McCain on CBS Dismisses 'Attacks of the Liberal Media Against' Sarah Palin

Smith began the interview by hitting McCain from the left on campaign finance, fretting about the amount of money being spent in the midterm election: "Almost $2 billion to be spent on these campaigns. $20 million on your primary campaign alone. Another almost half billion dollars coming from outside sources. Is this what you and Russ Feingold had in mind ten years ago when you passed campaign finance legislation?" While McCain acknowledged he was "worried about that," he made sure to point out Democratic sources of funding: "...money like the unions that spend without the permission of union members, that obviously there are many union members that don't agree with the far left agenda of the union leadership."

Later, Smith pressured McCain to agree to a Democratic compromise on extending the Bush tax cuts that would increase taxes on high income earners: "Democrats are floating the idea of moving that ceiling up to $1 million a year. If the Bush tax cuts, which are up for renewal, come up again and they say, 'you know what, we'll just only tax people who make $1 million or more,' is that something you might be able to stomach?" McCain shot down the proposal: "We're not going to get into a bidding war with the Democrats over what level rich people we hate. Look, we don't need to raise anybody's taxes at this time."

Here is a full transcript of the October 26 interview:

7:04AM ET

HARRY SMITH: Also in Washington, Arizona Senator John McCain, who joins us exclusively this morning. Good morning, Senator.

JOHN MCCAIN: Good morning, Harry.

SMITH: Almost $2 billion to be spent on these campaigns. $20 million on your primary campaign alone. Another almost half billion dollars coming from outside sources. Is this what you and Russ Feingold had in mind ten years ago when you passed campaign finance legislation?

MCCAIN: Yeah, we were worried about that, especially money that comes from sources that are not really known. Or money like the unions that spend without the permission of union members, that obviously there are many union members that don't agree with the far left agenda of the union leadership. So, it is what it is. And we're in for an interesting election.

SMITH: It's - people are saying winning the House for the Republicans is a fait accompli. What is your thought about the Senate? Will the Republicans take control of the Senate in a week?

MCCAIN: I'm not - I don't know, Harry, because I'm a little worried about some of my Republican friends who are taking a victory lap about a week ahead of time. And indications are that, as always, the Democrats have a very sophisticated 'get out the vote' operation. We've got to get our vote out. If I had to predict, and I'm very hesitant to do so, I think we will be up late, or even after election night, waiting to see what happens in California and the state of Washington. I think it - the election will probably depend on that.

SMITH: You have a history of-

MCCAIN: As far as the Senate majority.

SMITH: Yeah. You have a history of reaching across the aisle in the past and trying to work with Democratic colleagues. With a mixed House and Senate, and certainly a House majority facing a president come the first of the year, one of the things that may come up again is the Bush tax cuts. And Democrats are floating the idea of moving that ceiling up to $1 million a year. If the Bush tax cuts, which are up for renewal, come up again and they say, 'you know what, we'll just only tax people who make $1 million or more,' is that something you might be able to stomach?

MCCAIN: Look, let's just extend them all for a couple of years, and then worry about it and see what happens a couple years from now. We're not going to get into a bidding war with the Democrats over what level rich people we hate. Look, we don't need to raise anybody's taxes at this time. Let's extend them for a couple of years, as 45 Democrats in the House said that they were committed to. And let's start attacking the real problem, and that's spending. That's spending. Taxes isn't the problem. It's spending that's the problem. And so that's what we need to do.

SMITH: Okay, last but not least, Sarah Palin is getting a lot of credit for kind of lighting the fire among some parts of the Republican Party, especially the tea party, and they're going to be - take a lot of credit for the seats that are won come a week from now. There's still speculation about her running two years from now. If she runs, will she have your support?

MCCAIN: Well, I'd certainly know that Sarah would be an outstanding candidate. But neither she nor I would want to say I would endorse her at this time. I'm proud of her. I'm very grateful for all the things she's done to invigorate our party. But I think it's very early to start picking winners and losers. But she will continue to play a major role in the American political scene.

SMITH: So you're just going to leave that one sit for now? You don't want to-

MCCAIN: Oh, yeah, I think it's way early. Again, I don't think Sarah would want me to at this particular time, before she's even made a decision. But I continue to hold her in the highest regard, and continue to be entertained by the attacks of the liberal media against her. It's very entertaining to watch.

SMITH: Senator John McCain, always a pleasure to talk with you. Thank you very much for your time.

MCCAIN: Thanks, Harry.

SMITH: You bet.

MAGGIE RODRIGUEZ: A very political answer.