May 2, 2008 9:56 AM

Live-blogging John McCain's Town Hall meeting

Crowd estimated at 500 but that seems high. Press row guess is around 300. Overflow in the next room of several hundred more.

Senator wearing blue blazer, open-collared shirt and khaki slacks.

Says he got an honorary doctorate from Oklahoma, pretty good for a guy who finished fifth from bottom of his class.

I'm from Arizona. Thanks for the water. Barry
Goldwater used to say we have so little water in Arizona that the trees chase the dogs.

Was with Arnold Schwarzenegger and a guy came up and said, 'Anybody ever say you look a lot like John McCain?' I said yes. He said, doesn't that make you mad?

Recognizes group from Divided We Fail, affiliated with AARP.

Following is transcribed on the fly.

Americans are hurting today. Latest jobs reports still bad, unemployment continues up.
Enormous challenges, can't sugar-coat it. this morning and this evening, families will be sitting around their kitchen table trying to figure out how to afford their new home mortgage payments.

On his proposal for a holiday from the federal gasoline tax between Labor Day and Memorial Day:

My friends the prices of a gallon of gas continues up. Why don't we give American men and women just a little break for the summer. It's not the end of western civilizaiton as we know it. May not be able to send $10 million to a county in Florida that said they didn't want it. Might not be able to fund all the pork barrel projects put into these bills in the middle of the night.

I'm going to stop that pork barrel earmarking process and I'll veto every pork barrel bill that comes across my desk.

Let's give low-income people a break this summer. I'm astonished at the influence of the special interests who say what a devastating effect this would have. Take the money out of the general fund to replace that money.

On health care:

This city and state is well-known for wellness and fitness. One of most alarming statistics is the rise among young Americans of obesity, diabetes and high blood pressure. We should have insurance companies pay cash premiums back to people who are well and fit. We need to encourage membership at health clubs, have every American parent find out what's in their school menus ... and their physical education programs in schools.

Let me start with one fundamental premise: The quality of health care in America is highest of anywhere in the world. It's the cost and availability of care and the inflation associated with health care has been double-digit and no nation can stand that.

I believe if you believe the programs of Sen. Clinton or Obama you'll have a wasteful system replaced by another wasteful system. Government-run health care will be more wasteful.

Need to support community health centers, walk-in clinics. If Wal-Mart wants to set up a clinic with doctor, pharmacist, fine, let's do it. We need to have outcome-based approaches.

Cash and counseling. If you're a senior citizen you can spend that on what's best to fill your needs. turned out to be true that when elderly patients receive this money they are the wisest. Encouragement of the most warm and beneficial setting for an aging person: home health care. We in Arizona encourage providers to keep people in home health care setting rather than institutional setting. It's much less expensive and more beneficial for obvious reasons.

We have an employer-based system where employer provides insurance. Point is when you're an employee you don't have any choice (sometimes two or three). Our proposal to give every family in America a $5,000 refundable tax credit, go online or to another state and choose the health insurance plan that's best for you. If you want to stay in employer-based fine, but if you want $5,000 tax credit, then do it. Some will say the cost of health insurance is higher than that but if you're a small business person with no insurance then you've got $5,000 to go invest in health insurance.

That's it for opening remarks. Sen. McCain opens the floor for questions.

Woman in Divided We Fail red t-shirt: How does your plan help those who can't afford insurance and have been turned down by insurance companies.

McCain says going to have to have GAP (guaranteed access program). Put in incentives for companies to care for these people with pre-existing contribution. There will have to be a federal contribution - straight talk - and they may vary from state to state. They're different in New York than they are in Fargo and Sioux City. Worst situation of all is when they wind up in the emergency room.

People from One talk about their cause: disease eradication and global poverty.

Man says Hillary Clinton was handed health care reform on a silver platter and she blew it.

McCain: Medicare is going to go broke (citing director). In 1993 we rejected the Clinton universal healthcare proposal, it was rejected by the American people. The latest proposal is putting lipstick on a pig. I was at Cleveland Clinic yesterday, they are making incredible use of technology, technology that's startling. Heart operation that goes in between the ribs. Capability of monitoring patients online.

Medical errors: how many lives are lost and cases complicated because nurse couldn't read doctor's handwriting? With this online sharing of information, medical errors have plummeted. Cost savings have been phenomenal.

Younger guy in short-sleeved shirt: Appreciate all the years of being a pork-buster. Would you at least consider legislation that we control tobacco, get it away from 7Elevens, stop subsidies to farmers, stop exporting it around the globe?

McCain: Decided to fund children's S-CHIP program with tobacco tax money. Only in Washington could we come up with that.

There's a farm bill in front of Congress today that gives some of your tax dollars to people in agriculture who make up to $900,000, to ethanol which has distorted the market and driven up food prices. I went to Iowa and said I was against ethanol subsidies because it distorts the market. I will open every market in the world but I will not support these subsidies.

Younger guy in open shirt thanks McCain for being a role model. We have a very strong and professional military but hear discouraging things from my friends about training standards and buying foreign equipment.

McCain: On the issue of us buying defense equipment from corporations based overseas: Our exporting of military equipment is four to five times what we import. If we shut off any purchases of overseas equipment they would retaliate by not buying ours. Half of our trade deficit today is because of imported oil. Worry about our military. It's over-stressed. Many mistakes we made at end of Clinton administration and in this administration because we didn't expand the military. We're in two wars. We need to increase size of military. We have to provide the benefits and incentives for young Americans to serve. One of those is educational benefits.

We have to appeal to young Americans' patriotism and to their pocketbooks. All of us are appalled and angered at that picture of Fort Bragg. Some of the barracks our military residing in today go back to Korean War and that's not acceptable.

Woman questioner: If you were President how would you see we should deal with Iran on nuclear issue?

McCain: I will do whatever's necessary to preserve and defend the state of Israel and I will do that without fail (big applause). On the issue of Iran: we cannot allow Iran to have nuclear weapons. They are supporting terrorist organizations, tremendous influence in southern Iraq, exporting most lethal devices to Iraq which are killing young Americans. and trying to exert an ages-old Persian influence in Middle East. They have a president continues to espouse his nation's policy to wipe Israel off the map.

We could put meaningful economic and political sanctions on Ian which would affect their behavior. They are having to import gasoline because of lack of refineries. I believe we can have a significant impact with a league of democracies. We now have a pro-American President of France which shows that if you live long enough anything can happen.

Questioner: Not going to call you Sen. McCain because we need to get used to calling you President McCain. I have a special-needs sibling, whom I think is autistic. We have a long waiting list for needs. Like to know how you as president would re-prioritize our national spending.

McCain: Need to find out what the cause of autism is. We have to put a brake on increasing incidence of autism in America. That has to be highest priority. This will place a very dramatically increased burden on special education programs. I would fully fund special education program but also make sure teachers don't just put discipline problems in those programs, that screening is a little more conscientious.

Are we going to hand off to the next generation these problems? Of course we shouldn't. Have to regain the trust that dollars they send to Washington are being wisely and carefully spent. I know these people (in Congress) well and I know how to reach across the aisle to solve these problems.

What happens when your child grows older and you're not there? That's the thing that bothers me most.

(McCain is standing throughout, prowling the stage. His water bottle sits on the stool.)

Female questioner: My husband's a doctor, we have a rehab center (and other facilities). McCain asks her to explain laser healing therapies. Her question: You are so on track about defensive medicine. We're required to send out 2,3,4 referrals. Trial lawyers a very active lobby . How would you counter that?

McCain: A doctor, caregiver who adheres to the clinical guidelines laid out should be protected from suits. Trial lawyers are very very powerful, I respect their rights to advocate what they believe in. Turns it back on questioner: What would you like to see?

(Cranky baby gets carried out.)

Questioner: We have laws that facilitate reimbursement for consumers, insurance companies use tactics to stall reimbursement for providers.

McCain: By using computer technology, examining exactly what physicians and providers and insurance companies are doing and knowing the actual cost as opposed to what's being reimbursed, consumer goes online and says this is what I want. Only with transparency and information will be able to cure most of these problems, plus a vigorous regulatory system.

Man in Air Force hat: I want to compliment you, even though you were in the Navy. Want to compliment you on your short stay in Nam, only six years. You did a damn good job.

McCain: Those I had the honor of serving with in prison, I love them the most. You have seen an ad campaign mounted against me that says I want to stay and fight in Iraq for 100 years. It's a direct falsification. After we win the war in Iraq I'm talking about a security arrangement like we have in South Korea. Sen. Obama and Clinton want to set a date for withdrawal. I believe that would lead to catastrophe and chaos. I will have an energy program which will eliminate our dependence on the Middle East that will prevent us from ever having to send our men and women to conflict in the Middle East.

That's it. Scheduled press availability cancelled because they're running late.