Tammy Haddad spoke with Douglas Holtz-Eakin, John McCain's top economic adviser, for the June 13 edition of "National Journal On Air." This is a transcript of their conversation.

Q: This is National Journal On Air, this is Tammy Haddad, and with us now is Doug Holtz-Eakin, he is the senior economic adviser for Senator John McCain. He's been with him all throughout. Welcome, Doug.

Holtz-Eakin: My pleasure to be here.

Q: Today the index, Consumer Price Index, and inflation number went up 0.6, the biggest gain since November. Does that make it harder? First of all, what is your take on that?

Holtz-Eakin: Well, if you look at the numbers being driven by higher energy prices, and those higher energy prices are feeding into higher food prices, take those components out, it's far less startling. Somewhere in the 0.2 range. It's just a reminder of how important it is, of how important it is to address the high cost of gasoline in America today. Senator McCain has called on the Congress to have a gas-tax holiday, to allow diesel fuel to have a $0.22 reduction in its cost, about $600 for a trucker trying to deliver their groceries. Would help the American family get through the summer a little bit easier. Not a solution to all their problems, but a little of a break. But, you know, the Democratic Congress has blocked taking up the bill.

Q: What can a president do to fix the oil and gas prices? I mean obviously, long-range, pass legislation, but what can be done in January of '09 if McCain wins?

Holtz-Eakin: Number one, you can have good policy that would strengthen the dollar. I mean, this election is about John McCain and his desire to have small businesses that are in position to hire workers and grow their businesses. To have health care costs under control so they're not crushing them. Be very concerned about jobs being sent to other countries. He wants to have a corporate tax code that supports businesses in America, allows them to invest and innovate. If we do those kinds of things and see the dollar get stronger, we can take 20 percent of it out of the cost of oil real quickly and then get serious about the long-term challenge that, quite frankly, has been a bipartisan failure in allowing us to rely so much on oil from unstable parts of the globe.

Q: Listen, I know you're not a political person, but how do you advise a presidential candidate in the middle of such high gas prices and so much economic pressure? How do you not have to push through the things that'll help you in the short term but not in the long term?

Holtz-Eakin: I happen to advise a presidential candidate who has phenomenal instincts and a track record for saying and doing the right thing, even when it's not politically convenient. And for that reason, my job is very simple. I'm working for the right person.

(Laughter)

Holtz-Eakin: You know, you want John McCain and send him off to tell the truth, it's a great job to have.

Q: (Laughter) You said it very well. There are many in this country who now want someone to hold the CEOs of these gas companies responsible, as well as the prospectors, not just the major gas companies. You know, the Today Show has this feature where it's, you know, meet the president of Exxon, meet the president of this company. There are faces, not just companies' names, that are out there. Do you think that would help you, in a McCain administration, to get them to make some changes?

Holtz-Eakin: John McCain has been putting responsibility right where it belongs for a long time. And that began with the Congress, which passed in 2005 a bill that included a lot of breaks for Big Oil. It was a bill that was supported by both sides of the aisle, including Senator Obama. But it wasn't the right thing to do. Senator McCain opposed that. He doesn't think that oil companies should get special breaks. They should operate within the same tax code as everyone else. And he would actually, in moving forward, ask for a little bit of accountability from CEOs. He's like, you know, let's have shareholders vote on your pay packages and make sure that real people have a say in the kind of salaries that you earn. And let's turn the oil companies and, indeed, the entire environmental community, the corporate planners, people on the street, and unite them in pursuit of an energy policy that is good for our environment, good for our economy and good for our national security.

Q: So you think that public pressure can actually help fix an economic problem like this?

Holtz-Eakin: This is a problem that is fixable. The American people have always risen to challenges. The American economy is incredibly flexible. It's a wondrous machine, that seeing a challenge, generating new technologies to meet that challenge, providing an increased standard of living. We've just never been serious about pointing our best talent, pointing our efforts toward not relying so much on imported oil. And now we're sending $700 billion overseas. We're sending it, in some cases, to people like Hugo Chavez and Vladimir Putin, who don't support our values. And we're allowing oil to be used as a weapon against our economy and, indeed, our families. That's something that simply has to stop.

Q: As an economist, how much more time do you spend on foreign policy issues now that globalization is at meta-level?

Holtz-Eakin: There is no longer domestic versus international economics, and indeed the line between international economics and foreign policy is not a distinct one. And think about the parameters (inaudible). We've seen candidates in the state of Ohio promise to renegotiate NAFTA unilaterally. That's not good economics, and Senator McCain has said so. It's also not great foreign policy to surprise your best allies, Canada and Mexico, with whom you have a third of your trade, and announce that you're going to change the terms of international agreements. So all issues end up running through one another, and it's important to just try to stay abreast of them and give the best advice you can for the candidate.

Q: What about the food crisis? When people read the paper, you know, The Washington Post just had this incredible series going on how this all plays out, and the amount of corn that's used for ethanol, etc. etc. How do you help your candidate get out there and show that there are other ways to resolve this issue and that he can do it?

Holtz-Eakin: Number one, he was way ahead of this in saying that we shouldn't be subsidizing ethanol. It would be fine to be driving ethanol if it met the market test, but spending a lot of money to take corn out of the food chain and stick into gas tanks was not wise federal policy, and sadly, we've learned he was right. But more than that, we can sell American grain, sell them parts American farmers around this globe. And we have the most productive farmers -- we're paying them in some cases not to farm. The world has a food shortage. That just doesn't make sense. We can make our farm country better off and the world can eat better if we simply break down these barriers. Don't have bad policies. And sell the food around the globe. You know, other countries have good (inaudible) to do well too, they need to know something on American farm and technology.

Q: And where would you go first to do that overseas?

Holtz-Eakin: The fastest-growing economies are those of the Brazils, the Russias, Indias, Chinas. There's tremendous opportunity there. It gives us the ability to improve not just our farm exports but the participation of those economies in the global trading system. You know, China has not always met its obligations. You can give them the opportunity to have more food and behave better. Russia is a different set of challenges, but these are the kinds of things that McCain's experience will allow him to pursue.

Q: Thank you, Doug. We appreciate you being with us.

Holtz-Eakin: My pleasure.