McCain: Everything Must Be on Chopping Block

NEW YORK - Sen. John McCain said the American people's message from the last message was clear: Cut government spending.

And so the Arizona Republican has little tolerance for the targeted investments aimed at spurring job growth that President Barack Obama is expected to describe in tonight's State of the Union address, categorizing "investments" as government spending to be avoided.

Obama to Seek Balance Before Divided Congress
CBS News Panel Previews State of the Union
Special Coverage: 2011 State of the Union

"The president admitted that it was a shellacking that they took in the last election," McCain said on "CBS' "The Early Show."

"I had to campaign for re-election in the last election, and the message is clear: They want to stop the spending, it's out of control, that it mortgaged our children's futures - $14 trillion debt, it's unimaginable. And the consequences of our failure to get spending under control will be a bankrupt America.

"The size of government has doubled since 1999," he said. "The debt has gone up ... some $5 trillion."

McCain said significant cuts are required - and that no area of government should be off-limits.

Among the areas McCain said could be targeted for cuts: The Pentagon.

"There are cuts that can be made in some defense spending, although I hope those will be translated into savings," he said. "And across-the-board reductions in spending, no matter what it be. But agricultural subsidies is one of them. Waste and mismanagement. Medicare fraud.

"But we also have to look at the entitlements," he continued. "The two elephants in the room are called Social Security and Medicare. We have to address them and we have to reform them and we're going to have to make painful changes.

"We have to convince the American people that we are serious, because we have literally mortgaged our children's futures," he said.

House GOP to Back Pre-Obama Spending Levels
John McCain: Obama Has "Learned a Lot"
Tea Party: Defense Spending Not Exempt From Cuts

Now that many companies are turning profitable again - in some cases very profitable - the president has been urging businesses to invest more in job creation.

When "Early Show" anchor Erica Hill asked McCain what this president, or any president, can do to encourage more private sector job growth as companies earn more and spend less, McCain said, "Let's assure them they're not going to see another flood of regulations coming down from Washington."

Survey: Jobs Outlook Best in 12 Years

"When I campaigned for president, I said 'Let's cut the corporate tax rate from 35 percent to 25 percent and even lower. Let's keep the research and development tax credit. Let's give them incentives to invest and to hire, rather than create more government spending that has very temporary effects.'

"We just tried a stimulus package of $787 billion. The White House people said that maximum unemployment would be 8 percent and we would be on a road of recovery.

"We've seen this movie before: 'Investment.'"

McCain said that despite tonight's "prom night" atmosphere of Republicans and Democrats crossing the aisle as they attend the State of the Union - "It's a nice thing to do" - the differences between the two parties is clear.

"The fundamental differences you're going to see outlined tonight," he said. "The president will call for more, quote, investment. We will call for reductions in spending, savings, efficiencies in government and really attacking some of the fundamental problems that have led to this out-of-control budget which as I said has mortgaged our children's futures."

He also advocated for more civility, but not at the expense of all else. "We can be more civil, but let's not lose our passion. Some of my favorite debates were with a guy named Ted Kennedy, who had passion like I haven't seen before or since."

CBS News will broadcast the State of the Union Address live tonight at 9:00 p.m. ET, and on CBSNews.com.