"Face the Nation" transcript: August 21, 2011

Libyan rebels run for cover during fighting against forces of the Qaddafi regime, near the Gadayem forest west of Tripoli, August 21, 2011.

Below is a rush transcript of "Face the Nation" on August 21, 2011, hosted by CBS News Chief White House correspondent Norah O'Donnell, substituting for CBS News chief Washington correspondent Bob Schieffer. The guests are Sen. John McCain, R-Ariz., economist Mark Zandi and former party chairs, Ed Gillespie of the Republican National Committee and Terry McAuliffe of the Democratic National Committee.

You can watch the full show by clicking on the video player above.

NORAH O'DONNELL: Today on FACE THE NATION, the economy slumps even further as the 2012 presidential campaign takes off. President Obama had his own campaign-style bus tour through the Midwest this week, but it was the shaky stock market and the long jobless lines that held the nation's attention.

PRESIDENT BARACK OBAMA: I don't think we're in danger of another recession, but we are in danger of not having a recovery that's fast enough to deal with what is a genuine unemployment crisis for a whole lot of folks out there.

NORAH O'DONNELL: As the President prepares yet another plan to create jobs, we'll ask Senator John McCain what he thinks might work and also get his take on the breaking news out of Libya this morning. Then we'll get some insights from Mark Zandi, chief economist of Moody's Analytics about what could be done to help the economy. And finally, we'll host a reunion of sorts of two party chairmen who butted heads during the Bush administration--former Democratic National Party Chairman Terry McAuliffe, former Republican National Party Chairman Ed Gillespie.

It's all ahead on FACE THE NATION.

ANNOUNCER: FACE THE NATION with CBS News chief Washington correspondent Bob Schieffer. And now substituting for Bob Schieffer, CBS News chief White House correspondent Norah O' Donnell.

NORAH O'DONNELL: Good morning. And welcome to FACE THE NATION. Republican Senator John McCain is here with us on Capitol Hill. And we're going to start with the breaking news out of Libya this morning. Rebel forces appear to have surrounded the capital city of Tripoli and the city is under siege. We're seeing the heaviest fighting in six months of this conflict as forces loyal to Moammar Qaddafi are resisting the rebel advances. Qaddafi addressed his followers last night by radio but his whereabouts remain unknown. Joining us now is Senator McCain. Senator, thank you so much for joining us. You have been to Libya twice this year. You were one of the original proponents of military action. Is this Qaddafi's last stand?

SENATOR JOHN MCCAIN (R-Arizona): Absolutely. It's a matter of hours if not days. And, once our UN-- our NATO forces under the leadership of the British and the French and others became more heavily engaged with the use of air power, I think it was-- something that was going to happen. So I believe that it's nearing the end and it's going to be a big challenge forming a new government, uniting a country that's never known democracy. We've seen the difficulties with other countries that made this transition. But we will be rid of a guy that has the blood of Americans on his hands. He will-- we will be rid of a guy who's practiced the worst kind of brutalities. And now it's going to be up to us and the Europeans. But I'd like to say that I'm-- I grieve a bit because this-- this conflict didn't have to last this long. United States air power could have shortened this conflict dramatically and unfortunately we chose not to. We led from behind.

NORAH O'DONNELL: You have met with some of the rebels. What would a new government look like and can we trust them?

SENATOR JOHN MCCAIN: Well, I'm sure we can trust them to the degree that they're people who want their democracy, freedom. There are many former American-Libyans who are there in their government. It's very difficult. There's tribal rivalries from a long time ago. They've never known democracy. They do have access to a lot of money. There's a lot of oil and a lot of assets there. But so-- I-- I think they can succeed but our European friends and we are going to have to help out a lot. And let me just say this will send a message to Bashar Assad. It'll send a message in Yemen. It'll send a message to other dictators that their time is nearing the end. This Arab Spring is echoing all over the world from Russia to China to Israel to-- and being manifested in a lot of different ways. But we-- since that young man burned himself to death in Tunisia, we are seeing a vastly changed world. And we're going to have to make some adjustments.

NORAH O'DONNELL: Let's turn now to the economy--