The following is a rush transcript of the September 5, 2010, edition of "Fox News Sunday With Chris Wallace." This copy may not be in its final form and may be updated.

CHRIS WALLACE, ANCHOR: With the bleak economic news, many experts now predict that Democrats are going to get clobbered in the November elections. Our next guest is determined to make sure that doesn't happen. Joining us is Tim Kaine, chairman of the Democratic National Committee.

And, Governor, welcome back to "Fox News Sunday."

GOV. TIM KAINE, CHAIRMMAN OF THE DEMOCRATIC NATION COMMITTEE: Chris, great to be with you, as always.

WALLACE: Back in June, the White House said this was going to be recovery summer. Here is Vice President Biden on just that.

(BEGIN VIDEO CLIP)

VICE PRESIDENT BIDEN: The Recovery Act is working, but it's going to continue to work. It's not over. A lot's going to happen this summer. And even after the summer, there's more to come with the act.

(END VIDEO CLIP)

WALLACE: But over the summer, the economy lost 283,000 jobs. GDP growth was just 1.6 percent in the last quarter. And existing home sales fell 27 percent in July.

Question: Wasn't recovery summer an economic and political bust?

KAINE: Chris, there are still challenges out there. Too many people are hurting and we've got a long way to go.

But let me throw a couple of other facts on there. After nearly 20 months in a row of private sector job loss, we've gained jobs in the private sector now eight months in a row. There was some net losses over the summer because the census phased out. But we have the private sector economy growing again. My hometown paper, the Richmond Times-Dispatch, has an article this morning about manufacturing being up.

The GDP, which was shrinking, is now growing. It's not growing fast enough. We've got to do more.

WALLACE: But the rate of growth has slowed considerably...

KAINE: But...

WALLACE: ... from 5 percent at the last quarter of 2009 to 1.6 percent in the second quarter of this year.

KAINE: It is -- it -- we've got some ways to go. But remember, we were shrinking at 6 percent a year when President Obama took office in GDP. And so there has been a turnaround from negative to positive.

It's clear that we've got a longer way to go. The auto industry's hiring again and putting people back to work. I was in Indiana last week and there was excitement about that. So we've just got to keep at this. It doesn't...

WALLACE: Are you still calling it recovery summer?

KAINE: I'm calling it -- here's what I say. I say we are climbing out of a ditch and we are climbing up.

WALLACE: I've heard that before.

KAINE: We've got to keep climbing. Yeah, there have been a few of us that have used that. But we -- the Democrats have built the ladder. We built the ladder and we're climbing again. We've got a long way to go. As long as people are hurting, this president and his team are going to be focused on the issue of jobs.

But as we're adding private sector jobs now every month, we just have to focus on things that will continue that. There's a bill right now pending on the -- in the Senate to extend lending and other tax credits to small businesses so they can keep hiring.

WALLACE: OK. The president, we're told, is going to announce a new - - if not economic plan, a series of measures...

KAINE: Yes.

WALLACE: ... this week. And reportedly, he wants to take -- first of all, he wants to make research and development tax credits for all business permanent. He also wants to take the $35 billion from letting the Bush tax cuts for the wealthy expire and use that instead to give tax cuts to small business and lower-income earners.

What can you tell us about what he's going to announce this week?

KAINE: Well, Chris, you know, it's a little bit above my pay grade. As I used to say when I was governor, when there's a policy, it will be announced. And before it's announced, there's no policy.

The president and his team are definitely going to announce some steps later in the week. I think, again, they will focus upon this small business bill that's pending in the Senate right now, which would increase lending to small businesses through community banks, tax -- no capital gains tax for small businesses.

But yes, they are talking about other ideas, including this research and development tax credit. The American economy has always been the innovator in the world, and we're starting to see some tremendous increases in innovation, especially in the clean energy sector.

So I know the president wants to continue to, you know, give businesses that -- you know, that incentive to continue that innovation and research that powers our economy.

WALLACE: But is part of the argument going to be to try to frame the debate "Republicans want to have tax cuts for all the wealthy, everyone making over $250,000..."

KAINE: Right.

WALLACE: "... a year. We want to target it..."

KAINE: Yes. Yeah, you put your finger on it. The Democratic strategy has been -- and it's going to be discussed in more detail later -- let's target the tax credits to middle-class folks and to small businesses, but especially let's target the tax credits to where they will do the most good, where they will have the most likelihood of increasing economic activity.

And I saw Senator McCain on before me saying that was a bad idea. This is exactly what Senator McCain supported in 2003-2004. Remember, he voted against the Bush tax cuts, and he said he wanted to target them toward the middle class and small businesses, and he felt like the tax credit were too heavily weighted toward the upper end, toward the wealthiest and the biggest...

(CROSSTALK)

WALLACE: Well, if we're going to play history, McCain did say just now that he calls this a deathbed conversion. The fact is Republicans were calling for more tax cuts in the first stimulus, including a payroll tax holiday. The Democratic majority refused.

Isn't this too little, too late before the election to try to help Democrats?