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Transcript: Govs. Pawlenty, Kaine on 'FNS,' Part 1

The following is a partial transcript of the June 8, 2008, edition of "FOX News Sunday With Chris Wallace":

FOX NEWS SUNDAY HOST CHRIS WALLACE: And hello again from FOX News in Washington. Well, the primaries are finally over, and the general election campaign has begun. To discuss the politics and policy of a McCain-Obama face-off, we're joined by two key supporters who are being touted as vice presidential running mates, Republican governor Tim Pawlenty of Minnesota and Democratic governor Tim Kaine of Virginia.

And, gentlemen, as I welcome you both back, consider this something of an "American Idol" audition, because I'm sure they're watching back at campaign headquarters.

(LAUGHTER)

MINNESOTA GOV. TIM PAWLENTY: I can't sing, Chris.

WALLACE: Well, you don't have to sing.

Let's start with some politics.

Governor Kaine, Virginia — 13 electoral votes — has not gone for a Democrat since Lyndon Johnson in 1964, but the RealClearPolitics average of recent polls shows McCain leading there by just one point.

Now, Obama campaigned in your state this week after he became the presumptive nominee. How does he attract the white working class voters among whom he showed such weakness against Hillary Clinton?

VIRGINIA GOV. TIM KAINE: Chris, we were thrilled when the senator started his general election campaign in Virginia with events in Bristol in southwest Virginia and then in Manassas here in northern Virginia.

And in our primary on the 12th of February, he did very well among white voters, won the white vote, won the Latino vote, had great crossover appeal. So he had in — a tough opponent in Senator Clinton. You know, she would win white working-class voters in some states, but he did real well in Virginia in this already.

And in Virginia, we're independent, so you can walk into the ballot booth and pick either ballot on a primary day. He got more than twice as many votes as Senator McCain did on February 12th. And that gives us reason, along with those polls, to be very optimistic about his chances this November.

WALLACE: All right.

Governor Pawlenty, Minnesota — 10 electoral votes — hasn't gone for a Republican since Richard Nixon back in 1972. And for all the talk about your state being in play this year, the latest RealClearPolitics average shows Obama leading by 11 points.

So even though you're holding the Republican convention in your state of Minnesota, isn't it really still pretty much a longshot for McCain?

PAWLENTY: Not necessarily, Chris. It's a state that has transitioned from kind of deep blue or Democrat to competitive. And in recent years, we've had Republicans get elected statewide in Minnesota, and President Bush came very close two times in Minnesota.

And you combine that with Senator McCain's straight talk, his kind of populist appeal, his appeal to the mainstream as somebody who's going to sell well in the upper Midwest — that's a combination I think would do well in places like Minnesota, Iowa, Wisconsin and the upper Midwest.

SurveyUSA had a poll out recently that showed he actually was ahead under certain circumstances in Minnesota.

WALLACE: Governor Pawlenty, let's talk about some of the groups where Senator Clinton showed strength, especially in the later polls from March on — white working-class voters, women, especially elderly women, Hispanics.

Do you really think those voters may cross over and vote for McCain, and if so, why?

PAWLENTY: Well, if you look at Senator Clinton's message, it related to who has the experience, who's ready to do the job. Clearly, that would be Senator McCain as compared to Senator Obama.

They also perhaps were looking for somebody who was a little more mainstream, a little more ability to work across party lines, willing to take the leadership role. Senator McCain has a record on those things, not just rhetoric, as Senator Obama does not.

And so those are just two of many examples of qualities they perhaps saw in Senator Clinton that I think they'll also see in Senator McCain, a reformer, somebody who's willing to get things done and also was willing and able to appeal to a middle-class or mainstream voter.

WALLACE: All right.

Governor Kaine, why should — and why do you expect the Clinton supporters, and particularly those groups I talked about, to go to Obama instead of McCain?

KAINE: First, we saw them strongly support Senator Obama in Virginia. The early polling in the match-up between...

WALLACE: But not in Ohio, and not in Pennsylvania...

KAINE: That's true.

WALLACE: ... or West Virginia.

KAINE: That's true. There's a deep affection for Senator Clinton. I mean, she knocked it out of the park yesterday with her speech. And the fact that people preferred Senator Clinton or Senator Obama doesn't mean they'll not get on board.

And what we see, Chris, here is this fundamental desire in the American population for a change in direction of this nation. And the match-up between Senator McCain and Senator Obama couldn't be more clear.

Senator McCain, an honorable public servant and man, very much is going to pursue policies that have been the policies of the Bush administration. He's a stay-the-course candidate on Iraq and on the economy at a time when Americans want a change in direction.

And Senator Obama's got a great record in Illinois and in the U.S. Senate of working across party lines, not demonizing the opposition, welcoming all to the table so that we can solve these difficult and vexing questions — energy prices, the state of the economy, our relations with nations in the world.

And these are big, tough issues that require this kind of "let's all work together" approach that Senator Obama has shown again and again can bring him success.

WALLACE: Go ahead.

PAWLENTY: Well, I was just going to say on that issue of the perception or the message that Senator Obama is going to have everybody working together, that defies the facts in the record.

He is somebody who's been out of the mainstream not just of America but of his party. He's somebody who has taken positions that have regularly ranked lockstep, almost robotically, with the Democratic caucus and liberal interest groups.

You look at Senator McCain's voting record — he has consistently and regularly reached across the aisle to get things done in a big way. The change really has been from Senator McCain, somebody who's willing to take risks, take on big issues and get things done for the country.

KAINE: Well, Tim, let me just go at that a little bit. You know, again, saying that — kind of talking about the senator's voting record, et cetera — that's kind of Washington political talk.

What Senator Obama is talking about is let's solve problems. You know, look. We've got an energy policy and energy prices that have just gotten worse and worse. Foreclosures are — the war in Iraq. We've got to solve these problems and do it in an effective way.

And in terms of a change message, I mean, Senator McCain is a person who — again, respectable public servant, obviously, but — has voted with President Bush 95 percent of the time in recent years and has said that that's what he wants to continue to do on Iraq and on the economy, pursue those policies that the American people have basically rejected.

WALLACE: All right. Let me pick up on this, and particularly on the economy, because with all the bad news that we saw on Friday, it's becoming increasingly clear, it seems to me, that the economy is going to be the central issue in this campaign.

And both Obama and McCain talked about the economy in their big speeches Tuesday night. Let's watch.

(BEGIN VIDEO CLIP)

OBAMA: It's not change when he offers four more years of Bush economic policies that have failed to create well-paying jobs or insure our workers or help Americans afford the skyrocketing costs of college.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

MCCAIN: I have a few years on my opponent.

(LAUGHTER)

So I'm surprised that a young man has bought into so many failed ideas.

(END VIDEO CLIP)

WALLACE: Governor Pawlenty, won't voters blame Republicans, including John McCain, for the bad economy now under President Bush, especially when McCain is backing so many of President Bush's economic policies?

PAWLENTY: I think that's really a false premise, Chris. If you look at who's the change candidate in this election, it really is Senator McCain.

Look at the positions he's taken on energy. Tim raised that just a little while ago. The 2005 energy bill, which was the most significant piece of energy legislation the country's faced — Senator McCain has voted against that bill because it was too much of the status quo, too many more benefits and breaks for the traditional gas companies, oil companies.

Senator Obama, after bashing, you know, President Bush's approach on energy actually voted for the bill.

Senator McCain is leading the charge on climate change. Senator McCain has led the charge for a change of strategy in Iraq and on...

WALLACE: But let's talk specifically about the economy and the problems that we're facing right now. I mean, isn't McCain going to be blamed for the bad economy? It's his party. It's a Republican president.

PAWLENTY: I think once his message resonates or gets out with people as compared to Senator Obama's — Senator McCain wants to cut taxes. He does not want to raise taxes on Social Security like Senator Obama does.

Senator McCain wants to relieve tax burdens on businesses so the entrepreneurial spirit can be unleashed and people will invest and grow jobs, as opposed to adding tax burdens to businesses in this country like Senator Obama wants to do.

WALLACE: Let me ask...

PAWLENTY: He has a health care program that wants to empower individuals with tax credits.

WALLACE: Well, we'll get to health care in a minute, but let's stay on the economy.

Governor Kaine — because that was exactly what I was going to ask you. Obama talks about raising income taxes on the wealthy. He talks about raising the payroll tax for anyone making over $100,000. He talks about raising the capital gains tax from 15 percent up to as high, possibly, as 28 percent.

Isn't that exactly the wrong policy, raising taxes in a faltering economy?

KAINE: Chris, I've just got to say, Tim and I, I think, have reached a historic agreement here. We both agree this campaign's going to be about change, and that's a good agreement to reach.

And what we see with Barack is he does want to change direction, but it's not just about raising taxes. He wants to reduce taxes on seniors who make less than $50,000. They wouldn't pay income tax. He wants to reduce taxes on the middle class.

So instead of tax breaks targeted just at the wealthiest segment of the population, tax cuts for the middle class.

And he also — on the capital gains side, he would allow the Bush capital gains cut to expire but then put in place taking the capital gains rate to zero for new businesses or small businesses to juice the economy at the small business level, which is where job growth occurs.

So these guys have very different strategies. Again, the McCain strategy has been pretty much economically keep in place the Bush tax cuts.

Senator Obama has said, "Let's reshuffle them and target these tax cuts more at those who truly need them in this tough economy."

WALLACE: Let me just move on, and you can continue this conversation.

But I want to talk about energy prices, because clearly, the spike in the price of crude oil is one of the biggest drags on the economy and one of the biggest pocketbook issues for Americans. Both candidates talked about that on Tuesday night. Let's watch.

(BEGIN VIDEO CLIP)

MCCAIN: The next president must be willing to break completely with the energy policies not just of the Bush administration but the administrations that preceded his, and lead a great national campaign to put us on a course to energy independence.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

OBAMA: ... pass an energy policy that works with automakers to raise fuel standards and makes corporations pay for their pollution and oil companies invest their record profits in a clean energy future.

(END VIDEO CLIP)

WALLACE: Governor Kaine, Obama opposes drilling in Alaska, opposes drilling offshore, opposes nuclear power until you solve all of the safety problems. How does he end our dependence on foreign oil?

KAINE: Well, a couple of ways. He's a strong supporter of increasing investments in cleaner coal technology. The U.S. has sizable coal reserves, and we need to be investing significantly to clean up coal, and we can. It's been done in past generations and we can keep doing it.

He wants to, as he pointed out in the clip that you just showed, use greater taxes on the oil companies to plow into alternative energy research, which is something that other nations in the world have done. But we haven't had an energy policy in this country.

I mean, to think about it, a country with no energy policy — and that is one of Barack's top priorities, is to push us toward a robust level of investment and research so we can expand alternative energy sources. And that's at the core of his energy plan, and it's the direction our nation needs to go.

WALLACE: Governor Pawlenty, McCain is almost as liberal on a lot of these energy issues as Obama. He opposes drilling in Alaska. He would leave it up to individual states as to whether to allow offshore drilling, which in most cases means that they wouldn't do it.

He wants a 60 percent reduction in carbon emissions by 2050. He talks about a national campaign for energy independence, but he's even less specific than Obama is.

PAWLENTY: Well, Chris, he's been very specific on a number of things, and I would also say this is another example of separating the rhetoric from the reality.

Senator McCain has led on this issue, much to the chagrin of some parts of the Republican Party. Senator Obama continues just to toe the line robotically with the Democratic caucus in Congress.

He votes 95 or so percent every year. What change has he really led? What big thing has he crossed over and said, "I'll work with the Republicans on?" The answer is nothing. Here you have Senator...

WALLACE: Let me interrupt for a second, because that's a good question.

What's your answer to that?

KAINE: Well, look. He, in his time in Illinois, worked with Republicans to reform the criminal justice system, worked with Republicans to find health care solutions for children, worked with Republicans on tax strategies for low-income individuals.

In the Senate, worked with Republicans on nuclear proliferation issues. He has been in the Senate here in Washington a short period of time — campaign finance reform. He picked that mantle up and worked with Republicans in the Senate on those issues.

So this is a standard feature that's in Barack's DNA. On any big issue, he is going to reach out and find somebody on the other side and say, "Look, we may not agree on everything, but we do agree on this. Let's make common ground and move us forward." And that's what this nation needs. We're so divided right now. He can cut through that.

WALLACE: How do you respond to that, Governor Pawlenty?

PAWLENTY: Well, you look at Senator McCain's record on the big issues of our time — changing the strategy in the war, being for climate change, cracking down on pork-barrel spending, being against earmarks, reaching across even on things even that are controversial, like campaign finance reform.

As a United States senator, not casting a vote as a state legislator, but leading, being the person who's in the middle of it — gang of 14 that Senator Obama was against that gave us Justice Roberts and Alito.

WALLACE: This was the compromise on judicial nominations.

PAWLENTY: Senator Obama was even against that. Senator McCain was right in the middle of it leading that bipartisan charge.

So again, whether it's energy, whether it's ethics, whether it's reform, whether it's spending, Senator McCain time and time again has been saying, "I'm willing to lead. I'm willing to take risks." We have not seen that kind of boldness from Senator Obama.

WALLACE: All right. We need to take a quick break here, gentlemen.

But when we come back, we'll discuss foreign policy, health care and the chances that one or both of these guys will end up as the running mate. Back in a moment.