WASHINGTON – CHRIS WALLACE, "FOX NEWS SUNDAY" HOST: I'm Chris Wallace and this is "Fox News Sunday."
The presidential candidates try to get a handle on America's financial crisis.
(BEGIN VIDEO CLIP)
SEN. BARACK OBAMA (D-ILL.), PRESIDENTIAL CANDIDATE: This is the kind of erratic behavior we've been seeing out of Senator McCain.
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(BEGIN VIDEO CLIP)
SEN. JOHN MCCAIN (R-ARIZ.), PRESIDENTIAL CANDIDATE : Do you want to help the homeowners of America or do you want to help Wall Street? That's the question here.
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WALLACE: With 23 days left till the election and the markets tumbling, which candidate can convince voters he'll fix the economy? We'll ask the top men for both nominees, McCain campaign manager Rick Davis, and David Axelrod, chief strategist for the Obama campaign -- Davis and Axelrod, only on "Fox News Sunday."
Then, what effect is the economic crisis having on the electoral map? We'll talk with the governors of two key battleground states, Democrat Ed Rendell of Pennsylvania and Republican Tim Pawlenty of Minnesota.
Plus, Alaska investigators say Sarah Palin abused her powers. The governor says, "Not so fast." What's the political fallout? We'll ask our Sunday regulars -- Brit Hume, Mara Liasson, Bill Kristol and Juan Williams.
And it's getting ugly out there as we go "On the Trail," all right now on "Fox News Sunday."
And hello again from Fox News in Washington. Well, it was a wild ride on Wall Street this week and one of the roughest so far on the campaign trail.
We'll talk about the financial crisis with our two governors in a few minutes, but first, the rough back and forth between the candidates. And we're joined by Rick Davis, McCain's campaign manager, who is here in Washington, and from Chicago, David Axelrod, chief strategist for Obama.
Well, let's start with the latest controversy over angry rhetoric at McCain campaign rallies. Yesterday, Congressman John Lewis, the civil rights leader, compared it to segregationist George Wallace back in the '60s. Let's put up what he said.
"What I am seeing today reminds me too much of another destructive period in American history. Senator McCain and Governor Palin are playing with fire, and if they are not careful that fire will consume us all."
David, Congressman Lewis later backed away from the comparison with Wallace, but the Obama campaign, while they said that they do not see any comparison to George Wallace, did condemn what it calls hateful rhetoric, such as...
DAVID AXELROD, BARACK OBAMA CAMPAIGN CHIEF STRATEGIST: Yes. Well, they haven't -- we're not the only ones who have condemned it. Editorial pages across the country have condemned it. Other public officials -- Republicans like Governor Milliken, former governor Milliken, from Michigan; Ray LaHood, a congressman from Illinois, a Republican -- have all condemned it, because when you stand up and you say someone's been palling around with terrorists, they don't see America the way we see it, you don't really know who he is, and so on, and people start yelling, "Kill him, bomb him, off with his head," that is not where we want to take politics in this country.
You know, a week ago, Chris, an official of the McCain campaign said, "We don't -- we're going to start aiming at his character, because if we have to talk about the economy we're going to lose." And the economy does hang from their neck like the anchor from the Lusitania. I understand that.
But this is really not the place we want to take -- we've got to pull together as a country. And there are parameters, and those parameters have been crossed.
Now, we give Senator McCain credit for, at the end of the week, taking on a couple of these comments in his -- in his appearances. But the ads are continuing to drive this. And you know, you have to take responsibility.
WALLACE: Well, Rick Davis, let me bring you in. It is a fact that has been reported by reporters who have been at these rallies that some people in the crowds -- not the majority, but some people in the crowds have been saying, "Terrorist, kill him, off with his head."
Do Palin and McCain bear some responsibility for, in their ads and their campaign stumps, calling Obama a liar who pals around with terrorists?
RICK DAVIS, SEN. JOHN MCCAIN'S CAMPAIGN MANAGER: Look, Chris, I think we have to take this very seriously. And the kind of comments made by Congressman Lewis, a big Obama supporter, are reprehensible.
The idea that you're going to compare John McCain to the kinds of hate spread in the '60s by somebody like George Wallace is outrageous.
Where was John McCain when George Wallace was spreading his hate and segregationist policies at that time? He was in a Vietnam prison camp serving his country with his civil rights also denied. Nobody knows sacrifice like John McCain does.
And the idea that Barack Obama did not address this issue directly, had his campaign walk out with a half-baked statement that didn't even address the comments made by Lewis as it related to John McCain -- Barack Obama should apologize to John McCain directly for the kinds of comments made by Joe -- John Lewis yesterday, and that should be the end of this sordid affair.
WALLACE: But let me...
DAVIS: Now, the reality is...
WALLACE: Wait, wait, wait, wait, let me...
DAVIS: The reality is that -- that -- well, you didn't interrupt...
WALLACE: Well, wait, no, no...
DAVIS: ... you didn't interrupt him. Let me -- let me speak to this.
You asked what were the things said that would be considered this kind of remarks that would drive this kind of hate. And what did -- what did Mr. Axelrod say? Nothing. He went into a diatribe about attacking John McCain.
Do we not think that the relationship between Bill Ayres and Barack Obama bears some scrutiny? Because the press will not ask any questions about Barack Obama's background, it is a legitimate question.
There are voters all over the country who say, "We don't know enough about this man. What is his experience? What forms his judgment? What will make him a president of the United States?" And I think filling in those blanks is essential to having a dialogue on this campaign.
WALLACE: So -- but you have -- so -- I'm going to ask him whether he apologizes for what John Lewis said, but I want to ask you directly, you don't back off at all the comments that McCain and Palin have made that Obama lies, he's a liar and he pals around with terrorists?
DAVIS: Oh, my God. Obama's campaign commercials themselves call John McCain a liar. John McCain's never used the liar phrase until Barack Obama put it up on air. You know, Obama has a whole habit of doing this.
You know, back in the days when he used to make statements like, "Oh, they're going to call me risky, you know, they're going to think that I look -- don't look like one of those guys on the face of the dollar bill," you know what he did next? He then ran an ad against John McCain calling him risky.
I mean, that's the most hypocritical statement I've ever seen.
WALLACE: All right.
DAVIS: I mean, let's...
WALLACE: Wait, wait.
DAVIS: ... let's be fair about this. There is absolutely...
WALLACE: OK. I want to be...
DAVIS: ... nothing being done in our campaign that hasn't already been done first by Barack Obama.
WALLACE: I want to be fair and I want to ask Mr. Axelrod, do you condemn the comments made by Congressman Lewis?
AXELROD: Well, let me just say, before I answer that question, if anybody has any questions about risky, they ought to take a look at how Senator McCain has been handling this financial crisis and the economy for the last couple of weeks.
DAVIS: David, that's got nothing to do with the question.
AXELROD: It will underscore the point...
DAVIS: Why don't you answer his question about John Lewis?
AXELROD: But look, we -- we made -- we issued a statement right away and said there's no comparison between George Wallace and John McCain. But what I haven't heard Rick say...
DAVIS: Who's -- who's we?
AXELROD: ... is -- what I haven't...
DAVIS: Was it Barack Obama who issued that statement?
AXELROD: What I haven't heard -- what I haven't heard Rick say is that there's anything wrong with the kind of statements that are coming out in these rallies. And that's the issue.
Are you going to speak out against that kind of...
DAVIS: Oh, absolutely. Look, I'll say right away...
AXELROD: ... kill him...
DAVIS: ... for the record, there's absolutely nothing appropriate about those statements. But I would also say...
AXELROD: And you don't think that...
DAVIS: ... for the record...
AXELROD: And you don't think that...
DAVIS: ... that there's absolutely nothing being done on the stage by our candidates, John McCain or Governor Palin, that would incite that kind of thing. You know, people are angry right now.
AXELROD: Well, I disagree with that.
DAVIS: And one of the things they're angry about...
AXELROD: I disagree with that, Rick.
DAVIS: ... is the campaign that you're running doesn't answer the simple questions, just like you've just shown you're not willing to answer Chris' question.
AXELROD: No, Rick. What they're angry about is that they can't pay their bills. They can't get a loan.
DAVIS: I agree, which is why they're coming to McCain rallies.
AXELROD: They're worried about their job. They're worried about their health care.
DAVIS: And they're hoping that he'll become...
AXELROD: And they don't -- and what they hear...
DAVIS: ... elected president so that he can lower their taxes...
AXELROD: ... and what they hear from the McCain campaign...
DAVIS: ... and generate economic growth.
AXELROD: ... is they don't want to -- what they hear from the McCain campaign is we don't want to talk about the economy because we'll lose, so we're going to throw a bunch of bogus...
DAVIS: No, that's what they're hearing from your campaign.
(CROSSTALK)
WALLACE: All right. All right. All right. All right.
(CROSSTALK)
WALLACE: Gentlemen, let me -- as I said before, just let's break clean on the clinches (ph) and let's go to the next point.
But on Friday, Rick, McCain tried to calm things down because he felt that the anger at this one rally was getting out of hand. I want to run a clip from one of your recent ads and then what McCain said at the rally. Take a look.
(BEGIN VIDEO CLIP)
NARRATOR: Obama's blind ambition -- when convenient he worked with terrorist Bill Ayres. When discovered, he lied. Obama -- blind ambition, bad judgment.
(END VIDEO CLIP)
(BEGIN VIDEO CLIP)
MCCAIN: He is a decent person and a person that you do not have to be scared as president of the United States. Now, I just...
(BOOING)
Now, I just -- now -- now, look, I -- I...
(BOOING)
... if I didn't think I wouldn't be one heck of a lot better president, I wouldn't be running, okay?
(END VIDEO CLIP)
WALLACE: Here's the question I have for you, Rick. If McCain stands by that ad and -- that Obama is consorting with a former terrorist, blind ambition, bad judgment, lies, why shouldn't we be scared about Barack Obama as president?
DAVIS: Well, look. You're going to make your own judgment based on that. John McCain...
WALLACE: Well, no, John McCain made his judgment.
DAVIS: John McCain would not -- first of all, let's be clear. The person who he is addressing specifically said very nasty things about Barack Obama that had nothing to do with that commercial.
He was addressing someone who stood up in one of our town halls, which -- by the way, we let anybody who wants to come to our town halls. We don't -- we don't require any kind of checks. Anybody can stand up in those town halls and say anything they want to John McCain. Sometimes they say inappropriate things.
In this cause, it had nothing to do with that commercial. So I wouldn't mix and match them. It is a fact...
AXELROD: That's -- that's absolutely not true.
DAVIS: It is a fact...
AXELROD: That's not true. He was repeating...
DAVIS: ... that -- that -- that our commercial...
AXELROD: ... the messages of a false commercial. Your commercials...
DAVIS: That is -- that's absolutely not true.
AXELROD: ... are designed to incite people.
DAVIS: That commercial is...
AXELROD: He was repeating...
DAVIS: ... exactly accurate.
AXELROD: ... the message of that commercial.
DAVIS: Why don't you answer the question...
(CROSSTALK)
AXELROD: Chris, let's talk for a second...
DAVIS: ... As to why it's so confusing on your Web site, David...
AXELROD: ... let's -- let's -- let's...
DAVIS: ... about whether or not John McCain...
AXELROD: ... let's talk for a second...
DAVIS: ... or whether or not he had a...
AXELROD: ... Chris, about his commercials.
DAVIS: ... relationship with Mr. Ayers.
AXELROD: I want to talk about those commercials.
DAVIS: Is Mr. Ayres a part of...
WALLACE: Well, wait, wait, wait. All right. Let's -- let's give Mr. Axelrod...
DAVIS: ... his -- his -- his history?
WALLACE: Let's -- I am going to get to Ayres in a moment.
DAVIS: Let's -- let's...
WALLACE: But go ahead -- go ahead, David.
AXELROD: Well, let's talk about their commercials. They're running commercials right now with Bill Ayres in them, and in the same commercial they attack Senator Obama for his support from Bill Daley, the former commerce secretary who was confirmed by Senator McCain's committee and who Senator McCain called one of the great commerce secretaries in history, and now...
DAVIS: I'm sorry...
AXELROD: ... they're talking...
WALLACE: All right. I don't want to argue about...
AXELROD: ... they're attacking us for this...
WALLACE: Guys, let me...
AXELROD: No, but I mean, the point is all of these commercials...
DAVIS: Let's make a list of all the people who you're attacking...
AXELROD: ... these commercials are insidious...
DAVIS: ... in your commercials who are part of the McCain...
(CROSSTALK)
WALLACE: Gentlemen...
AXELROD: All these commercials...
DAVIS: You know, this is...
AXELROD: All these commercials are designed...
(CROSSTALK)
AXELROD: ... are designed to distort...
DAVIS: ... character assassination at the hands of Barack Obama.
AXELROD: .. are distort...
DAVIS: It's very simple.
AXELROD: ... are designed to distort and inflame.
Let's talk about Bill Ayres. The...
WALLACE: Let's talk about -- let's talk about Bill Ayres.
And, David...
(CROSSTALK)
WALLACE: David, it will work better if I ask the question and then you answer the question. This week...
AXELROD: Well, tell that to your guest as well.
WALLACE: David? This week Obama said that after -- that when he learned that Ayres had been a terrorist -- and let's put it up on the screen -- given his standing in the community, I assumed he had been rehabilitated.
Does Obama think that you can ever be rehabilitated after bombing the Pentagon and the capitol?
AXELROD: Chris, he has -- he has condemned those things, and that happened when he was 8 years old. And of course, you can -- you can never take those back. He condemns those acts. But let's talk about the board -- the boards that he...
WALLACE: No, I'm asking you, though -- but wait, can he be...
AXELROD: No, no, no, no...
WALLACE: He used the word rehabilitated.
AXELROD: ... because this is important, Chris. This is -- this is -- he said at the time he thought he was rehabilitated.
But let's -- let's go forward here and talk about these boards that Rick and the commercials are talking about. Who was on these boards? The publisher of the Chicago Tribune, right, a newspaper that hasn't endorsed a Democrat in 150 years. Is he consorting with terrorists? The head of the largest business group in Chicago.
DAVIS: Well, David, I don't think any of these people are running...
AXELROD: Is he consorting with terrorists?
DAVIS: ... for president of the United States. And I don't think anybody in this...
(CROSSTALK)
AXELROD: These were -- these were -- no, but it's very important, because these were boards that Obama served on in order to promote education reform in this city.
DAVIS: That's right. He made an informed judgment...
AXELROD: And the most respectable people in the city...
DAVIS: ... that he was going to develop a relationship...
AXELROD: ... conservatives...
DAVIS: ... with William Ayres.
AXELROD: ... conservatives...
DAVIS: And then he -- and then he spent the next...
AXELROD: ... conservatives, liberals...
DAVIS: ... five years trying to obfuscate the relationship...
WALLACE: All right.
DAVIS: ... that he had with him.
WALLACE: Rick?
(CROSSTALK)
DAVIS: Sure he did. The first time he was asked about him...
AXELROD: He's not obfuscating anything.
DAVIS: ... he said it was just somebody from my neighborhood, denied that he actually attended one of his first political events in William...
WALLACE: All right.
DAVIS: ... Ayres' home.
WALLACE: Let me -- but, Rick, let me follow up on this.
(CROSSTALK)
WALLACE: Excuse me, gentlemen. Obama asked a pretty good question this week, and I want you to take a look at it.
(BEGIN VIDEO CLIP)
OBAMA: I am surprised that -- you know, we've been seeing some pretty over-the-top attacks coming out of the McCain campaign over the last several days -- that he wasn't willing to say it to my face.
(END VIDEO CLIP)
WALLACE: You obviously have no problems confronting David Axelrod about William Ayres. Will John McCain confront Barack Obama about his relationship with William Ayres and explain why it's relevant at the debate on Wednesday?
DAVIS: Oh, I don't know what's going to happen at the debate on Wednesday. And it depends upon the kinds of questions that the moderator asks. I didn't notice that the moderator asked any questions about Bill Ayres.
I don't notice that the press asked any questions to Barack Obama about Bill Ayres. I mean, this is one of the reasons why I think it's a germane topic in this debate, because the press has basically given a free pass to Barack Obama so that none of his background gets challenged.
And so whether it's his relationship with Bill Ayres, his relationship with Tony Rezko, his relationship with the ACORN group which is...
AXELROD: Bill Daley.
DAVIS: ... under investigation right now, and many other things, if you would just come clean in the Obama campaign and actually tell the public what's been going on in Obama's life -- look, there are legitimate questions about his experience and his background that deserve...
AXELROD: You know, Chris...
DAVIS: ... public scrutiny, and...
WALLACE: Go ahead.
(CROSSTALK)
DAVIS: ... the outcome of this election.
WALLACE: Go ahead, David.
AXELROD: Chris, the fact is I think there's been more written about Bill Ayres in recent days than any unknown public figure ever. The fact is Barack Obama's been scrutinized for 20 months.
And I think what frustrates Rick is the American people are getting a clear picture of who these two candidates are, and they're making a judgment, and they're moving in Obama's direction because he's a guy who's actually addressing their concerns about the economy, about the future.
And Rick Davis and his campaign have made a judgment that they can't compete on that, and so they want to...
DAVIS: Well, that's not true, David. I mean...
AXELROD: ... they want to throw out abstractions and...
DAVIS: ... the reason everybody's talking about...
AXELROD: ... and character assassinations...
DAVIS: ... Bill Ayers is your campaign and your candidate keeps changing the story on what...
AXELROD: Every single charge you guys have thrown out...
DAVIS: ... what the relationship is.
AXELROD: Every single...
DAVIS: That's what makes it news.
AXELROD: Every single -- every single charge that you've thrown out has been debunked by FactCheck.org.
WALLACE: All right. Gentlemen, enough about...
(CROSSTALK)
AXELROD: ... have examined all of them...
WALLACE: Gentlemen, enough about Bill Ayres. We're going to move on to something else.
(CROSSTALK)
AXELROD: And yet you continue to repeat it. You continue to repeat it.
WALLACE: David, an investigation by the Alaska legislature has found that Governor Palin abused the powers of her office by pressuring subordinate officials in the Alaska government to try to fire her brother-in-law, who was a state trooper.
Does Senator Obama believe that has any relevance to Palin's fitness to be vice president?
AXELROD: Well, voters are going to decide that, Chris. And one thing that is clear is that we've had examples of abuse of power in Washington over the last eight years that are concerning to people, and we want them -- and certainly, if we're going to move this country forward and reform this government, then, you know, we certainly don't want more of that philosophy in government.
But that's up to voters to decide and to judge the facts of this case.
WALLACE: Rick, the report said that Palin was within her rights to get rid of the public safety commissioner, but it also said that she violated the state ethics act by pressuring state employees to try to fire her brother-in-law, and this was approved unanimously by a bipartisan legislative council.
DAVIS: Yeah, let me tell you, this whole thing has been a kangaroo court from day one. The person who is heading the investigation into this is one of Barack Obama's biggest supporters.
This was going nowhere until the point at which Sarah Palin was asked to join our ticket and at which point it became a big public circus. And frankly, everyone in Alaska has treated it as such.
The reality is there was absolutely no wrongdoing found in the report -- 1,000 pages, an enormous waste of time. And the best that they could come up with was no violations of any kind of laws or ethics rules, but...
WALLACE: Well, wait, wait, wait, no, it says she violated the state ethics board.
DAVIS: But that -- that she acted within her power and scope of authority as governor to do exactly what she did.
And so the bottom line is this thing now drops dead, and there's absolutely no follow-up to this at all. So you know, it was a great...
AXELROD: Chris...
DAVIS: ... it was a great public circus.
Look, David, I didn't interrupt you when you were speaking.
WALLACE: I think you both interrupted each other.
AXELROD: Yes, actually, you did. You did it repeatedly.
DAVIS: So -- so the bottom line is...
AXELROD: You interrupted me almost this whole show.
DAVIS: ... the bottom line is David -- David actually has a very good point. He says, "You know what we need to do, is root out corruption." You know, John McCain is the only candidate for president right now who's actually done anything about rooting out corruption in Washington.
And do we really believe that the American public is going to feel safe by having both the head of the Congress and the head of the White House from the same party that's had so many challenges with the way they've run Washington over the last couple of years?
So honestly, I really believe that isn't germane. This may be one of the things that David Axelrod and I can leave this show actually agreeing on. I think it's a major issue as to who's got the track record and experience to root out corruption in Washington, and that's only one guy on this campaign, and that's John McCain.
WALLACE: All right.
David, you get the last word. And talk, if you will, about this argument that, you know, if you -- if you elect Obama and you have a strong Democratic majority in both the House and the Senate, you're giving total control of the government to the Democrats.
AXELROD: Look, I think the way you root out corruption in Washington is first take on the lobbyist culture, and you know, what we can't have are lobbyists making millions of dollars selling access to public officials, as Rick has done selling access...
DAVIS: Well, David, what do you...
AXELROD: ... to Senator McCain.
DAVIS: ... think you've been doing in your organization?
AXELROD: That is not -- that is not how -- that is not...
DAVIS: I mean, you even wrote...
AXELROD: ... how you clean up...
DAVIS: ... you even wrote an op-ed...
AXELROD: ... corruption in Washington.
DAVIS: ... saying that you thought -- you thought that the...
AXELROD: I -- I'm -- Rick...
DAVIS: ... the patronage politics...
AXELROD: ... Rick, we're talking about...
DAVIS: ... of Chicago was a better model for...
AXELROD: ... we're talking about...
DAVIS: ... Washington than the law and order model that we currently occupy.
AXELROD: We -- I never -- that is...
DAVIS: I think...
(CROSSTALK)
AXELROD: That is as untrue as everything else that you've said here.
(CROSSTALK)
AXELROD: That is not what I said. Rick...
DAVIS: Does your company represent any corporate interests?
AXELROD: Rick, why don't you answer the question about whether you sell access to Senator McCain?
DAVIS: Well, if you're going to talk about me...
AXELROD: That's been reported in the newspaper. Is that false?
DAVIS: Well, I think that's the point.
AXELROD: It is false that you sell access to Senator McCain?
(CROSSTALK)
DAVIS: ... what you do in your business in the newspapers...
AXELROD: No, answer the question.
DAVIS: ... because I think it would be excellent reading.
AXELROD: Do you sell access to Senator McCain?
DAVIS: No, I don't.
AXELROD: Is that how you've made millions of dollars?
DAVIS: Not at all.
AXELROD: You've never done that. You've never -- nobody's ever...
DAVIS: David...
AXELROD: ... been told that they ought to hire you...
DAVIS: ... let me ask you a question. Is this the kind of...
AXELROD: ... if they want to get to Senator McCain?
DAVIS: ... politics that you're...
AXELROD: I'm asking you a question.
DAVIS: Character assassination has become the hallmark of the Obama campaign. This is the kind of thing that...
AXELROD: Anybody who watches this show knows...
(CROSSTALK)
DAVIS: ... when he first got on...
WALLACE: All right, gentlemen.
(CROSSTALK)
AXELROD: ... anybody who watches the show knows otherwise.
DAVIS: Attack, attack, attack.
WALLACE: Gentlemen, we're going to have to -- we're going to have to end it there, and I'm glad to say that...
DAVIS: Thank you very much, Chris.
WALLACE: ... we've settled all that.
DAVIS: David, it was nice to see you on T.V.
WALLACE: All right. Wow. Thank you both for talking with us. See you both at Wednesday's debate. Stay in opposite corners and break clean on the clinches.
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