The following is a partial transcript of the Nov. 16, 2008, edition of "FOX News Sunday With Chris Wallace":
"FOX NEWS SUNDAY" HOST CHRIS WALLACE: And hello again from Fox News in Washington. The Senate returns for a lame duck session tomorrow with a proposed bailout for the auto industry and another stimulus package at the top of the agenda.
Here to discuss what's going to happen are two Senate leaders — Jon Kyl, Republican of Arizona, and Byron Dorgan, Democrat of North Dakota.
And, Senators, welcome back to "FOX News Sunday."
SEN. BYRON DORGAN, D-N.D.: Thank you.
SEN. JON KYL, R-ARIZ.: Thank you, Chris.
WALLACE: Let's start with that proposal to give the struggling Big Three automakers a cash infusion of $25 billion.
Senator Dorgan, do Democrats have the votes to pass that kind of bailout in this lame duck session?
DORGAN: Well, we don't know at this point. We hope that we'll be able to make some progress on that. Let me just make the point that this is not just about an industry or three companies. This is about jobs — 350,000 direct, probably as much as 3 to 5 million jobs in total reflecting that industry.
And I want to make a point. You know, the fact is the large financial companies in this country steered this country into a ditch. We've got a serious problem. It affects almost everybody in the country.
The auto industry didn't cause this problem of having a 30 percent reduction in sales last month. So you know, what is happening here is substantial numbers of jobs are at risk.
The question is do we want to put more people in the street, cause more unemployment, or do we want to use just a small fraction of that which has already been appropriated to help the financial services industry, just a small fraction, to try to save these up to 3 to 5 million jobs working on the automobile issue.
And one final point. I don't think you long remain a strong economic power in this world unless you have a manufacturing base. And we're talking about a significant part of that manufacturing base as well.
WALLACE: Well, we heard the arguments for it there, Senator Kyl, and the auto companies say — and there's everything indication — that they are close to bankruptcy.
Let me ask you. Do you think Republicans have the votes to block it? And you can already hear from what Senator Dorgan said, if you do block it, the Democrats are going to blame you.
KYL: Well, sure. It's a perfect political setup. And I wonder if that isn't really the point of the exercise this week, since it's pretty clear that it's not going to pass. Why wouldn't the Democratic leadership wait until next year?
But in any event, the arguments — and I don't speak for every Republican, but I suppose most of us will oppose it as a very bad idea. This didn't happen to the auto companies overnight. For years they've been sick. They have a bad business model. They have contracts negotiated with the United Auto Workers that impose huge costs.
The average hourly cost per worker in this country is about $28.48. For these auto makers, it's $73. And for the Japanese auto companies working here in the United States, it's $48. So you've got huge costs there.
And the people who would be paying the bill for this, the average worker in the United States, I don't think should be burdened with bailing out the auto companies that have been sick for a long time.
The financial markets, which provide the credit for all of us, will get better as a result of the money that Congress has set aside. But there are companies all over this country that are going to be hurting because of the recession.
And I don't know how you distinguish between a company like DHL, for example, that had to lose 10,000 jobs in one Ohio city, as opposed to — as opposed to the auto companies, so the question is...
WALLACE: So — wait. Well, let me...
KYL: ... where would it end...
WALLACE: Let me be clear.
KYL: ... and how would you ever pay for it.
WALLACE: What do you do, then? Are you basically saying to the Big Three, "You're on your own?"
KYL: Well, we have laws to deal with companies who are having a hard time. And if they can't pay their bills, they go into a reorganization under what's called Chapter 11...
KYL: ... of our bankruptcy code, and as a result of that, like the airlines have done and like a lot of other companies have done, they can restructure, reorganize, get rid of the contracts that are bringing them down, create a new business model and move forward.
But $25 billion — what does it pay for? Maybe five or six months' worth of their bills, and then they're right back where they are, and the taxpayers have nothing to show for it.
This is not something that's going to be repaid, as opposed to the financial markets, where we expect to — hope to get most of the money back that we're investing.
WALLACE: Senator Dorgan, I mean, the fact — the fact is Senator Kyl's quite right. A number of airlines have gone into bankruptcy. That doesn't mean that they shut down or stop flying. They just restructure, reorganize and have a sounder business model.
Why not go that route with the Big Three?
DORGAN: Well, let — but let me make a point on what my friend Senator Kyl just said. It's true, the auto industry has a lot to answer for, but they've been turning a corner, making better products. They've seen new contracts in which wages have come down. A lot of changes have happened.
But the fact is dealers can't sell cars. Consumers can't get loans for cars. We've got an industry that's in very significant trouble at this point.
And the question is whether you want to sit around and do nothing, you know, an imitation of a potted plant here, or do you decide to, on the heels of 1.2 million people losing their jobs — 245,000 last month, half of the 1.2 million in the last three months — on the heels of that, do we just decide one of the largest portions of America's manufacturing base, the source of up to 3 to 5 million jobs, doesn't matter, let them go? That makes no sense to me.
And let me make one other point, if I might, Chris. It was no holds barred to shove money to the financial services industry, the big banks, up to...
WALLACE: Which you opposed.
DORGAN: Between two and $3 trillion has now been offered up to those folks, $700 billion in a bailout. I did oppose that, because the — and I hope we'll talk about that. They didn't have the foggiest idea what they were going to do with that money, and that's been demonstrated in recent weeks.
But my point is how about one small fraction of that, 1 or 2 percent maybe, to help a significant part of our economy preserve some jobs? How about speaking up for working people for a change?
WALLACE: Well, Senator Dorgan, if the money is needed so desperately, why not compromise with the Republicans both in the Senate and also in the White House, and take that $25 billion which was approved back in September to retool the industry?
The White House says, "We're all for letting you use that money." The Senate Republicans say, "We're all for letting you use that money." Why not use that $25 billion and bail out the industry with that?
DORGAN: Well, that money is not going to be made available very quickly. We've been through this process with those kinds of loans before. But the fact is the proposal is not new money.
The proposal is to take just a small fraction, 3 percent, of the $700 billion that has already been appropriated, say divert less than 3 percent of that to help a major industry.
The rest of it is — you know, the treasury secretary says, "No, you can't do that. This all has to go to the big banks, the big financial services industry." What about workers? Is somebody going to speak up for workers who are losing their jobs, 245,000 last month? I mean, I don't see much concern about workers.
And one final point. The issue of whether we're going to pass a stimulus bill any time soon...
WALLACE: We're going to — we'll get to the stimulus...
WALLACE: ... package, so let's wait on that.
But, Senator Kyl, let's finish up on this.
KYL: Two problems. The business model of the Big Three automakers, all experts have agreed, is a failing model. It's got to be changed. Just giving them $25 billion doesn't change anything. It just puts off for six months or so the day of reckoning.
The other problem that Byron mentioned is a real one, and that's the lack of credit, both for the dealers who take their cars on consignment from the companies and for the consumers. That was the point of getting money into the financial system, into the banks, so that they can loan it.
And the auto companies are probably the first to notice when credit is really tight. It is now beginning to loosen up as a result of getting the money into the banks so that they can loan it. That's how you help the consumers buy cars.
WALLACE: OK. Let's...
DORGAN: Chris, let me just...
WALLACE: No, no. Let me...
WALLACE: Let me just move on, if we can, to the stimulus issue. And you...
WALLACE: It will be like a debate, Senator Dorgan.
DORGAN: All right.
WALLACE: You can — you can answer the previous question when you answer this one.
The other big issue facing this lame duck session is whether or not to pass a second economic stimulus package.
And, Senator Kyl, there was talk about another $150 billion with big infrastructure projects, aid to states and cities that are now clearly struggling, with an economy that is clearly headed into a recession. Why are Republicans against that?
KYL: First of all, where does the money come from? Washington doesn't grow money on trees. It gets it from the American people. And when you take it from families, when you take it from small businesses, you're taking money right out of the area that we need — where we need production, that creates jobs.
So — now, you can borrow it and you can saddle future generations with more of the burden, or you can print money and inflate your way out of it, which, of course, nobody wants to do.
So when you think about bailing out — for example, let's just take a county in Arizona, Pima County. Pima County has had an increase of over 50 percent of its budget in the last five years.
Why should — what's the idea of taking money from Washington, where it came from North Dakota, citizens of North Dakota, citizens of Virginia, citizens in other states, and sending it to that particular county simply because they've spent beyond their means?
WALLACE: Senator Dorgan, there does seem to be a sense on Capitol Hill that at least in this lame duck session, all you're going to be able to pass is a much smaller plan, perhaps $6 billion for expanded unemployment benefits. Is that how you read it?
DORGAN: It appears that might be the case. I mean, we're going to try to do more. But you know, we've been through this. Will Rogers said back in the 1930s — he said the unemployed around here haven't been eating regularly, but we'll get to them as soon as everybody else gets fixed up.
The question is what do you do about the unemployed. What do you do about the people that are about to lose their jobs? The number that I used earlier, 3 to 5 million jobs at risk as a result of the auto sector — that's not my number. That's the Chamber of Commerce number, which very strongly supports something should be done.
But you know, my point is this. There is a time when you have to make significant investments, and those investments would produce assets — building roads, building bridges, building schools, libraries, repairing all those things. All of that puts people to work immediately.
Now, last month there was an apoplectic seizure over the notion that consumer spending was down. Well, you know what? Consumer spending is not going to go up if people are out of work. You've got to put people back on the payroll. That's when you get consumer spending to drive the economy again.
So I don't — we can't proceed without some sort of a significant stimulus plan, and when you finish that spending, you ought to have an asset to show for it. Marty Feldstein, top Republican economist, says we should. The Chamber of Commerce — I mean, this is not a Democratic plan.
Most people believe that we ought to do something to put people back to work.
WALLACE: All right.
KYL: Marty Feldstein says we shouldn't. As a matter of fact, he testified before the Finance Committee in favor of the last stimulus package. He's now written that, of course, it didn't work. They never do.
WALLACE: All right. Gentlemen, we could — we could debate this, and you will debate it on the floor of the Senate. I want to move to some other business.
There's growing speculation, Senator Kyl, that President-elect Obama is going to name Hillary Clinton to be his secretary of state. First of all, would she have any trouble being confirmed by the Senate? And what do you think of the choice?
KYL: I don't know whether she would. I think it would be a good choice, at least superficially. It seems to me she's got the experience. She's got the temperament for it. I think she would be well received around the world.
So my own initial reaction is it would be a very good selection.
WALLACE: Why would she have any trouble being...
KYL: I'm not saying that she would. I just don't know the answer to that.
WALLACE: Senator Dorgan, what do you think about Secretary of State Hillary Clinton?
DORGAN: I think she'd be a fine choice. And I don't think she'd have difficulty in the Senate. She's worked across the aisle, has good bipartisan relationships.
And I think — you know, there have been three names out there, all of them very qualified, but you're asking specifically about Senator Clinton. I think she'd be an excellent choice, would have instant credibility around the world.
We have a lot of relationships to repair and a lot of work to do, so I think she'd be a fine choice.
WALLACE: Let's move to another piece of business here in Washington.
Senator Dorgan, you have to deal — you and the Senate Democrats have to deal on Tuesday at your House — rather, Senate Democratic Caucus about what to do about Joe Lieberman and whether or not you are going to strip him of his chairmanship of the Homeland Security Committee.
Back in September, you said that Democrats were, quote, "profoundly disappointed" with what he had done and his strong support for McCain over Obama in the election, the fact that he made a tough speech at the Republican convention.
Are you going to vote to strip him of his chairmanship?
DORGAN: Well, I'm not going to discuss — and the — our caucus won't discuss that on television programs. What I think will happen on Tuesday is Senator Lieberman will, I think, make a presentation to the caucus, and the caucus will by secret ballot decide what we might want to do.
And you know, look. Joe is a friend of mine. Joe sits next to me in the Senate. He sits at the desk to my right. He's a good American.
And so the question, though, is as a chairman of one of our significant committees in the Senate, not just going off and supporting a presidential candidate of the other side, but also criticizing the candidate on our side, and also involving himself in a couple of Senate races on the other side — the question is, is that acceptable. And the answer is no.
The question I think mainly is what should happen as a result of it. And our caucus will decide that. We're going to decide that...
WALLACE: You used the word profoundly disappointed. Do you think...
DORGAN: I was disappointed, but I think...
WALLACE: Do you think there should be some action taken?
DORGAN: I'll decide and I think our caucus will decide that on Tuesday. But you know, I think we will hear from Senator Lieberman and then we'll make a judgment.
WALLACE: And what about the concern that if you do get too tough with him, he'll leave the Democratic caucus and go over and vote as a Republican?
DORGAN: Again, these are decisions we'll make as a caucus on Tuesday, Chris. And I don't want to prejudge what might or might not happen.
But I was concerned and was upset about what happened earlier this year. But you know what? We turn the page. We'll make a decision about that on Tuesday.
WALLACE: Senator Kyl, I assume you'd be just delighted to welcome Joe Lieberman to your decide. Why should he make the jump?
KYL: Well, sure, we would. By the way, I think Joe Lieberman's going to vote on specific issues probably just as he always has. If he came over to the Republican side and organized with us, I don't think it would change the way he votes.
But it would, I think, signal that — obviously, we're — we would welcome him with open arms to be a part of our caucus, to come to our lunches, to plan things with us.
WALLACE: What do you think it would signal if he were to come?
KYL: Well, Joe is a very open-minded person. And people of both caucuses love Joe because he is a great American, as Byron said.
And he is a lot tougher on the national security issues — on those issues, he's generally with Republicans. On a lot of the economic issues, he might still vote more with some of his Democratic friends.
But he would be welcome in our conference. We'd love to have him there, and I think since he was such — of such assistance to John McCain in this last election, it would be good to have him over with us.
WALLACE: All right.
DORGAN: And let me — Chris, let me just say, nobody — nobody's going to suggest throwing him out of our caucus. That is not, I think, on the table. But you know, we'll make a judgment on Tuesday about the consequences.
WALLACE: All right.
Senator Dorgan, Senator Kyl, we want to thank you both for coming in and giving us a preview of what the Senate and Congress will do starting tomorrow. Thank you both again.
DORGAN: Thank you, Chris.
KYL: Thank you.