The following is a rush transcript of the Feb. 15, 2009, edition of "FOX News Sunday With Chris Wallace." This copy may not be in its final form and may be updated.
CHRIS WALLACE, HOST: President Obama scored a historic victory this week with passage of a stimulus plan that places the government at the center of the nation's economy, but it was also a week that saw a faltering rollout of the financial rescue package and another embarrassing stumble on the cabinet.
Here to discuss the good, the bad and the ugly is one of the president's closest confidants, senior adviser David Axelrod.
And, Mr. Axelrod, welcome back to "FOX News Sunday."
AXELROD: Great to be here, Chris.
WALLACE: Before we get to the stimulus package, General Motors and Chrysler must submit recovery plans to the government by Tuesday.
G.M. says it needs billions more in federal money or it's going to go into bankruptcy, and yesterday concession talks with the auto workers collapsed. Is the president committed to keeping the Big Three in business and not going into bankruptcy?
AXELROD: Well, we need a thriving auto industry in this country. There are millions of jobs that rely on it, not just in the auto industry itself, not just at the Big Three, but in all kinds of related spin-off businesses. So we have a vested interest in seeing the auto industry continue.
But as the president has said many times, that's going to involve significant restructuring of the industry so that they're looking forward and not back in producing the kind of cars that people are going to buy in the future. And that's going to involve concessions on the part of everyone, not just the auto workers, but shareholders, creditors and, of course, the executives who run the company. And that's what we're going to have to see.
WALLACE: So how do you view the fact that the UAW talks collapsed?
AXELROD: Well, you know, obviously, this is a difficult situation, and we're — everyone's going to have to continue to work toward a solution. We're going to wait and see what the automakers have to say on Tuesday and we'll go from there.
We have a working group within the treasury on this issue. And we're prepared to hear what they have to say and work with them toward a solution.
WALLACE: But when you say a solution, it sounds like you are not going to let them go into bankruptcy, at least at this point.
AXELROD: I'm not going to prejudge anything. I think that there is going to have to be a restructuring of those companies. I'm not going to get into the mode of how that happens. We'll wait and see what they have to say on Tuesday.
WALLACE: Let's turn to the stimulus plan. One of the president's economic advisers, Austan Goolsbee, says there should be signs the package is working within six months and that one of the signs will be whether unemployment at the end of the year is 8 percent or 11 percent.
How quickly do you think we'll know whether the package is working and how should we measure it?
AXELROD: Well, I think that there'll be signs of activity very quickly. As you know, the package will help fund infrastructure programs and other programs that are ready to go around the country.
But it's going to take time for that to show up in the statistics. The president has said it's likely to get worse before it gets better. It is true that without this program, it could be — it could be much, much worse.
And so I don't expect the arrow to bend down by the end of the year, but I do expect the rise in unemployment to be retarded by the things that were done this week.
WALLACE: So does six months sound like a fair marker to begin to see progress?
AXELROD: Well, I — it depends how you measure progress. As you say, I think where we see activity as a result of this, absolutely, all over the country you're going to see shovels in the ground. You're going to see construction projects under way.
The other thing you're going to see are people not being laid off, police and firefighters and teachers, because states are now going to have funding to forestall those kinds of things.
So I think you'll see an effect of it, but in terms of the overall economy, we're in the worst recession since World War II, and it's going to take — it took us a long time to get into this mess. It's going to take us a while to get out of it.
WALLACE: A few weeks ago, you — your team talked about getting 80 votes out of the Senate, and you ended with just three Republican senators and no Republican members of the House.
What did you learn about the resistance to bipartisanship here in Washington? And going forward, is the president going to make it less about actually getting GOP votes and more about being seen as at least reaching out?
AXELROD: Well, first of all, Chris, what we learned was old habits die hard. There's been a hard-bitten partisanship in this town for a long time. I don't think the president feels like he wasted his time. He spent quite a bit of time with members of both parties on this package.
The package reflects the thinking of members of both parties. And I think that over time, there'll be — there'll be a positive effect of just having dialogue, of just talking, which has not happened for a long time in this town.
So you know — but ultimately, let's be clear. Our goal was not about a number of votes on the bill. Our goal was to move this package forward because we've lost — we lost 600,000 jobs last month, over 1.5 million in the last three months. This recession is gaining momentum.
And if we didn't do something dramatic to break it, it could be catastrophic. And so you know, we're very, very happy that this has moved forward.
We think it's going to make a difference in the short term and the long term because we're investing in things like health care, and energy, and education, and rebuilding the roads and bridges and dams and levees of this country.
That's going to make a difference for us in the long run.
WALLACE: This week, I think it's Tuesday in Denver, the president will announce his new plan to try to stop, to prevent, more home foreclosures.
Is the focus on reducing monthly payments, or is it going to be on getting the institutions to actually lower the principal that's owed on those mortgages? And is $50 billion nearly enough to deal with this program?
AXELROD: Well, I'm not going to deal with the details of the program, which will be announced Wednesday, by the way, but — in Phoenix.
WALLACE: Well, that's a switch right there.
AXELROD: No, that was always the plan.
WALLACE: But I mean, obviously, our goal is, first of all, to deal with this rash of foreclosures that is being accelerated by the economy.
It's to help people who are right on the edge now making their payments but are on the edge of moving into that area, and ultimately reducing — raising home values that have — that have been plummeting as a result of this rash of foreclosures.
And I'll leave the details to the president. But you know, we feel we have a good, solid approach to this.
WALLACE: But is $50 billion — I mean, that seems like a drop in the bucket when you're talking about...
AXELROD: Well, there'll be a lot of aspects to this — to this program, so — but the $50 billion obviously — 50 to 100 billion that's been discussed to date is obviously a necessary part of it.
WALLACE: Meanwhile, the president promised at his news conference on Monday that the treasury secretary would explain your financial bailout plan on Tuesday. But Mr. Geithner left — when he did speak, left more questions than answers. Let's watch:
(BEGIN VIDEO CLIP)
PRESIDENT BARACK OBAMA: Tomorrow, my treasury secretary, Tim Geithner, will be announcing some very clear and specific plans for how we are going to start loosening up credit once again.
(END VIDEO CLIP)
(BEGIN VIDEO CLIP)
GEITHNER: We're not going to put out details until we are confident that we've got the right structure that's going to achieve these objectives.
(END VIDEO CLIP)
WALLACE: After the markets dropped 382 points, the Wall Street Journal said, "Geithner's opening act as rescuer in chief yesterday was a bomb." And the New York Times said there was no bailout plan and no firm time line for a plan. There were only outlines.
Question: Tim Geithner was appointed almost three months ago. How could he not have answers this week to basic questions like what are you going to do with the toxic assets and how are you going to price them?
AXELROD: Chris, first of all, we should note that this weekend, the secretary's been in Rome talking to finance ministers from around the world, spent six hours with them.
And they all emerged saying they were impressed with the administration's approach. It will help shape their thinking. He did a spectacular job for us there. This is a complex problem the likes of which we've never dealt with before.
There are — there are issues that are so abstruse, so hard to penetrate, that even the most brilliant of financial analysts are puzzling about how to unravel it.
I know that Wall Street would have liked him to walk into that room on Tuesday with a wheelbarrow full of money and say, "I'm going to solve all your problems today," but that's not realistic.
And the one thing we don't want to do is make the mistake that was made on the first half of the TARP by the last administration where there was a lot of starts and stops, changes of strategy, that left everyone unsatisfied.
We want to do this in a thoughtful way. He announced a strategy. He will unveil the tactics to support that strategy in the coming weeks. And we believe that he has the right approach.
WALLACE: But again, if I may, the president himself, as we — just said in the news conference — said that Geithner would have on Tuesday very clear and specific plans. Everybody agrees he didn't have specific plans.
And again, I ask, almost three months in office — why didn't he have an answer to the question, "What are you going to do with the toxic assets —" it's been the central question all along, "and how do you set a price for them?"
AXELROD: He did announce a general framework for how to deal with the toxic assets. He talked about a public-private partnership to deal with those.
WALLACE: But everyone said that was more a goal than a plan.
AXELROD: Well, as I said, he announced a strategy. It was a — it was an overarching strategy. He will announce the tactics to support that strategy in the next few weeks.
We're going to get this right, Chris. And I understand the impatience. Look, the stock market went up 1,000 points, I think, when the last TARP passed. And I don't think anybody's very satisfied with it now.
So we can't gauge our success on the basis of one day of fluctuations in the stock market. We're in this for the long term and we're going to try and solve this problem for the long term.
WALLACE: It now turns out that buried in the economic stimulus plan that was passed this week by Congress is a measure that would sharply restrict bonuses for top earners on Wall Street. The White House is reportedly worried that this could result in a brain drain from the firms, that some firms may now pay the money back more quickly than they responsibly should so they don't have those restrictions.
Is the White House going to try to soften that set of restrictions on pay?
AXELROD: Let me say the president's been very clear that he shares the outrage that most Americans feel about the spectacle of gaudy bonuses at — for executives at firms that are getting extraordinary assistance from American taxpayers. It's not right. It shouldn't move forward.
He's announced his own guidelines for how we should restrict that. In some ways, they're tougher than the ones that the Senate passed. They have a hard cap, for example, on compensation. And in other ways they differ, but — in other ways they differ.
So we're going to work with them to come up with a...
WALLACE: Work with whom?
AXELROD: ... good approach. With the — with the Senate to come up - - and the House — to come up with a — an appropriate approach to this.
WALLACE: So you're saying this — that what was passed by the Congress in the economic stimulus bill is not the last word.
AXELROD: I'm saying we all have the same goal. We all have the same sentiment. And we want to do something that's workable, and we'll work with them to get to that point.
WALLACE: And do you worry that what they've passed in the economic stimulus could be counterproductive?
AXELROD: Well, obviously, Secretary Geithner and Mr. Summers had concerns about that, and they expressed those concerns. But those concerns are at the margins, and the goal is one we share.
WALLACE: Meanwhile, I don't have to tell you that you had another top nominee drop out this week, and it's becoming quite a roll call. Let's put it up on the screen.
Judd Gregg and Bill Richardson at Commerce, Tom Daschle at Health and Human Services, Nancy Killefer as chief performance officer, General Anthony Zinni as ambassador to Iraq.
I know you've had big successes, but why, to use the president's language, does he keep screwing up?
AXELROD: Well, first of all, I understand that in the news business the idea is to report the cats that ran away. You don't report the cats that didn't run away that day. The fact is that we've had enormous successes, and we've had enormous successes with our cabinet when you look at our national security team, with Secretary Clinton and Secretary Gates. You look at the kind of people we've brought to Education with Arne Duncan, and to HUD with Shaun Donovan, and Dr. Chu to Energy.
WALLACE: I know the ones you got in, but we don't — we don't report on the planes...
AXELROD: No, I understand, but...
WALLACE: ... that don't crash, either.
AXELROD: ... let's be — let's be clear. I think that our process has worked rather well. We — perfection is not the standard that we can - - that we can keep, but we have high standards for our appointees. We're holding them to it.
WALLACE: Aren't you disappointed to have — I mean, how many cabinet secretaries are we talking about? Two at Commerce, one at Health and Human Services, the chief performance officer. That's not a — that's far from perfection.
AXELROD: Chris, no, it is. But we feel like we've made good progress with our cabinet. We've just passed the most ambitious economic recovery plan in the history of this country, and we did it in record time. That, by the way, is going to have...
WALLACE: But why all — why all the — to use the phrase — screw- ups?
AXELROD: Look, let's talk about Senator Gregg. Senator Gregg approached us. He said he was interested in serving in the Cabinet at commerce. We thought he'd be a good representative of American business around the world.
And then he decided, as he said, that being as — the maverick that he is, that he — that he didn't belong in anybody's cabinet. So he had a change of heart.
I don't think that that ultimately is a reflection on the administration. It's a reflection on Senator Gregg's change of heart.
But we're going to — we're going to move forward. We've made great progress over the last four weeks, and we're going to continue to make progress.
WALLACE: We — we've got a couple of minutes left, and I want to do a lightning round of quick questions, quick answers on some of the hot-button issues. When are you going to issue an executive order on stem cell research?
AXELROD: That — we'll be doing something on that soon, I think.
WALLACE: An executive order lifting the ban on federal funding.
AXELROD: The president is considering that right now.
WALLACE: Are — will you rule out re-imposing the Fairness Doctrine?
AXELROD: I'm going to leave that issue to Julius Genachowski, our new head of the FCC, to — and the president to discuss. So I don't have an answer for you now.
WALLACE: On the census, now that Judd Gregg, your Republican nominee, is out, are you going to, in the interest of reassuring everybody that it will be apolitical, going to give the commerce secretary total control over the census?
AXELROD: The census should be in charge of the professionals who conduct it, and we — there are — there are great professionals over there. We intend to bring in additional impeccable people.
WALLACE: But what about the question of...
AXELROD: We need — we need...
WALLACE: ... White House involvement?
AXELROD: ... Chris, we need — we need — well, the White House needs to ensure that the — that the census is fair and accurate, and that's what we're going to do.
But the way to do that is to put professionals in those slots to run the census in the most advanced way they can.
WALLACE: So you and Rahm Emanuel are going to continue to weigh in on the census.
AXELROD: I am not an expert on the census. I don't — and neither is Rahm. We want the experts to run this program, and we want to make sure that every American is counted.
WALLACE: Finally, you said this week that the president is committed to going on the road at least once a week going forward.
Doesn't that take him away from his job? Or is it your feeling that it's important for him to be seen as being in touch with the nation and, in a sense, campaigning against Washington as an outsider?
AXELROD: It's not about campaigning against Washington. But part of his job is to stay in touch with the American people, and the White House can be a very suffocating place if you don't get out and talk to people.
It's the reason the president wanted to keep his BlackBerry. It's the reason the president reads every day a sampling of letters that he receives and responds to them.
He is — he is determined to keep in touch with the American people who sent him here to do this job. And I think that you can't say that that is separate from doing the job. That is part of doing the job, going out and meeting with the American people.
WALLACE: Mr. Axelrod, thank you.
AXELROD: Great to be here.
WALLACE: Thanks for coming in.
AXELROD: Enjoyed it, Chris.
WALLACE: Please come back, sir.
AXELROD: Will do.
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