The following is a rush transcript of the September 20, 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: With some positive news on the economy coming from Washington and Wall Street, we thought the time was right to convene a group of top business leaders to find out where they think we stand.

We're joined now by Fred Smith, chairman of Federal Express; John Chambers, head of Cisco, who comes to us from California; and from Florida, Steve Odland, chairman of Office Depot.

Well, Federal Reserve Chairman Ben Bernanke said this week the recession is very likely over. We now hear that President Obama says that he believes the economy is beginning to grow again but that it's going to be next year before we see jobs picking up.

Fred Smith, FedEx stock is up 18 percent this year, but you announced this week quarterly earnings are down 53 percent. Where do you see things right now?

FRED SMITH, CEO OF FEDEX: Well, I think the recession has bottomed out. We have a very unique view of the economy, Chris. We have our express company that operates all around the world, our ground company that's tied in with retail, our freight company that's tied in with the industrial sector of the economy, and we're really beginning to see some pickup in all three of those areas.

Asia is very strong at the moment, led by China. So there's no question in our mind that the economy at least has stabilized, albeit at a lower base.

WALLACE: John Chambers, Cisco stock is up 43 percent this year, but earnings are down 21 percent. Where do you think we are in this recession?

JOHN CHAMBERS, CEO OF CISCO: Well, I think Fred is probably the best indicator of especially small business and the consumer-type activity. We get to see what's going on in medium-size business and larger companies.

We saw the market for us level out in the first calendar quarter of this year. The second calendar quarter we began to see pretty good upturns in terms of sequential growth, good balance in the U.S.; Asia very solid, as Fred said; Latin America. Europe will probably lag by a couple of quarters.

But I think the key takeaway, Chris, isn't about the economy recovering, because it clearly is. It's do we put Americans back to work and have we made the changes during this downturn to position our country on the global basis from a competitiveness point of view, because that's what companies try to do during the downturns.

WALLACE: All right. We're going to — we're going to get to that in just a second, but let me bring in Steve Odland.

Office Depot shares are up 111 percent this year, but second quarter earnings were down 22 percent. Are you seeing a turnaround, Mr. Odland?

STEVE ODLAND, CHAIRMAN OF OFFICE DEPOT: Well, Office Depot's customers are small businesses, and so we've been a barometer of the health of the — of the small business sector.

What we've seen is that this sector — the small business customers have been hurt disproportionately in this downturn, because housing is a traditional source of liquidity for these people. They start their businesses with a second mortgage. They fund them with home equity lines of credit.

And as that credit has dried up, these businesses have not been able to recover. So we went off a shelf last year, and I feel like we're rocking around down here at a bottom, but we're not seeing a meaningful recovery at this point, and I'm worried that we're not going to until the liquidity returns to the small businesses.

WALLACE: All right. We're going to get into that. And actually, let me pick up with you, Mr. Odland, on that, because, you know, there was this credit crunch.

Have you seen the Obama policies — I want to turn to what the president is doing now, both what he's done and what the Fed has done, both the stimulus, also the financial rescue — has that eased the credit crunch?

ODLAND: Well, you know, the stimulus money has not gone to small businesses. This is an unusual recession in that it's been banking- led and housing-led. And so as these sources of cash have dried up for small businesses, they haven't been replaced by stimulus money or any other money.

The issue here is that every modern recession is led out by the small businesses as they create jobs. So all net job creation happens in small business. In this case, we're not going to see a job rebound until we see these small businesses get more access to liquidity.

WALLACE: Mr. Chambers, when you look at what the White House is doing — because the president and his administration, while being cautious, has said that they believe their policies are responsible at least for the end of the economic free fall — do you think they're making the kinds of changes that you talked about in your first answer, to build a solid and enduring recovery? And do you worry about government intrusion in the private sector?

CHAMBERS: Well, Chris, if you'd call me John, I'd appreciate it. That way I won't feel too old. In terms of the policies, I think you have to give the central banks and the Fed Reserve very positive marks on a global basis. And I do think you're seeing the trends going the right way that both Steve and Fred talked about.

In terms of the programs that they're spending money on, such as the smart grid capability, really making our country competitive from an electrical point of view and cost to the consumer, in terms of broadband, in terms of electronic medical records, they're steps in the right directions.

But much like the investments business makes, you won't know for 12-18 months were they the right steps. And a lot of them still have form to take in terms of are they positioning us for really sustainable job growth. But it is in areas that they're starting to spend that I'm cautiously optimistic.

WALLACE: Fred Smith, are the Obama economic policies helping or hurting?

SMITH: Well, I don't think they're hurting, Chris. I'm not sure they get to the heart of the fundamental problem. The economy got way too invested in finance and housing, and it did so because the tax policies of the United States favor debt, speculation in the financial services sector, as opposed to the industrial sector.

So if you want to improve the earnings power of blue-collar folks, you've got to stimulate the industrial sector. And our tax policies just don't — just don't do that at the present time.

WALLACE: So give me one magic bullet. What would you like...

SMITH: Well, I think there are two things that need to happen. One, the tax rate in the United States at the corporate level is 38 percent. Other than Japan, it's the highest in the industrialized world.

Secondarily, interest is completely deductible, so if you borrow money to speculate on Wall Street, the government is basically helping you with that speculation, whereas an industrial company like FedEx that buys a new 777, that employs people building the plane in Washington and the engines in Ohio — we get that airplane and put it in service, and we have to depreciate that airplane.

In other words, the capital investment in that equipment is taxed much greater than speculation in the financial sector. So expensing that capital would be a huge stimulus to the industrial sector of the economy.

WALLACE: Let me bring you all in to what is the big subject here in Washington, and that, of course, is health care reform.

Since you insist on it, John, I'll begin with you. Would the president's health care reform plan — and I'm not talking the specifics, but the general outline of it — would that be good or bad for the economy?

CHAMBERS: Well, I think, Chris, you've got to find a way to get every American covered by health care capabilities. For us to be the richest nation in the world and not deal with that I think would be a problem for us.

I do think technology has to play a much more aggressive role which I've not seen as much from any of the proposals that are in front of us in terms of reducing cost of health care at the same time you deliver the service.

So I think you can do an "and." I think you can provide the service, but we've got to do it much smarter and much more technology- based than before. The current plan or proposals — I think we have a ways to go.

WALLACE: Steve Odland, what do you think of where the president and the Democrats are headed on health care reform? What's that going to mean to your business and to the economy?

ODLAND: Well, I think we've got to go back on health care and ask the question what are we trying to solve. What problem are we trying to solve?

We seem to have about 45 million Americans who are not covered. Half of them have access and choose not to buy it, which is, I think, an American choice. Half of the rest are illegal aliens. We have to debate that.

I think what we're trying to solve is access for about 5 to 7 million Americans out of 310 million Americans. So you've got 80 to 85 percent of the population which is fine with the coverage.

We have to be careful not to mess up the greatest system in the world in order to solve the problem for a few. So I'm a little worried about big government interaction here and the effect on small business and large business as well.

WALLACE: Fred Smith, there's been a lot of complaints from big corporations and small businesses that this is going to add to their costs.

SMITH: Well, there certainly has to be reform, as John said. And Steve mentioned there are about 46 — I think it's 47 million people that are not covered today.

A hundred and sixty million people get insurance from their employers. About 80 million are covered in Medicaid primarily for the young and Medicare for the aged.

The problem is that the people that do provide insurance, like FedEx, for our employees, or Office Depot or Cisco, are actually paying for the medical care for the uninsured because we don't deny people medical care.

So if I were the czar, I would basically say what we need to do is to have a mandated coverage of catastrophic care. When I was young, there was no such thing as first dollar medical care or medical insurance. It was major medical.

And I think if we got to the point where our major or catastrophic medical expenses were covered and the market worked in between Medicaid and Medicare, you'd have the beginnings of a reasonable solution.

WALLACE: We're beginning to run out of time, and so I'm going to ask you, Mr. Smith, for a quick answer on this. The president announced tariffs on Chinese tire imports. Sensible response to predatory trade practices, or do you worry that we're headed for protectionism and a trade war?

SMITH: Well, I think we've got to be very careful about this. Twenty- five percent of the world — of the United States economy is related to international trade, about 13 percent in imports which give us a much higher standard of living. About 12 percent of our economy are exports.

And we have to be very careful. There are 5.7 billion consumers outside the United States in excess of our 300 and some-odd (sic) consumers. Trade has built our standard of living. We have to be extremely careful not to bring in protectionism, because it will be a very catastrophic result if we do.

WALLACE: We've got about 30 seconds left for each of you, so let me start with you, John, and we'll go around.

Your thoughts about — look a year out, in 30 seconds. Where do you see the economy? Where do you see unemployment?

CHAMBERS: I think the economy a year out will be growing between 2 to 4 percent. I think you'll start to see the unemployment pick back up. But, Chris, the real sustainability of this is based upon have we thought three to five years out about how competitive our business and how competitive our education and health care system is.

If we do it right, I think we'll build a base for the future, and I'm optimistic on America's future.

WALLACE: Steve Odland?

ODLAND: The economy started to go off two years ago and it has calmed down dramatically. I think we need to get the liquidity to the small businesses to start to create jobs. If we do that, we will have a slow, steady recovery in 2010.

But I think it's going to take two to three years to get back to where we were two years ago. So this is going to be a long haul.

WALLACE: And finally, Fred Smith?

SMITH: Well, I think in the fourth quarter this year, the economy is going to grow over 4 percent sequentially. Next year our forecast is for between 2.5 to 3 percent.

But remember, that's off a lower base that's come down because of the tremendous economic contraction we've had.

WALLACE: We're going to have to leave it there. Gentlemen, I want to thank you all. It's good to get some analysis from three people who have to meet a payroll every week. Thank you.

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