The following is a partial transcript of the Sept. 21, 2008, edition of "FOX News Sunday With Chris Wallace":
"FOX NEWS SUNDAY" HOST CHRIS WALLACE: The White House is asking Congress to pass its bailout plan within a week, which, even if we weren't talking about $700 billion, would still be warp speed on Capitol Hill.
Joining us now, two of the key senators in the debate, Jon Kyl, the number two Republican who's on the Finance Committee and backs John McCain, and Senator Charles Schumer, chairman of the Joint Economic Committee and a supporter of Barack Obama.
Gentlemen, welcome back. Let's start with one of the core issues Congress will have to decide.
Senator Schumer, you just heard Secretary Paulson. Do you read that as a green light to add on some mortgage debt relief to this plan?
SEN. CHARLES SCHUMER, D-N.Y.: Yes, and I've talked to Secretary Paulson, and I've told him that while his plan is a foundation and we certainly have to do something, we need changes in it relating to housing.
Chairman Bernanke — no less than he — said if you don't solve the mortgage crisis, you're not going to solve the financial crisis. We need to put the taxpayers first, ahead of bondholders, shareholders, executives.
I'm looking at something, and I've talked to Paulson about this — warrants that would put the federal government first.
And finally, we need accountability. You know, the RTC, when it was founded, had a board. You need transparency. You need oversight to make sure this huge amount of money is spent without favoritism, in a fair way, and that people see what's going on as it happens.
WALLACE: And you say you're going to do this before you pass the bailout plan?
SCHUMER: I think — you know, we're work all the time, all weekend. Jon and I are down here, and — but it needs changes. It needs changes. I think we agree.
WALLACE: If you hear some Democrats talk about a stimulus package — infrastructure, you know, a variety — unemployment relief, a variety — even a bailout to the auto companies. Are you going to "Christmas tree" this bill?
SCHUMER: No, we will not "Christmas tree" this bill. The times are too urgent. Everyone has their own desires and needs. It's going to have to wait.
Now, as for a stimulus package, I think that is — the economy is sinking. Unemployment, 6.1 percent. Many of us believe we need a stimulus package. Many of us believe this is the appropriate time to do it before Congress adjourns. We can't wait three months.
WALLACE: As part of the bailout?
SCHUMER: But it doesn't necessarily have to be part of the bailout. That's something that's being decided right now.
And I think our leaders both in the House and Senate are coming to the conclusion it should be alongside the bailout, but not part of it.
WALLACE: Senator Kyle, can you live with the kind of add-ons that Senator Schumer is talking about?
KYL: Well, first of all, I think that he is correct to say that these things should not be added on to this particular bill.
WALLACE: Oh, I think he did say that the mortgage should be added onto the...
KYL: Well, all right. We'll talk about that separately. But with regard to the stimulus package...
WALLACE: Stimulus, right.
KYL: ... look, there is a crisis in our country. And we've got to come together as House and Senate, Democrat and Republican, and deal with this crisis as Americans, for the American people, and not try to bring on all of our political agendas.
Republicans have a lot of political agendas we'd like to bring into this debate, too. What Secretary Paulson said is there's going to be time to do that. First, let's put the fire out, and then we can go deal with our favorite solutions to all of these problems.
Specifically, with regard to the mortgage issue, we already, in — as of July 30th, passed a bill that provides up to $300 billion worth of relief for guaranteed mortgages that can be worked out with people. We've had what, seven weeks for that to work out.
My suggestion is we see how that can be melded with this. I think that's what you heard Secretary Paulson talking about.
When the government gets these tranches of mortgages that are purchased, and securities instruments, they'll be able better to figure out how they can deal with the individual mortgage workouts that Senator Schumer was talking about.
WALLACE: We're getting a little in the weeds here.
KYL: Well, we are. But the bottom line is...
SCHUMER: It's hard not to.
KYL: ... there's a way to do that, but I think we need to get some experience working with the issue rather than assuming that we can do it in this particular bill.
WALLACE: How confident — and I'll start with — but both of you briefly — let me start with you, Senator Kyl.
How confident are you that this won't be bogged down in partisan wrangling and that Congress will pass the bailout, with whatever is added to it, within a week?
KYL: I think the chances are better than 50-50 that we'll get it done by the end of the week, and hopefully it won't be bogged down with too many extraneous and costly provisions.
WALLACE: Senator Schumer?
SCHUMER: Well, look. We have a patient whose arteries are clogged, and the first thing you want to do is avoid a heart attack. So we have to do something. And I think the odds are even higher than 50 percent we'll get something done.
But part of that is based on the fact that when I and others have talked to Secretary Paulson, he has said he is open to changes. And I would call changes necessary, as I said, in three areas. I call them THO.
Taxpayers. They have to come first.
Homeowners. We have to do something about the mortgage crisis, not just foreclosures but the price of housing, which is affecting everyone on Main Street.
And oversight. We need some accountability here.
If we can do those three things, and I think we can do them fairly quickly, we can get this done.
WALLACE: Obviously, the financial crisis has become part of the presidential campaign. This week with all the economic turmoil, Democratic vice presidential candidate Joe Biden defended Obama's idea of raising taxes. Let's watch.
(BEGIN VIDEO CLIP)
KATE SNOW: Anybody making over $250,000...
SEN. JOSEPH R. BIDEN JR., D-DEL.: You're going to pay more.
KATE SNOW: ... is going to pay more.
BIDEN: You got it. It's time to be patriotic, Kate. Time to jump in. Time to be part of the deal. Time to help get America out of the rut.
(END VIDEO CLIP)
WALLACE: Senator Schumer, is that Democratic policy, that paying higher taxes is patriotic?
SCHUMER: Well, I think you have to show the whole program. What Senator Obama...
WALLACE: We're not going to show the entire program.
SCHUMER: No, no, no, but talk about the whole program. I don't mean you show it on here.
WALLACE: No, but I'm talking about his specific comment...
SCHUMER: I wouldn't expect you to show the positive parts of the program here, Chris, but...
WALLACE: No, I'm — do you mean — I'm talking — you're talking about Good Morning America? No, we're not going to show the entire program. This is Fox, sir.
SCHUMER: Anyway, Obama's plan is very simple. He wants to provide real tax relief, significant tax relief for the middle class...
WALLACE: Senator, I'm not asking you that question.
SCHUMER: Wait a second.
WALLACE: Well, no. I'm asking you a question. Well, forgive me. I'm asking you a specific question. I'd like you to answer it.
SCHUMER: I'd like to give an answer.
WALLACE: But I — the question is does — do the Democrats believe that it is patriotic to pay higher taxes? Simple question.
SCHUMER: It is important to have a tax plan that gives relief to the middle class first and foremost, not relief to the highest end, as John McCain does. And that's what Biden believes, and that's what Obama believes.
WALLACE: Do you regret the way Biden...
SCHUMER: Oh, I don't — you know, Joe Biden put it in his way. But if you look at the tax plans of Obama and McCain, there is no doubt if you're looking at the average middle class person, they do much better under the Obama plan, and they're going to like it better.
WALLACE: Senator Kyl, is it somehow unpatriotic if people want to hold on to their own money?
KYL: You know, whether patriotic or not I don't think is the point. I'll agree with Chuck on one thing about that. I think the question is what's a good idea.
And when the times are as difficult as they are right now, when we're worried about extra burdens on people, that's the last time in the world that you increase their taxes.
And we're not just talking about the so-called middle class. We're talking about the people who invest in America — the small business owner, for example, whose taxes would go up under Obama. You can't let that happen.
And so even the Obama campaign, I understand, is now beginning to reevaluate the certainty with which they're suggesting that taxes are going to go up on the investor group in the United States.
SCHUMER: Let me just say...
KYL: It would be a bad idea.
SCHUMER: Yeah. Let me say one thing, and I agree with John about this. First job is to fix this big mess. But a president's elected for four years, a vice president for four years.
To talk about their general philosophy and where they go on taxes, if, God willing, we get out of this mess — very legitimate.
WALLACE: But would you say, if you were taking on a $1 trillion in new debt, that maybe raising taxes isn't the way to go?
SCHUMER: Well, look. I think it's the state of the economy in general. When the economy is in decline, you don't want to raise overall taxes. In fact, those of us who believe in a stimulus package are saying you ought to pump money into the economy.
But again, in a four — I think one of the important points in this presidential debate is the policy on taxes, and I think as Americans learn the contrast between Obama and McCain, they're going to favor the Obama plan, which aims the tax cuts, should we be allowed to have them given the economy gets better, at the middle class.
WALLACE: Meanwhile, John McCain laid out this week what he thinks is the cause of the current crisis. Let's watch.
(BEGIN VIDEO CLIP)
MCCAIN: We're going to put an end to the reckless conduct, corruption, and unbridled greed that have caused a crisis on Wall Street and America. We're going to put a stop to it.
(END VIDEO CLIP)
WALLACE: Senator Kyle, is that the Republican view, that corruption and unbridled greed on Wall Street have caused this crisis?
KYL: I'm sure that greed, the desire to make more money and not to be too careful about how you do it, was a factor. I think Senator McCain is right.
Now, the question is unbridled. Ordinarily, we have a system in which the desire to make more money is a free market principle that we all agree with. We'd all like to do better. But it's got to be controlled so that the kind of thing that occurred did not occur.
And what I would note is that from 2002 right on through until recently, the Bush administration and Republicans have sought to further — or have sought to put regulations on the government- sponsored entities, Freddie Mac and Fannie Mae, the groups that I think everybody agrees started this whole problem by the securitization of these mortgages, and they were stopped at every turn by Democrats.
My point here is that if we're talking about the free market and regulation, this is one area where Republicans were willing and desirous to regulate. Democrats were not.
WALLACE: We've got less than a minute left, and I give it to you.
SCHUMER: You know, John McCain in one week went from sounding like Milton Friedman to Huey Long. That kind of language that he used you've never heard it from him before.
And I would just say in this last week, John McCain's economic pronouncements have been erratic. First day, he says — Monday, he says the economy's strong. Second day, he's against the bailout of AIG. Third day, he's for the bailout of AIG. Fourth day, he calls for the firing of Chris Cox, without saying what the policy changes are. Chris Cox is just...
WALLACE: The head of the SEC.
SCHUMER: ... head of the SEC, but he's an appointee of the president. And the fifth day, he has this populist rhetoric which we've never heard from him, and he sounds like Huey Long.
I don't think it gives people confidence in John McCain's stewardship of the economy.
WALLACE: All right.
KYL: The bottom line is Republicans have been calling for regulations on Freddie Mac and Fannie Mae since 2002. Democrats have resisted it.
My friend Chuck Schumer, in fact, even said that the new regulator that we finally got in place shouldn't come into being until next year. Thank God he was in place to find out what the books of those companies were really like so we could take them over.
WALLACE: Senator Kyl, Senator Schumer, we're going to have to leave it there. We want to thank you both so much for coming in today.