"FOX NEWS SUNDAY" HOST CHRIS WALLACE: Hello again from FOX News in Washington. Late this week, the leak of possible names in President-elect Obama's cabinet became a flood as word rushed out as posts at State, Treasury and Commerce are about to be filled.
Joining us from Chicago to talk about the incoming administration is David Axelrod, who has been appointed a senior adviser to the new president.
And, Mr. Axelrod, welcome back to "FOX News Sunday."
OBAMA SENIOR ADVISER DAVID AXELROD: Thanks, Chris. Good to be here.
WALLACE: The president-elect is expected to announce his new economic team tomorrow, and let's go over some of the names being mentioned now. FOX News has confirmed Timothy Geithner, head of the New York Federal Reserve, will head Treasury.
Governor Bill Richardson will be commerce secretary. And there are reports former Treasury Secretary Lawrence Summers will direct the National Economic Council, coordinating the federal response to the — to the meltdown.
Mr. Axelrod, what message is Mr. Obama sending to the markets and to the country with these appointments?
AXELROD: Well, obviously, we have a dramatic problem facing this country. We lost — we've lost 1.3 million jobs this year. The market has lost a great deal of its value.
Last week we had announced the — 560,000 unemployment claims, largest number since 1992. We've got big problems. And there — right now it looks like they could get worse before they get better.
So we need to start climbing out of the hole we're in. The president-elect spoke yesterday about his goal of creating or saving 2.5 million jobs in the next couple of years, and the plan that — or the outline of a plan that will get us there.
And we need the best people we can find, the best minds in our country, to help us accomplish that plan, and people like Tim Geithner and Larry Summers are among those people.
Bill Richardson's — I saw that report, and certainly he's someone who the president-elect has huge respect for, but that is not necessarily an appointment we're going to announce any time in the next day.
So I'll confine myself to those two right now and say that they are — they are people who are recognized across the board as leaders in the area of the economy.
Tim Geithner is someone who had experience in dealing with economic crises as the assistant secretary of treasury for international affairs in the '90s.
He's obviously intimately involved with the situation now in his — in his role as president of New York Fed. By temperament and experience, he's the right man to lead the Treasury now.
WALLACE: During the campaign, late in the campaign, Mr. Obama talked about an economic stimulus package in the neighborhood of $175 billion. Since then, the stock market situation has only gotten worse. All signs are that the recession is going to be even deeper and longer.
Is he now thinking about a stimulus package even bigger than that 175 billion?
AXELROD: Well, as he said yesterday, the economic recovery plan we are going to bring in January has to be big enough to deal with the huge problem we face.
And I expect he will ask for what is necessary to begin this process of economic recovery, to put people to work repairing bridges and schools, and working on alternative energy projects, and to do the range of things we need to do not just to get out of our problems in the short term, but to build our economy in the long term.
WALLACE: He said yesterday, Mr. Obama did, that he hopes to sign this package soon after he takes office. That would seem to indicate that he intends to work with the leaders of the new Democratic Congress even before he takes office so that it will be there and ready to go soon after Inauguration Day.
AXELROD: Our hope is that the new Congress begins work on this as soon as they take office in early January, because we don't have time to waste here, Chris.
As I said, the projections are that things may get worse before they get better. We're facing the biggest economic challenges we've had really since the Great Depression. And we want to hit the ground running on January 20th.
WALLACE: It's been suggested that one way that Mr. Obama could reassure the markets is to announce that he is not going to raise any taxes, even on the wealthy and corporations, during a recession.
Is that something that he is considering announcing, postponing that part of this tax plan?
AXELROD: Well, as you know, Chris, the aggregate effect of his plan would be a net tax cut. He's committed to getting middle-class tax relief in the pipeline quickly, and there's no doubt that we're going to have to make some hard decisions in order to pay for the things we need.
And whether it is through repeal of those tax cuts for the very wealthiest or whether we simply allow it to — allow those cuts to expire in 2010, we're going to accomplish that because we have to. We have to make some hard choices.
WALLACE: But you're making it sound as if one consideration would be to let them expire, which means that the taxes would go up on the wealthy and corporations in 2011 rather than calling for it right away so it would happen in 2009.
AXELROD: Well, as I said, you know, those considerations will be made. The main thing right now is to get this economic recovery package on the road, to get money in the pockets of the middle class, to get these projects going, to get America working again, and that's where we're going to be focused in January.
WALLACE: Let's turn to the Big Three auto makers. And I think it's fair to say that the chief executives who came to Washington this week bombed in asking for the $25 billion bailout.
There are a bunch of ideas out there now — bankruptcy, what's called a pre-packaged bankruptcy, which would be a pre-arranged bankruptcy — or a bailout. Does President-elect Obama have any preference for a solution?
AXELROD: Well, as he said earlier this month, what we can't give is a blank check for an industry that isn't prepared to reform itself, to rationalize itself, and to retool for the markets of today and tomorrow. And if — and so he expects that they will do that.
I hope that they will come back to Washington in early December on commercial flights with a plan to do that, or the beginnings of a plan to do that, because the American taxpayers aren't going to hand them a black — a blank check to continue doing what they're doing.
Some of the practices of the last 20, 25 years are the reason that they're in the hole they're in. And we certainly aren't going to encourage them to go forward in the same vein.
WALLACE: You know, Mr. Axelrod, let me ask you about those practices. It wasn't just the Big Three auto makers. It also has been the unions, the auto workers who have been big supporters of President Obama. Is he prepared to say to them, "You have to sacrifice, too, as part of the solution?"
AXELROD: Look, I think everybody involved in the auto industry who wants to save the auto industry — and, Chris, it's imperative that we do. There are millions of jobs that rely on that industry. We have to have an American auto industry.
But — and everyone involved in it has a stake in doing the things that are necessary to keep it competitive and to keep it flourishing and — or to help it flourish. So I expect those discussions will go on between all the players there, not just the executives of the auto companies.
WALLACE: Let's turn to the national security team that President-elect Obama is expected to announce after Thanksgiving. And again, let's look at the key leading players.
FOX has confirmed that Hillary Clinton will be secretary of state. Retired Marine General James Jones is the leading contender for national security adviser. And Mr. Obama is at least talking with Defense Secretary Robert Gates about staying on at the Pentagon.
Mr. Axelrod, a lot of voices in the left wing of your party are saying this is not the kind of change that they thought they were going to get.
AXELROD: Well, let me make something clear, Chris. There's one person who's going to set policy in this administration, and that's the president of the United States. That's true on the economy. It's true in foreign policy.
And what he wants are the people who are — who are most able to help advance that agenda. But the agenda will come from Barack Obama. He has a very clear sense where he wants to lead this country.
The people who he's recruiting for these jobs understand what that vision is. And they wouldn't be joining the administration if they're not willing to support and advance it.
And everyone who voted for Barack Obama can have great confidence that he's going to follow through on the commitments that he made.
WALLACE: Ever since Senator Clinton's name was mentioned, I guess about 10 days ago, there has been the familiar soap opera that always seems to surround them about his financial ties to foreign countries and companies, whether or not she would really prefer to stay in the Senate.
After two years, almost, during the Democratic primaries of dealing with all of this, why on earth would Barack Obama want to bring the Clintons into his White House?
AXELROD: Well, let me — let me just say they've had some great conversations. Some of the obstacles that you mention have been removed. We'll probably make an announcement on some of these national security positions after the holidays.
But — so let me separate that from what I'm about to say, which is that Hillary Clinton is a demonstrably able, tough, brilliant person who can help — who, if she were in a position such as that, would help advance the interests of this administration and this country. And that's the basis on which he would make such an appointment.
The one thing about — that I've learned over six years with Barack Obama is that he invites strong personalities around him. He enjoys that input, that give and take, people who are willing to tell him what they think he needs to know. And then he makes the best judgments based on all the information that he has.
And again, I'd just say this. He will be the leader of the government. He will be the man who sets the direction. And what he wants are people who are capable, strong, dynamic to help drive that agenda forward.
WALLACE: Finally, and we have about a minute left, as we said, you are going to be the new senior adviser to the — to the president. I don't know how you're going to like this comparison, but are you going to be the Karl Rove of this administration in a sense, at the intersection of policy and politics?
AXELROD: Look, I — I've never — I've never accepted that — that comparison. I — my role with Barack Obama for the last six years has been to help the communications operation impart his message, his values and his vision to the American people. And I expect to continue to do that.
And you know, my role is circumscribed to those responsibilities. I'm not trying to rebuild the Democratic Party or any of these other — I think Mr. Rove had quite an expansive portfolio. I think mine is very focused.
WALLACE: Mr. Axelrod, we're going to have to leave it there. We want to thank you so much for talking with us today, and we look forward to seeing you again once you get to Washington.
AXELROD: Thanks, Chris. Thanks for having me.