Transcript: Sens. Dodd, Schumer on 'FOX News Sunday'

WASHINGTON – The following is a partial transcript of the March 16, 2008, edition of "FOX News Sunday With Chris Wallace":

"FOX NEWS SUNDAY" HOST CHRIS WALLACE: And hello again from Fox News in Washington. Well, with the next presidential primary in Pennsylvania more than a month away, here's where the Democratic race stands as of today.

Senator Barack Obama holds a 119-delegate lead, having picked up more delegates Saturday at Iowa county conventions and in California. He has won more states than Senator Clinton, and he also leads in the popular vote by more than 700,000.

On the campaign trail, the week was dominated by controversial statements by supporters of both candidates, which raises the question: Is there a growing racial divide in the Democratic party?

For answers, we bring in two key supporters — Senators Charles Schumer, who backs Clinton and comes to us from New York, and Chris Dodd, who has endorsed Obama.

And, Senators, welcome back to "FOX News Sunday".

SEN. CHRIS DODD, D-CONN.: Good to be with you, Chris.

SEN. CHARLES SCHUMER, D-N.Y.: Good morning.

WALLACE: Senator Dodd, let's start with Barack Obama's long-time pastor, Jeremiah Wright, and some of the things he has said from the pulpit. Here's part of his sermon from the first Sunday after 9/11. Let's watch.

(BEGIN VIDEO CLIP)

WRIGHT: Now we are indignant because of stuff we have done overseas is now brought right back into our own front yard! America's chickens are coming home to roost.

(END VIDEO CLIP)

WALLACE: Senator, over the years, Reverend Wright has said that the U.S. government created the AIDS virus to kill African Americans. He has said instead of singing "God Bless America," we — blacks should sing "God Damn America."

How would you characterize Reverend Wright's remarks?

DODD: Well, I'd use the words of Barack Obama. He's totally rejected this as quickly as anything. He was not there when these statements were made. They're outrageous statements.

I don't know how much more clear Barack Obama could have been on all of this. Obviously, these things come up. We've seen a lot of invective being used over the last number of weeks in the campaign. It doesn't help, obviously. But guilt by association is not typically American.

We've all been around in places where people have given speeches or said things that we've thoroughly objected to, totally objected to.

The fact that he was as quick as he was — I thought his comments yesterday, Barack Obama's comments yesterday, in Indianapolis recalling the words of Robert Kennedy with the death of Dr. Martin Luther King — talking about we're never going to accomplish anything in this nation of ours as a divided people.

I think one of the qualities that Barack Obama's bringing to this candidacy is that ability to bring us back together again. President Bush talked about it six, seven years ago. We never came close to it.

The country wants that very, very much. And I don't think we helped that cause necessarily by focusing exclusively on these kind of comments that he has totally rejected.

WALLACE: Well, you say he is quick to condemn them. Even if you believe that Obama was unaware of all these comments, this is one statement that Reverend Wright said. These are statements that go back. And the one that you just saw goes back to September of 2001, six years ago.

Even if he says that he's unaware of that, he admits that he became aware of these statements last year. And yet just last month, here is what Obama had to say about Reverend Wright's statements, "He is like an old uncle who sometimes will say things that I don't agree with, and I suspect there are some of the people in this room who have heard relatives say some things that they don't agree with."

An old uncle, he says. Senator, he only rejected these statements after these tapes became public.

DODD: Well, Chris, again, we can spend all morning talking about this. The American public are watching their foreclosure rates climb. Oil prices are going up.

WALLACE: Well, sir, you're changing the subject. I'm asking you...

DODD: Well, the question is — well, this is subject matter...

WALLACE: You don't think it's relevant that this man was a member of this church for two decades and this fellow...

DODD: No, you made it relevant here for the last four or five days on this network. But the fact of the matter is...

WALLACE: It's not just this network, sir.

DODD: I know. But the fact of the matter is people would like to move on to other things. I've answered your question. Barack Obama has rejected this.

WALLACE: Well, no, I don't think you have answered it, because you said that he answered it — that he rejected it very quickly.

DODD: Well, I don't think he's...

WALLACE: He didn't reject it quickly. The fact is last month, when he's known about it, he said he's a crazy old uncle.

DODD: Well, going back and reviewing at what point who said what to whom — we can dwell on that. He's rejected it. He said he no — he doesn't have any association with it. He finds these comments outrageous.

I don't know how much more clear he could be on the subject matter.

WALLACE: But he didn't find him outrageous and condemn them last month...

DODD: Well, I'm not sure he...

WALLACE: ... when we didn't have the videotapes.

DODD: Well, I'm not even sure he necessarily was aware of them until they became public. I can't say...

WALLACE: That's not true. He says that he was aware of them when he started running for president in 2007.

DODD: He has rejected them here. Whether he did it a month ago or a week ago, he's rejected them. I think that's the important point. And again, guilt by association here is something we've got to stay away from in this country.

Anyone involved in public life, Chris, has been places, have been with people who have said and done things we totally reject. Running for president, obviously, revives a lot of this.

But I think it's implement about what he has said. What position has he taken? What sort of a campaign has he run? What is he calling upon Americans to be doing in this country?

These are not the words of Barack Obama.

WALLACE: But, Senator, it isn't...

DODD: So we can dwell on that, but I think we ought to move on. He's rejected it.

WALLACE: Senator, it isn't a question of guilt by association.

DODD: Sure it is.

WALLACE: Forgive me. If you read Barack Obama's book, "Dreams For My Father," he talks about what a huge role Reverend Wright played in his deciding his affirmation of his identity as an African American.

He's been a member of this church for two — forgive me, for two decades. He was married by this reverend. His children were baptized in this church. It is not that he happened to walk into a room and Reverend Wright was there. He has been a member of this church, a member of Reverend Wright's flock, for 20 years.

DODD: Well, again, Chris, look. A member of a church and a parish where you may have a pastor, a minister or a rabbi who says and do things you totally disagree with — you don't necessarily walk away from your church.

WALLACE: You would stay in a church that had a...

DODD: Well, I would — no. I would certainly disagree with this individual. We've all been in situations like that.

But the idea somehow that this is deeply involved and ingrained, that this is — this is really who Barack Obama is — what you're suggesting, or those who are making these accusations, is this is really who Barack Obama is.

Anyone who knows this man, who has worked with him, who has spent time with him, would say this is totally unlike him. It's not him at all. And so the suggestion somehow that this is really who this candidate is I think it is an unfair accusation.

WALLACE: Senator Schumer, are you troubled that Obama would belong to a church, be married by a minister, have his children baptized by a minister, who says these kinds of things?

SCHUMER: No. I agree with Chris here. Look, each campaign is wide-ranging. Supporters are all over the place.

And you will find in every campaign — you have Senator McCain endorsed by a reverend who said very anti-Catholic things. You've had the problems our campaign had with certain statements that Geraldine Ferraro made.

If you are going to ascribe what every supporter says, every word they say, to the candidate themselves, you know, you're going to just be in an — we have major issues facing us in America, whether it's the war, the economy, and I do believe — you know, past elections have had too much emphasis on these things.

This election won't, Chris. And the reason is people are worried about the future of the country, and they want a real discussion on issues.

WALLACE: Well, let me just ask you, if I may, for just a moment. This isn't just a supporter. This is a man who was the head of his church for 20 years.

Are you telling me — because I'm a little surprised at this, Senator. You're not troubled that Barack Obama belonged to a church which had a reverend, Reverend Wright, who said that the U.S. has sponsored state terrorism through Israel against the Palestinians? That doesn't bother you?

SCHUMER: Look, I know Barack's views on Israel, and I think they're very strong. I mean, as you know, I prefer Senator Clinton for a whole lot of reasons, but I don't cast aspersions on Senator Obama for what somebody else said.

We'll be in a game here where we'll never debate the issues. We've spent half our time already on this, and it has nothing to do with Barack Obama's views.

WALLACE: Well, let me ask you, Senator Schumer, about something that someone in the Clinton campaign said.

SCHUMER: OK. How come that doesn't surprise me?

WALLACE: Well, there's a pattern here, Senator. Geraldine Ferraro, former vice presidential Democratic candidate, also a big fund-raiser for Hillary Clinton, made her own controversial comments this week. Let's take a look at them.

"If Obama was a white man, he would not be in this position. And if he was a woman of any color, he would not be in this position. He happens to be very lucky to be who he is."

Senator, this isn't just one isolated comment. There's a long list of comments like this. Why do members of the Clinton campaign keep playing racial politics?

SCHUMER: Well, first, Geraldine Ferraro said she said those completely on her own. I know Geraldine. I've known her for 20 years. She says what she thinks.

These comments were wrong. They were condemned by Hillary Clinton. Geraldine Ferraro is no longer part of the campaign. She had the grace to step aside on her own because she didn't want to make these an issue, and that's that.

DODD: And I agree with that as well. I've known Geraldine Ferraro as long as Chuck has. And I disagree with her comments here, but again, it's the same kind of thing. We can spend our time talking about Geraldine Ferraro and Jeremiah Wright, but the issues are — is where does Barack Obama stand.

What are these major issues we face in the country? That's what people are really worried about. We've got a major, major problem in our nation. We need to get back on track again.

And that's what people, I hope, are going to cast their ballots on come this November, not about whether or not you agree with Jeremiah Wright or Geraldine Ferraro. That should not be the subject — central point in the debate.

SCHUMER: And by the way, just one point, Chris. I think this election will be much more on the issues. The dramatic differences between Hillary Clinton and Barack Obama and John McCain are not only large, but they're right at the center of what's worrying people.

When people are basically content, these kinds of minor issues — unimportant issues, in my opinion — play a major role.

But when people are worried about the future of this country, as they are now, we're going to see a very interesting campaign where the differences on Iraq, the differences on the economy, the differences on health care and energy policy, are going to make the big difference here and be most of the discussion.

So I think, you know, to dwell — obviously, you can ask the candidates the question. And obviously, if they don't denounce what is said, if it seems so bad as these statements are, you can hold them accountable. But once they denounce them, let's move on.

WALLACE: Well, I am going to move on to the economy. But I would disagree with you to this extent, Senator Schumer. We don't know a lot about Barack Obama, and he does not have as long a record in public life as Senator McCain or Senator Clinton.

And when, I think, a lot of us find out and are somewhat shocked to find out what his minister said over the last two decades, I actually think that's a very legitimate question in judging the character of a candidate.

But let's move on to the economy.

Secretary Paulson, Treasury Secretary Paulson, Senator Dodd, is going to be here in a moment. On Friday, the president rejected your plan for a multibillion-dollar government program to buy up foreclosed homes.

And generally speaking, he says the Democratic plans for massive government intervention won't help people and, in fact, will make it harder for the economy to recover.

DODD: Well, it's hardly that at all. In fact, the American Enterprise Institute has endorsed this idea, and it's not about buying them. It's refinancing here.

What's going on — the credit crisis is that...

WALLACE: You said refinancing. Aren't a lot of these homes already abandoned?

DODD: No, not yet. You're going to have a huge wave coming on resets. There's already been one wave. The second wave is coming, Chris, which is larger than the first one here, and the foreclosures — it isn't just the foreclosures, but the declining value in properties, where mortgages are current but falling because the neighbor next door or down the block property has foreclosed.

The idea here is to get a floor. We need to find out where the bottom is in all of this. The people who are investing, making capital available, just don't know where that is.

One of the benefits of this idea is not only to keep people in their homes — owner-occupied, not the speculator — but also to determine where the bottom is, where the floor is, so you can restore that sense of confidence that's been critically missing in all of this.

In the absence of that, there is no bottom to this, and thus you'll not see that...

WALLACE: But the argument some people — and, frankly, conservatives — would make is if the government keeps propping up the price, the market never establishes where the floor is, and therefore it only prolongs this housing crunch that we're in.

DODD: Well, that's a good point. But here's the point. If we were talking about just individuals, a Long-Term Capital situation, that company back a number of years ago that was in deep trouble, that's one thing.

You're talking here systemically. We're not just talking about a couple of firms. We're talking about a system-wide problem here. And so you need to address it as such here.

This ought to be — there are no sweetheart deals here. Any assistance that's provided whatsoever, the first lien holder ought to be the American taxpayer to the extent you're going to back this up in any way at all.

But this is a problem that's growing. It's affecting student loans. It's affecting availability of car loans. Everything is being affected by it. And so you need to have bold ideas, some aggressiveness here, or this is going to spin out of control.

There's a self-fulfilling prophecy to this. It's spiraling down. And it's exacerbating the problem far beyond what it is.

And you add to that, Chris, the following. As Chuck has already pointed out, you've got high energy prices. You've got a huge deficit. You've got inflation on the rise, unemployment on the rise.

This will be the second recession in this administration — twice in one administration to have a recession. The difference is in this recession, you don't have the solid underpinnings that we had six years ago when you had another recession.

WALLACE: I want to bring in Senator Schumer, because this week you compared President Bush to Herbert Hoover, as you said, whistling a happy tune as the economy goes south.

But back in 2001, when President Bush was talking about the recession then, the recession that Senator Dodd is referring to, and saying that he had inherited it from the Democrats, you said the following, "The president should stop talking down the economy."

Other than playing the political blame game, what possible good does it do for President Bush to say, "You're right, we're in a recession?"

SCHUMER: Let me say this, Chris. I'm not talking down the economy. The economy is talking down the economy. The statistics that we see on foreclosures, gasoline prices, the dollar, the deficit talked down the economy.

The president is, indeed, behaving like Herbert Hoover. We're in the most serious economic problem we've been in in a very long time, much worse than 2001. The president's hands-off attitude is reminiscent of Herbert Hoover in 1929, in 1930.

There are lots of things that can be done, particularly on housing. Housing has been the bull's eye of this crisis. We Democrats have a five-point plan. We're going to move that forward when we come back.

And the president says, "No government involvement. Take the government out of it altogether." And let me tell you, this has become the Bush recession.

Had the president done some of the things that people like myself, Chris, were asking back in May, the recession would be much less deep, because fundamentally, credit is confidence.

There is no confidence by Democrats, Republicans, leaders of Wall Street, leaders of Main Street in this administration. And it's a real problem that builds on itself.

WALLACE: Senator Schumer, Senator Dodd, we're going to have to leave it there. And it's going to be interesting, given our next guest. Thank you both for talking with us today.

DODD: Thank you.

SCHUMER: Thank you, Chris.