GEORGE STEPHANOPOULOS, ABC NEWS: With staggering losses in the stock market and all signs pointing to the worst recession since 1982, President-elect Obama moved late this week to take control of the economy, leaking word Friday that New York Fed President Tim Geithner is his choice for Treasury secretary. That sparked a 500-point rally on Wall Street.
And announcing in his Saturday radio address -- also on YouTube -- a brand new plan to jumpstart the economy.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT-ELECT OF THE UNITED STATES: I have already directed my economic team to come up with an economic recovery plan that will mean 2.5 million more jobs by January of 2011 -- a plan big enough to meet the challenges we face, that I intend to sign soon after taking office.
(END VIDEO CLIP)
STEPHANOPOULOS: And for more on this, we're now joined from Chicago by the president-elect's new White House senior adviser, incoming senior adviser, David Axelrod, in his first Sunday interview since being appointed.
DAVID AXELROD, SENIOR ADVISER TO PRESIDENT-ELECT BARACK OBAMA: Thanks, George. Appreciate it.
STEPHANOPOULOS: Let's get into -- right to the economy. We saw part of the president-elect's radio and YouTube address right there. He says he wants a plan big enough to meet the challenges we face right now.
In the campaign, Senator Obama talked about $175 billion stimulus package over two years. But recently, several of his economic advisers -- Larry Summers, Robert Reich, Governor Jon Corzine of New Jersey -- have said that you need a package in the $500 to $700 billion range.
Is that the range the president-elect is thinking about?
AXELROD: George, I'm not going to throw a figure out here. What he said is, he wants a plan big enough to deal with the large challenges we face.
And I think there's a growing consensus across the spectrum among economists that we're going to have to do something big.
He wants to put people back to work repairing bridges, repairing schools, working on those alternative energy projects that are going to make us energy independent. And, you know, we'll do what needs to be done to get this economy moving again.
STEPHANOPOULOS: But clearly, the $175 billion he talked about in the campaign would be insufficient. That's not the kind of scale he's talking about?
AXELROD: Well, again, I'm not going to get into numbers. But we have to do a lot to get -- you know, we're in a growing hole, as you mentioned in your intro. We've lost 1.3 million jobs already this year. The unemployment claims last month were the highest in 16 years. And it looks like it could get worse before it gets better.
And we need to -- we need to start digging our way out of this hole here -- or climbing our way out of this hole, and stop digging. And that's our objective, and that's what we're going to do.
STEPHANOPOULOS: But it's fair to assume that, since the economic conditions, the president-elect is being told, are worse than what he faced during the campaign, he would scale up the package.
AXELROD: Well, again, I think he's going to do what's necessary. And I suspect you're asking a question that you know the answer to.
But we'll -- I'm not going to throw a number out here today.
STEPHANOPOULOS: OK. But just in terms of, then -- forget -- setting aside the numbers, the building blocks of a plan would include a tax cut, an accelerated tax cut for middle class families, the so-called investments in green jobs, alternative energy and other kinds of infrastructure, roads, bridges, aid to state and local governments?
AXELROD: Yes, we've talked about all of those things. And I think we're going to have to do a combination of things to get the economy moving again.
STEPHANOPOULOS: The pressure was building on Wall Street all week long, as we saw the market dropping, for the president-elect to send a signal that he was engaged with the economy. And then that word leaked out of the potential pick for Treasury secretary, Tim Geithner, on Friday at three o'clock. You saw a huge spike in the stock market.
Did the president-elect let that word get out because he was concerned about the markets? And what do you think of the response so far?
AXELROD: Well, the response has been great, and it should be. Tim Geithner is uniquely qualified to do this job. He's someone who is steeped in the economy and in managing crises, as you know, George, from -- in the '90s, he was the assistant Treasury secretary for international affairs, and he handled a couple of international financial crises.
And he's someone who, by both temperament and experience, is well suited for the times we're in. And we were gratified by the reaction to news of his pending appointment.
STEPHANOPOULOS: So, you say he's been deeply involved in all these issues. And, of course, he is -- including the rescue package passed by Congress, including so many of the extraordinary actions taken by the Fed over the last several months.
And what do you -- how do you respond, though, to the critics of those measures, especially, for example, the decision to allow Lehman Brothers to fail? Mr. Geithner was in the middle of all these decisions that have not been well received.
AXELROD: Well, George, we're in unchartered waters. And I'm not going to re-litigate every decision that has been -- that's been made in these -- under these unique circumstances.
I know this, that Tim Geithner was an early warning system in terms of the need for greater regulation, and has been ahead of the curve on a lot of these issues.
And again, when you look at the history of what he's done over time, he is the sort of person you want when you're facing the kind of economic crisis we have today.
STEPHANOPOULOS: The president-elect is also facing calls to do even more -- right now -- to try to use his authority, even though he doesn't have full responsibility as president, to try to fix the economy.
Some have said he should try to get -- help forge an agreement on Capitol Hill, to help bail out the Big Three auto companies.
Does he intend to do that?
AXELROD: Well, I think he feels strongly that the signal that was sent by Congress was the right one.
We all have a stake in the survival and the prosperity of the auto industry. Millions of jobs depend on that.
But in order to do that, they're going to have to retool and rationalize their industry for the future. And if they don't do that, then there's very little that taxpayers can do to help them.
So, my hope is that the Big Three auto executives come back to Congress in early December -- hopefully on commercial flights -- and come back with a plan, and not just an expression of need. And if they do, that Congress will respond.
But -- and he said from the beginning, since right after the election, that we need to help, but we can't give them a blank check. And I think most Americans agree with that.
STEPHANOPOULOS: The other big appointment on track, of course, is Senator Hillary Clinton to be secretary of state -- expected to be announced after Thanksgiving. Received a lot of praise from a lot of quarters, but also some criticism, including from David Ignatius of the "Washington Post."
And he asked this. He says, "Clinton is immensely talented, but it could be the wrong job for her, since it has the potential to undermine Obama's own transformational role in foreign policy -- perhaps the greatest opportunity he has. Why subcontract this to Clinton and her entourage?"
What's the answer?
AXELROD: Well, first of all, George, you're right that they've had some great discussions. We've not made any announcement related to that yet, and probably won't until after the holidays.
But let me say this. People need to understand one thing. There's one person who's going to be in charge of American foreign policy, and there's one person who's going to be in charge of American economic policy. And that's Barack Obama.
He's going to set the direction, and he's going to assemble a group of talented and brilliant people to help execute that vision. So, and certainly Senator Clinton, should she be selected, fits that category of brilliance and ability.
And he is assembling the best possible team to move this country forward, but he will set the direction.
STEPHANOPOULOS: Clearly, as president of the United States, the question, though, a lot of people have -- and I think that Senator Clinton may have had it herself -- is how much authority will she have as secretary of state?
According to our reporting, she was fairly reluctant mid-week to take the job, but she had a conversation with the president-elect on Thursday, I believe, where he did convince her and got everything back on track.
And the question is, given the recent history of secretaries of state, we saw that Secretary of State Powell did not seem to have the full backing of the president, President Bush, and it hurt him -- unlike Secretary of State James Baker under the president's father.
Will Secretary of State Clinton, if, indeed, she is nominated and confirmed, have the full backing of the president? And will she have a direct line to the White House?
AXELROD: Well, I think it's fair to say that all of these appointees will have the full backing of the president. That's why he's selecting them.
And the one thing I can tell you from working for six years with Barack Obama, that he is someone who invites strong opinions. He enjoys that. He thinks it's an important element of leadership.
And I think that he'll have a great working relationship with his secretary of state, his secretary of treasury, and his entire Cabinet. They are not going to be a potted plant in their departments. They are going to be partners with him in governance, and he is going to encourage that.
And I'm sure that that's the message that he's given to everyone he's spoken to about potential positions in the administration.
STEPHANOPOULOS: Other names begin talked about on the national security team, potentially General Jim Jones, the former commandant of the Marine Corps as national security adviser, maybe Bob Gates staying on for a while as secretary of defense.
When you look at that array, what do you say to some of your supporters, particularly those supporters who were energized by their opposition to the Iraq war, who look at this and say, "Wait a second. This isn't the kind of change I was voting for"?
AXELROD: Well, the president-elect was clear throughout the campaign, that when he became president, that he was going to give the secretary of defense a new mission. And that mission was going to be to wind down our involvement in Iraq.
Nothing has changed. And obviously, events are moving there in that direction as we speak.
But our supporters can be -- and the entire nation and the world can be -- assured that, when he gives -- that the commitments that he's made are the commitments he's going to keep.
STEPHANOPOULOS: One final question, what can you tell us about the role you're going to be playing in the White House?
AXELROD: I don't know, George. You did the job once. What do you suggest? I...
STEPHANOPOULOS: Well, I get to see -- to watch you do it. But I think...
AXELROD: Well, you know, I'm kind of eager to see how it works out myself.
But I expect I'll do what I've done for the last six years, which is to try and help organizationally with the -- with the message of the administration.
Barack Obama knows exactly where he wants to lead. I want to make sure that all communication channels are imparting that message, and doing it in a way that's consistent with his vision and his values.
And if I can do that, I think it will be a productive assignment.
STEPHANOPOULOS: OK, David, well, good luck with it. Thanks for joining us this morning.
AXELROD: Thank you so much, George.
STEPHANOPOULOS: And for more on the economic debate, we're now joined, from New York, by the chairman of the Joint Economic Committee, Senator Chuck Schumer of New York, and the ranking Republican on the Senate Banking Committee, Senator Richard Shelby of Alabama. He's in Jacksonville, Florida this morning.
Senator, welcome to both of you. And let me begin with the appointment -- the expected appointment, tomorrow, of Tim Geithner as the Treasury secretary for Barack Obama.
Senator Shelby, can you approve that appointment?
SHELBY: I think it's, overall, a good appointment. I've worked with Tim Geithner. He's got -- he's young. He's innovative. I believe he will be up to the challenge. He knows a lot about the economy and he knows a lot about problems.
He has been involved in the bailout -- I don't think it's worked perfectly -- working with Secretary Paulson, but he is a breath of fresh air, so to speak.
I think he will do well. I would try to work with him.
STEPHANOPOULOS: Senator Schumer, the American Spectator Magazine reported that you privately suggested that neither Mr. Geithner nor Larry Summers, who's now expected to be President-elect Obama's head of the National Economic Council, are fit for the job. Is that true?
SCHUMER: No, not at all. I think either would be a great choice. Tim Geithner's a great choice. I was glad to read, this morning, that Larry Summers may well become part of the administration as well.
These are brilliant people, two of the best. When you have an economic problem or issue, you call them; you get incisive answers.
Tim Geithner has been fabulous in this job. And they are all -- they know how to solve problems. They are smart. They're deep. They're practical. And they're non-ideological.
I think they're going to give a lot of assurance -- Tim Geithner is, and if Larry Summers is appointed, as reported today, NEC, they're going to give the markets a whole lot of assurance.
STEPHANOPOULOS: Let's talk about problem number one, this deep recession that the country seems to be facing. Senator Schumer, you heard David Axelrod, there. He says a big stimulus package is coming, but he wouldn't put a number on it.
How big a package do you believe is necessary?
SCHUMER: Well, I believe we need a pretty big package, here. First, I think that Congress will work with the president-elect, starting now, and will have a major stimulus package on his desk by Inauguration Day.
I think it has to be deep. I would -- my view has to be between $500 and $700 billion. And that's because our economy's in serious, serious trouble. You look at unemployment; you look at consumer confidence; you look at the stock market.
SCHUMER: We're on the edge of deflation. Once you get into deflation, you almost never get out. That's what the Great Depression taught us. That's what Japan taught us.
So a strong shot in the arm, just the way Barack Obama has conceived it, infrastructure, green jobs, is what is needed. And most economists say, to make this work, you need about 5 percent of GDP, which would be $700 billion. I think we need a large one.
It's a little like having a new New Deal, but you do it before a depression occurs, not after.
STEPHANOPOULOS: Senator Shelby, can you sign on to that?
SHELBY: Well, I would like to see the details of any stimulus package: what it would do, how it would work, who would benefit from it.
One thing we'd better be careful about, not just throwing money -- borrowing a lot of money and throwing it at deals, and create snow jobs, to speak of.
What we need is to really get the economy going. And we'll -- I think it's fair to say that we Republicans will look at the details and see if we can support it.
I want to support things that are meaningful for the economy, and I believe Senator Schumer does, too.
STEPHANOPOULOS: Well, let me just press you on that, though. What he talked about is about $700 billion. The details that are being discussed are an accelerated tax cut, investments in infrastructure, aid to state and local governments, maybe modernizing some schools, as well.
Can you accept a package of that size, directed in that way?
SHELBY: Well, that's a lot of money. I want to see the details; no details yet. But if it would accelerate appreciation, things like that; tax incentives for people to hire, to retool and things like that are very -- very important to us; schools, education -- very important; infrastructure in the country.
But let's wait and see the details of the package.
STEPHANOPOULOS: Senator Schumer, let's turn to the auto industry. The Senate left Washington this week without approving new funds for the auto industry.
Even though there was a bipartisan compromise on the table, led by Senators Levin, Democrat, Senator Voinovich, Republican of Ohio, Senator Bond of Missouri, that would allow the auto companies to draw on a loan that has already been approved.
President Bush scolded the Senate for going home without approving that. Take a listen.
(BEGIN VIDEO CLIP)
PRESIDENT GEORGE W. BUSH: If the automakers are willing to make the hard decisions needed to become viable, they should be able to receive the funds Congress already allotted to them for other purposes.
This is a critical issue for our economy and our country. The American people expect their elected leaders to do what it takes to solve it.
(END VIDEO CLIP)
STEPHANOPOULOS: Senator Schumer, why didn't the Senate leadership bring that bipartisan compromise up to a vote?
SCHUMER: Well, I think it didn't have the support that it needed. I think there's a general view, certainly among Democrats and many Republicans, that we have to do something for this industry. It is too important to just let go under, 3 million related jobs directly or indirectly related, an economy in really bad shape.
But the problem is this. We don't want to give the automakers money and then have them come back three or six months later and say, we need another $50 billion.
So I think the basic consensus, Democrat and, I think, Republican, in the Senate and the House, was what Speaker Pelosi said. We first need a plan for future viability, then the money, not the money first, and then the plan.
And I think the problem was, when the automakers came before us, yes, they flew in their corporate jets, and that was dumb, but what was much more serious is, they had no plan for the future.
And we can't put money into these problems unless there is a plan for the future. There can be. There will be. And then Congress will step up to the plate.
The good news is that I have talked to some of the Big Three and they are seriously working on a plan for future viability, with many, many concessions, across the board. And they're going to present it to us December 2nd. Then we'll come back, December 8th. And if it's a good plan, I think you'll see the support that is needed to get them through this rough patch.
STEPHANOPOULOS: Senator Shelby, you've been reluctant to sign on to any rescue plan for the auto industry. Is there any kind of a plan they can put together that would get your support?
SHELBY: Not a bailout plan, not taxpayers. What these people do -- the management, in my judgment, and the judgment of a lot of other people -- they can't turn these companies around. They've got failed models, failed leadership.
They've been paid billions -- millions and millions of dollars for running weak companies. This didn't happen overnight. This has been going on for years.
I believe the companies could turn themselves around. With the proper management, proper leadership, they could get lean; they could get competitive.
But I believe what they're interested in is getting on the taxpayers' relief fund. And, as Senator Schumer said, I don't believe $25 billion will be enough. I don't believe $50 billion will be. I believe it will take several hundred billion, and still, they might not make it.
So I believe they've got an opportunity to go through restructuring in Chapter 11.
SHELBY: A lot of other people that know a lot more about running companies than I do have said that's their only real hope. I think somebody needs to stand up for the taxpayer.
Here, we would like these companies to survive, but they're not going to survive. They're basically failures now unless they have new management, new innovation, new products.
STEPHANOPOULOS: Senator Shelby, let me follow up with a question on another company in trouble this week. Citigroup taking ads in newspapers across the country this morning. They lost 60 percent of their value over the last week. Reported to be in talks with the government this week about maybe getting a new injection of capital from the federal government, either have the federal government assist them with a merger or imposing new bans on short selling. Senator Shelby, do you think the federal government should step in to help Citigroup right now?
SHELBY: Well, I opposed, George, the intervention by the Treasury secretary into the whole deal. I thought it was a flawed plan. I did believe we've got problems in our banking system. We've got a lack of trust. We've got all kinds of problems in our insurance businesses, and we've got to restructure all of this. But to say -- for the government to say we're going to save Citigroup, I think that's a mistake. Or to save any particular company or corporation. Citi has got to save itself. And can they do it by a merger with somebody else or going to somebody else, I don't know. They are a large bank and there are a lot of jobs there and there is a lot of prestige there. But ultimately, George, the question is, should the government do all this? And the answer for me is no.
STEPHANOPOULOS: Do you agree, Senator Schumer?
SCHUMER: No, I don't. I think what we learned with Lehman Brothers is you can say that the company made mistakes, and boy, did they. But the ramifications of letting them go under affect millions of innocent people. And I think most economists who looked at letting Lehman go down now regard that as a mistake.
To let Citigroup go down -- and it's different than the auto companies, because the basic parts of Citigroup are still good and solid and money making, whether it's the consumer banking or investment banking. The trouble is, the holding company at the top was far too risky in the financial games it's played. But I do know this, that top leaders of the government and Citigroup are talking this weekend and have been talking late last week, and they will come up -- they are confident they can come up with a plan that ensures Citigroup's viability, which is really important for the whole economy. Not just the jobs, and of course there are a lot of jobs in New York, so I have a parochial interest -- but more important, when you have a major institution like this, it has tentacles everywhere. And if you let it go down, millions of innocent people are hurt, and the economy suffers at a time when it's terribly, terribly fragile.
STEPHANOPOULOS: Senator Schumer, we only have 30 seconds left. I just want to know, who's your pick to be the new junior senator from New York if indeed Senator Clinton does take the job of secretary of state and is confirmed?
SCHUMER: Well, there's no vacancy yet, and I'm not going to comment until there is a vacancy.
STEPHANOPOULOS: I'm afraid I knew that was going to be the answer...
SCHUMER: Good try.
STEPHANOPOULOS: ... but I had to ask. Thank you both very much.