'This Week' Transcript: Obama Adviser David Axelrod and Sens. Jim DeMint and Robert Menendez

AXELROD: Well, look, first of all, I think that there was -- the entire political community was caught a little bit unawares on that one, but -- so we have a -- we have a very strong political operation. What it's a reflection of is that David was working on his book for the last year. He's done with that now. He's enormously talented, as everyone knows, and he brings value added to our operation as we look forward, in terms of strategy and tactics, and he'll be consulting with us on that, and we'll be stronger for it.

I think that the reaction to it has been overblown, but I know that Washington loves a great -- Washington loves the shake-up story, Washington loves the "When are we going to throw a body out?" story. That's not how we roll.

MORAN: Fair enough. Let's get to specifics now, the impact of all this on the president's agenda. Health care, the day after Scott Brown's victory in Massachusetts, the president gave a remarkable interview to George Stephanopoulos in which he seemed to dramatically scale back his ambitions for health care reform. Here's what he had to say.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I would advise that we try to move quickly to coalesce around those elements of the package that people agree on, that we know that we need insurance reform, that health insurance companies are taking advantage of people.

(END VIDEO CLIP)

MORAN: So according to the president, then, David, health care reform as we know it, that huge bill that Congress labored on for months, is dead, right?

AXELROD: No, that's not true at all, Terry. I think what he's saying is let's take a look at this. There are so many elements of this -- tax breaks for small business, extending the life of Medicare, more assistance for seniors with their prescription drugs, a cap on out-of-pocket expenses, help for people with pre-existing conditions -- that are too important to walk away from. What he's saying is, let's get back to it.

Now, I will -- I must tell you that, if you look at the polling in the Washington Post yesterday on the Massachusetts race, it's very clear, people don't want us to walk away from health care. They want us to address their concerns with the program, and they want Brown to come and work with us and not be obstructionist. That was very clear in the polling.

And I suggest that the Republican Party look at that poll, as well. Their policies were viewed more dimly than -- than Democratic policies. And people were crying out for cooperation instead of obstructionism.

So we're looking forward to working together to pass this on behalf of the American people, who are going to feel greater and greater burden from this -- these health care costs if we don't step up and deal with it.

MORAN: You're looking forward to pass this. Now, this -- the president sounded like he was reducing the scale, let's coalesce around some core elements, insurance reform, cost containment. And -- and are you talking -- what do you think of the idea that is being...

AXELROD: Well, I think what the president...

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