Transcript: White House Chief of Staff Josh Bolten on 'FNS'

The following is a partial transcript from the April 30, 2006, edition of "FOX News Sunday With Chris WALLACE:"

"FOX NEWS SUNDAY" HOST CHRIS WALLACE: Joining us now for his first interview since taking on his new assignment, the architect of that shake-up, Josh Bolten, the new White House chief of staff.

Mr. Bolten, thanks for coming in and welcome to "FOX News Sunday".

WHITE HOUSE CHIEF OF STAFF JOSH BOLTEN: Thank you, Chris.

WALLACE: You have made a number of changes in your first two weeks on the job. We'll get into the specifics later. But looking at the big picture, what are you trying to accomplish? What are you trying to change in the way this White House does business?

BOLTEN: What the change says, Chris, is simply that there's a new person in charge. I told the president that when he asked me to do this job that you can't trade up from Andy Card. He's one of the finest, most decent, honorable and effective public servants that this country has ever known.

But what the change does provide is an opportunity for the White House to step back, refresh, re-energize at a time when we're 5.5 years into an administration, normally a slow point, a low point, in many administrations, and a chance for us to get our mojo back, to go back more on the offensive and to get people within the White House to look at our operations, re-energize them for the next six months up through the election, the next 1,000 days through the end of this president's term.

WALLACE: Are there some things, as you've looked at this, either in terms of operations or in terms of policy, that you want to change?

BOLTEN: Yes, there are things that we want to change I've talked with the president about. We do want to have a more open environment to the press and to the public. We've already had that under way for a while.

You've seen the president out more in more casual settings, more free-flowing. He's very good in those settings, and we've taken advice from a lot of folks that we ought to put the president out more in ways that the American people can see what he's really like.

WALLACE: I want to show you the three latest polls on presidential approval. Take a look at them here. All three have Mr. Bush in the 30s, at all-time lows for his presidency, with disapproval up around 60 percent.

There's a new phrase here in Washington which I'm sure you have heard, the Bolten bounce, the idea that somehow you're going to be able to achieve a rebound in the polls for the president.

But given the deep concerns that the public has about Iraq, where in the month of April it was the highest death toll for Americans in the last five months, the concern they have about energy prices and other real issues, how much can a White House chief of staff do to improve the president's standing in the polls?

BOLTEN: Oh, I don't think very much. I mean, I don't give much credence to the Bolten bounce stuff. What my job is is to bring the best possible policies to the president, the best possible operations within the White House, and then let the president and the policies take care of themselves.

It's not about me. It's about me giving the president the most effective operation he can have.

WALLACE: Well, you know, you talked about what basically was packaging, getting him out more, being friendlier to the press corps. What about policy?

I mean, in the end, isn't that what people are concerned about, policies, whether it's on energy or immigration or Iraq? Isn't that what you have to change?

BOLTEN: I don't think we need to change, but we do need to refresh and re-energize.

WALLACE: What does that mean, sir?

BOLTEN: Well, it means, for example, that when we get an issue like immigration, which is one of the toughest issues on the agenda today, that we are thinking actively and we're taking the president out in a leadership role on one of the toughest issues of the day.

WALLACE: Let me ask you — we'll get to immigration in a moment, but I want to ask you about one of the top issues, certainly, in voters' concerns around the country right now, and that's energy.

On Friday, the president came out and talked about how strong the economy continues to be, the 4.8 percent growth in the first quarter of this year. But there's a cloud on the horizon, and the new Fed chairman, Bernanke, talked about it this week. Let's take a look.

(BEGIN VIDEO CLIP)

BEN BERNANKE, FED CHAIRMAN: The nominal price of crude oil has risen to new highs and gasoline prices are also up sharply. Rising energy prices pose a risk to both economic activity and inflation.

(END VIDEO CLIP)

WALLACE: How concerned is the president that high energy prices could cause a downturn in the economy?

BOLTEN: Oh, very concerned about the high energy prices, but one of the remarkable things about this economy has been how resilient it's been to the many shocks we've had during the president's tenure.

Remember, we came in with a recession on the doorstep, had the attacks of 9/11, corporate scandals, the war on terror, the worst natural disaster in this country's history — by far the most expensive — and now, on top of that, energy prices that are probably about three times as high as when the president came into office.

And through all of that, we've had a very resilient economy. That's a remarkable thing, for the economy to be as strong as it is today given the shocks and challenges we've had.

I credit to a large extent the economic policies of this president, especially the tax cuts, but we need to be cautious about it going forward, especially with these high energy prices. We need to make sure that we retain a competitive environment, and that means in particular a low tax environment for this economy.

WALLACE: But specifically on energy prices, because they've never been this high — they're now up over $3 most places around the country and might go higher — could a continuation of those kinds of prices threaten the economy?

BOLTEN: They haven't so far. And we need to do everything possible to make sure that they don't.

WALLACE: The president came out with a plan this week to deal with high gas prices, and I want to ask you about part of it, halting deposits to the strategic petroleum reserve this summer. I want to go back and show you what the president said about the strategic reserve back during the 2004 campaign. Let's watch.

(BEGIN VIDEO CLIP)

PRESIDENT GEORGE BUSH: We will not play politics with the strategic petroleum reserve. That petroleum reserve is in place in case of major disruptions of energy.

(END VIDEO CLIP)

WALLACE: Question, isn't the president now playing politics with the strategic reserve?

BOLTEN: No, no. All that we're doing with the strategic reserve right now is we're deferring some deposits that were planned to be made in the summer. We were planning to end the deposits in any event this fall, so we're just at a time when we've got especially critical crimps on supply going into the summer driving season.

We just decided to defer the deposits into the — the policies that the president set back then are the ones that still stand.

WALLACE: But halting deposits to the reserve would add 10 million barrels of oil to the U.S. supply. That's half of what Americans consume in a single day. I mean, isn't that basically, in terms of dealing with this problem, meaningless?

BOLTEN: Oh, it's a modest step, and I think when the president announced it, he said it was a small step. What we've got to realize here, Chris, is that this is a very large problem. It's built up over many years — decades, in fact. It's not going to be solved in the short run by some silver bullet.

There are a lot of policies that need to be put in place over the long run to wean ourselves from our dependence on foreign oil. That's the only thing that's going to make a difference in the long run.

WALLACE: In that sense, if everything the president called for this week went through, how much would it lower the price of a gallon of gas at the gas pump this summer?

BOLTEN: Oh, I have no idea, but I expect the effects would be relatively modest. The point of...

WALLACE: Pennies, correct?

BOLTEN: I don't know what the price — what the exact price would be. But the point is that there are some steps we can take in the short run, like dealing with the strategic petroleum reserve, like loosening up on regulations about the fuel mix that needs to be used in particular localities.

But what the president was also talking about this past week and what he's been talking about for some time are longer term measures to increase supply and reduce demand in this country.

Now, some of the things can have some effect in the short run — greater encouragement for hybrid vehicles. But others are going to take a long time to have effect, like taking advantage of the supply we have here, shifting over to more alternative fuels.

All of those policies need to come together because we need to leave behind a legacy in which this country is headed toward weaning itself from its dependence on foreign oil. We've been going in the wrong direction for years, for decades. We have deepened our addiction to foreign oil. The president is determined to set that back on the right path.

WALLACE: Let me ask you about one other specific point. The president asked this week for authority to be able to raise the fuel economy standards for all cars, not just light trucks and SUVs.

Do you have a plan in place, if you were given that authority, as to how much you would like to raise the fuel efficiency of cars?

BOLTEN: The process itself would take some time for the secretary of transportation to work out. But we have a plan to proceed to arrive at the right kind of number.

Remember, it's not just raising the corporate average fuel economy. The system needs a reform so that it's based more on the size and weight of vehicles so that we get the efficiencies without sacrificing safety in our cars.

WALLACE: Let's talk about some of the changes that you have made. The choice of Tony Snow as the new press secretary — you mentioned at the very beginning that one of the things you want to do is improve relations with the press. Why is that important?

BOLTEN: Well, it's very important because the way that we communicate, that the White House itself communicates, with the press is the way that the American people see us.

The most important thing in particular on the president's agenda right now is the effective prosecution of the war in terror in Afghanistan, in Iraq, around the world. If we're not communicating effectively about the importance of that task and the way in which we're carrying it out, we're not going to sustain the support of the American people.

And without the support of the American people, this very difficult task can't be sustained. The president said before that we will win this war on terror. The only way we can lose it is if we lose our will at home.

We need to be sure in particular on that subject that we are sustaining public support for the policies that I believe very strongly are exactly on the right course.

WALLACE: Very briefly, it sounds counterintuitive, but some people suggest that a way to improve relations with the press would be to end the televising of the press briefings and all the posturing by members of the White House press corps, and I say that as somebody who used to be a member of the White House press corps. Any thought of doing that?

BOLTEN: I'm sure, Chris, you never postured in the way that some people are talking about. It's worth considering. I think that will be a — Tony Snow's first test to see what kind of power player he really is and whether he's able to establish the right kind of relationship with the press that we need going forward.

WALLACE: You say "worth considering." Would that be something that you think would improve relations with the press or hurt them?

BOLTEN: My guess is in the short run it would hurt them. The judgment would be, as we do in all things, is look at the long run and see whether it's helpful in the long run. I'm going to leave that judgment to Tony Snow to make a recommendation in concert with your colleagues in the White House press corps.

WALLACE: Taking the policy portfolio from Karl Rove, a lot of people read that as a signal that you are the new sheriff in town.

BOLTEN: I'm the new chief of staff, and what that means is a new management style. But with respect to Karl, he remains a very important voice in our policy process. He's not only a brilliant political mind, he's one of the most brilliant policy minds as well that we have, I believe, in this country today.

And what I've done in the restructuring in White House responsibilities is passed off the day-to-day management of the policy process to my deputy, in whom I have the greatest confidence, Joel Kaplan, and freeing up Karl to focus more on bigger strategic issues. It's a refocusing of portfolios, but it's not a removal of voices in the policy process.

WALLACE: So he hasn't had his wings clipped.

BOLTEN: Oh, no, not at all. He's a terrific person. He's a dear friend. And he has the absolute confidence of the president and everybody else in the White House.

I think this restructuring that we're going through will, in fact, enhance his ability to serve the president.

WALLACE: And how much does it weigh — we saw him, of course, testifying for the fifth time before a grand jury this week. How much does that legal uncertainty weigh on this White House?

BOLTEN: Well, obviously, I can't comment at all on the case. But what I can tell you is that Karl Rove is as engaged as I've ever seen him in his work. He's always cheerful, optimistic and energetic. He gets more done in an hour than most people get done in a day. And I don't think anybody else in the White House feels weighed down by it at all.

WALLACE: We have to take a break here. But when we come back, I want to ask you about the possibility of more personnel changes. I want to ask you about other issues, especially immigration, and about your working relationship with your boss, the president.

And we'll be right back with more of our exclusive interview with the new White House chief of staff in a moment.

WALLACE: And we're back now with White House Chief of Staff Josh Bolten.

Before we move to other issues, I want to ask you a little bit more about personnel. When Secretary Rumsfeld was under fire recently, the president said that he had decided what's best is for Rumsfeld to stay at the Pentagon.

Does he feel the same way about Treasury Secretary Snow?

BOLTEN: The president has full confidence in Secretary Rumsfeld, Secretary Snow, all the members of his cabinet.

WALLACE: Are there any plans at all to replace John Snow in the treasury?

BOLTEN: Well, we all serve at the pleasure of the president, including me. Maybe, as chief of staff, especially me. But the president's got full confidence in Secretary Snow. He's been doing a great job, as he has full confidence in all the members of the cabinet.

WALLACE: I mean, you can put all the rumors to rest right here. Are you shopping that job out? Are you talking to people about replacing him? Is that right or wrong?

BOLTEN: We're all serving at the pleasure of the president, and the president has full confidence in every member of his cabinet, including John Snow.

WALLACE: Is the shake-up basically over, and do you regard it as a shake-up?

BOLTEN: At the White House?

WALLACE: Yes.

BOLTEN: Yes, I regard it as a change. I mean, when you bring in a new chief of staff, you get some change. You get change in management style. We have a couple of more posts to fill. But we've got really good people. And I'm proud of everybody that I've been working with for several years. I'm proud of all the folks we have.

I'm hopeful that the change means an opportunity for everybody within the White House to look at their operations and gear themselves up for a very tough several months ahead. But I think we've got a good team in place, and I think we can serve the president well.

WALLACE: One of the hot-button issues that you've got to deal with now is immigration reform. Does the president worry that the immigrant boycott that is scheduled for tomorrow plus this whole development involving the Spanish Star-Spangled Banner — does he worry that that could create a backlash and make it even harder to pass sensible immigration reform?

BOLTEN: I don't know what effect those particular events are likely to have, but in fact, the president does want to try to bring this very difficult issue to some kind of consensus. He said that to a bipartisan, and very bipartisan, group of senators in a meeting last week.

It's a very emotional issue. There are ways to solve the enormous illegal immigration problem that we have in this country, but I think only if we tone down the very emotional rhetoric on both sides of it and come to some consensus position in the middle.

WALLACE: How active, and I mean not just in having a meeting, but getting into the legislative details, does the president plan to be in getting immigration reform passed by Congress?

And specifically, does he support the concept in the leading Senate bill, the idea that illegals that have been here longer, say five years, should get an easier, quicker path to citizenship than illegals who have been here a shorter period of time?

BOLTEN: Well, the president was deeply engaged even this past week when he met with the members. They were talking details. I won't try to negotiate on television about what the specifics might be.

But the president does believe in a temporary worker program that makes it possible for a willing foreign worker to be matched up with a willing American employer for jobs that Americans are typically not available to do. We need to do that on a basis that gives comfort to everybody concerned.

We need to make sure that the people who come in, for example, would — into this program, if they've been here illegally, would, for example, pay a fine, pay back taxes, learn English, follow our laws, and then get in the back of the line for possible citizenship, if that's what they want to pursue, because the one thing the president doesn't want to do in this process is disadvantage the people who have been playing by the rules and are in line to try to come in here legally.

WALLACE: There's a report that your top priority on taxes is to extend the rate cuts for capital gains and stock dividends. True?

BOLTEN: It's a high priority, yes, it is. And it's been a very important element of the strong economic recovery we have in place right now. I mentioned all the shocks that our system has been through in the last 5.5 years.

And yet we've still got an economy that this past quarter, as you mentioned at the top, Chris, is growing at 4.8 percent. That's terrific growth for any economy, much less one that's been through what we've been through.

So the capital gains cuts, the dividend cuts, are important. But also important are the rates in individual income taxes that the president put in place in 2001 and 2003. They've been an important part of our recovery as well.

WALLACE: What about the analysis that more than half, 53 percent, of the benefits from rate cuts and stock dividends and capital gains go to households making more than $1 million a year?

BOLTEN: You know, there's been a lot of criticism of the president's tax cuts as benefiting the rich. The truth is that the tax cuts that the president put in place in 2001, 2003, with the strong support of members of Congress — those changes have made the tax code more progressive rather than less.

Let me give you one data point, and that is that the top 10 percent of income earners in this country, and that's people making, I think, about more than $130,000 a year — the top 10 percent in the absence of the president's tax cuts would be paying about 64 percent of our total federal income tax take.

After the president's tax cut, that same group is paying 66 percent of the total federal income tax take. The tax code under this president has become more progressive, and we have the top 10 percent of income earners paying two-thirds of the federal income tax.

Now, it seems to me that that's a system that cannot be accused of being unfair to — or skewed toward the wealthy. And it's also a system that's produced a lot of growth in this country and ought to be sustained.

WALLACE: Let's talk about your working relationship with your boss. There's some speculation in Washington that the president has misgivings about taking on a strong chief of staff.

And I want to play two statements that he's made since you took over, the first about Don Rumsfeld, the second about Tony Snow. Here they are.

(BEGIN VIDEO CLIP)

BUSH: I'm the decider. And I decide what is best.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

BUSH: My job is to make decisions. And his job is to help explain those decisions to the press corps and the American people.

(END VIDEO CLIP)

WALLACE: How free a hand has the president given you?

BOLTEN: Well, first of all, I agree with him completely. He is the decider.

WALLACE: That's smart.

BOLTEN: Yeah. But no matter who the president is, you want the president to be the decider. Nobody elected me or Tony Snow or anybody else. The people elected George W. Bush to be president, and he knows his role, he understands his role, and he makes the decisions that are presidential decisions.

He's given me a very free hand to organize and run the White House staff. That's what I'm doing with the changes that I've made so far. And he knows that that's not the kind of stuff a president ought to be messing with.

He needs to work on the big policy issues of the day and make sure that he has the staff in place, including me, that can support him best in doing that.

WALLACE: The talk, and it's mostly from outsiders, is this president is stubborn, that he doesn't like to hear criticism. Are you prepared to deliver the bad news he may not want to hear?

BOLTEN: I am. And I think that's one of the benefits of going to a chief of staff who's been in his operation for a while, somebody in whom he's got — with whom he has some experience and confidence.

So I do feel comfortable going in and telling the president bad news sometimes. And let me emphasize, the president welcomes internal disagreement. He prizes the people — in my experience, he prizes the people who come in and tell him stuff that's different from what everybody else has been telling him or that's different from where he's headed.

He doesn't necessarily change his mind, but there's no penalty internally for disagreeing with the group or with the president. But I say internally, because he's very much a CEO, and when he makes a decision, then everybody within the White House should salute and get in line, at least publicly, with that decision.

We have our disagreements internally. They're vigorous, but they're civil, and they're, I think, well-policy-based.

WALLACE: Does the president have a nickname for you?

BOLTEN: He does. The repeatable one is Yosh.

WALLACE: What's that mean?

BOLTEN: I think it's just a corruption of Josh. I'm not exactly sure where it came from.

WALLACE: And is there an unrepeatable one?

BOLTEN: Yes, there are several unrepeatable ones.

WALLACE: Will you tell me about them during the commercial?

BOLTEN: Yes, during the break.

WALLACE: OK. Finally, let's talk a little bit about Josh Bolten, because the fact is this is the first opportunity a lot of people have had to get to see you. I understand one of the biggest problems you've got with your new job are the early hours.

BOLTEN: Yes. I'm not a morning person. I used to just barely make it to the senior staff meeting every morning at 7:30.

WALLACE: Andy Card got in at about 5:30.

BOLTEN: Andy Card got in often earlier than that, so I'm told. I was actually never there to see it.

WALLACE: So what time are you getting in?

BOLTEN: I'm getting in a little after 6:00 a.m. because my boss gets to the office at about 6:45. He's been up for a while, but he typically comes to the Oval Office at 6:45, and it's important for the chief of staff to be there to greet him and to talk over the business of the day.

But, Chris, as part of our outreach and openness to the press, I'm here with you this early on a Sunday morning. I've probably never seen this early on a Sunday morning before.

WALLACE: But you tell us you do TiVo the show.

BOLTEN: I do TiVo "FOX News Sunday", but I've never seen this early before except maybe from the other end.

WALLACE: Now, is it true that you used to date Bo Derek?

BOLTEN: We are friends from the 2000 campaign where she was a good supporter of the president. She...

WALLACE: Here we have a picture of the two of you. You look like more than good friends, Mr. Bolten.

BOLTEN: Yes. You know, the president once said that when he'd seen a photo like that or had heard about it, the president commented that between the two of us, we're a perfect 15.

But Bo Derek remains a good supporter, a good friend to the president. She's been very articulate on a number of important issues. And we're glad to have that kind of support.

WALLACE: Listen, at our age, I think being rated a five by the president is probably a compliment.

BOLTEN: I'll take it.

WALLACE: Mr. Bolten, we want to thank you so much for coming in for your first interview. Please come back, sir.

BOLTEN: Thank you.