Treasury Secretary Henry Paulson insists the stimulus package is working.

WASHINGTON (CNN) — Treasury Secretary Henry Paulson assured CNN’s Wolf Blitzer on Sunday morning that the stimulus tax rebate issued to millions of Americans this year is working.

“When you look at the consumer data we have for the second quarter; you look at retail sales, the stimulus package is working,” Paulson said. “And it's coming at a time when it's very much needed.”

But Paulson rejected the idea of a second stimulus package of $50 billion, which has been proposed by Democratic House Speaker Nancy Pelosi and other democrats.

“We put it together so it would be big enough to be meaningful to the economy today, and not so big that it was going to jeopardize our fiscal responsibilities and some of our longer-term priorities,” Paulson said.

He stressed that the focus needs to be on the stability of our capital markets, energy prices, and the housing market.

Sen. Chris Dodd said it's 'not accurate' to say Fannie Mae and Freddie Mac are in trouble.

WASHINGTON (CNN) — Things got heated Sunday morning on CNN’s Late Edition over the question of whether taxpayers have to bail out the government-sponsored mortgage lenders Fannie Mae and Freddie Mac.

“If they're in deep trouble, [should] U.S. taxpayers go out and bail them out?” host Wolf Blitzer asked Senator Jon Kyl, R-Arizona, a member of the Senate Finance Committee who was on the program with Senate Banking Committee Chairman Chris Dodd, D-Connecticut. Dodd jumped in to respond himself.

“To suggest somehow that [Fannie Mae and Freddie Mac] are in trouble is simply not accurate,” Dodd replied.

Last week shares of the two mortgage giants plummeted as speculators grew increasingly nervous that Fannie and Freddie would not be able to guarantee the $5 trillion debt they hold in mortgages. Dodd’S committee oversees Fannie Mae and Freddie Mac.

“The facts are that Fannie and Freddie are in sound situations,” Dodd said. “They have more that adequate capital, in fact more than the law requires.”

When pressed about the recent IndyMac Bank federal takeover, Dodd said that could have been avoided if there had been proper regulations in place to monitor the sub-prime mortgage market.

IndyMac closed on Friday after federal regulators realized that the bank was no longer capable of guaranteeing deposits. The bank was also a large issuer of sub-prime mortgages.

Kyl said Americans should not fear the money they have in banks is at risk. But he added that the Fannie Mae and Freddie Mac situation is “of serious concern… They really are barely staying above water.”

Bill Clinton and Barack Obama will talk soon, according to Terry McAuliffe.

(CNN) — Clinton campaign chairman Terry McAuliffe assured CNN’s Candy Crowley that former President Bill Clinton and presumptive Democratic nominee Barack Obama will be discussing Clinton’s role in the campaign within the next two days.

“I believe that in the next 24 to 48 hours they will talk and off we will go,” McAuliffe stated on Sunday’s Late Edition.

Clinton has remained behind the scenes so far during the general election. He was not present at the Democratic event in Unity, New Hampshire on Friday and has only released a one-sentence statement saying that he will do whatever he can to help the Illinois senator win the election.

Many analysts have said that Clinton’s not-so-subtle absence from the campaign is because he is angry and bitter about his wife losing the nomination.

McAuliffe defended the former president, saying that he has been taking time to let his wife finish up her campaign and secure her relationship with Obama.

“She was the candidate, she got 18 million votes, she’s the political leader of the Clinton family now,” McAuliffe said.

Obama asked to talk to President Clinton on Friday and Hillary Clinton told him, “Absolutely,” according to McAuliffe.

Now that President Clinton is back from a five-nation tour during which he attended Nelson Mandela’s 90th birthday party, McAuliffe predicts that they will be speaking shortly—but stressed that the attention should be on Hillary Clinton and Obama coming together.

(CNN) — Sen. John McCain supporter Gov. Tim Pawlenty, R-Minnesota, remained mum on Sunday about the possibility of running alongside the Arizona senator in the general election.

"We talked about family and sports and politics and the like, but we did not discuss any talk about the vice presidential pick," the governor told CNN's Wolf Blitzer when asked about his recent meeting with the presumptive Republican nominee.

Many analysts have identified Pawlenty as a likely V.P. candidate. He is the national co-chairman for the McCain campaign and has been an active supporter of the Arizona senator's presidential pursuit.

Minnesota, which hosts the Republican National Convention in September, is also widely considered to be a battleground state for both parties this November-adding to his appeal as a potential running mate.

Despite staunchly defending McCain on issues ranging from taxes to oil drilling to alternative energy solutions, Pawlenty refused to take the bait on the "veep" question.

"I am very happy being the governor of the state of Minnesota. [being vice president] is not something I have designs on," Pawlenty stated.