The former Treasury Secretary during the Clinton Administration said on CBS News' Face The Nation that he thought an "enormous amount" has been done with the bailout package, but "I think there's a good deal else we can do."
"I think it is imperative that we have a very large fiscal stimulus, although I do think that stimulus needs to be married to a commitment to long-term fiscal discipline, so we don't risk undermining our bond market and our currency market," he said.
Rubin told host Bob Schieffer that the package could include $1,000 tax rebates for families, but also could give help to cities and states running into difficulties and money for infrastructure if it is ready to go right now. Rubin added that the cost could be around $150 billion and that Democratic presidential nominee supports these measures.
"You could do all of that -- and it needs to be done in a very short period of time, in order to stimulate economic demand in a time of a weakening economy," Rubin said.
Douglas Holtz-Eakin, a campaign senior policy adviser to campaign and a former director of the Congressional Budget Office, said that the Republican presidential nominee wouldn't take a new stimulus package off the table, but he focused instead on the $700 billion already passed and McCain's proposal to use much of the money to directly buy mortgages from banks and renegotiate them for homeowners.
"If you go back to what he talked about in getting mortgages off people's backs, that allows you to pay your grocery bills, that allows you to pay your gasoline bill. You can keep making your college tuition payments," Holtz-Eakin told Schieffer.
"There's no greater stimulus than keeping American households spending. They're 70 percent of the economy, and so focusing on them, keeping them in jobs, creating new jobs, that's the greatest stimulus of all.
"The idea that somehow tough economic times are a license to spend money on anything you can think of is something that you want to look at very carefully," he added.
Both Holtz-Eakin and Rubin defended their candidate as the best able to guide the country through the tough economic times. The advisers both said the situation could be turned around within months.
"Once you get past the crisis of confidence … you're still back in the kinds of difficulties we've had over the course of the past year," Rubin said. "You've had a lot of damage. You now have very large wealth loss. You've had weakened consumers, weakened financial institutions, problems around the world. There is a great deal that needs to be dealt with, and I do think in that context, public policy will be very, very important.
"And it is absolutely imperative that we have a highly active public policy approach. And I think [Obama] laid out -- not I think, he has -- laid out a very sensible set of measures to take in this respect. But it's going to take very strong presidential leadership," Rubin added.
Holtz-Eakin, meanwhile, criticized Obama's proposal to raise taxes on those making more than $250,000, and also to increase environmental regulation, as bad for the economy.
"A remarkable fact is that in this bad economy … small businesses have created 331,000 jobs this year. Don't raise taxes on them. Don't make their lives harder. And, you know, let's take care of the institutions, the small businesses, the home owners, that have been successful in America. And that's the McCain strategy," he said.
"Senator Obama has promised that, day one, he would enforce the Clean Air Act, treating carbon dioxide as pollutant. That runs the economy from the Environmental Protection Agency. It's a draconian regulatory approach. That's not a rescue for jobs," Holtz-Eakin added. "The question will be, who can most quickly generate jobs in this economy to keep the unemployment rate from spiking so high?"
Also on Face The Nation were Democratic Gov. Ed Rendell of Pennsylvania and Republican Gov. Tim Pawlenty of Minnesota. Both defended their candidate's prospects heading into Election Day next week.
"I don't think we've got a double-digit lead. And I think complacency is our biggest foe in Pennsylvania. I've been agitating to get Senator Obama back. He's coming into Pittsburgh Tuesday, Philly on Wednesday. I think President Clinton is coming in," he said.
"Senator McCain and Governor Palin have been virtually living in Pennsylvania. And we need to have our candidates there. And Senator Obama is such a great campaigner. Everywhere he goes, the enthusiasm level goes up dramatically."
And despite polls showing Obama well ahead, Pawlenty stressed how the race isn't over yet.
"Time and time again, he's overcome and had comebacks in his life that have been incredible. And I think he'll do it again here."
Read the full "Face the Nation" transcript here.