TRANSCRIPT: ABC News' Chris Cuomo Interviews Gov. Arnold Schwarzenegger

The president's health care push comes at a time when some states are slashing budgets. California Gov. Arnold Schwarzenegger faces a $26 billion shortfall in his state. He discussed the president's health care initiative and his thoughts on what it means for California.

CHRIS CUOMO: Your state is somewhat of a window into the reality of health care. You've been pictured at your desk with a big knife having to cut the budget. Over $1 billion in health care cuts. It's gonna affect low income families. It's goin' to affect the coverage that children get. Is this absolutely necessary?

ARNOLD SCHWARZENEGGER: Well, you know, when you have a $26 billion shortfall in revenues, then you have to go and do a combination of things. And one of the things you have to do is make deep cuts in various different programs. But the important thing at the same time is that the cuts are not just cuts.

They're also coming from reforms. Very important reforms in welfare, for instance, or in in home services where we cut some of the fraud and the abuse in in home services. That will save us billions of dollars down the line and also the same is with CalWorks or welfare reform where we finally created a system where people'll get a second chance, but at the same time it shouldn't become a way of life like it has been in California. So we saved billions of dollars also there. So there were good things that happened, but also it was without any doubt a tough budget but a necessary budget.

CUOMO: Some controversy surrounding reform in the prison system. That some 27,000 prisoners may get out early just to save money. Is that too much just for cost savings?

SCHWARZENEGGER: Well, first of all I think that there's all kinds of rumors flying around about prisoners getting out early and all of those things, which is incorrect. You have to understand that we have thousands of undocumented immigrants that are incarcerated. Those will be handed over to the federal authorities, for instance. There's others that will be, you know, being locked up in their homes with electronic devices so they can't leave their homes and so on. So no one will be released. That is incorrect information.

CUOMO: OK. Thank you for the clarification, Governor. Looking at your fate of the state with respect to the federal government on health care, many governors do not support President Obama's health care bill because of what it will mean to their budgets. You do support Obama's bill. Why?

SCHWARZENEGGER: Well, first of all, I cannot say that I support exactly everything that is in the health care bill because I don't know exactly what is in that bill. It changes all the time, as you know. What I have said was, and I told this to the president, that I will support him 100 percent in health care reform, because I think it's necessary.

It's inexcusable that we have 48 million people in Califor-- in the whole United States that are uninsured. In California we have our own shared of uninsured. It's six-and-a-half, 7 million people right here in our state. So I think we need health care reform. And it has to be done the right way.

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