'This Week' Transcript: Gov. Schwarzenegger

Nov. 16, 2008 — -- ABC'S "THIS WEEK WITH GEORGE STEPHANOPOULOS" NOVEMBER 16, 2008

STEPHANOPOULOS: Good morning and welcome to "This Week."

Our exclusive headliner, Arnold Schwarzenegger.

SCHWARZENEGGER: Good to see you.

STEPHANOPOULOS: On more government bailouts for the economy.

STEPHANOPOULOS: President Bush is resisting that. So are your Republican colleagues.

SCHWARZENEGGER: I don't care about what anyone's philosophy is.

STEPHANOPOULOS: The GOP brand.

SCHWARZENEGGER: If they want to go and talk about core values, I think it's all nonsense talk. I think we have to just talk about one thing -- what do we need now.

STEPHANOPOULOS: And our next president.

STEPHANOPOULOS: Do you think he'll have to challenge you on the basketball court? Plus...

SEN. HILLARY RODHAM CLINTON, D-N.Y.: I'm not going to speculate or address anything.

STEPHANOPOULOS: ... will Hillary be Madam Secretary? That and the rest of the week's politics on our roundtable, with George Will, Sam Donaldson, Cokie Roberts and Paul Krugman of the New York Times. And as always, the Sunday Funnies.

UNKNOWN: Barack Obama met with Hillary Clinton on Friday to see if she would be interested in a role in his administration. Of course, said Hillary. I'll take president.

STEPHANOPOULOS: Before Sarah Palin came along, no Republican could match Arnold Schwarzenegger's star power. He's still the GOP's most powerful governor. But Schwarzenegger did not join his peers at the conference in Miami this week, so we went to him, for a wide-ranging conversation on the economy, the election, and how his partycan come back. When we sat down Friday afternoon in Los Angeles, the governor was dealing with two emergencies -- more devastating wildfires, the worst near Los Angeles in four decades; plus, a budget crisis that's forcing him to abandon his "no new taxes" pledge. That's where we began.

SCHWARZENEGGER: Through global warming, we have now a fire season all year round. We used to have fire seasons only in the fall. But now the fire seasons start in February already. So this means that we have to really upgrade and have more resources, more fire engines, more manpower, and all of this, which, of course, does costextra money.

But I think that that's what -- you know, why you have reserves in the budget.

STEPHANOPOULOS: But you have a budget crisis now.

SCHWARZENEGGER: When we have such things as the -- but we have a budget crisis as many other states have. It's simply because, you know, this is a different world now. We have been hit first by an economic slowdown. And then, because we are relying through our tax system, that is relying heavily on income tax and capital gains tax,that we have a flat economy, but our revenues took a dive by 10 percent. So that means that all of sudden, we have $11.2 billion less than anticipated. And so now we are in a special session to bring Democrats and Republicans to lead us together, and it's to cope with those kind of things through revenue increases and also makingadditional cuts.

STEPHANOPOULOS: Yet, your critics say that this one-and-a-half- cent sales tax is the most regressive form of tax. It's going to hit the people who are going through the toughest times right now the hardest.

SCHWARZENEGGER: Well, no one should be that worried about any of that, because remember, the way it works is that the governor puts up a proposal, and then the legislative leaders go and start debating over that and looking into it, if they maybe have a better idea or a different idea. So we have a very collaborative kind of approach tothe whole thing. So they may come up with different type of taxes.

I totally agree with you. It is very hard when you have to increase taxes, no matter when you have to increase taxes...

STEPHANOPOULOS: You don't want to do it.

SCHWARZENEGGER: I don't want to do it. I hate taxes. I hate the word "taxes" and all of those things. But there's certain times when you have to forget about the ideology, and, you know, all of this, and fix problems...

STEPHANOPOULOS: That is...

SCHWARZENEGGER: Because people want their fixed problems.

STEPHANOPOULOS: That is exactly the same debate that's going on in Washington right now. And there's this question whether the federal government should step in and throw a lifeline to the automobile industry, the domestic automobile industry. Should they?

SCHWARZENEGGER: Well, first of all, I think the important thing for the federal government is to look and follow through with what they intended to do in the first place with the $700 billion. I think the key thing is to show consistency to the financial community and to the American people, so you don't have to, you know, going back andforth and changing too many times, and also to show to the world's financial community that America has its act together. We know there's a problem in the economy, and here's how we fix it. So that's number one.

Number two, I think it's important for the United States and Washington to look at the states, which states are struggling, and maybe helping them out.

Number three, if they go in the direction of helping companies like the car manufacturers, I think it's very important to not just put money in, but let's go and see if they have been fiscally responsible, and if they're really operating the right way. Because right now, all of those -- you know, if you pay the auto workers or the benefits and all of those things, are maybe too high. Right now, if you compare it to Germany and to Japan and to other countries, theycan build cars cheaper, and they don't have that overhead with the amount of what they pay to the workers, the benefits they provide.

SCHWARZENEGGER: We have, like, in America, you sell a car, and you have $2,000 of each car just goes to benefits.

So I think that there's a way of reducing all of that, make them more fiscally responsible. And then, if they have to act together and have renegotiated those deals, then, yes, you can go in there and help them out, financially.

STEPHANOPOULOS: So Democrats have said that some of that $700 billion should be used for the auto industry. You're for that if the auto industry agrees to make some changes?

SCHWARZENEGGER: Make, really, changes that are fitting our time today. This is a different world. Anyone that wants to go and think that they don't have to shift down and make changes -- if it is states; if it is local government;if it is the auto industry, or any other industry, as far as that goes, they're living in a dream world or in a fantasy world.

You've got to recognize that this is the time, now, to renegotiate and to work in a different way -- like we have proposed a furlough to have, you know, our state workers, for instance, not work one day a week and not get paid for that day.