Schwarzenegger: 'We Sprint Through the Finish Line'

Gov. Arnold SchwarzeneggersRick Rowell/ABC News
California Gov. Arnold Schwarzenegger's popularity has suffered amid the state's grinding fiscal and political crisis.

On a recent afternoon before last night's California primaries, the highest-profile politician in the state stepped to a podium to give a speech -- but not on behalf of any candidate.

With one year to go in his term, Gov. Arnold Schwarzenegger appeared at a San Diego ceremony to welcome California veterans returning from overseas service.

"It doesn't matter if this is my last months in office, which it's not, it's my last year in office," Schwarzenegger told "Nightline" co-anchor Terry Moran in an exclusive interview. "I mean we continue on and we sprint through the finish line. The last months, the last year, the last six years, it's all about serving the veterans, because there's no one that appreciates their work more than an immigrant like myself."

The Governator: I Have Work to DoPlay
The Governator: 'I Have Work to Do'

Watch the full story tonight on "Nightline" at 11:35 p.m. ET

Carly Fiorina won the state's Republican nomination for Senate, pitting her against incumbent Sen. Barbara Boxer. Republican Meg Whitman, former head of eBay, won California's Republican gubernatorial primary to face the state attorney general, former Gov. Jerry Brown, in the general election.

But the guy who once dominated California politics -- who seemed poised a few years back to usher in a new era in the Golden State, like Ronald Reagan before him -- was out of the limelight.

These are difficult days for most incumbents, and even with his superstar status, Arnold Schwarzenegger is no exception. Despite his signature self-confidence, he acknowledges that he's become a very unpopular governor.

"You know something? It's perfectly fine, I understand the mood," Schwarzenegger said. "I don't blame the people for being upset about what's going on."

In a rare, wide-ranging interview, Schwarzenegger spoke exclusively to "Nightline" about everything from veterans' issues to how President Obama is handling the Gulf oil spill to healing partisan divides.

Voter Disgust in California

California faces a colossal, grinding fiscal and political crisis with no end in sight: a $19 billion deficit in the state's budget; a political system in such deep partisan gridlock it makes Washington look almost functional. Add to that cutbacks in state services, higher taxes--it's all a recipe for deep voter disgust.

Much of that anger is aimed at Schwarzenegger, who has seen his approval rating collapse to 23 percent, with seven in 10 saying they disapprove of the way he's done his job.

So he may no longer be "the Governator," but he is determined to keep pushing to change the entrenched political system he entered into seven years ago.

"I will continue doing the reforms and run through the finish line till I'm finished," Schwarzenegger said. "Because we've got to change the system that doesn't serve the people well. That is the bottom line. Rather than just complaining."

Schwarzenegger on Oil Regulation

Schwarzenegger resisted joining several fellow Republicans in criticizing Obama's handling of the oil spill, saying instead that the president was "doing everything that he can" to fix the disaster in the Gulf of Mexico -- but that may not be enough.

"What's the public relations disaster versus what's the reality?" Schwarzenegger said. "Two different things altogether. I think that he's doing everything that he can in order to deal with the crisis. But public relations-wise ... the people in America are saying that he hasn't responded quickly enough or he isn't responding strong enough, or he's not in charge of the situation."

Schwarzenegger put blame for the spill squarely on the shoulders of Congress for its lax oversight of the oil industry.

"Why do we have this problem? The problem is because we failed, as a country, to force the oil companies to have a safety device, which European countries have," Schwarzenegger said. "What did we do and tell the oil companies that when you drill, and you have an accident -- and I know you are saying the technology is way ahead now and we won't have those accidents -- but in case? What would you, what's the safety feature? What device do you have? Nothing.

"Because they lobbied, and Congress voted against it. So you can't go to the president or the Bush administration now, and say it's all your fault, when Congress has already screwed up years ago, when they had the chance to go and to make the oil companies have these safety features there. It costs more money, so that's why [the companies] lobbied against it."

The governor said the spill had changed his thinking on offshore drilling.

"This is why we said in California -- made it very clear -- 'Look, if there's a financial crisis like we are right now, I'd like to get this extra money for the oil drilling,'" Schwarzenegger said. "But you know something? What I've seen in the Gulf of Mexico, no thank you.

"I changed my mind, and I say no drilling in California, because I have not seen the oil companies really being responsible when it comes to this drilling."

Getting Past Partisanship

Schwarzenegger has long taken pride in being an example of the ultimate moderate, and when he took office many lauded it as a new era of consensus-building in a state seized with partisan stalemates. But with the rise of the Tea Party and other elements on the right, is there still room in the party for a Republican moderate like him?

"I don't feel like I'm getting squeezed out, I feel like I need reforms," Schwarzenegger said. "It's not the Republican party, it's not the Democratic party, it's the system that is wrong. ... We need open primaries. People overwhelmingly are supporting open primaries because they want to get things done. ... People just want Democrats and Republicans to work together. ... We also know that both parties are interested in one thing, and this is to do something that is good for the United States.

"And so how do we ... bring those two philosophies together? Rather than looking at the other party as the evil party, or as the enemy, or the other side of the fence. I don't look at them this way.

"First of all, I sleep with a Democrat every night, so I cannot look at it this way. ... What we want to do is create a system where you get rewarded for compromise rather than get punished for compromise, and where you're [not] rewarded for getting stuck in your ideological corners."

Schwarzenegger on Immigration

Moran asked Schwarzenegger about a controversial comment he made regarding Arizona's new immigration laws. At a commencement speech in May, the governor joked that if he were to give a commencement speech in Arizona, he might be deported for his accent.

"It's, first of all, humor," Schwarzenegger said. "I come from the entertainment background. ... So obviously, when there's something that is really hot in the news, you try also to look at it in a humorous way.

"I made it very clear that we in California have no use for this kind of a law. I have also made it very clear for years already that you need to have more border patrol. We need to secure our borders. Our borders are not secure. That is the bottom line.

"We have put 1,000 National Guard troops on our border, when the Bush administration asked us for help. We put them on the border and immediately we have seen, within months, a drop-off of 26 percent on illegal crossings."

California's Operation Welcome Home

Despite deep budgets cuts and California's ever-growing deficit, Schwarzenegger continues to launch new programs he thinks are absolutely necessary. One of those is Operation Welcome Home, to benefit California veterans returning from service.

On the deck of the USS Midway, the retired aircraft carrier docked in San Diego that now serves as a museum, Schwarzenegger talked about the state's new program to link veterans with the services they need.

"If someone comes back and has post-traumatic stress disorder, we reach out and we do everything that we can for them to help them to get out of that situation, and to get a job and get back to their family and get back to a normal life," Schwarzenegger said.

"Whatever that takes -- medical attention, rather than having people sent around from one agency to another and from one government silo to another and give them the runaround. This is why we started now a one-stop shop.

"It is important to have a Web site where [veterans] can all go and get all these various different services... which we started. We were one of the first in the United States to do that and also this program here, Operation Welcome Home, is the first in the nation. We hope it will spread to other states. I will make sure of this through governor's conferences and so on that it spreads to other states."

Looking Ahead

Speculation abounds as to what Schwarzenegger will do after his term ends. He claims he has not -- and will not -- think about any future plans until his final days in office arrive.

"I don't allow myself," he said. "Even if I sometimes wander off, I come right back to this year. I don't allow myself to have no meetings, and nothing about next year or about my future because this time, right now it's about now, and getting things done, serving California. That's my job."

Watch the full story tonight on "Nightline" at 11:35 p.m. ET