This is a partial transcript of Special Report with Brit Hume, August 7, that has been edited for clarity. Click here to order the complete transcript.

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(BEGIN VIDEO CLIP)

ARNOLD SCHWARZENEGGER : I'm very happy that Mayor Dick Riordan (search) is supporting my campaign. He called me and he says, Arnold, I was pleasantly surprised yesterday by your announcement. And he says I told you for the last two weeks that you will be the best candidate and I will support you.

(END VIDEO CLIP)

BRIT HUME, HOST : That of course, Arnold Schwarzenegger after picking up his candidacy papers today in Los Angeles, talking about his friend, the former L.A. Mayor Richard Riordan, who was just as surprised as everyone else, at the actor's decision.

For more on an ordinary...an already extraordinary political situation now made more so, we're joined again by Dan Weintraub, the noted political columnist of the Sacramento Bee.

So, Dan what is the immediate sort of to the extent that the dust has settled, where does it leave everybody in terms of who's gains, who's lost, who's where now in the aftermath of these development in the last 24 hours?

DAN WEINTRAUB, COLUMNIST, SACRAMENTO BEE: Well, I think the dust is still setting. But clearly Gray Davis is down, the unity of Democratic Party has crumbled, Arnold Schwarzenegger is up, I think. Darrell Issa (search), the guy who put his money into this whole thing and put on the ballot in the first place, is out with a weepy concession speech before the campaign has even begun.

I think it's starting to shape up for the moment as maybe a three-man race: Arnold, Cruz Bustamante (search), the Democratic lieutenant governor, and Bill Simon, who...now, Cruz Bustamante...go ahead, I'm sorry. Cruz Bustamante, of course, just got in the race today. He is the lieutenant governor of California and he...he said when he got in that he had hoped that people would not vote for the recall of the governor. But that if they did, Bustamante said he hoped that they would vote for him to succeed him if they wouldn't stay with him.

Now unfortunately, we've lost communication with Dan Weintraub, our guest from the Sacramento Bee as he was telling us that this was breaking down in a three-way race. And you will notice that as he was saying that he did not mention one of the three being Gray Davis. So, it seems clear that he, along with many other people now think that the emergence of Arnold Schwarzenegger is curtains for Gray Davis. Cruz Bustamante being in the race as well.

Now, Gray Davis, as it happens, has just had something to say out in California and let's listen to what he said.

(BEGIN VIDEO CLIP)

GOV. GRAY DAVIS (D), CALIFORNIA: To make their lives better. Now what do I mean by that?

We still have serious problems to deal with. We have to revive Jackie Spears' privacy legislation. That's a high priority with me. We have to get worker compensation reform to help every nonprofit, every city, every small business that's experiencing rate increases of 2 to 300 percent. That is just not acceptable. People can't stay alive with those kinds of rate increases.

We have to work on long-term financial structural reform and I'm assembling some foremost budget experts to help us in that regard. We ought to get on it right away.

So that's my agenda for the next 60 days. And of course, I'll comment. There will be campaign activities. But I'm going to use my time to do a good job as governor. All these other people are running for governor, I am the governor, I'm going to use my time to do the job as well as humanly possible.

QUESTION: Governor, are you afraid at all about other Democrats jumping in?

DAVIS: You know, I can only control what I say and what I do. and I'm trying to focus on the job ahead of me. I'm grateful to have this task; I'm going to do it as...

(END VIDEO CLIP)

HUME: All right. Well, were looking at...we were looking at a videotape there of what Gray Davis had to say. Let's go back to Dan Weintraub, who is able to rejoin us now from out there.

Dan, I noticed that when you were talking about the list of people who you thought were the three that were in the hunt here, you missed...you mentioned three without mentioning Gray Davis. Is it your view that he is basically finished now?

WEINTRAUB: No, I still think he has some chance to somehow dig deep and persuades the voters that this whole event, which he calls the circus or a carnival, is bad for California and is going to be disruptive and is just bad government. And somehow, I'm not quite sure how he does it, but somehow persuade people to get out to the polls and vote against something, which they already might consider something illegitimate. That is his really only chance. His right-wing conspiracy has been swallowed up in a bipartisan or multi-partisan populist revolt. So that argument is gone. That's all he's got left.

HUME: You mentioned Bill Simon, which surprised me a little bit. I don't know California politics as well as you do. Of course, he was the loser in the race to Gray Davis the last time. Is it your view he becomes a formidable candidate now this new landscape?

WEINTRAUB: Well, with Darrell Issa out of the race and state Senator McClintock in, but under funded, if Simon is willing to and able to part with some of his millions, he was the Republican nominee last year. He got 42 percent of the vote against Gray Davis. I think he still has a call on the base Republican vote that he and...and Issa and McClintock were going after. Arnold has a lot of trouble with those people.

HUME: I only have a couple of seconds left. Do you think Bustamante has a real chance here if Davis is recalled?

WEINTRAUB: Yes, I do. He polls well.

HUME: All right. Dan, it's nice to have you.

WEINTRAUB: Sure.

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