This is a partial transcript from Sean Hannity's WABC radio show, Sept. 25, 2003. Watch Hannity & Colmes weeknights at 9 p.m. and 1 a.m. ET!
SHEPARD SMITH, FOX ANCHOR: Hannity is starting the interview with Arnold now and --Arnold Schwarzenegger (search), and they're talking about last night's debate.
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SEAN HANNITY, WABC RADIO TALK SHOW HOST: And he has his tough love plan for California, and he says he's going to raise taxes.
ARNOLD SCHWARZENEGGER (R), CALIFORNIA GUBERNATORIAL CANDIDATE: Increase taxes by $8 billion and punish the people of California (search) more. That is the sad story, exactly. Exactly. And also, they have a choice, you know, do they want to have a candidate that caters to special interests, or a candidate that believes that you have to represent the public? I believe you have to represent the public.
HANNITY: Well, there is a bit of controversy -- OK.
HANNITY: Involving -- you had a number of heated exchanges with Arianna in particular last night. Well, it seemed like she came ready to take you on. You had one line in the debate, you thought you'd have a perfect part for her in "Terminator 4."
Now, because of that comment -- you may not know this, so we're making news here -- she is urging the women of California not to support you, and she says this represents what you think of women. And she believes you were referring to the scene in "Terminator 3 (search)" that showed a female robot's head in the toilet. That's what she's saying to our friends in the media that are here with us today. What do you want to say to that?
SCHWARZENEGGER: Well, I don't know why she picked that scene. I have no idea. But the fact of the matter is it was a compliment, because in "Terminator," we always had powerful women. In the first "Terminator" and in the second one, it was Linda Hamilton who played always the powerful woman that succeeded.
SCHWARZENEGGER: And in "Terminator 3," the female terminator was the most powerful character in the whole movie. So, therefore, in "Terminator 4," it will continue the trend. So, it actually was a compliment. If she takes it the wrong way, it's not my fault.
HANNITY: OK. All right.
HANNITY: We are -- for those of you -- Arnold has a lot of history here in the L.A. Center Studios. Many of you may not know this. You have been here filming scenes for "Collateral Damage." For "Terminator 3," you had some scenes that were filmed actually right here on this lot. And you were also involved in, at one point, it was one of your "Terminator" movies, they wanted to take the jobs away from California.
SCHWARZENEGGER: That's right.
HANNITY: Do you want to tell us?
SCHWARZENEGGER: Yes, as a matter of fact, this is a fantastic studio here, the L.A. Center Studios. I mean, it's a really great facility, that you can literally shoot just about any scene that you want here, that the stages are big enough and all of that. So, we have shot "Collateral Damage" and, of course, "Terminator 3."
And "Terminator 3" was supposed to go to Canada. As many, many productions -- you know, there's an endless amount of productions that are leaving California and are going to Canada, because they have great incentives in Canada. And so, what I did was I said, "No, we're going to stay with 'Terminator 3' here. What is the problem?" And they said, "Well, there's a difference of $8 million." And I said, "Well, we have to sit down and negotiate."
So, we sat down and negotiated. I put in out of my personal salary, I put money in. They said, "OK, the producer should put some money in," and they put some money in. And then the various different departments, departments that were cutting down some of the fees, and we came in with a difference of the $8 million. And we created 500 jobs here in Los Angeles.
HANNITY: All right.
HANNITY: All right.
HANNITY: Let me...
SCHWARZENEGGER: That's exactly what I want to do as governor. I want to bring jobs back to California. I want to bring businesses back to California and bring the economy back.
HANNITY: All right, let me -- let me raise the important question here, because this is not a primary, although there are two Republicans in this race: Tom McClintock and yourself. There's going to be a vote, yes or no, on the recall, and then they will vote for one of the other candidates. If Tom McClintock stays in the race, the polls show that you are at a dead heat with Cruz Bustamante. If Tom McClintock is not in this race, it looks like you're going to win by a fairly comfortable margin.
So, that raises the question: Would you, in some way, do you have any plan 12 days out of this election to reach out and somehow join forces with Tom McClintock?
Now, I must tell you, he was on "HANNITY & COLMES" last night on the Fox News Channel, and he said under no circumstances would he get out of the race, that he has made a promise and he's going to stand by it. Do you think there's a way that you could reach out and somehow, whatever way, team up with him?
SCHWARZENEGGER: Well, first of all, as you know, I respect him very much. I mean, Tom is a terrific guy and he's very smart and we see eye on eye on a lot of the issues. I mean, we think alike. But this is a decision he has to make. I mean, I think that it is obviously much better, mathematically speaking, to win when you don't split the vote, and I think that it is very important for him to think about that, but I am not going to be the one that pushes him. But I'm looking forward to working with him in the future, because I think that he and I would make a great team.
HANNITY: OK, fair enough.
SMITH: (UNINTELLIGIBLE) here as well. So, the question is: Will, in fact, he drop out, McClintock? We'll talk about that with our guests and have more of Arnold Schwarzenegger's town hall with Sean Hannity. That's coming up on Studio B. It's great to have you with us.
SMITH: It's the Hannity and Schwarzenegger show, and it continues, a town hall meeting, WABC Radio, Sean's radio network and Fox News. You see it up there on the wall. They're still talking. We're not sure when they're going to take a commercial break, but when they do, we have some mighty good guests.
Let's listen until then.
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SCHWARZENEGGER: ... third-world country conditions in the schools. That's what I want to change. I want to have education equal to everybody.
HANNITY: All right, we're going to take a break. We'll come back. If you're missing this but you're listening on the radio, it will be on "HANNITY & COLMES" tonight on the Fox News Channel. More with Arnold Schwarzenegger as we continue coast to coast on the SEAN HANNITY SHOW.
SMITH: Twenty-three minutes past 12:00 in Los Angeles, where Hannity and Arnold Schwarzenegger are talking it out. Hannity has just asked Arnold, as they've come back from commercial break, what he's going to do about the economy, and Arnold is answering.
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SCHWARZENEGGER: ... a billion dollars extra than other states are paying. He made a deal, a long-term deal at the time, and the price was the highest.
HANNITY: You'll get out of it?
SCHWARZENEGGER: Yes, I would renegotiate it, that's for sure, and provide also more energy and really build up the resource that we need here. The other thing is, of course, the Medi-Cal. Medi-Cal, there's just an endless amount of problems here, but what we have to get rid of is the red tape. The red tape and the frivolous lawsuits that we have here in this state is driving businesses out, so we have to change all of that and create reform.
Can you cut enough spending? Can you do it without raising taxes, and can you balance the budget that way? Will you -- on my program, you said you will not raise taxes unless there is a natural or a state emergency of some kind. How do you define a state emergency?
SCHWARZENEGGER: Well, first of all, you're absolutely correct. I would never raise taxes, because I feel that we do not have a problem that we have under-taxed. We have a problem that Sacramento has overspent. All they do is spend, spend, spend.
And then, when they realize they have spent too much, they've spent money they don't even have, then it is tax, tax, tax. And then, they want to punish the people of California for the mistakes that they have made in Sacramento. I think it is unfair to increase, for instance, the car tax by 300 percent. What is that?
HANNITY: Yes. But, yes, you...
SCHWARZENEGGER: So, therefore, what I would do is, you have to really -- you have to create cuts. The workers' compensation reform will help with that, because there are a lot of state employees; that will give you $1 billion right there.
The other thing you have to do is you have to start selling off some of the assets that California has. There is no reason when you're in an emergency like that to hold onto those assets. So, you have to strip away slowly in this.
What about Indian gaming, for instance? I, as governor, would sit down with the Indians, and I would renegotiate cutbacks. So, they'd participate, like, for instance, in Connecticut, where they pay 25 percent of their revenues. If they pay 25 percent of their revenues, there is right there $1.25 million.
HANNITY: Well, let me ask you this: Can you do all of that? All right, so there's a lot of money in those areas.
SMITH: We'll get some more of this in just a little bit.
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