The following is a transcribed excerpt of "FOX News Sunday," May 8, 2005.

CHRIS WALLACE, FOX NEWS: When he was elected governor of California in 2003, Arnold Schwarzenegger rode a wave of support into office. But after launching a bold reform agenda this year to change everything from the state pension system to pay and tenure for teachers, Schwarzenegger's poll numbers have dropped 20 points in the last few months.

We went to Sacramento this week to talk with the governor to find out how he and his program are doing, now that he's getting his first full taste of the rough and tumble of California politics.


WALLACE: Governor, your approval ratings are down below 50 percent. Public workers protest wherever you go. And you've had to scale back on some of your reform initiatives. A recent article said about you, "The action hero has begun to shrink to human form."

Are you getting smaller?

GOVERNOR ARNOLD SCHWARZENEGGER, R-CA: I concentrate only on one thing, and that is to create reform in California and to focus on the things that I've promised to people of California, which is that I will fix a broken system.

Leading is not about popularity; leading means that you have to sometimes make tough decisions. You have to make decisions that will be good the long run, but maybe they're tough in the short run.

And this is exactly what we're going through. This is like a script in a movie. You start the hero in the top. Then you take him down so the people rooting for you, and then they're all with you, and then you take him up again. And then there's an end to this arc. This is it; it's the perfect script.

WALLACE: But the opposition has had some impact. You've had to pull back your reform on state pensions. Some people used to say that you might be the next Ronald Reagan. Now they're saying you might be the next Jesse Ventura.

SCHWARZENEGGER: Well, first of all, let me just correct you. In all due respect, we did not pull back our reform agenda on pension. We pulled back the initiative to rewrite it and to resubmit it because we need reform. Our pension, our government pension is on a track to disaster.

WALLACE: So the point is you have had to rewrite some of these things or even, in some cases, delay them, pull them back.

SCHWARZENEGGER: Exactly the way you rewrite your script, exactly the way you kind of retape a show. If the answer doesn't work or your performance doesn't work the same as we do in movies, you do take two, take three, take four. That's exactly what we're doing.

But we are right on track. It is wonderful how our reforms are going. And you know something? The other side is now coming to the table because yesterday I started handing in the signatures. Last week we handed in already signatures. We're going to continue on handing the signatures in. And all of the other reforms. And everything is going great.

WALLACE: Governor, direct question: Will you call a special election in November to put your three reform measures up to voters?

SCHWARZENEGGER: If the legislators don't act and if they don't do their job to create the reforms with me, then I will definitely go to a special election. There's no two ways about it.

WALLACE: Are you willing to sit down with the Democratic legislators and make real compromises, you as well as them?

SCHWARZENEGGER: Well, it depends to what extent you are talking about compromise.

We still need real reform. So, if the compromise means not to create real reform, no, of course I wouldn't do that.

What I want to do is just — and by the way, my doors are open to negotiate. I love to work out things with Democrats and Republicans.

WALLACE: The unions for teachers, for nurses, for public safety officers say that you have turned out to be a heartless Republican, who is pushing the big business agenda and leading an assault on organized labor.

SCHWARZENEGGER: We have a lot of people in Sacramento that are being shooed in and paid off by the unions.

I'm not going to be the unions' representative. I'm not going to be the unions' governor. I will be the people's governor, not for the special interests or for anyone. I'm only the people's representative.

Because remember one thing, the thing that's changed during the recall election was the governor but not the rest of it.

You see, the same politicians are still there. The same unions are still there. The same special interests are still there. The same people that have created the mess, the $22 billion debt, the disaster that made companies move out of the state, people losing jobs, having the worst credit rating — everything went belly-up. Our economy went down.

All of it was created by the same forces that are still there. Now I'm fighting those forces.

WALLACE: Governor, the president held a news conference recently, and there was not one word about said about immigration. What are we missing in Washington? How big a problem is it?

SCHWARZENEGGER: The federal government has to solve it. It doesn't make any sense to me to continuously just tiptoe around and avoid the subject.

No one — Democrats and Republicans alike — really want to go in there and really tackle the problem and come up with a comprehensive solution to: What do we do with the undocumented immigrants that are in this country? What do we do about the border situation? What do we do about the driver's license situation?

WALLACE: You said recently, we should close the borders, and then you got in trouble for that. And the next day you said, no, I meant secure the borders. But...

SCHWARZENEGGER: It's very important to know that this — I meant: Secure the borders.

WALLACE: Understood. But, you also have praised the Minute Men whom President Bush says are vigilantes for doing a terrific job. Briefly, how would you secure the borders?

SCHWARZENEGGER: By just having more patrol. That's what every country does. It's not reinventing the wheel. That's a no-brainer.

I mean you don't have to be a brain surgeon or anything like this to figure that one out; that if you have not enough border patrol, then people can go through it left and right. I mean...

WALLACE: But there are thousands of miles.

SCHWARZENEGGER: So what? That's what you do when you have a huge country. If you have thousands of miles and thousands of cities in America and they all have to be patrolled.

We have the money to do it. It's not a lack of money. When we can afford the war in Iraq, we can afford to control our own borders.

We are not saying that, yes, we endorse — the Minute Men should do the job. We are saying that the federal government should do the job.

But if the federal government falls short of doing their job and fulfilling their responsibility and the promise to the people, then the average citizen will rise up and will do that job. And that's what they do.

WALLACE: At the national convention in New York last summer, you said that the Republican Party should be a big tent. What is a Schwarzenegger Republican?

SCHWARZENEGGER: A Schwarzenegger Republican is all about fixing problems. I don't care if you're a Democrat or a Republican or if you're an Independent or if you choose not to state your party. It makes no difference to me. We want to represent everybody.

WALLACE: How do you feel about mixing politics and religion?

SCHWARZENEGGER: I think that one should make an effort to keep religion out the decision-making process.

It doesn't always work because you can't change you as a person. If you grow up as a very religious person, then that will always be part of it, but you should make an effort, as much as you can, to keep religion out of the decision-making process...


SCHWARZENEGGER: I think that because everyone has a different religion. I mean there's so many different religions around. Who knows what those various different principles and religious beliefs are?

So I think we should stay with the laws, and then the courts should interpret the laws, but we should not be making decisions, or at least I don't, based on religion.

WALLACE: I want to do a lightning round with you, if I can, where I'm going to give you quick questions and you if you'll give me quick answers.

SCHWARZENEGGER: I can't do that.

WALLACE: Can't do that?

SCHWARZENEGGER: I cannot do quick answers. I mean, I always have to finish my sentence.

WALLACE: All right. Well, we'll see.

WALLACE: What about these stories about your wife, Maria Shriver, that she's unhappy with your drop in the polls, and she's trying to shake up your administration?

SCHWARZENEGGER: Absolutely untrue. Maria was always by my side, and always was participating in all decision-making, in my movie career, in my business, and now also in politics. We are partners. That's why I got married, to have a great partner.

WALLACE: And is she trying to shake up your administration? Is she upset?

SCHWARZENEGGER: Don't buy into all the things that the other side is saying. Because remember one thing, that the way they tried to derail my reform, and my whole program, and the initiatives, is by saying: This office doesn't know what they're doing, they're confused, Maria is upset, Maria wants to have him home again, Maria wants to redo the office.

It's absolutely wrong. Those are all tactics, but it is not going to work. My office is strong, we are in one lane, and this is a lane to victory. That's what we're doing.

WALLACE: Now let's get really personal. There's a bill out there that would ban smoking around the Capitol. Are you going to have to take down your smoking tent, where you entertain legislators and put out your cigars?

SCHWARZENEGGER: As long as I'm at the Capitol, I will be smoking my stogies down there, and I will be having people down there smoking stogies. This is my negotiation tent and no one is going to take that away. Just remember one thing: They can be passing all the bills they want. There's one person who has to sign it. That's me.


WALLACE: When Ronald Reagan ran for governor, there were people who said an actor can't be a politician. But after he became governor, holding the job that you now do, he said: I don't understand how you can be a politician without being an actor. Do you find that your old career comes in handy?

SCHWARZENEGGER: Oh, absolutely. As a matter of fact, there's a lot of things that come in handy. When I was a kid that learned how to be a salesman, and I use that craft that I learned in trade school all the time, selling body-building, selling fitness, selling the Planet Hollywood, selling my movies, now selling California, selling my philosophy.

It's always selling, selling, selling and marketing it the right way. And the same is also in show business. I mean, you know, this politics has a part that is show business, that is all about how you stage events, how you present things, how clear you are with your delivery, how you communicate with the people.

But at the same time it's also something totally different, because it's a much more serious subject, because you're dealing with people's lives. So it's a much more serious subject than doing movies. But the presentation ends up a lot of times being also like acting.


SCHWARZENEGGER: And to those critics who are so pessimistic about our economy, I say: Don't be economic girlie men.



WALLACE: This talk about economic girlie men and kicking the butts of the special interests: Is that part of the show?

SCHWARZENEGGER: That's part of Arnoldisms. You know, this is me speaking. I mean, I didn't get elected because I am a trained politician, a typical politician. I'm Arnold. People have followed me over the last 30-some years with done in this country, and they like my style. They like my honesty. They like my approach to various different challenges that are facing me. And that's why they elected me and they trust me.

And so I would not go and change my behavior all of a sudden and start speaking like a politician. Because it's the one thing that I never want to become, is a typical politician.

I always want to be a public servant. Everything that I have is because of California and the generosity of the American people and the Californian people. So there's a chance for me to give something back.

WALLACE: Are you going to run again for governor in 2006?

SCHWARZENEGGER: Well, we can make a deal (inaudible) I would make the announcement on your show...

WALLACE: You already told Sean Hannity you're going to make it on his show.

SCHWARZENEGGER: We're doing an auction. This is going to be an auction item here.

WALLACE: To the highest bidder?

SCHWARZENEGGER: To the highest bidder. The money goes toward my campaign, and then we are home free again, you see. Because I know you guys are rich. You have a lot of money.


SCHWARZENEGGER: But anyway, so this is not the year to make those announcements. This is the year of reform. And so we are only going to concentrate and talk about reform, reform, reform, bringing California back again and making it a strong state that it once was and then create a great future for California.

WALLACE: Now, Maria, you said this is just the tactics of the other side, but she herself said on television she wants you back home with the children.

SCHWARZENEGGER: Like I said, I don't blame her for saying that. Because every wife wants to have their husband at home. And no...

WALLACE: Not every wife.

SCHWARZENEGGER: Well, maybe not. But if you have a great marriage like we have, and of course if she has the choice to have me home or to have this job or this office not be in Sacramento but in Los Angeles, then she will be much happier.

But I mean, I'm happy to have a wife that says: I want you at home. I miss you. I love you. I need you to be here. That's terrific to be wanted and to be needed.

WALLACE: Certainly better than the alternative.


WALLACE: Governor, thank you so much.

SCHWARZENEGGER: Thank you very much.

WALLACE: Appreciate it.