Exclusive Interview: Gov. Arnold Schwarzenegger

This is a partial transcript from "Your World with Neil Cavuto", March 11, 2004, that was edited for clarity.

Watch "Your World w/Cavuto" weekdays at 4 p.m. and 1 a.m. ET.

NEIL CAVUTO, HOST: In little more than four months on the job, Gov. Arnold Schwarzenegger is on a tear. He rammed through a referendum to help bail the biggest state in the country out of the biggest fiscal mess in the country. Not bad for an actor who was thought to be in over his head.

That's what they were thinking then. They're not saying that now.

So don't discount the guy when he's going after employers in this state to start hiring more workers in this state.

The governor telling me exclusively just minutes ago, he's got a plan to do just that.

(BEGIN VIDEOTAPE)

Governor, welcome to Fox.

GOV. ARNOLD SCHWARZENEGGER, CALIFORNIA: Well, thank you. It's nice to be here.

CAVUTO: Let me ask you. Jobs, big issue for you. The question is how we get them back to California.

SCHWARZENEGGER: Well, I think that the most important thing that the government has the responsibility to create a positive atmosphere so that businesses can really bloom and the economy can bloom. And that brings the jobs back. So the government really has to sit back and not create obstacles.

And also, it has the responsibility to reduce the cost of doing business here. Like, for instance, in California the costs have been very high for business. And since there are a lot of businesses have left, especially when it comes to workers compensation costs, high unemployment insurance costs, higher energy costs and so on.

So what we're doing, for instance, right now is we're in the middle of negotiating workers' compensation to really create reform to lower those costs so business can come back again. Very important to create a good, positive environment, deregulate some of it, and make it cheaper to do business here.

CAVUTO: The problem is more systemic, is it not, Governor? There's a big concern that technology jobs, which used to be the money leader in California, a lot of those jobs are going. That 775,000 of them in this country, just technology, since 2001. A fifth of those in California. How do you entice them back? The Packard people, Cisco, are going to India.

SCHWARZENEGGER: Well, I actually had a meeting with Silicon Valley, which has been the second time since I was elected. And I'm in close contact with all the leaders, with the CEOs of all of those companies.

And I have them sort of coming up to Sacramento, and we have, you know, all the Democratic and Republican leaders sitting down with them to see the things that we can do.

There's a lot of things we can do for them. If you get all of the jobs back it's really not the question. The question is how can you create a positive atmosphere, that we can sell it by shop (ph), get jobs back. And those will create new businesses.

The new businesses end up in the United States and all over the world every day. How can we bring those businesses here? This is why I'm starting a commission today. And they will be in charge of really bringing jobs back and bringing our economy back.

CAVUTO: High tech CEOs, Governor, say, you know, if you talk to the governor, remind them of a couple of things. What's to stop me from outsourcing jobs when I can hire workers to answer telephones in India for a tenth the price I pay them in the United States?

With all due respect, Mr. Governor, then that is compelling enough for me to say India.

SCHWARZENEGGER: Look, there's some shops that will always go overseas. That's just the way it is because we are now a global economy, and people do business all over the world.

But that is not an excuse. We cannot just use that number, that 11 percent went to India with their services. The fact of the matter is that California, we have a terrible business climate. And what we have to do is we have to strip down the obstacles. We have a lot of self-inflicted wounds in this state, and we maybe we have to do is some limited (UNINTELLIGIBLE) so that businesses can come back.

Look, I know about the businesses that went to Nevada. During the campaign when I ran for governor, I visited those businesses. They packed up and they left for Nevada because they said, "Look, I cannot afford to do business here." Their workers' comp costs were $300,000. This year they're $800,000. You're cutting away the profits and they cannot remain competitive.

Agricultural businesses and industries are suffering because of the high workers' comp costs. But they cannot pack up their farms and move to another state. They're stuck here.

So really, you have to protect those businesses and do something preventative, rather than just always beating up on them and making it difficult for them to do business. What I promised in my campaign was always that we have to start and create a positive environment here. This is why I'm creating, also, this commission now.

(CROSSTALK)

CAVUTO: ... bad now because they're hiring people abroad.

SCHWARZENEGGER: That's not the point. We're trying to become better at this, and we have to just put our best foot forward and really make it clear, make the profits better for businesses to do business here.

There will always be some businesses that will go to Germany or to Africa or to China or to Taiwan and all those places, but we should create a good business environment here.

CAVUTO: Let me ask you, Mr. Governor, your biggest success has been the $15 billion bond referendum. Now you're going to have some money (ph) here. But many of your critics have been saying, including Fresno Mayor Alan Autry, with this Proposition 57, we've sent those spending addicts the biggest fix they've ever had, and I hope the state of California doesn't O.D.

What do you say to those who say you're just borrowing time?

SCHWARZENEGGER: Well, first of all, I never pay any attention to those critics. Because I was elected. I have put forward certain proposals when I was running for governor, and people voted for me to go to Sacramento to create action, not the dialogue.

All those people that are criticizing, all those people that are making those comments and that the critics, have been around for a long time and they didn't help to bring our economy back.

So now I'm the new sheriff on the block. I'm in Sacramento. And I will create a positive business environment, and I will change our financial equation, our fiscal crisis that we are in and step with that move forward.

Is it the answer? The $15 billion bond? No. But we have to do 10 different things. But it is one step in the right direction to get us out of the hole. That's all we said, this is the first step to get us out of the hole, because we have such a huge debt.

I've inherited a $22 billion debt. We have to deal with that. We cannot keep looking away and shoving it down to the back, which they have done for the last five years. What I do is I bring it back to the daylight. I say, here is the problem. For instance, there's a $22 billion debt, and we have to deal with it.

And I'm going to go directly to the people, and I'm going to ask the people to help me. Because they should take some action at the polls, and they should be part of the decision making process. And they are. The people are very smart in California. They know what's going on.

And this is why I'm very happy now and very thankful that they trust in me. They trust in me, and they will help me with those decisions.

CAVUTO: How much of the success you've had do you think is owed to your celebrity?

SCHWARZENEGGER: Well, you know, I really don't care. That's not the bottom line. The bottom line is to get the job done. You don't want to (UNINTELLIGIBLE) because it was because you liked my name, was it because you liked my movies or because they think it's a good idea.

(CROSSTALK)

SCHWARZENEGGER: I won. And the real news is that together, the legislators in Sacramento, Democrats and Republicans, are like, have to work together. I was very fortunate and very proud that I could bring them together, that they talked on all of those issues, together. There's no one party that can solve the problems. It's every Democrat and Republican together can solve the problems.

And the same with workers' comp reform. They're sitting at the table right now. For the first time, do we see the businesses and the union leaders all sitting together. And we're moving forward. And we will be able to reform those things and bring changes about. And with workers comp, we're very optimistic that we'll move in directions that will create changes.

CAVUTO: Isn't it true, though -- legislators, I don't know whether it's jealousy, Governor, or the fact that your success is confounding them, but the state treasurer says, "We shouldn't be measuring any leader by the number of cigars they hand out or how many backs they slap in Sacramento."

What do you make of that?

SCHWARZENEGGER: I pay no attention to what he says. It's irrelevant. That's irrelevant because I was sent to Sacramento to create action. And that's exactly what I'm doing.

I've stated my demands. You know, those guys are all political ambitions, and they're the typical politicians.

CAVUTO: Do you have a problem with them?

SCHWARZENEGGER: The people spoke louder than I ever can. The people in California are sick and tired of the rhetoric. They're sick and tired of politics as usual. The message to every state is politics -- if California wants to succeed, politics as usual should die. And that's exactly what it is.

I pay no attention to it. I was sent by the people, not by any of those guys. I was sent by the people, and I will serve the people. And no one will be in my way. No politician, no special interest, no one. I went there to create action.

CAVUTO: All right. Your relations with President Bush. Now, his budget this year guarantees less money for California than was the case last year. Also, when the president was in town last week, you weren't barnstorming with him. Do you have bad relations with him?

SCHWARZENEGGER: No, I haven't. I was at the (ph) fundraiser where he raised a lot of money here. And I had other things to do at that time. But I was in Washington and spent time with him in Washington, during our national conference, California. And we have very good relationships.

And you know, obviously he's hurting for money because of the money that goes to Iraq. But at the same time, we in California have created a bipartisan coalition this last December. We all, Democrats and Republicans, will come together. And we will go and really make sure that we're getting the money that we deserve.

CAVUTO: But you didn't get the money. You had said, when you were campaigning and again when you became president (sic), the president has a good chance of winning here if he gives some money here. I'm paraphrasing. He president has not.

SCHWARZENEGGER: There is many, many months to come. We're closer. Not everything can be done at the same time. So we're really doing that now, really lobbying Washington. I made many trips to Washington. I talked to the budget department heads and the secretaries. I talked to the White House. And I think that eventually we will be successful.

I think we just have to keep pressing and letting them know that it is extremely important to help the state of California. We have lot of problems, especially with the undocumented immigrants that have been incarcerated. It costs us $700, $800 million a year. It is sending business (ph) created by the federal government because of the mistakes that they have made.

Now we are sitting here in Southern California, we have to pay for those kind of problems...

CAVUTO: But do you think there's more money for you guys? No, I think not.

SCHWARZENEGGER: No, but we wanted to make sure that they at least, in the Congress, allocate some money. But the main thing is that they will go on this entire year, next year, the following year. I always say I will be like a tick. I will be hanging on the subject.

CAVUTO: Were you a party to that? Were you required to give him the state?

SCHWARZENEGGER: I will be working hard to get the money to the state...

I have no love for hypotheticals. What if? That is a waste of time. What we have to concentrate on is this, that we all, Democrats and Republicans, have to make an effort to get the money from the federal government, to work together and have good relationships with them. There's so many things that we can do together. We are powerful when we work together. We are not if you don't.

So money is one of the issues that we can work together on.

CAVUTO: Another area where there was some issue with the president than there was on gay marriage. Because you know the president is looking for a constitutional amendment to knock that sort of thing out. You do not support that. What is your view on gay marriages?

SCHWARZENEGGER: It's the same that it always has been, which is that I -- for me a marriage is between a man and a woman. I believe very strongly that the people should obey (ph) the law that we have here in California. But I do not find it necessary to create a constitutional amendment in the United States. I think it's a state issue. And I think that every state has its laws and so therefore, I'm not a supporter of the constitutional amendment.

CAVUTO: So these thousands of gay couples who have been wedded in San Francisco, have they been wedded illegally?

SCHWARZENEGGER: Yes.

CAVUTO: How would you stop it?

SCHWARZENEGGER: Well, I have instructed the attorney general to stop it. He has sent it to the Supreme Court. They will most likely kick it down to the lower court. We really don't know.

I don't think anyone knows exactly what's going to be happening in the future. I can only guess that it will be kicked down to the lower court and then it will go back up again to the Supreme Court in California.

Whatever that decision is fine with me. I mean, if the Supreme Court changes it, so be it. If the people change it because of an initiative, also...

CAVUTO: You don't have any passion on this subject, one way or the other?

SCHWARZENEGGER: I am a representative of the people. It is irrelevant what I think. What is important is that I represent the people, and whatever the people want or whatever the court decides is legal, that's what we have to go by. And I will represent that.

CAVUTO: Now Senator Kerry yesterday was caught off-microphone, Governor, saying about the White House they're a crooked, lying group. It's scary. What did you make of that?

SCHWARZENEGGER: Well, I heard the comment and, you know, I know myself, having made a lot of kind of comments that afterward you regret you said it, but the mike was on. So it's an uncomfortable situation. Sometimes people say these things. So I really can't comment on that, you know, if he meant it, if it was a joke.

I remember Reagan one time made this comment when the mike still was on and he regretted it. I mean, I think a lot of people have made those mistakes and we should not take it that seriously.

CAVUTO: Your campaign, how much of it is decided, you think, on the economy? The economy appears to be improving in California. It appears to be improving nationally. How much will that weigh, ultimately?

SCHWARZENEGGER: Well, I think it is extremely important that the economy improves. And I think we see improvement. We see the stock market has gone up these last few months. I mean, we really see a positive move forward. There's no two ways about it.

We see great, great gains in the various different industries. I hear it out there on the streets and traveling around from city to city, that people feel like the businesses are coming back.

But we at the same time, I need to create a much, much better atmosphere and reduce the cost of doing business in our state in order to be competitive with other states.

CAVUTO: If we got the Constitution changed, Governor, and foreign-born nationals could run for president, would you be interested?

SCHWARZENEGGER: You know something? I have so many problems to solve in this state that's the last thing I think about. All I'm thinking about is, day and night, is what can I do to make this a better state, a more successful state, to make our economy boom again, to get our education back and to make it all great and to make our kids smart until they get big and take on the challenges.

CAVUTO: Well, if you do all that, what if now the nation is begging…

SCHWARZENEGGER: ... hypothetical question, which is a ways to get into, I just feel very strongly that we should just pay attention right now. There's just so much to be done, and I'm in a good groove right now to work together with Democrats and Republicans.

Our workers' comp reform negotiations are going well. We are going out this week, you know, and (UNINTELLIGIBLE) gathering signatures so in case it doesn't go well we can put it on the ballot.

And all of those things are really going well, so I want to continue to be thinking about that. Positive, moving forward, representing the people, because it's the greatest state, again, in the greatest country in the world.

CAVUTO: You'll deal with the president issue later?

SCHWARZENEGGER: Come on again some time and you can ask me about it.

CAVUTO: Governor, thank you very much. Thank you a lot for being on.

SCHWARZENEGGER: Thank you very much. Thank you.

Content and Programming Copyright 2004 Fox News Network, Inc. ALL RIGHTS RESERVED. Transcription Copyright 2004 eMediaMillWorks, Inc. (f/k/a Federal Document Clearing House, Inc.), which takes sole responsibility for the accuracy of the transcription. ALL RIGHTS RESERVED. No license is granted to the user of this material except for the user's personal or internal use and, in such case, only one copy may be printed, nor shall user use any material for commercial purposes or in any fashion that may infringe upon Fox News Network, Inc.'s and eMediaMillWorks, Inc.'s copyrights or other proprietary rights or interests in the material. This is not a legal transcript for purposes of litigation.