This is a partial transcript from "Hannity & Colmes," March 7, 2005, that has been edited for clarity.

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SEAN HANNITY, HOST: Governor Schwarzenegger... Now you've been at this job for a while. I was there when you were running for office. Is there ever a night you come home, you look at your wife, you look at your kids. Any regrets, ever? You think this is a tough job, tougher maybe than making movies and bodybuilding?

GOV. ARNOLD SCHWARZENEGGER, R-CALIF.: Well, I can tell you that my wife can tell you and my friends can tell you and anyone in my office that every day that I am so happy that I am governor of California. It is the greatest job that I have ever had. I am so enthusiastic doing this job. I am looking forward to it every morning and of course there is a lot of work and a lot of traveling and a lot of being out there dealing with the issues and all of this and there is a lot of pressure to perform and solve the problems of California, but I love this job, it's the greatest thing I have ever done.

HANNITY: Yeah. I've spent a little bit of time around you. Not a lot but a little bit of time. You joke around all the time. The people around you love to be around you. Just speaking with one of your employees and they're telling me what you did in the last week, which is an incredible schedule. You're the only guy that can say "girly man" and Democrats bubble and fizz. What is that? They don't have a sense of humor? They don't get you?

SCHWARZENEGGER: Well, we say it's all in the way — kind of a little bit of political fun, because as you know, most journalists that I talk to always complain about how politics is boring and it's always the same thing and they are doing interviews in front of a bookcase or in front of a flag or something like that and it gets boring so I try to spice it up a little bit. It's not [a] personal attack, as you know, I respect Democrats and Republicans the same way, so it's just all to spice it up a little bit.

HANNITY: You want them to lighten up a little bit.

SCHWARZENEGGER: It's kind of my style of governing and to be a little looser and also at the same time to be much more aggressive about the agenda and not to just try to do things in a slow way but I have very little patience. I want to have it done now. This is what I said in my state of the state address that this year is the year of reform. We have to do the job this year and reform these four major reforms. I don't want to wait around until next year, until the election, or the year after that, it has to be done now because the people of California deserve a better state and we need to really change things around.

HANNITY: We're going to get those reforms in just a minute because you have taken on one of the most aggressive agendas I've ever seen not only for a governor, I think you can compare it to even being president, it's so aggressive. You first want to ban all junk food sales in California schools. Fruits and vegetables take over for potato chips and pretzels. By the way, which I think is a good idea, I recently did this at my own house, so …

SCHWARZENEGGER: Oh, that's good. We do it in our house, too. The key thing is that we want to make our children perform better, not only in education but also physically. We see a lot of our children becoming obese. They are gaining too much weight. They are getting a lack of exercise in the schools and they're eating horrible foods in the schools. When I was the chairman of the President's Council on Physical Fitness and Sports during the early ‘90s and I traveled around through all 50 states and visited hundreds of schools, I saw first hand the kind of junk food that was in those vending machines and they were talking about Healthy Kids 2000 and how we are going to turn our kids healthy. There is no way you can turn them healthy if you give them the junk food. What kind of a message are we sending to our kids when we sell those things and then you say, oh, the reason why we have to sell it is because we have to raise money for our schools.

Find another way of raising money but don't sell them junk food. This is a terrible thing to do. We should replace it with fresh vegetables, with fruits, with milk. We think that it's good for the body. It creates energy for the children so they can learn better. They're more alert rather than getting sleepy and tired which you normally do when you eat sugar products.

HANNITY: Now look, I work out every day and I still can't get rid of this ten pounds here in my stomach so I probably need to follow your advice as much as anybody here. You had your heart surgery. Has that impacted — I read a recent interview, you said that you only lift weights a couple of days a week. Your doctor told you to stop lifting.

SCHWARZENEGGER: Well, no, as a matter of fact, the doctor said that I should discontinue with the heavy lifting.

HANNITY: Heavy lifting, OK.

SCHWARZENEGGER: Exactly. And the reason is the more pressure you put on your valve the worse it is and the more it wears down, so I mean, the idea is to protect it, lift like you lift right now where you lift 15-20 repetitions for each exercise rather than doing five or 10 and lift more weight. So to reduce the weight that you lift and then do more repetitions so it's healthier, it's better to burn calories and it still is good to keep the strength of your muscles.

HANNITY: All right. Now you were in Ohio this weekend and you commented and made a lot of news about the issue of steroids. You admitted you took steroids when you were an athlete and a bodybuilder. At the time you took them they were legal, doctor supervised and when a little sixth grader asked you about it you said that they're harmful. Did they harm you in any way?

SCHWARZENEGGER: No. I don't feel any side effects but I really took so little that it really didn't have any side effects. Now some of the athletes are taking so much of it that it does create side effects and we have even seen athletes die because of steroids or growth hormones or other kinds of substances that they are taking and what we have to do is we have to go and look at the sports in general. All sports. And say what do we do to go and get rid of the drugs in sports? The testing has not really been that successful because for every test there is a way of getting around it and to beat the test.

It is very hard to test growth hormone, for instance. The Olympics Committee has come up with all kinds of tests. We are following the same tests, which is random testing but I think there is still more we can do. So this is why I said in Columbus, Ohio, that we should actually have a summit where we bring all of the experts together, scientists and some of the medical profession, athletes and so on. And let's talk about it. How do we get rid of drugs in our sports? Because we have to clean it up, because as I always say, if my son comes up to me and says, "I want to be a professional football player or a weightlifter or a bodybuilder," I would say "Go and train four or five hours a day, eat the food supplements the vitamins and all of this. Be dedicated, be disciplined. But don't take drugs." We've got to tell this to our children. Don't take drugs.

HANNITY: I think it's a great message, especially coming from you. I mean, what do you do in the case of baseball? I recently interviewed Jose Canseco and he talked about the widespread use of steroids in baseball. How would you compare somebody who, let's say, gets a home run record, beats out Babe Ruth, Hank Aaron, but yet they were using steroids? There's no comparison, right? It gives you that big of an advantage.

SCHWARZENEGGER: First of all it's very important to know that if you take all the drugs away you would have the same winners. Nothing would change because all it would do is it would take the performance down on everybody five percent. That's exactly what it does. And if old records are broken, it's also because of the technology. I mean, look at the kind of running shoes that people have compared to 30, 40 years ago the way they ran. Or the pole vaults, the way it bends now, not any more wooden stick, it is this fiberglass special material that makes you perform better.

So there is all kinds of other reasons why people outdo athletes from the past, but I mean we have got to get rid of it, I think, if it's baseball, football, bodybuilding, weightlifting, all of those sports we have to work on it. But the only way it happens is if the athletes and if the medical profession and everyone and the drug companies come together and figure out the way of doing it.

HANNITY: All right. Let's talk a little bit about one of the reasons you're in New York. It's to raise money. They have a process in California, it's a referendum, it's an initiative process, I think people know it as prop and then it has a number after it. You are proposing a special election and you have four specific items that you want to put before the people of California.

SCHWARZENEGGER: That's right. Yes.

HANNITY: Tell us what they are.

SCHWARZENEGGER: The four items is the budget reform, pension reform, education reform and redistricting. Those are the four major issues as you said. It drives the special interests and the unions absolutely up the wall and the interesting thing about it is it's not just in California where it drives them up the wall, nationwide, because they know if those reforms become a reality, if we really create these reforms, which we will, by the way, we will create these reforms, they know that if California goes, so goes the rest of the nation and this is what worries them and this is why the national unions and the national special interests will come into California and will spend $200 million this year on trying to defeat the four reforms because they know that the four reforms will be against the special interests and unions but it will be for the people.

This is something I would always promise I will represent the people of California, not the special interests or the unions. This is what we are doing. So they are pouring all of this money in trying to defeat us but in the end we are going to be successful because, like I said, I will raise my money, I don't have to raise as much as they're going to spend because remember what happened with the Indian gaming tribes. They spent $80 million, we spent seven and we defeated them so we only have to spend a certain percentage but we need to raise that money.

HANNITY: Politics is usually a risk aversion business. Here you are not only at odds with some members of your own party, you're at odds certainly with most of the Democrats, you're at odds now with unions, including the teachers' union, the nurses' union, the state employees and others. You've taken this all on at once. Do you ever think of the battle that's about to ensue in California?

SCHWARZENEGGER: Well, first of all I am very happy that you are one of the few that identifies unions versus the nurses, unions versus the teachers because a lot of people say, "You've taken on the nurses." I'm not taking on the nurses, I love nurses. They've saved me many times. I was three times in the hospital and they have done an incredible job to keep me alive. So I have the utmost respect for nurses. It's just the unions and the reason why I could go with the union's demands because we have a shortage of nurses in California. We need many, many more nurses and I said let's build first the base of nurses and then it changes the ratio from a six to one to a five to one ratio. That's what this is all about. I just said give us a few years to build up the base of nurses …

HANNITY: You lost a court decision on that recently.

SCHWARZENEGGER: Well, this was only a preliminary decision. We are still in court on that so this is not over until it's over.

HANNITY: Perpetual optimism, I can tell.

SCHWARZENEGGER: Absolutely. But I mean the key — the same thing is with education. I love – with a lot of the teachers too but I proposed that we should reward good teachers. If the teachers perform well and if they can raise the grades and improve education of our children that we should offer them more money and we should offer them bonuses. Or the combat pay for teachers that go into the inner city schools, we should offer them more money because it's dangerous to be there and it's difficult to teach. We want to attract the best teachers to our inner city schools.

So those are the kind of reforms that I want to create.

HANNITY: Let me go through some of this because I don't think — There's been so much press about it, there seems to be a lot of hyperbole surrounding the proposal but I just — maybe to hear it directly from you because these are your initiatives and you're pursuing this with a passion and you want the special election.

In redistricting you want a neutral panel of judges to decide who goes in what district. Correct? How it gets redrawn.

SCHWARZENEGGER: Absolutely correct. It's supposed to be a panel of judges that don't have any political interest to do it just based on geographic boundaries and just draw the lines the way it ought to be rather than protecting a certain incumbent or protecting a certain party. What happened the last time was with the politicians that have drew the district lines, imagine having the power to withdraw the district lines in such a way that they can stay in power. The protect themselves rather than protecting the voters. They pick the voters rather than the voters picking the politicians.

And we have to turn everything upside down so I think we should change that.

HANNITY: One of the reasons you're going directly to the people even though you ran on this idea that you were going to get along with Democrats and Republicans. These four proposals would never pass, ever if you went through the legislative process. You know that, correct?

SCHWARZENEGGER: Well, first of all, by nature, they don't want to move on those things because it doesn't protect them. They know that. And so the thing that they're doing is basically is saying look, go to the people and now of course they think it is a chance because we are going to the people, we started with the signature gathering and the amount of people that came out, I am telling you it was so exciting because of…


SCHWARZENEGGER: … restaurants and various different places and to see the masses of people coming out saying, we want to sign up, we want to reform the system. It is wonderful to see that.

HANNITY: You need 600,000 signatures for each one. You want state employees to have their own 401(k) plans like most people have them.

SCHWARZENEGGER: Just like the private sector. I want the private sector and the public sector to have the same kind of pension plan and there is a wonderful pension plan that they can take anywhere they want to go with them but it is unfair to create this kind of a huge obligation. It went from the year 2000, $160 million of pension obligation, to $2.6 billion five years later. We cannot afford that. This is the kind of the that bankrupted California almost. That's why we had the recall.

HANNITY: In five years it's gone up that much.

SCHWARZENEGGER: That's what the recall was all about. The people said we're mad as hell. Let's go and change the …

HANNITY: Will people who have been promised benefits, will they lose those benefits?

SCHWARZENEGGER: No, the important thing is that anyone who is employed now would not be affected at all but the idea …

HANNITY: In the future.

SCHWARZENEGGER: … is that from 2007 on, new employees will be told here is your pension plan, it is a 401(k). Here is what your salary is and all of this. It will just be new rules, but that's all it is.

HANNITY: You want merit and combat pay for teachers. How do you determine if that one person is qualified to get that extra pay?

SCHWARZENEGGER: Each school district would determine exactly how they want to go about it. Some would say the whole school would get the benefit because the whole school is improved. Some will say the classroom will get it. The important thing is the teachers work together and help each other so they create better performance. The way it is right now it doesn't matter if you perform well or if you don't perform will because after two years you have tenure and you are shoed-in for the rest of your life. You will have your pensions, you will have your benefits, anything for the rest of you life. I would say let's increase the amount of years until you get to tenure and give teachers extra money for great performance.

HANNITY: One of the things you're also proposing, fourth one, is that when lawmakers fail to act you'll implement cuts in the budget that'll be automatic.


HANNITY: Because they're not acting, they're not doing the necessary work. They don't want to make hard decisions so you'll just take it away from them.

SCHWARZENEGGER: I'm telling you we have a system that is absolutely crazy. We have these formulas that kick in, so for every dollar that we make in revenues we have to spend $1.10. This is what got us into trouble in the first place. When I took over office we had a $22 billion debt. I inherited a $22 billion debt. Now they want to continue spending again $10 billion more each year as we make in revenues. We've took in $5 billion more in revenues since last year. It is unbelievable. Last year we had $78 billion, now we have $83 billion coming in. They want to spend $93 billion. It is irresponsible. They are big spenders that cause the big problems in California in the first place and now I am there to stop this. I promised the people of California that when I become governor I will not spend more money than the state takes in.

HANNITY: All right. What's tougher? What's more cutthroat? You've been a championship bodybuilder and a top actor and now you're one of the — governor of the largest state in the country. What's more cutthroat?

SCHWARZENEGGER: First of all let me say that all of the three categories that you mentioned are a lot of hard work. Hard work and a lot of sacrifices and you have to be disciplined and keep your eye on the ball and all of this. The great thing about being governor is that it is for people rather than for myself. Everything I have done always before, bodybuilding and other things was for myself. This is now every move that I make is for the people of California so that gives me extra inspiration, it energizes me. I am excited every morning when I get up to say that I am working for the people of California.

My father in law said to me 20 years ago the most noble profession and the greatest profession you can ever has is to be a public servant. Now I understand what he is talking about. It gives me great joy to give something back to the State of California.

HANNITY: Well you know the critics are out there in full form as we speak. I have one of the union members saying this is ground zero in California. An attempt for Republican Bush-Schwarzenegger's efforts to privatize pensions. We are fully committed as a union to defeat whatever you push. You're saying bring it on.

SCHWARZENEGGER: Isn't it interesting how they are always linking me to Bush?

HANNITY: I see that.

SCHWARZENEGGER: How they are linking me to say that my budget has the fingerprints of the conservative think tanks. It doesn't take a conservative think tank or any think tank. It's common sense. You can only spend the money you have. That is the important thing. If you take in a dollar, spend a dollar, but don't spend $1.10.

HANNITY: I've listened to you speak. The Assembly speaker said you ideas are half-baked, half-cocked proposals. You relish this battle going to the people of California. I sense a real confidence that when this is all over, what do you have to have this done by some time in April?

SCHWARZENEGGER: We are gathering the signatures by the end of April. We will have all the signatures. We will have the 600,000 signatures, the valid signatures for each one of those initiatives, for each one of those propositions and then we're going to go to the people and at the same time it's very important to know that our doors our open. At any given time, the legislative leaders can come down to my office, and say, look, we are ready to negotiate like they had done last year. Remember, with workers' compensation when I gathered the signature instead of getting concerned that it may get on the ballot. And they came down and we reformed worker's compensation. So, it was the ...


SCHWARZENEGGER: ... poison (ph) of our economy.

If they come down, they can ...

HANNITY: So all — it all go away.


What happens until now is, two months ago I held (ph) from the State of the State Address. And they haven't done a thing.

The things — look at it. I wrote it down here. What they have done is they have proposed legislation for plastic surgery for dogs since then, where ice cream trucks ought to be parked, what the name of a baseball team ought to be or not to be. Or should we hand out condoms in prisons? Or eyebrow trimming and hair removal legislation.

HANNITY: Where (ph) is (ph) that?

SCHWARZENEGGER: They had a special press conference for (ph) that (ph).

I mean, those are the kinds of things that they're playing around with, rather than going to the source and say, let's fix the problem that we have.

Last year was stopping the bleeding. This year we have to heal the patient. Let's get to the source of the problem, and then let's fix it once and for all.

The people of California deserve it. They deserve a perfect system.

HANNITY: I wish every state had the referendum and initiative process, because I think that truly is democracy in action.

SCHWARZENEGGER: Oh, it is the ultimate of democracy. You go directly to the people. If the legislators don't do the job, the people will. And I tell you. The reason why the legislators are really not inspired to perform is because there is no competition.

The way the district lines are drawn, we had 153 congressional and legislative seats up for reelection last time. What happened? None of them changed party. None of them — because they're all shoed in.

You can't get rid of them. So now they don't have to perform because they cannot be voted out.

This is the problem. So the people are not being represented the proper way.

And I say, here we are fighting all over the world for democracy. Let's also fight right here in this country. Let's get the redistricting done, not only in California, but all over the country. That's what I say.

HANNITY: Let's talk a little bit about your relationship with the president and the Republican Party.

Do you have a good relationship with the president? You were just in Washington not long ago. Do you speak to him often?

SCHWARZENEGGER: Not often, but I speak with him periodically. And I would say we have a good relationship. But, you know, he is busy with his things. I'm busy with my busy things.

It's not like we call each other and say, hey. What did you do today? What did you accomplish? It's none of that.

But I got there and we have a good working relationship with the federal government. And the important thing for us is to bring our congressional delegation — a bipartisan congressional delegation — together, so that we fight together for California.

Because so many times, Democrats and Republicans are fighting amongst each other. And what happens is, they divide and conquer. The other — the money then goes — the federal money then goes to other states, and it doesn't come all to California. We get only 79 cents on the dollar.

If we work together more, and if we come together and talk and fight together, we have a good chance to get that number up to 83, 84 cents for each dollar. We don't want to say we will never get the dollar back for each dollar we make. But we can get much more money than we are getting right now.

HANNITY: You look at the Republican Party. I remember when you were running for governor. I was out there, and we did that townhall at the time.


HANNITY: And there were conservatives that were concerned that you were too liberal. There were people saying, ah (ph), they had their doubts. You don't — I don't see you taking on any of the liberal social issues.

Your agenda is really about the economy. Your agenda is about the infrastructure in Sacramento. And your feeling is — and I'm putting words in your mouth here — is that, if you fix that, California's in trouble.

SCHWARZENEGGER: We have to fix our education system. We have to fix our budget system, the pension system, the redistricting. And those are all really issues that are bipartisan issues. It shouldn't be a partisan issue at all.

And as far as Republicans are concerned, there are maybe some conservative Republicans that don't agree with everything that I stand for on social issues, but it's perfectly OK.

We have a great party, you know, that goes, you know, from all the way from the center all the way to the right. And people can express their opinions and they can talk.

And I am very happy the way the party is, and I do as much as I can, that we come together and have a better relationship with the Democrats, because on a state level and on a national level, if Democrats and Republicans work together better, we can accomplish much more and we can serve the people much better.

HANNITY: The issue that you and I disagreed on the last time we spoke was the issue of illegal immigrants getting driver's licenses. Where are you on that issue today?

SCHWARZENEGGER: Well, the same as I was then. Which is that ...

HANNITY: You mean I haven't convinced you?

SCHWARZENEGGER: You know, we have to make sure that if we go in that direction, that we know exactly who the people are.

We don't know who the people are. The matricula card, there's a huge percentage of them that are falsified. Social Security numbers are falsified. Driver's licenses, the way it is, has been falsified, many of them.

We don't know who they are. If I would know who they are, then it is one way of helping. But if we don't know, then we're handing out just cards and the breeding kind of document for other documents. And right now with our homeland security, it would be too dangerous.

This is why I say, let's get our guidance from the federal government now, and they will get us the guidance within the next 18 months, to let us know exactly what every state there, what each state should do, in order to deal with that kind of a problem.

HANNITY: But — but we — but is it wrong to give illegal immigrants illegal driver's licenses? Does it not give them the documentation?

If you look at the hijackers on 9/11, they had 21 licenses between them. Isn't that a dangerous situation, because that gives them the documentation to get on an airplane to travel freely around the country? …

SCHWARZENEGGER: No. You're absolutely correct. And we ...

HANNITY: Oh, so we ...

SCHWARZENEGGER: ... we have agreed on that the last time also, remember, when I said it is dangerous. This is why we have to protect the homeland security. We have to protect our nation.

And it is very important that we know who they are.

And then also I recommended that we then put on it "immigrant," so that like in any other country they put immigrant on it so that we know that this is only to drive legally, not to use as a document to go through the airports or to open bank accounts or to do anything else.

The idea was always just to help them, so they can drive, but not to make it a legal document for anything else.

HANNITY: Two last questions. You're probably sick of the are you, do you want an opportunity for immigrants to run for president question. Is it — something you've said you've never thought about. Never?

Now that you've had an opportunity to govern and lead in California, ...


HANNITY: ... if that opportunity existed, you wouldn't consider it?

SCHWARZENEGGER: No. First of all, I cannot say I've never thought about it. It would be ludicrous. But I said that I don't think about it, that do I want to go in this direction, or something, because I am too busy with all the various different things that I'm dealing with in California.

As you know from my past, from my career, I always concentrated like a target. I concentrate on my goal. And I don't look to this side or to this side.

Right now I'm looking exactly at the four reforms, and also to govern California, and to perfect the system the way it is in various different areas.

There is many issues that we still have to tackle, which is — when it comes to, for instance, the environment — a lot of things that we want to do. Building the economy and bring businesses back, getting rid of some of the regulations.

All of those things that we want to do (ph) — besides the four reforms that we are talking about.

So, my eye is on that. Let's get California in great shape so that we can make it again what I always called the golden dream by the sea. That's what it is.

It's the greatest state in the greatest country in the world. And I came to California, you know, 36 years ago, and they received me with open arms. And it gave me all the opportunities that anyone can ever get in any country in the world.

And now it's for me time to give something back. And this is what I'm doing now. I keep my eye focused and give now back to the great state. And it's a great pleasure to be governor.

HANNITY: And you'd like to run again? You could announce it right now.

SCHWARZENEGGER: I'm not going to go and announce that. And I'm not going to think about it, because as I said, we have to fix this year our problems, and then I can think about the next move.

HANNITY: Governor, thanks for stopping by.

SCHWARZENEGGER: Thank you very much.

HANNITY: Good to see you. Thank you. Appreciate it.

SCHWARZENEGGER: Thank you. Great to see you, always.

HANNITY: Thank you. Good to see you again.

SCHWARZENEGGER: Yes, thank you.

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