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updated 2/26/2006 1:45:37 PM ET 2006-02-26T18:45:37

MR. TIM RUSSERT: Our issues this Sunday: This man tries to mount apolitical comeback after his ballot initiatives were soundly rejected by the voters. With us, in an exclusive interview: the governor of California, Arnold Schwarzenegger.

But first, uproar over the Bush administration’s approval of a deal to hand over operations at six major American ports to a government-owned company from the United Arab Emirates.

SEN. HILLARY CLINTON (D-N.Y.): This process is a failure of judgment.

MR. RUSSERT: The president stands firm.

PRESIDENT GEORGE W. BUSH: This wouldn’t be going forward if we weren’t certain that our ports would be secure.

MR. RUSSERT: And is Iraq on the verge of civil war?  What would that mean for U.S. troops?

With us: the chairman of the House Homeland Security Committee, Republican Peter King of New York, and the chairman of the Senate Armed Services Committee, Republican John Warner of Virginia.

Gentlemen, welcome, both.

Let’s go right to it. Congressman King, there are reports that the White House and the company from Dubai are going to enter into a deal which would say that there’ll be a 45-day investigation to look again at this arrangement where the company from the United Arab Emirates would take over six American ports. What can you tell us?

REP. PETER KING (R-N.Y.): I’ve heard the same reports you have. Some people close to the negotiations have been talking to me, and it appears as if it’s almost wrapped up, but I don’t want to, you know, prejudge it. But they seem fairly confident that it is going to be announced relatively soon. If so, I think it’s a good step. We have to see all the details. And it has to be a real investigation. It’s the type of investigation that should have been conducted, quite frankly, when this process was under way. It shouldn’t be an add-on. But now that it is, I think it will be very positive step. It has to be a full and thorough investigation, because no investigation has been conducted up till now.

MR. RUSSERT: If there is a full and thorough investigation, and it comes back and says, “We can allow this deal to go forward. I, President Bush recommend it,” will that satisfy you?

REP. KING: I think Congress has to see the findings, Congress has to be made aware of it as it goes along, because they’re also saying that—Michael Chertoff, on your show last week, said there was an investigation which cleared this company, and there was no investigation. So we’ll have to see exactly what the report is, what the findings are, what the facts are, have that shared with Congress, and at that time we can decide.

MR. RUSSERT: Congressman, on Wednesday you were saying things like this:

“For a port manager to run the ports, they have to interface with our security forces. They have to work with the Coast Guard, they have to work with all the local authorities, which means they are within our defense perimeter. They know exactly what is being done as far as security, so they can easily infiltrate, they can easily take advantage of that. You know the old expression of bringing the fox into the chicken coop. You would be having a company right in there in the heart of our security operation. Whether or not they’re doing the security isn’t the main issue, the fact is they would be brought into the security nexus, into the security operations.” Is there anything that anyone can say that would make you feel comfortable with a company owned by the United Arab Emirates operating ports in America and involved in that security nexus?

REP. KING: First of all, I stand by everything I said, and I would have to be shown, to the extent that my opinion counts, I would have to be shown that there’s nobody in the government today, in UAE, which had ties to the Taliban or to al-Qaeda, no one within this company has any ties to al-Qaeda or to the Taliban. Because remember, this was only four and a half, five years ago that they were very close to bin Laden, they were supporting the Taliban. And unless there’s been a complete transformation, I have real concerns. And I think people who sort of glibly say, “Well, you know, they’re not going to handle security, UAE is a great ally,” four and a half years ago, they were not an ally, they were working with the enemy, and if those same people are still there today that were there then, these are real serious issues.

MR. RUSSERT: Would you want U.S. monitors involved in the company reporting to Congress on a bimonthly or biyearly basis?

REP. KING: One thing that could be done is sort of like when the courts imposed monitors over a union or a company to monitor it, perhaps that could be at the end. Because even if nothing turns up now, the fact is this government could shift overnight, the way it’s done in the past, and then we’ll be stuck. So again, I don’t want to prejudge it, but I think certainly a real possibility at the end of this process to have U.S. officials monitoring it on a regular basis.

MR. RUSSERT: Senator Warner, you were the first United States senator to express some support for the president on this. You’ve been deeply involved in the discussions, in the negotiations. What can you tell us?

SEN. JOHN WARNER (R-Va.): Well, first, I think the president has taken the right steps. And I have carefully gone back and reviewed all the intelligence that was given to the CFIUS panel. I have, yesterday, spent a good deal of time in the Department of Defense with the Joint staff on the issues of intelligence, the impact and talked to my leader, Bill Frist. And I see there’s a coming together within the Congress now of a consensus that we’re going to take a good look at this for 45 days. And last night, I was contacted by the chief operating officer of this company, and he asked to see me. So I went over and I spent about two hours with him and his lawyers, and I talked again this morning. And this is a copy of the agreement which is now being delivered to the administration and to members of Congress. And it really spells out unequivocally the willingness of this country—excuse me, this company, to give every means of support to help work this thing out.

It says, “DP World and POPNA,” that’s the British, “jointly request,” now, they’re requesting, that’s a key thing, “that the CFIUS process on a nonprecedential basis to conduct an aview—review full and 45 days for the acquisition.” So there it all is. And I...

MR. RUSSERT: So the company is requesting a 45-day review investigation ...

SEN. WARNER: That’s correct. Mm-hmm. Mm-hmm.

MR. RUSSERT: ... before the deal would go forward?

SEN. WARNER: Well, the deal—now, you’ve got to make certain, the deal is a very large one. You know, this company ...

MR. RUSSERT: The U.S. component of the deal.

SEN. WARNER: That’s right. It’s about 10 percent of a deal. This company’s doing business, Tim, with over 30 nations. It has an excellent record. It was selected last year among its peer group as the most outstanding terminal operator in the world. And I want to point out, this is a bigger issue for our country than just this commercial agreement. We’re in a global situation, it is diplomacy, it is our economic standing in the world, and it is the military security. Let me address the latter. As I said, I read the reports to the intel, which went to the CFIUS under the previous and will obviously be a part of this new review. I talked with the Pentagon, and the Pentagon views this as follows: We are using facilities in the UAE today, docking over 500 ships, American warships, last year, using their air fields to perform support missions for both Afghanistan and Iraq. We cannot treat this company as a second-class citizen. In the past, as the Congress mentioned, there were problems, but since 9/11 they’ve been a full partner in the war on terrorism. We as the United States are dependent on countries like the UAE, Qatar, Bahrain, Kuwait, all of them there, to give us the support to fight this war on terrorism. We cannot mess this deal up. And in the eyes of the world...

MR. RUSSERT: You said there—Senator, you said there are problems.

SEN. WARNER: Yeah.

MR. RUSSERT: I think the American people are quite concerned with those, quote, “problems.” This is how the Associated Press reported it: “Critics of the proposed purchase say a port operate—operator complicit in smuggling or terrorism could manipulate manifests and other records to frustrate Homeland Security’s already limited scrutiny of shipping containers and slip contraband past U.S. Customs inspectors. Since the September 11th attacks, the FBI has said the money for the strikes was transferred to the hijackers primarily through the United Arab Emirates’ banking system, and much of the operational planning for the attacks took place inside the UAE. Many of the hijackers traveled to the U.S. from the UAE. Also, the hijacker who steered a United Airlines flight into the World Trade Center’s south tower born in the UAE. After the attacks, the U.S. Treasury Department officials complained about a lack of cooperation by the United Arab Emirates and other Arab countries trying to track down Osama bin Laden’s bank accounts.” The September 11 Commission report.

SEN. WARNER: Sure.

MR. RUSSERT: The chairman, Tom Kean, says this is not a good deal, a good idea. And in this report it suggests that when we had a chance to take bin Laden out, that UAE official may have tipped bin Laden off to get out of the hunting camp that he was staying in and to avoid our strike.

SEN. WARNER: Tim, those facts in large measure were before the CFIUS that reviewed this.

MR. RUSSERT: The government board that looks into these things.

SEN. WARNER: That’s correct, which has already reviewed it. They will be rereviewed under the 45-day process. And let’s say that the concern across America is legitimate. In all of our hearts is 9/11 and the losses we sustained. But also in our hearts are the men and women of the armed forces—over 2,000 have been killed, some 25,000, 30,000 wounded. We need to continue to give them the support they need to finish this battle. Whether it’s in Afghanistan or Iraq, and the utilization of the facilities in UAE and the other Arab areas is essential. Absolutely essential. If the UAE felt that they’re being mistreated and were to pull back that support, where would it shift?  We know not. Would other Arab nations—given the fact that it looked like we used a double standard here, would they step up and take that excess?  I don’t know. Let us be very cautious. Remember, we’ve got to look at this thing from a global perspective. Those facts are important. They were taken into consideration in the previous review. They’ll be subject to rereview in the 45 days forward.

MR. RUSSERT: The feelings of the UAE, is that an important factor here?

REP. KING: Yes, but there can’t be a moral equivalency here. We can’t be comparing Tony Blair to the emir of Dubai.

And I have to disagree with the senator. I don’t believe CFIUS did really look at this. For instance, they didn’t speak to anyone on the 9/11 Commission to find out if the people who tipped off bin Laden are still in the government. Are they in the government?  Do they have any involvement with this company?  That any of those who strongly urge recognition of the Taliban, are they still in the government?  That’s why this alliance could be an alliance of convenience. Obviously we have to work with UAE and other moderate Arab states, but still in no way a democracy. It still is anti-Israel.

So, this is a government, right now they’ve decided for their purposes right now that they will side with us. But just as they were siding with the Taliban before, they could shift back. And I just don’t feel we should give them this carte blanche that so far they’ve gotten. And that’s why I think all these issues have to be looked into. And just because they’re an ally doesn’t mean we can overlook the fact that there could be an emir or a relative of an emir who was very close to al-Qaeda, who is still in the government and involved with this company. That has to all be looked at. It has not been looked at. It’s a matter of national security that it be looked at.

MR. RUSSERT: You mentioned moral equivalency. I want to show you something the president said. Let’s listen.

(Videotape, Tuesday)

PRES. BUSH: I think it sends a terrible signal to friends around the world that it’s OK for a company from one country to manage the port, but not a country that has—plays by the rules.

(End videotape)

MR. RUSSERT: You told Laura Ingraham on her radio show that’s the equivalent of the president playing the race card.

REP. KING: Yes, when the president suggests that people are questioning this because it’s an Arab nation or because it’s a Muslim nation, that was the implication, that was wrong. And nobody has more regard for President Bush. I’ve supported him down the line, but on this issue it’s really wrong. And I thought it was inappropriate to say that a person like myself—who lost over 150 friends, neighbors and constituents on September 11--is questioning the United Arab Emirates because of its past record, and instead implying that I’m doing it because they’re Arabs and Muslims. That’s wrong. There are real issues here, and the White House should realize it.

This is not—there’s no demagoguery. This is a very, very serious, involved issue, and we have to set a protocol as to how we’re going to deal with nations like this as we go forward. I don’t believe you can treat the United Arab Emirates the same as you treat Great Britain. We certainly treat them better than other countries, but not like Great Britain or Australia or other countries who’ve stood side-by-side with us from the beginning. Not just, you know, Johnny-come-latelies.

SEN. WARNER: Tim, who—there comes...

MR. RUSSERT: Senator, do you think there is anti-Arab bigotry in this?

SEN. WARNER: Tim, here’s my approach to this thing. I think we’ve got to show the chairman and others strong leadership in the Congress in this next 45-day period and try to dispel any concept of bigotry, recognize the sincerity of the feelings across the country for our losses, our continuing losses, but recognizing in the broader context of our global relationships of our country, future business deals with other companies. This is going to establish a precedent, and it’s got to be done in a way not to choke off other opportunities. So I’m confident if we show that strong leadership in the Congress—and Bill Frist and I discussed it late into the night last night, and he’s prepared to do it—then I believe we can make a persuasive case that the government review the first time with the second review, justifies what the president said, this deal should go forward.

MR. RUSSERT: If you’re satisfied that this will be an aggressive 45-day investigation, will you hold off any legislation to try to block the deal?

REP. KING: Yes, I will. I don’t see any purpose to go forward and force a confrontation with the president, because the main purpose of the legislation was to bring about this 45-day investigation. If that—if that occurs, if when we see details, it’s a full investigation, yes, there’s no need at this time to go ahead with any legislation.

MR. RUSSERT: Senator Hillary Clinton of New York said that airports in the United States are controlled by local authorities. She doesn’t think that there should be foreign ownership of any port in the United States. Do you agree with that?

REP. KING: No, I don’t think we can make that statement across the board. First of all, there’s any number of ports in the country that are controlled by foreign companies now, certainly a lot of this began under the Clinton administration itself. But I think we do have to, in the post-9/11 era though, see what companies we’re going to be dealing with, what countries we’re going to be dealing with and if additional protocols have to be put in place. But I would not say, no, we can’t say across the board no foreign ownership of ports.

MR. RUSSERT: Let me—let me ask...

SEN. WARNER: Tim, you got to—you got to stop using this foreign ownership. They’re not buying the port. That remains in domestic control, whether it’s a municipality, the state or private. They’re just getting leases to operate the terminals—the cranes, the handling, the transportation...

MR. RUSSERT: The operation and management.

SEN. WARNER: That’s correct. So this—it’s wrong, we got off on the wrong foot, that’s why I held that hearing last week, put everybody up there, we’re not selling our ports to the foreigners.

REP. KING: But they do have access to what goes on inside the ports, and that is significant.

MR. RUSSERT: I—gentlemen, the Democrats have—are saying very loudly that they have tried repeatedly to put more money into port security. Benny Thompson, Democrat on your committee, Congressman, he tried to increase spending by a billion dollars, he wanted to double the number of oversea port inspectors, he wanted to put radiation portal monitors. And every time, the Republicans said no, you voted no. Do you regret now opposing some of those measures to improve port security?

REP. KING: Tim, we have voted to increase port security dramatically, it’s gone up almost $2 billion since four years ago. Almost 100 percent is screened, it’s not actually examined. But even, you know—people use a number that only 5 percent of the cargo is actually examined. Even Senator Clinton the other day, said 15 is maximum. So it’s between 5 and 15, we do have to do more. I support doing more. In fact, my committee is holding hearings next month, Congressman Lundgren, Congresswoman Harman are holding hearings on the issue of port security. More does have to be done, but a lot has been done also.

MR. RUSSERT: So the Democrats were right?

REP. KING: No, we—no, a lot more has to be done. The fact is you don’t just throw money at it, you do it in a way that works. Well, half this technology the people are talking about doesn’t work that well, and the idea is how do you do it?  You can’t be examining every piece of cargo that comes in, it’s to do it effectively and also to do it in a way that doesn’t stop world commerce. Having said that, we realize more has to be done. But their idea, in all due respect, often is throw money into it. And you—again, the idea is to do it in an effective, smart way. I think more should be done, and I’ve said that all along. I had hearings last year as subcommittee chairman, having hearings now that I’m full chairman, and we are going to move forward. I think Susan Collins is really moving the right direction.

MR. RUSSERT: Senator...

SEN. WARNER: If there’s one good thing that can come out of this, it is compelling us to go back and review this whole question about port security and the funding levels, and I...

MR. RUSSERT: It may take more money.

SEN. WARNER: It’s going to take a lot more money.

MR. RUSSERT: Let me turn to Iraq, Senator. You are the chairman of the Senate Armed Services Committee, this is the cover of Time magazine coming out on the newsstands tomorrow: Breaking Point. Do you believe that Iraq is on the verge of civil war?

SEN. WARNER: I don’t think I or anyone else could make a definitive response to that question. I believe that there is not at this time the civil war that one would envision that meets the traditional definitions. Clearly, there’s a very high level of conflict, secular conflict, but the good news in the last 48 hours is that the—there are really three levels of influence of the people: There’s now the elected representatives, only a prime minister at the moment, temporarily there. Then there’s the religious people, and they’ve all come together and said, “Let’s take a grip on our situation and not let it get out of hand.” The third level is your tribal leaders, and they’re strong influence, they’ve joined. So across the board in Iraq in the past day, and our president telephoned these various leaders, becoming the realization we could slip into a civil war unless we act decisively to bring this government into being and put it in operation, and secondly, to continue at an accelerated rate to train and equip the forces needed to stop any civil war if it were to start.

MR. RUSSERT: If there is a civil war, what happens to the U.S. troops?

What do they do?

SEN. WARNER: The U.S. troops, in my judgment, just speaking for myself, should not be involved in that type of secular conflict. We have trained 200-some odd thousand of these forces today. There’s a hundred battalions of Iraqi military. Over 50 of those battalions are able to take the lead in a fight with minimal U.S. support. So there’s in place today, I think, sufficient military under the control of the Iraqis with certain limited support from us. But I do not think we should get involved in the civil war other than to give support to the Iraqi forces as they begin to put it down.

MR. RUSSERT: Congressman King, you supported the war. We are now three years into it. And there were four fundamental judgments made by the administration. One: There would be weapons of mass destruction found. That is not the case. Two: We would not need large numbers of troops to occupy Iraq for years on end. Three years in, we still have 130-some thousand troops. Three: We’d be greeted as liberators. And four: That the Shiites, the Sunnis and Kurds would all come together...

REP. KING: Uh-hmm.

MR. RUSSERT: ... and unite as Iraqis and not break down into tribal or sectarian warfare.

REP. KING: Uh-hmm.

MR. RUSSERT: Was the administration wrong on all four counts?  Were there four fundamental misjudgments?

REP. KING: No, I think—and I still think it was the right thing to go in. You cannot allow a dictator to continue to defy U.N. resolutions, with people believing you had WMD and having the capacity to have WMD. And I believe the situation—we are at a very defining moment right now in Iraq.

What Senator Warner said, I think, is very significant, that you have had the parties come back together for the purpose of talks. And the Sunnis realize that if this does turn into a civil war, they will be slaughtered. So they need an American presence there, and they have to end any possibility of going toward a civil war. I think Ayatollah Sistani is still doing a very good job of trying to keep the Shiites from retaliating completely against the Sunnis. So I’m still—listen, this is a defining moment, and Senator Warner said, you know, it’s up to them, ultimately. But I do think the Iraqi Army is much better trained. Seventy percent of the operations in Baghdad are carried out by Iraqis, the Iraqis being in the lead. So no, I think that this is a tough time, it’s a very difficult time. My heart goes out to anyone who’s lost anybody in Iraq. But having been there several times, I think we’ve made enormous progress. And if they can hold it together now, this can—having looked into the abyss, the Iraqi people may realize it’s time now to not go to a civil war but instead form a government.

MR. RUSSERT: And the people on Long Island, in your district, aren’t concerned about this war and they’re patient and supportive the way you are?

REP. KING: No, they are very concerned and every, every death is tragic. But my district also lost well over 100 people on September 11. And realizing you cannot defeat radical Islamic terrorism unless the Middle East is stabilized, and you cannot stabilize it so long as Saddam Hussein was in power.

MR. RUSSERT: But you’re not connecting Iraq to September 11?

REP. KING: I’m saying that in war against terrorism it’s essential to have a stable Middle East, and you cannot have done that so long as Saddam Hussein was in power.

MR. RUSSERT: Senator, if the situation in Iraq is the same as it is today at the end of this year, what do you say?

SEN. WARNER: Well, I’m going to say it won’t be the same. I still have a high degree of confidence that this government will come together and be responsible and perceived by the Iraqi people as representing their best interests in a unified way. And if that takes place, I think the president can continue, on the advice of his military commanders, to bring down the level of our forces there.

We have liberated that country. We have turned it over to them. The key is to keep the pressure on these elected leaders, 275 of them now. When they come together with the first meeting of their congress, if we should call it, assembly, and tell them, “You’ve got to get your act together.” We cannot let it be perceived, we’ve given them an open ticket to sit there and dither around, as the previous government did, for a long period of time. You saw what happened in the streets in the last few weeks as a consequence of a tragic incident of blowing up the Golden Dome Mosque. You do not want to see that happen elsewhere in this country. Take charge. But we’ve got to send that message and remind them every day as our able ambassador, I think, is doing.

MR. RUSSERT: Well, we’ll—and we’ll see if they will listen. We’ll be covering that story closely.

SEN. WARNER: Right.

MR. RUSSERT: Senator Warner, Congressman King, thanks very much.

REP. KING: Thank you, Tim.

MR. RUSSERT: Next up, he is the governor of the most populous state in the union. California’s Governor Arnold Schwarzenegger. He’s right here, next, on MEET THE PRESS.

(Announcements)

MR. RUSSERT: He’s trying to mount a political comeback. The California governor, Arnold Schwarzenegger, is our guest after this brief station break.

(Announcements)

MR. RUSSERT: And we are back.

Governor, welcome back to MEET THE PRESS.

GOV. ARNOLD SCHWARZENEGGER (R-Calif.): Thank you very much. It’s great to be here again.

MR. RUSSERT: Let me take a few minutes and talk about some of the issues the congressman and the senator were talking about. Ports. Do you believe that this deal should go forward to allow the United Arab Emirates company control six American ports, operate them?

GOV. SCHWARZENEGGER: Well, first of all, Tim, let me just say that California is not affected by that, which is good. Second of all, I think that the wise thing was, that the Bush administration made and Secretary Chertoff made, was to postpone the decision-making and to say, “Oh, let’s give it some extra time.” Because I think when you see complaints coming in like this, you got to study it further, and I think that’s what they’re doing right now. And it’s a very complex issue, because, you know, we have the globalization, we want to do trades with everyone all over the world, but at the same time, globalization crosses with terrorism now, and there’s that whole fear. And then we have villainized the Arab world also so much that now Arab country—or company taking over our ports and maybe have some influence in our security, it freaks everyone out, and rightfully so.

So I think you have to be really careful. The whole thing as the two gentlemen have just discussed is we have to think it through and make sure that because—and in the end, the number one responsibility of government is to protect the people of California and the United States. This is really the responsibility. That is what you have to watch out for. And if we can accomplish that, then this company should be able to manage these ports. I mean, we have in California, Chinese managing our ports and have facilities that are leased. We have other countries like Japan and South Korea and Denmark and so on occupying space. So I think that the trick is just how do you do it and protect the people and protect our ports.

MR. RUSSERT: But in principle, you don’t have opposition?

GOV. SCHWARZENEGGER: I don’t have opposition, but it has to be really thought through by experts. I’m not an expert in this issue, but it has to be thought through by experts, and we cannot compromise our security because that would be terrible if that happens.

MR. RUSSERT: You mentioned about Los Angeles. And it is interesting because 13 or 14 container terminal operators at the Los Angeles Long Beach Port are foreign-owned: China, Japan, Taiwan, Singapore and Denmark, as you said. Are you concerned that China operates a port?  In terms of security?

GOV. SCHWARZENEGGER: Well, we have the ultimate control over security. I mean, they occupy space. They lease space. They don’t own it. And we have Long Beach, for instance, controlling the Long Beach, the ports there. We have the Coast Guard, we have the customs service, we have the local law enforcement, we have the Port Authority. We have all of those agencies, various different agencies that control it. It’s not the Chinese or any other country that control our security. So I feel very confident with that. And I also feel very confident with the kind of relationship that we have with the national Homeland Security Office with Secretary Chertoff. They have always responded really well to every single one of our concerns that we had.

MR. RUSSERT: Let me ask about Iraq because it affects California in a very big way. These are the numbers of Californians lost in the war: killed, 242; wounded, 1,857. You now have 20,000 Californians serving in Iraq, 4,000 of them, National Guard and reserves. Are you concerned that the National Guard in your state is being depleted by the war?

GOV. SCHWARZENEGGER: Sure, it has an effect. And let me tell you something. It really—it kills me every time when I hear that one of our officers or someone from the military or National Guard dies over there. It is terrible. And, you know, I got this morning, for instance, terrible news that Gregory John Bailey, one of our CHPs, died last night—yesterday because he was run over by a drunk driver and while he was ticketing another driver. And when you hear news like that, it is terrible. And, of course, in this case, my thoughts and prayers go out to his family and to his friends. You know, it’s always—those are the terrible moments when you’re—when you’re governor. When you get this kind of information, you put the flag at half-mast, and you go to some of the funerals and so on.

MR. RUSSERT: But you said in your speech the other night to the Republican Convention, ‘We are one huge storm, one big earthquake away from disaster.’ And I was thinking about that as I was reading the Oakland Tribune, and they said this: “Fewer than half of the California National Guard’s battalions are combat-ready because they are stretched thin by foreign deployments and because troops are quitting faster than they are being replaced. Some high-ranking Guard officers question whether these units can respond effectively to floods, fires, earthquakes, riots, terrorist attacks in California. Troops are increasingly quitting the Guard. California has a 22 percent attrition rate, which it concedes is ‘alarming.’ At the same time, fewer recruits are enlisting. California missed every recruitment and retention standard set for it by the Pentagon during the last federal—last year.” Are you concerned that the Guard is not going to be ready for the floods, for the earthquake because of the shrinking numbers?

GOV. SCHWARZENEGGER: I am not concerned about that. I am concerned that we are not acting fast enough to rebuild our levees. Because our levee system is 100 years old, and we have levees that were built 100 years ago by farmers. We don’t even know what they were built of. I think that they’re unsafe. They’re worse and worse conditions than the ones in New Orleans. And I think it is irresponsible for us not to act quickly, and this is why I declared an emergency and also asked the federal government and federal disaster to declare federal disaster in order to get the money as quickly as possible, in order to make the legislators respond as quickly as possible. Because there’s thousands of people that are vulnerable. Thousands of homes and the farms and everything like this. We could have a worse disaster than New Orleans. So I’m concerned about that, that we’re not really doing enough to protect the people. Because that’s our ultimate job.

Now, when it comes to the National Guard, I think that we have to just do everything possible. Remember it’s war time. People feel more reluctant to join because they don’t want to be sent over, maybe, to Iraq. So it is a difficult moment, but I think it’s something that is doable, and we always just have to work together on this.

MR. RUSSERT: The Washington Post today has a headline, “Governor’s Challenge Cuts the National Guard Funds,” that they’re going to challenge President Bush in your meetings here in Washington about cutting National Guard funds. Will you be joining your fellow governors in challenging the president?

GOV. SCHWARZENEGGER: Oh, absolutely. I mean, there’s a lot of things that we’ll be talking about to the president when I meet him, you know, if it is getting more money for California, getting more money for state—for the incarceration of undocumented immigrants, if it is talking to him about getting more border patrol and making our borders safe. And all of those kinds of issues, we’re going to, you know—that’s why we’re here. That’s why we have the governor’s conference, to talk to each other, to help each other, but also to talk to the president and to the fellow government to get this help. Because I think it’s still inexcusable that California gets only 79 cents for every dollar we pay in taxes, in federal taxes. We have to fight for that, we need more money, if it’s in health care and education, border patrol, if it isn’t—any of those issues, you know, that’s what we’re here to do, to fight for those things.

MR. RUSSERT: Do you think the Iraq war was a mistake?

GOV. SCHWARZENEGGER: No, I think it’s always easy in hindsight to go and say maybe if we wouldn’t have gone in, we wouldn’t have had all this hassle. But I think this is, you know, difficult to do that. I think that we had to go in, there was a threat of terrorism. I think that it was the right thing to do. It’s just now it has mushroomed into something bigger than it was ever intended to, and you know, that is always the problem. And now if it goes in the direction of civil war, how do you just walk out of that mess?  So it’s just easier said than done. You know, it’s always easy when you want to attack the president, to go and say, you know, he made a mistake, he shouldn’t have done this, look at the problems we have now, let’s get out, let’s pull out and all this. You can’t just pull out of the situation, you know. So I think it’s a difficult situation to be in. It’s no different than, you know, the Vietnam War or the Korean War, any of those things we’re always in, and you try to get out but you can’t. You know, you’re kind of glued to the situation. So I think the trick is we’ve got to get out as quickly as possible, but also in a sensible way.

MR. RUSSERT: But if war is an issue in this year, 2006, you’re up for re-election in November. Are you concerned you could get swept up in an anti-Republican tide?

GOV. SCHWARZENEGGER: Yes, you know, that’s always a concern. But you know, in the end, Tim, the ultimate thinking has to always go towards one thing, and this is how do we do the best job for the people. My job is how do I do the best job for the people of California, and I am going to do everything possible to go and do everything I can in order to make the state of California better. And then, in the end, it is up to the people. It’s election year, it’s up to the people to judge and say did this man really improve the state. Remember the old Ronald Reagan line, when you say that you’re better off now than you were four years ago?  Well, you know, Californians are much better off today than we were four years ago. I mean, we created 500,000 new jobs, we increased our revenues from $75 billion to $92 billion. We’re building the hydrogen highway, we reformed workers compensation, we are paying down our debt now for the first time, we’re putting money into the rainy-day fund. So we’re doing all kinds of wonderful things. So, in the end, the people have to judge that: Have I done enough for them or do they want to have change?

MR. RUSSERT: Will you run as a Bush Republican?

GOV. SCHWARZENEGGER: I will run as an Arnold Republican, which is that I am there to govern and to serve the people of California, meaning Democrats and Republicans. Even though there are some on the right wing that are not happy about that, that think I should only govern for Republicans, but that’s not what I promised the people of California. I always promise that I will serve everyone, and let me just tell you when it comes to service, it’s the greatest job I’ve ever had. I love it. I love being a public servant, my father-in-law was right 25 years ago when Sergeant said, ‘Arnold, this is the most honorable job you can do.’ And I just love it.

MR. RUSSERT: There have been a lot of things written about your attempt to push initiatives in the special election. The Washington Post columnist Harold Meyerson wrote this: “Arnold Schwarzenegger’s nine months of governing Democratic California as a partisan Republican came to the most predictable of unhappy endings. Each of the four ballot measures he inflicted on voters in his special election lost decisively, his spending-limit proposal tanking, his measure to curb the clout of public sector unions losing. The mystery of this election is ‘what on earth Schwarzenegger could have been thinking.’ No comparable elected official in recent memory has picked a fight so gratuitously and come out of it so beat-up.”

Do you agree?

GOV. SCHWARZENEGGER: Well, what I agree is that it was worth the fight. These are very important reforms that have to take place. We have a dysfunctional system in California. I was sent to Sacramento and I was elected by the people of California to fix the broken system. And this is what I did. Now did I do it the right way?  Did I not make mistakes?  Of course, I made mistakes. I think that I rushed it too much, I was too much in a—in a hurry. But I mean, as you know, this is my style. I set certain goals, and I say this has to be done at that time, and I think that when you’re in public service and when you are doing things in the political arena, you have to maybe take more time in nurturing those things along, and so maybe I rushed it too much.

But they’re the right causes. It’s very important that we redo our education system, our budget system, our redistricting system. It is dysfunctional. It doesn’t work in that thing. It was the right fight. And you know, sometimes when you go out and you battle it out, sometimes you lose and sometimes you win. It’s the same in weightlifting. Sometimes you try the 500 pounds and you can’t lift it; other times, you can lift it. And so, this is like my wife said to my kids. You know, there’s no shame in losing. The shame is in not trying. And we tried hard, and we will continue trying.

You know, I’m not doing things in the way—in the traditional way. People always try to put me in a box and say, “Is he on the left or is he on the right?” You can’t put me in a box because I’m just there trying to do what is best for California. You know, sometimes I also make mistakes going about doing these things. So that’s OK, but you know I have accomplished great things in these last two years. If you think about it, where California was two years ago, almost in bankruptcy, and now we’re pushing everything forward, and I think California is doing great.

MR. RUSSERT: But the Democrats smell blood. They think you’re weak. Bob Mulholland, former Democratic chairman who’s advising one of your opponents, said this, “He was a pit bull last year, and now after the special elections, he is an old French poodle.”

GOV. SCHWARZENEGGER: You want me to respond to that?  I don’t respond to Bob Mulholland. Trust me.

MR. RUSSERT: How about the ...

GOV. SCHWARZENEGGER: I am the same—remember one thing. I am the same Arnold. I am as determined to fix California and the problems. This is the year of rebuilding California. We’re going to go out there. We have proposed at the State of the State address $222 billion infrastructure proposal.

MR. RUSSERT: I want to get to that, but you won’t be calling the Democrats “girlie men” anymore?

GOV. SCHWARZENEGGER: Well, if necessary, I will. But I mean, you know, this is not what I do right now. But let them do the calling. This is OK with me.

MR. RUSSERT: Let me show you the latest poll of all Californians. They have your approval rating at 35 percent, your disapproval at 53. Why do more than a majority of Californians rate the job you’re doing as governor so poorly?

GOV. SCHWARZENEGGER: Well, let me tell you something, that some people pay a lot of attention to polls. And I think that we all like to be liked and loved and, you know, to be doing—to get the great approval rating and all this. But you know, the numbers that I pay more attention to are the numbers that we see when we see, for instance, the unbelievable decrease in the budget infrastructure deficit to 75 percent; to see an increase of 500,000 people getting more—getting jobs in California; to see the increase in revenues that we have; to see the increase of businesses that are coming in; to see the increase in salaries and wages that people make. Those are the numbers that I care about ultimately. Even though I like also to get great approval ratings, but I pay more attention to the progress and the success we have in the state, and the rest of it I leave up, you know, to the critics.

MR. RUSSERT: But people have sensed an evolution in your philosophy and your governing style. Tony Quinn, who covers politics in California wrote it this way, “Every new year seems to bring on a new Arnold Schwarzenegger. In his first State of the State address in January of ‘04, he was the Arnold who would ‘blow up the boxes’ and remake state government. That idea fizzled, and in 2005, he proclaimed the “year of reform.” This notion became the four ballot measures stomped on by voters in the November special election. So in 2006, Schwarzenegger is back with another ‘New Arnold,’ this time as the great empire builder.”

GOV. SCHWARZENEGGER: Well, and you know, I’m very happy about that because when I came into office, I made it very clear that we have to recover, reform and rebuild. And this is exactly the agenda that I go after. And this is exactly what needs to be done in California. Like I said, not every single thing you do is going to be a success, but we have had much more successes than we had failures. It is an important thing here. I’m happy about what we have accomplished, bringing the state back, bringing businesses back to the state again and having more trade and the kind of relationships that we have, how well people are doing in California. They’re spending more money on education than ever before. More money on transportation. We have funding for the first time, Proposition 42, that we, as I said, put money in the rainy-day fund, paying down our debt. So there’s all kinds of wonderful things that are happening.

And also another thing I’m very proud of is the environmental things that we are doing. You know, the 25 million acres of conservancy that we put aside, the Sierra Nevada Conservancy, which is the greatest preservation of land in the history of California. The hydrogen highway that we’re building. Every 20 miles, a hydrogen fueling station, so that eventually we can have hydrogen-fueled cars driving there. You know, sending tough standards with, you know, greenhouse gases to reduce the greenhouse gases. All of those things I’m very proud of.

So I think that we did an incredible job for the state and you know, there’s, of course, also politics in there and the whole thing. It’s election year, everyone is trying to attack you. Then you have opponents that are trying to take your job away so they say things. But you know how this all works. I mean, for me what is important is that I enjoy fixing California. That’s what I was elected to do, and that’s what I’m doing.

MR. RUSSERT: But, Governor, your critics who are not partisan will point out that you said you’d get control of the spending and the budgetary problems and now you’re—want to spend more money, and you want to be the “Green Arnold” and the “Arnold the Builder.” This is from the Los Angeles Times. “Governor Schwarzenegger’s latest $125 billion budget plan would have state government spending $6.4 billion more than it takes in during the next fiscal year. ‘That moves the state in the wrong direction,’ says nonpartisan legislative analyst Elizabeth Hill.”

And this is from a fellow Republican, you know him well, Mike Spence. This is what Mr. Spence has to say, and I’ll read it for you. “One year out, Gov. Arnold Schwarzenegger declared: ‘We don’t have a revenue problem. We have a spending problem.” But what has he done about it?  Within two months of failing to persuade voters to ‘live within our means’ in last year’s special election, the governor has now raised the white flag of surrender to the spending lobby by proposing a $222 billion infrastructure plan which would include a record $68 billion in bonds, fee increases and $2.6 billion operating deficit this year, another $29 billion of red ink projected for the following four years. It seems we still have a spending problem.”

Which led the Orange County Register to write this simple line in an editorial, and here it is: “Does the governor have any principles?” What happened?

GOV. SCHWARZENEGGER: Well, I have very strong principles, as you know. First of all, let me tell you that those people that are criticizing my infrastructure deal and my strategic growth plan are people that are a little bit confused about the difference between spending and investing. You know, when you go to those people—like, I went to one of my critics and I said, “What are you criticizing?” And he says, “Well, you’re spending too much money, $222 billion dollars.” And I said, “Well, let me ask you something.” I said, “How much money do you make a year?” He says, “150,000 dollars.” I say, “How much did you pay for your house?” He said, “A million dollars.” So I said, “So, did you pay cash?” And he says, “No.” I say, “How did you pay for it?” He says, “I borrowed. I got a loan.” I say, “Ah. You got a loan,” I said, “because it’s wise to pay off your loan over a period of 30 years rather than paying. You invested in your future.” And that’s exactly what we are doing in California.

MR. RUSSERT: But what happened when...

GOV. SCHWARZENEGGER: We are investing in the future.

MR. RUSSERT: What happened...

GOV. SCHWARZENEGGER: It’s not spending. Spending we’ve reduced. Remember what I said. We have cut down the structural deficit by 75 percent. It was expected to be $16.5 billion dollars. We’re now at $4.7 billion dollars. That is great progress, Tim, no matter what anyone says. This is just a few people. Remember one thing: 80 percent of the Republicans are with me, and it’s the old line that Ronald Reagan said, “If 80 percent of people are your friends, then you don’t have 20 percent enemies, you have 80 percent friends.” So I mean, that’s really the bottom line.

MR. RUSSERT: Well, the latest poll says—the latest poll says 66 percent Republicans. You’ve got to get it up to 80.

GOV. SCHWARZENEGGER: Well, but my—no, no, it was 80 percent at the polls. But, I mean, we’re—like I said, we’re not getting involved in the numbers of the polls. The key thing is you know and everyone knows that we need to rebuild California. Our California has not been built in 30 years. And what I said in my speech to the Republican—at the Republican Convention was, “I’m not going to pass this burden on to the next generation.” We should start building now, we need more space, we need the universities built out. We need more classrooms, we need 40,000 new classrooms. We need to fix our levees, we need to fix our highways. All of those things need to be done that have been neglected for years, and I want to do that because that’s what I promised the people of California.

MR. RUSSERT: But it is spend, spend, spend.

GOV. SCHWARZENEGGER: No, it’s invest, invest, invest. Tim, you’re wrong. It’s invest.

MR. RUSSERT: But you did say—you did say that you’ve realized that it’s a lot tougher to balance the budget than you thought when you were campaigning for office.

GOV. SCHWARZENEGGER: Yeah, absolutely. And you know, I say this today again. The key thing to know is that you have—when you’re in the private sector, you make a decision and you’re the only one that makes the decision. In a public sector—and this is one of the things you—I leaned when I got into this job—that you have 120 legislators and everyone has their own opinions. And so they now come in and tell you what they think is the right way to go and how we should cut. So if the Republicans say cut, cut, cut; if the Democrats say, raise tax, raise taxes, so you have to meet somewhere in the middle, and it’s a very challenging thing. I mean, just imagine that every question that you ask me, you have 120 people sitting here saying, “No, no, wait a minute. Ask it this way. No, do it this way. No, no, the question is too long. No, no, it’s too long for this, it’s the wrong way.” You—it’s very difficult to operate this way. But, it is doable and I’ve learned how to be more patient, I’ve learned how to work together with the Democrats and the Republicans, and we’re going to get the job done. But the fact is that we’ve cut down the spending and we are paying down debt, and we’re putting money in the rainy day fund, and we are now economically strong enough to build and rebuild California.

MR. RUSSERT: You talked to the Press Club in California and made a very candid acknowledgement. Let me roll that tape and come back and talk about it.

(Videotape, January 24, 2006)

GOV. SCHWARZENEGGER: Believe me, I expected it to go faster. In a way this is an on-the-job training. I mean I did not go to school to become a governor.

(End videotape)

MR. RUSSERT: Do you expect to see that replayed in Democratic commercials? On-the-job training?

GOV. SCHWARZENEGGER: Well, it’s for everyone. No matter—no one can prepare for the job of being a governor until you’re there. And that’s whey you all of a sudden see the kind of complexities. And notice the key thing is that you have a vision. I came in as governor as a vision, I was elected to make the changes, and that’s exactly what we’re trying to do now. And I think that we have a great state, we have the greatest state in the nation, there’s without any doubt, and this was a great state when I got here in 1968, and I said to the people, “Let’s keep it that way, this state. Let’s make sure that we have and we keep the best university system and the best transportation system and the best ports,” and so on.

I mean, I tell you, it’s so important to recognize that we have problems and we’re not living up to 100 percent of our potential. I mean I was in Japan, for instance. Prime Minister Koizumi, the first thing that he said to me was, he says, “Governor, please unload our ships. Our ships have to wait too long until they get unloaded.” What that means is that we’re losing business, because as he said, the ships will be unloaded, it just depends where. Will it be in California or will it be in Mexico or in Canada?  So for me it’s important that the ships will be unloaded in California, and if we built the infrastructure that we need so we can absorb all of this, because we are the center when you talk about, you know, the Asian market, of how it’s growing and exploding, we should benefit from that. And so this is why we need to redo some things and build. And so I want to encourage everyone in California, let us rebuild and build in California for the future of California.

MR. RUSSERT: And the estimates are you plan to spend $120 million dollars on your reelection effort. When you first ran, you...

GOV. SCHWARZENEGGER: That number didn’t come from me, may I remind you. It was some outsider that has nothing to do with us has said that, OK?  I don’t ever talk about numbers of what it will cost us. I couldn’t even tell you what it costs us. But the bottom line is, elections are very expensive, you’re absolutely correct.

MR. RUSSERT: But you said when you ran at first, “I don’t need to take money from anybody.” But you’re going to be raising thousands and thousands of thousand dollars from people who do business and have contracts with the state government.

GOV. SCHWARZENEGGER: I want to correct you. I said I would never take money from unions, that I would never take money from Indian gaming tribes. I take money because you need to take money. The important thing here is, is when you take money that they buy into your philosophy and into your program, that you don’t buy into theirs. And that you never can be bought, that’s the most important thing. Because what is wrong with the system right now is, is there’ve been people pay in then favors go out, and you never should do that. That is the key thing. But the fact is that elections are very expensive, as you know. Television, TV spots are very expensive because they have to support people like you. So if you cut your salary in half, Tim, then we could maybe just only have to raise half of the money, so maybe we can make a deal right here.

MR. RUSSERT: You’re not doing any national advertising, are you?  Or is this an announcement?

GOV. SCHWARZENEGGER: No, but it is also out there in California, because your show is very popular in California, may I remind you.

MR. RUSSERT: Now someone named Warren Beatty has been saying some very critical things of you. Someone who—an actor, your former profession. Let me watch that with you and give you a chance to respond.

GOV. SCHWARZENEGGER: Different party, may I remind you.

MR. RUSSERT: Yes, he is, a very liberal Democrat.

GOV. SCHWARZENEGGER: Doesn’t mean that he’s from the same profession, that he...

MR. RUSSERT: A very liberal Democrat. Let’s watch.

(Videotape, September 22, 2005)

MR. WARREN BEATTY: I’m just calling him an old-fashioned politician who will do whatever he thinks it takes to keep that Republican campaign cash coming in and try to be popular at the same time.

Government’s not show business. Governing by show, by spin, by cosmetics, by photo-ops and fake events and fake issues and fake crowds and backdrops, that’s a mistake. Not facing facts is a mistake. And that concept of reality should be saved for action movies and for show business.

(End of videotape)

MR. RUSSERT: What’s your reaction?

GOV. SCHWARZENEGGER: None. I never respond to Warren because I know Warren for too long and I think it would be wrong, you know, to respond to that. I do my job and he should do his job. If he wants to get involved in politics, jump into the race. Go and offer to the people what you have to say, and you know, that’s as simple as that. I continue on with my mission, Tim, which is to rebuild California, reform California and to bring the economy back. And I’m going to fight for that all the way, and I’m having a great time doing it. It’s, like I said to you earlier, it’s the greatest job I’ve ever had.

MR. RUSSERT: Now let me show you a picture that was taken after your last appearance on MEET THE PRESS. Here you are, right here, huh?  See what happened?  That was after your motorcycle accident. Have you stayed off the motorcycle?

GOV. SCHWARZENEGGER: No, but I mean the thing is I’m now having to get a license because you know, it became very clear that I didn’t have—didn’t have a license for driving motorcycles. But—so I’m going to take that taken care of and then I will drive some more motorcycles.

MR. RUSSERT: Governor Arnold Schwarzenegger, thank you for joining us, and we’ll be covering your race very carefully and closely.

GOV. SCHWARZENEGGER: I hope so, I hope so. And by the way, you look nice and trim. Your abs look good. Keep up the good work.

MR. RUSSERT: Well, coming from you, Arnold, that’s quite a compliment, I must say.

We’ll be right back.

GOV. SCHWARZENEGGER: Thank you.

(Announcements)

MR. RUSSERT: Don’t forget you can now watch the entire hour of MEET THE PRESS whenever, wherever you want. MEET—our MEET THE PRESS Web cast is posted each Sunday 1 p.m. Eastern on our Web site: mtp.msnbc.com.

That’s all for today. We’ll be back next week. If it’s Sunday, it’s MEET THE PRESS.

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