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CNN LATE EDITION WITH WOLF BLITZER

Interview With Arnold Schwarzenegger; Interview With Harry Reid; Interview With John Podesta

Aired November 9, 2008 - 11:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


JOHN KING, GUEST HOST: This is LATE EDITION, the last word in Sunday talk.
(BEGIN VIDEOTAPE)

KING (voice-over): Barack Obama makes history.

PRESIDENT-ELECT BARACK OBAMA: Because of what we did on this day, in this election, at this defining moment, change has come to America.

KING: How will he tackle the challenges facing America's 44th president? We'll talk with Obama transition team co-chairman John Podesta.

REID: I just think this is an opportunity for us to move forward and not worry about which party has the ability to flex their muscles today.

KING: Expanded majorities in the House and Senate, what are the Democrats' plans for the new Congress? Answers from Senate Majority Leader Harry Reid.

SCHWARZENEGGER: I think no matter what party would have been in control, we would have probably lost.

KING: As Republicans reel from a stinging Election Day setback, California Governor Arnold Schwarzenegger talks about where his party votes from here.

The world celebrates Barack Obama's election. To talk about the global challenges facing the next U.S. president, former British Prime Minister Tony Blair.

After witnessing a moment many Americans never thought they'd see, we'll discuss the significance of Barack Obama's election as U.S. president with three prominent African-Americans.

SEN. JOHN MCCAIN, R-ARIZ.: I hold in my heart nothing but love for this country and for all its citizens.

KING: What's next for John McCain and his running mate Sarah Palin? Insight and analysis from three of the best political team on television. The first hour of LATE EDITION begins right now. (END VIDEOTAPE) KING: It's 11:00 a.m. in Washington, 8:00 a.m. in Los Angeles and 6:00 p.m. in Baghdad. Wherever you're watching from around the world, thanks for joining us for LATE EDITION. Wolf Blitzer's off today, I'm John King.

Let's go straight to my exclusive interview with the Senate Majority Leader Harry Reid. Because as hard as it is to make deals with the Republicans on Capitol Hill, Barack Obama's success or failure could turn on how well he works with the Democrats. I had a chance to speak with the Senate Majority Leader about that and about the personal meaning of Tuesday's election results.

(BEGIN VIDEOTAPE)

KING: Let me thank you for your time. I know it's a busy week. I want just your reflections first on what happened in the country Tuesday night. A Democratic president elected, 53 percent of the vote, maybe a little more than that, an expanded Democratic majority here in the Senate. An expanded Democratic majority across the Capitol and the House of Representatives. Were the American people rejecting George W. Bush and John McCain or were they actively embracing the Democratic Party and its agenda?

REID: I think it's very clear. I read very closely with pundits, and listened to them and this is a permanent change that's taken place. Of course, George Bush helped us, but things are happening. Take Nevada as an example, Nevada. Nevada's a state that I worked for a long time trying to change things and it didn't happen overnight. We worked very long and hard trying to change what's happened in Nevada and Nevada is a blue state now, very blue.

It's a state where the two largest counties, Clark, which is Las Vegas, Washington County which is Reno, are blue. Now, Washington County hasn't been blue in some 30 years but it is now. And you have in Nevada large numbers of Hispanics voting as we do all over the country.

Four years ago, seven million voted and this year more than 10 million and this is not going to change. And I think that if we do our job, that is, Obama and the Congress, we do our job, how do we do our job? By letting the American people know that this was not a mandate for the Democratic Party, not a mandate for some ideology, but a mandate to stop the divisiveness and to roll up our sleeves and get some work done.

This is going to resound for years to come. Now John, I had a conversation today with Senator McCain. It's no secret. John and I have had our differences the last year or so. But it was a wonderful conversation. I reminded John that we came here together in 1982. And I said, John, you know, I said some things that maybe I could have said a little differently and you hurt me feelings a time or two during the campaign. John McCain said, it's over with. Election's over with. We have got to move forward and get some things done.

He realizes what condition the country's in probably better than most people in the world. So I just think this is an opportunity for us to move forward and not worry about which party has the ability to flex our muscles today.

KING: I was going to deal with Senator McCain a bit later in the interview but since you brought him up, I assume that you don't have that little quote from Thad Cochran in your pocket anymore. That was a Republican colleague.

REID: I do have it in my pocket, but thanks for reminding me. I'm going to throw it away. I do have it.

KING: Because you went around the country and anyone who asked, you were happy to say don't listen to me, listen to our Republican colleague, he said, "If he is the Republican nominee, my blood will curl."

That was among the unflattering things you said.

REID: I am going to throw that away but it's still there.

KING: You also said I don't think he has the temperament to be president.

REID: Uh-huh.

KING: And you said of him, do I have the ability to speak with experience about someone who has abused everyone he's dealt with? Those are your words. But you welcome him back into the Senate and think he can be a player in bipartisanship?

REID: Yeah. And I'm not going to repeat because we've ended this. Some of the things that he said about me, they were about like I said about him.

John McCain and I are both fairly pugnacious and we have in our younger days, did more than just talk about people that disagreed with us. In our younger days we had a few encounters with our fists and we still, I guess think that we still could do that which probably we couldn't.

But John and I had a good understanding of what we've done and what we're going to do for the future.

KING: Look forward to that.

Let me ask you before we get to the specifics of the responsibilities on the Democrats and the new president. This is your reflections on the moment. If I were here a year ago or 18 months ago and said to you, Senator Reid do you think there will be an African American president in your lifetime, what would your answer have been?

REID: I probably would have said, well, it could be, but as the campaign went on, I thought, well, that's who it's going to be.

KING: What do you think the moment means for the country? The first African American president? REID: When I was a very young lieutenant governor in Nevada, I was 30-years-old, we had all kinds of lawsuits because the Nevada gaming industry was not integrated. You would walk into one of those big casinos and you couldn't see a black face.

So what the governor and I did is we entered into a consent decree. We said, OK, we lost, let's integrate, and we got the casinos with a little pressure for us to agree.

That was not that long ago. That wasn't that long ago. And now we have an African American as president of the United States. That's what it means to me.

KING: What now I guess is the question and the Congress will come back into session before Barack Obama is president of the United States. George W. Bush is still the president and we learned this week the economy lost another 240,000 jobs last month and the unemployment rate is 6.5 percent.

What do you do in the short term to try to help with that and is it fair to say that whatever you might spend on a new stimulus package in the short term is money that might not be available for some of the promises that President-Elect Obama and your candidates for the House and Senate made.

REID: Well, first of all, until the first of the year I still have a one vote majority in the United States Senate so there is no thought that I can come in and get done what I think should be done and that's a very robust, bold stimulus package because I have the same votes I had before the election. So I am going to see what we can do but I am senior enough and experienced enough to know that you can't do something with nothing.

I need votes. So I am going to talk to my Republican counterparts and say are you going to help me get this passed? If they say no, there is no reason for us, the election is over, there is no reason for me on the floor to have a vote that I know I am going to lose.

But we have some things -- we certainly have to do something about unemployment insurance and I think my Republican colleagues would agree to that. There is a bill that's come from the House, we could vote on that, send it back to them, so I am going to, during this period of time, realize that I am still the same majority leader, just barely, with a one vote majority.

(END VIDEOTAPE)

KING: Just ahead, Harry Reid and Joe Lieberman. How will the majority leader handle the Independent Democrat who was an ardent support of John McCain during the election? His answer, when we come back.

And later, I go one-on- one with the California governor, Arnold Schwarzenegger. Much more LATE EDITION after the break.

(COMMERCIAL BREAK)

KING: Welcome back to LATE EDITION. I'm John King in today for Wolf Blitzer. Let's get back to my conversation with the Senate majority leader, Harry Reid.

(BEGIN VIDEOTAPE)

KING: Let's look around the world for a minute. You were quite frustrated over the last two years saying I want to bring the troops home from Iraq and I want to end this war because you think it's a mistake. And you said you couldn't do it because there was a Republican down Pennsylvania Avenue who wouldn't let you.

You will have a Democrat down the street in a few weeks. When will you keep your promise, it's your promise, too, to end the war and bring the troops home ...

REID: I think we've all had enough of the war in Iraq. As we speak, this little short interview, the American people are paying $5,000 a second every hour of the day, every week of the month, every month of the year. $5,000 a second. $10 or $12 billion a month.

So we're going to bring our troops home.

KING: And if a President Obama ...

REID: They're not all going to come home tomorrow as he said numerous times and we agree, that's what our resolutions that have been defeated on the floor have said. Set a timeline. The Iraqi government wants a timeline.

Set a timeline, leave people there to take care of our assets, to make sure that the Iraqis are trained properly and that we have rapid deployment forces in the vicinity that can move in a matter of an hour or two to take care of some problems.

KING: And if a President Obama tells you, Leader Reid, Harry, the generals have convinced me, they do need a little more time. Would you trust that in a way you did not trust that from President Bush and could you sell that to a caucus in a way you could not sell to them with a Republican in the White House?

REID: Senator Obama said the troops are coming home and they are coming home. It's just a question of how fast they come home. Everybody -- there will be a timeline, the Iraqis have a budget surplus, we don't, we can't spend $5,000 a second on that war. We've got to focus on what the real problems are and that's in Afghanistan today.

KING: There's been some talk of keeping Secretary Gates on for some time. Is that acceptable to you?

REID: Sure. I think we need a good transition there. I am confident that Senator Obama has somebody in mind for secretary of defense but Gates -- you know, it's interesting, my conversation with Secretary Gates, he's not even a Republican. Why wouldn't we want to keep him? He's never been a registered Republican.

KING: Who else? I assume you agree that if Senator Obama wants to be bipartisan he should put some Republicans in the administration. Any recommendations?

REID: I have a lot of favorite Republicans. Chuck Hagel, of course. I've read his book. I know a lot about his life. He was the one that allowed us to break -- and we won a vote on Iraq. We won it because of Chuck Hagel. So he certainly is a strong Republican. I like him very, very much. There are other people that I've served with. And we've got Jack Danforth in Missouri, who is still a young enough man to do something very, very good for our government.

There's other senators I think -- Bennett from Utah, what a fine man. He could be a great secretary of the interior or do other good things.

So I've got a lot of Republican friends, some who aren't so friendly who would be good in the Cabinet or other places.

KING: What is the greatest lesson of 1993 that you do not want to repeat next year when you have a new Democratic president and a Democratic majority so that two years from now when a guy named Harry Reid's name is on the ballot, the Democrats are not punished for going beyond their mandate.

REID: Listen, we have to understand the power we have and the power we don't have. You know, those interesting men who wrote this Constitution kept in mind situations just like we're in today that we can only do so much and the more that we're able to accomplish is our ability to reach across the aisle and work with the Republicans. So I think the key is understand this was an election, it's not forever, two more years there's going to be another election and we have to during that period of time convince the American people, these people really tried. These people worked very, very hard and I admire what they tried to do, I admire what they accomplished.

KING: A lot of attention focused on a new president coming into town but you have a pretty interesting job at the moment yourself, managing a sometimes dysfunctional family here in the Senate. You mentioned Senator McCain, I want to move on to one of his sidekicks on the campaign trail, was Senator Lieberman who is an Independent but a member of your Democratic family when it comes to voting in the Senate. Many members, many of your Democratic members flatly think he is a traitor for not only his support of John McCain but for the things he said critical of Barack Obama. They want him gone.

You have proposed he lose his premier committee, Homeland Security, take a lesser committee, Veterans' Affairs or something else. Why not just say sorry, Joe, you are not welcome here anymore.

REID: Well, John, whoever gave you this information is wrong because he is not on the Veterans' Committee. I couldn't offer him that if I wanted to.

But let me just say this about John -- about Joe Lieberman. I know Joe Lieberman very well. He is a senior member of the Senate. He is on Armed Services, if something happens to the chairman he becomes chairman. If something happens to the chairman of the Environment and Public Works Committee, he becomes chairman. So he is a senior member -- person around here. And I want to remind all of the people that are watching this newscast or however this program is going to air that I would not be majority leader but for his vote.

We could not have passed our budget -- we passed a budget the Republicans couldn't pass. They had 55 senators. We had 51. They couldn't pass a budget, we did. Why? Joe Lieberman voted with us.

So I recognize what he did was wrong and quite frankly, I don't like what he did. I told him so all during the campaign. But the caucus has a decision to make and they're going to make it. I am not going to make the decision. Whether we're going to say, OK, we've had enough of you, Joe, go vote with the Republicans or whether we're going to try to work something out with Joe Lieberman. Say, Joe, we don't like what you did. And here is what we propose we're going to do.

So we've had a number of conversations, we're going to have more. But for those people beating up on Joe Lieberman, I've done my share. Recognize the glass being half full, not half empty.

KING: He's chairman of the committee now, the Homeland Security Committee, which has a lot to do with the safety of Americans here. You mentioned Armed Services. He said this at the Republican Convention. He highlighted John McCain's service and he criticized those who quote, "wanted to retreat in defeat from the field of battle which would have been a disaster for the United States when colleagues like Barack Obama were voting to cut off funding for troops on the battlefield."

Senator Obama is about to be President Obama, about to be the commander-in-chief. Do you want a man who says he is not ready to be commander-in-chief, nowhere close, to be the chairman of a committee in the Democratic Senate?

REID: Joe Lieberman told me yesterday you have a big job to do. I am going to do everything I can to help Barack Obama.

KING: Does he owe him an apology?

REID: Oh, I don't know. This is not a high school deal where you say, OK, you embarrassed me in front of my girlfriend therefore you apologize.

KING: But you made peace with Senator McCain. Should they do something like that?

REID: Maybe they already have. I think a lot of this is very private stuff but Joe Lieberman has done something that I think was improper, wrong, and I'd like -- if we weren't on television, I'd use a stronger word of describing what he did. But Joe Lieberman votes with me a lot more than a lot of my senators.

He didn't support us on military stuff and he didn't support us on Iraq stuff.

REID: But you look at his record, it's pretty good. He comes from one of the most liberal states in the country. He is -- Joe Lieberman is not some rightwing nutcase. Joe Lieberman is one of the most progressive people ever to come from the state of Connecticut.

KING: Mr. Leader, thank you for your time.

(END VIDEOTAPE)

KING: Just ahead, the leader of Barack Obama's transition team tells us the president's top priorities when he takes the White House in January.

And later, California Governor Arnold Schwarzenegger on the future of the Republican Party.

(COMMERCIAL BREAK)

KING: Next to President-elect Barack Obama, there's probably nobody in the city of Washington more in demand than former President Clinton Chief of Staff John Podesta. After all, he's one of those deciding not only who gets a place in the Obama administration, but also to some extent what issues they'll be dealing with and in what order. A short while ago, I spoke with the co-chair of the Obama transition team.

(BEGIN VIDEOTAPE)

KING: As you know from your own experience in the past, sometimes the promises of campaigning crash into the realities of governing. Since the election, with what you've learned, whether it's something around the world or the depth of the economic crisis and government resources, what will a President-elect Obama have to tell the American people, I promised you this, but you have to wait.

PODESTA: Well, first of all, just this last week we learned that last month we've shed 240,000 more jobs. We've lost more than a million jobs this year. I think his first priority, as he said in his press conference on Friday was to get the economy moving again, to get an economic recovery package in place to begin to deal with the fact that people are losing their jobs and their wages are down and they're paying more for the goods that they have to pay for. So that's job number one. I think he talked about that during the campaign.

But I think he's also been very clear that a link to the economic problems that the country faces are the fact that we're dependent on foreign oil. We need an energy transformation strategy. We've got a health care system that's not working for people. Health care costs are spiraling out of control and people are losing their health insurance.

And we've got a public education system that is going to produce the workers of tomorrow. So these are all core, if you will, economic questions and they need to be tackled together and I think he'll have a program and a strategy to move aggressively across all those fronts. KING: Laying out all those programs you just did, you're talking about billions and billions in new government spending at a time when the government is already running pretty big deficits and does not have as much money coming in because the economy is so slow. A price you have to pay, but you believe, but as part of that, George W. Bush led with tax cuts, even though he just barely won in the contested election eight years ago. Will Barack Obama's tax plan be in those early days or does that have to wait?

PODESTA: Yes, no, absolutely. I think you have to think about this in the short term and the long term. It's clear that we need to get, to stabilize the economy, to deal with the financial meltdown that's now spreading across the rest of the economy. The auto industry is really, really back on its heels.

So, we're going to need to deal with this -- with, again, maybe to think about this in a short-term context with a recovery program in which we will have to inject a good deal of money into the economy to stabilize it and to get jobs growing again, to get the economy growing again and to get job growth back in the economy.

Over the long term, I think Senator Obama's been quite clear, President-elect Obama has been quite clear that when it comes to things like health care, et cetera, we ought to do it in a way that's fiscally disciplined and we pay for the investments that we need but there's no question for the long-term success of this country and for the long-term success of the middle class, that those are investments that the country needs to make.

KING: You just mentioned the auto makers. The government under a Republican president allocated $700 billion to bailout banks and financial institutions and to help Wall Street and some people on Main Street, if you will.

But the financial plan, now, the leaders of Congress, the Democrats are saying, let's also lend billions of dollars to the car makers. To someone out there who is worried about a Democratic president and Democratic Congress, are they going to spend too much money? Is the role of government going to grow too much? Where does it stop? Where does it stop in terms of an industry that fails in part because of its own decisions? Yes, because of global economic crisis, as well, in part because of its own failure to adapt. How can you keep coming, knocking on the government's door for help?

PODESTA: Well, I think that's an excellent question, John. I think what we need to do is stabilize the situation right now. They're in a tremendous credit crunch and I think that the auto industry directly employs about 250,000 people and if you think about the ripple effects, they are the backbone of our manufacturing economy. So I think we've got to stabilize the current situation, but we also have to build for a stable long-term path so that they're producing the kinds of efficient vehicles that we need in this country.

The Congress passed the $25 billion program for, to help them retool towards that future of more efficient vehicles. As again, President-elect Obama said on Friday, we need to accelerate the use of that money so that retooling can go on.

But there's quite clearly also a short-term credit crunch and I think that we're looking at whether additional legislation needs to be made. We're encouraging the legislation to use the legislation that it has available to it to try to, again, quite literally put a tourniquet on the bleeding so that we can build to the long term where these companies can be stable. You can't, you can't expect the taxpayers to keep coming back and back and back.

But in the short term, I think that we need to provide stability in the economy. In the financial side, in the auto side there's going to be other industries, obviously, affected.

Key to that is, again, this economic recovery program that is going to put people back to work directly through spending on infrastructure and energy transformation by giving the tax cut that Senator Obama talked about in the campaign.

I think that will be a very early item of business and then to rebuild on a sound base. You know, this economy has been, has not been just in trouble for eight weeks or eight months. It's been, I think built on a foundation for eight years that basically just value tax cuts to the very wealthiest Americans and it produced a very terrible result for the American people.

We're going to have to go back to basics, do it in a fiscally discipline way. But for the immediate term, we have to -- and I think conservative economists would agree to this, we have to stabilize the current situation so we don't deepen the recession and make it just a bigger mountain to climb out of.

KING: Senator Obama's signature campaign initiative on foreign policy was to bring the troops home from Iraq. Many of the generals are saying, we want to bring them home, too. And we are starting to bring them home in significant numbers but it will take a little bit longer than the 16 months that Senator Obama, candidate Obama laid out. Will a President Obama, is he prepared to go to the Congress too, to the Democrats who also want to bring the troops home and say, it is going to take a little longer?

KING: Or, if faced with a choice between listening to the generals or keeping a political promise, will he choose the political promise?

PODESTA: Well, of course, he was advised by former military leaders, including a number that served in Iraq and served during the course of the Bush administration, in making that pledge.

I think that he fundamentally is convinced that we can draw down one or two brigades a month, that we can -- that we can get on the path of eliminating our combat force from Iraq.

We need to pay attention to what's going on in Afghanistan and Pakistan, where the military has also called for the increase of troops in Afghanistan to stabilize the circumstance there.

So I think he'll meet with -- with the Joint Chiefs. He'll listen to military commanders on the ground in -- in Iraq.

But I think that we want to withdraw. I think he's clear that he wants to withdraw the combat force from Iraq in a responsible way, and that the time frame that he put out is, again, is consistent with where the Iraqi government is today.

They want to take over management of their own affairs. We need to stop spending $10 billion a month in Iraq. And we can do that and ensure that there is stability there and that the Iraqis are defending their own country.

That doesn't mean all troops will be eliminated from Iraq. It will still be necessary for force protection and our counterterrorism mission and to -- and to do -- continue training of Iraqi forces.

But we can get our combat force out of Iraq, pay attention to Afghanistan, and do that on -- I believe, on the time frame that President-elect Obama has suggested.

KING: May I ask you, lastly, you are working very closely now with an administration, the Bush administration, that, for eight years, you frankly called incompetent, over and over again, from the outside.

Are they cooperating now, in a competent way?

PODESTA: Yes. I think that we've had very good conversations with the administration before the election. I met with Josh Bolten, the president's chief of staff.

His deputy, Blake Gottesman, is really heading up the transition effort inside the White House. We've had several meetings before and subsequent to the election.

The transition executive director, Chris Lu, is in daily touch with Blake. And we're moving and proceeding in a very professional way. They've been very forthcoming in trying to help move this situation forward in...

(CROSSTALK)

KING: ... integrating you into the most sensitive things?

PODESTA: I think we -- we're just beginning that process. Josh and I signed a memorandum of understanding yesterday, which will permit our people to be in the federal agencies as early as this week coming up.

We've had, already, 100 people pre-cleared. They've gotten security clearances already in place. That was the result of legislation that was passed in 2004.

We took advantage of that by providing the names and the information necessary to clear them for their -- for security. I'm meeting, again, when President-elect Obama is meeting with the president tomorrow, I'm going to have a follow-up meeting with the chief of staff and deputy chief of staff at the White House, and move the process forward.

So far, cooperation has been excellent. We envision having a couple of joint meetings, once our national security team's named, between their national security principals and ours, so that we can have a seamless transition from the, you know, from January 19th to January 20th, when the president takes the oath of office.

We've -- I think we're trying to accelerate the process of identifying, selecting, nominating and hopefully confirming a layer below the cabinet. And we've had good cooperation with the White House in pursuit of that.

So, their personnel office, across the board, I think, in the White House, we've had a very collegial and cooperative arrangement, and I thank them for that.

KING: John Podesta, thanks for your time.

PODESTA: Thank you.

KING: Up next, the former British prime minister Tony Blair. He discusses the global challenges facing President-elect Barack Obama.

And later, Arnold Schwarzenegger sits with us exclusively to discuss the future of the Republican Party, the debate over same-sex marriage, and a whole lot more. Stay with "Late Edition."

(COMMERCIAL BREAK)

KING: Welcome back to "Late Edition." Former British prime minister Tony Blair is in Israel, attending a summit in his new role as Middle East peace envoy. But when we spoke, just a few moments ago, I asked him to think back to his transition to power when he came to 10 Downing Street.

(BEGIN VIDEOTAPE)

KING: You came to power, sir, in Great Britain, under similar circumstances as Barack Obama will assume the presidency here in the United States.

The New Labor Party created a great deal of excitement and enthusiasm, after a period of conservative rule, and came to power with that excitement and enthusiasm but also with a long list of significant policy problems to deal with.

Any advice for Senator Obama as he handles this transition?

BLAIR: Well, as I say, I wouldn't presume to give advice, but I think there was another Democrat politician, Mario Cuomo, who once said that you campaign in poetry but you govern in prose.

(LAUGHTER)

And, I mean, there is this huge weight of expectation, but, you know, he -- he is a man of tremendous ability, and I think it is possible to meet at least the reasonable part of those expectations.

I mean, nothing is ever perfect. Nothing is ever without its challenges, but I think there is a sense, around the world, of a desire to reach out to America, a hope that America reaches out to the rest of the world.

And if we can find the right agenda that unifies sensible people who are firmly fixed on the future; if we can find that agenda and unify the world, then I think, at least, as I say, the reasonable part of those expectations can be met. And I certainly hope they are.

(END VIDEOTAPE)

KING: You can see the entire interview with the former British prime minister tonight at 8 p.m. Eastern.

I'll be hosting an hour-long special on Barack Obama's "Transition to Power." Don't miss it.

But coming up next, here, does Barack Obama's winning the U.S. presidency signal a post-racial America?

We'll get perspective from three prominent African-Americans when "Late Edition" returns.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

OBAMA: If there is anyone out there who still doubts that America is a place where all things are possible, who still wonders if the dream of our founders is alive in our time, who still questions the power of our democracy, tonight is your answer.

(END VIDEO CLIP)

KING: President-elect Barack Obama delivering his victory address after his improbable political journey. Gamblers or non- gamblers alike, long odds against Tuesday night's outcome. But beat the odds, Barack Obama did and nowhere was his and America's achievement more heartfelt than among African-Americans.

So how does Barack Obama's election as U.S. president change the social, political and cultural landscape? Joining us Scottsdale, Arizona, Grant Hill of the NBA's Phoenix Suns. In New York, author and Black Entertainment Television correspondent Toure. And here in Washington, University of Pennsylvania professor and former U.S. civil rights Commissioner Mary Frances Berry.

I want to thank all three of you for spending time with us on a Sunday morning because frankly, as much as I might understand politics, there are parts of this I simply cannot as a white man understand.

Grant, let me start with you. Stunning this week to watch so many athletes, as you know, you are the role models for many children, white and black and brown across America, but especially in the African-American community, athletes are role models because for the longest time there was a ceiling on how blacks could go in politics. What does this mean?

HILL: Well, it means a lot. You know, first of all, I was inspired, as well to see so many athletes come out and support. I think the last 10, 15 years, the last four or five elections, athletes haven't really participated. And to see guys come out and play their part in the political process, you know, have fundraisers and speak at rallies. It was really good to see for me as a colleague of many of them.

But it's great. It's very inspiring. We need examples, we need role models, not just as athletes and not just as entertainers. Doctors, lawyers and, yes, now even as a president. So for my daughters to be able to grow up and in their lifetime know that, hey, may be one day I can be president, is inspiring but also very challenging, as well.

KING: On that point, Mary Frances Berry, Grant says he can now tell his daughters, you can be president of the United States. Every parent wants to tell that to their children. Ten years ago, five years ago, five months ago, was that a reasonable thing for an African-American parent to say to their child?

BERRY: It was not reasonable to say that 10 years ago. It is reasonable now. And we have a changed America. We don't know yet whether we have a post-racial America. We'll know that at the end of the Obama presidency when he's been in office for eight years.

Whether the world has changed for ordinary African-Americans and other people of color whose lives are not affected by discrimination and who have more opportunity and the rest. We'll know that then but it's definitely a changed America and a change, not just because of Obama, it changed because of all the things that came before him, including the popular culture, what we see there and including in politics.

All the people, even the Republicans, let's give them some credit. Colin Powell, Condoleezza Rice and you can go on and on. So, the opportunity is there. It's changed America in terms of race, but whether it's post-racial, we'll have to see what happens.

KING: Toure, let's follow on that point. In terms of how the society changes, Barack Obama did not talk about race a lot during the campaign. What is his responsibility now in your view to address these lingering questions or the lingering challenges?

TOURE: Well, I mean, Barack changes black America and black men in America just by the way he lived and by not making race the main thing.

I mean, race in this candidacy was sort of a grace note, a secondary thing complimenting his intelligence, his intense dignity, his grace, to use the word again. The thing is that the black male soul has been about rebellion because this country has been so hypocritical to black men and to black people in general, not extending the full promise of American opportunity and equality and liberty to us.

And now we can look out and say, hey, we are full parts of this country now. We can be unmitigatingly proud to be Americans. You know, when Michelle Obama said I'm just now being proud of this country, she was airing a black private conversation in public and a lot of black people nodded and said, yes, I know what you mean. And that cognitive dissidence that we felt, not being able to be fully proud of the country and remembering the things that happened to us and are continuing to happen to us. We can feel proud now. You know, we can feel full parts of the American dream now and that's going to unleash the soul and change black America completely. KING: Grant, has anything changed already besides that Barack Obama won a huge distinction, made history and broke a barrier. But on the streets of America and specifically on the streets of black America, is anything different today than it was on Tuesday morning before the election?

HILL: Oh, I think so, without a doubt. There is a feeling of pride I think in black America, really in all of America, but really in black America, primarily. A lot on what Toure touched on, to have somebody who ran a flawless campaign, who every attack that was aimed at him just handled himself with grace and dignity. And to know that hey, we have somebody like ourselves, someone who is us, who is of us, in the ultimate leadership position in our country.

That is inspiring and, certainly, the last four or five days I've been on the basketball court, but I know as a black American that everyone out there feels like, wow, we've come a long way and there is a sense of pride, a sense of joy.

BERRY: If you ask what is happening with the people on the streets and in the communities, it's the mother in the doctor's office the other day who said to her little kid who came out crying because he got an injection. You shouldn't cry like that, shut up. Barack Obama had to go through a lot more than that. He went through it, so what are you complaining about?

And mothers all across America, black mothers will be saying that to their sons and to their kids. And so what we have to see is what the impact is. The role modeling is there, we have to see what the influence is on ordinary African-Americans. That's what I meant when I said we'll know after it is over how much impact it has really had on them.

TOURE: John, I wonder if I can send a question to Grant because I'm sure that Grant Hill knows that black male authenticity, especially in the NBA, has really been located in people like Allen Iverson, been to jail, tattoos, rugged, rough, rebellious soul. And Grant Hill has been the opposite of that. Fortune 500 father, speaks perfect English, not rebellious. But now the nature of black male authenticity has to expand to include Barack Obama, Grant Hill, Toure, Cornel West, Michael Eric Dyson. So do you feel a new sense of belonging in the black male authenticity sweepstakes? HILL: That's a really good question. Yeah, I think to a degree. I think, you know, certainly the perceptions of the black male have been sort of that rebellious, that rebellious side, that rebellious angle and certainly there are loads of examples of that in professional sports, but also just in America in general. And certainly Obama has come out, President-elect Obama has come out and shown that, you know, getting an education and, you know, speaking proper English, whatever, all these different things and the way he's conducted himself, it's OK.

And it's not about being black doesn't mean necessarily you have to be ignorant. And you can conduct yourself, you can be educated, you can be a great husband and a great father. That is being black. And, so, I think it's important for black America, but it's important for white America to see that, as well. And certainly, he is changing perceptions, you know, throughout the country for Grant Hill and for Toure.

KING: We're going to sneak in a quick break. Sneak in a quick break. Hang on, Toure, we'll have a little more of our conversation when we come back. We need to make a little bit of money here. LATE EDITION will be right back. Please stay with us.

(COMMERCIAL BREAK)

KING: Let's continue our conversation about what the historic Obama presidency will mean for race relations and American society. With us, NBA player Grant Hill, BET correspondent Toure, and former U.S. Civil Rights Commissioner Mary Frances Berry. Mary, let me pick up with where we were before the break. What is the responsibility now to white Americans to maybe have conversations that we weren't comfortable having a short time ago?

BERRY: I think the most important thing is for white Americans to realize that because you don't see a lot of -- we hope -- angry black men anymore, that the number decreases, that there are still all these problems that ordinary people have in society.

And that if you really want to make a truly post-racial America, what you should be working is to close some of those gaps, whether it's in education, jobs, or some of the other things so that by the end of Obama's presidency, we can say that we successfully have gone the last mile and we've actually done the job. So there's a responsibility to join together and to push and to do that.

KING: Do you worry, Grant Hill, about the expectations on this president in the context of if I'm a seven or 8-year-old African- American kid living in a poor neighborhood, going to a lousy school, but I want to be like Grant Hill and I pick up a basketball and go up to the street, there's no net on the hoop. It might be bent and there's probably glass on the court. Is that kid expecting a week from now with an Obama presidency for that to be different?

HILL: Well, I mean, certainly, there's a lot of problems right now. And the last eight years under the current administration has a lot to do with that. So, you know, Obama to me, first of all, and America feels the same way, clearly the best candidate and the right person for the job.

But, you know, it's going to take time. I don't think things are going to happen overnight. And things may not even happen necessarily, some of the perceptions, you talked about education, hiring practices in corporate America, you know, these things may not in the blink of an eye change. And so, you know, it's going to take time. We're going to have to be patient. There's a lot of mess, a lot of things that have gone wrong and put us in this current situation. But I do think in time he is the right person, he will change perceptions and things will get better for all of us.

KING: Toure, how does it change African-American politics? Two months ago, three months ago, and you are flipping around the cable stations and there's some debate that involves African-American politicians, you probably see Al Sharpton or Jesse Jackson on TV. Has that era passed?

TOURE: I think that something in that era has passed. I think something very much in those politicians is about looking backwards, about continuing the complaint about saying, hey, America owes black people something. And I think now the feeling is that black Americans are part-owners of America and have to be to behave as owners, loving the place, cleaning it up, and I mean spiritually and emotionally, not literally.

One of the things this is going to do for black politics and black people, also, is that this guy is cool. I mean, he's a real brother. He's got a corny black person like Alan Keyes or Condoleezza Rice. He's got fist pumps. He talks like he's in church. He walks with a bob.

BERRY: Toure, stop it.

TOURE: You know, I look at what we've seen 43 white men be president and now this is going to be like, wow, let me show you how to do it looking cool. And that is a beautiful thing that we can take cool to that national, international stage.

BERRY: I wanted to say --

KING: Go ahead.

BERRY: Toure, that's going way too far. Condi Rice, calling her corny, I don't agree with you ideologically, calling her corny. But what I want to say is was that if black people behaved more responsibly who are poor and disadvantaged and who don't have that what they need and are trying as hard as they can, and if white people really are interested in accepting a new racial America and not just symbolically electing a president who is black and then saying, oh, well, we're all finished.

Then if black people and white people and other people of color joined together to try to solve some of these programs then during the Obama presidency we can see a new reality for all of America. It's up to black people to be responsible, and it's up to white people to show it was not just a thing they wanted to do as a fad, but that we're all in this together.

KING: It's up to me, unfortunately, to keep this show on time, so I need to end this one here. But it's a fascinating discussion. I appreciate your time. Mary Frances Berry, Grant Hill out in Phoenix, good luck, on the court. Grant, we'll talk to you soon. And Toure in New York, thanks so much for your time. A fascinating discussion.

There's much more ahead right here on LATE EDITION, including my exclusive conversation with the California governor, Arnold Schwarzenegger. He offers his prescription for what's ailing the Republican Party. LATE EDITION continues at the top of the hour.

KING: This is "Late Edition," the last word in Sunday talk.

(BEGIN VIDEOTAPE)

KING: Picking up the pieces.

SCHWARZENEGGER: Democrats and Republicans should do everything they can to help this man and his administration to be successful.

KING: After Republicans lose the White House and more seats in Congress, California Governor Arnold Schwarzenegger weighs in on his party's feature.

OBAMA: It is not going to be quick, and it's not going to be easy for us to dig ourselves out of the hole that we are in.

KING: President-elect Barack Obama prepares for tough challenges and a new administration. We'll assess the transition to power and the historic and emotional presidential election with three of the best political team on television. "Late Edition's" second hour begins right now.

(END VIDEOTAPE)

KING: Welcome back to "Late Edition." I'm John King, sitting in today for Wolf Blitzer.

Just a few hours ago, I had the opportunity to interview Governor Arnold Schwarzenegger of California, without a doubt one of the most intriguing politicians on the national scene. As a leading Republican married to a member of the very Democratic Kennedy clan, Maria Shriver, this election was very personal.

(BEGIN VIDEOTAPE)

KING: Thank you for your time, to begin with.

SCHWARZENEGGER: Welcome.

KING: Maria has bragging rights in the house right now? Is that a fair statement?

SCHWARZENEGGER: Oh, I would say so. I think that Maria is gloating now for these last few days, and it's been very tough for me, because she's running around the house with a cutout, a life-size cutout of Obama, you know? We won, we won, Obama won. Obama -- all of those kind of things.

So -- but luckily, I can get back into the bedroom, so there's the big advantage.

KING: On a more serious note -- although I might want to continue that one -- on a more serious note, give me your assessment of what happened, in the sense that was this a rejection of the Republicans or an embrace of the Democrats, a little bit of both? What happened?

SCHWARZENEGGER: I think that you will see that when there's an economic downturn of what we have experienced these last few months, especially -- started this last year -- but these last few months I think we have experienced a huge crash, especially on the stock market, that had a tremendous effect. And combined with the housing crisis and the mortgage crisis, I think that no matter what party would have been in control, would have probably lost.

And we've seen it over and over again. We've seen it when Jimmy Carter lost. There, the advantage went to the Republicans. Then we saw what happened in 1992, you know, when Bush lost, and the advantage went to the Democrats at this point. Then again eight years later, the economy went down again, and we've seen how that helped Bush to get elected in 2000. So I think we have seen it over and over, these kind of trends.

So, I think no one knew that it's going to be that bad. I think the Republicans were trying to hold on to, you know, if it would have been just the housing crisis or the mortgage crisis. But then when the stock market crash came, I think it was just too much.

So, that's my take. And you will see people guessing and having all kinds of other theories and ideas about that. I'm not one of the pundits and experts that is analyzing all this stuff or overanalyzing it. I just think what I said is what I believe.

KING: Well, I want to talk more about that, about the Republican Party picking up the pieces in a minute. But let me start with where we are. When you were out campaigning with Senator McCain, you were funny but also very critical of Barack Obama, talking about his scrawny arms and skinny legs, saying you needed to give him an exercise routine. But you also said he had Soviet-style, "spread the wealth" policies. Given the state of the economy right now, are you worried that a Democratic administration with policies as you see them, Soviet-style, "spread the wealth," will that make it worse?

SCHWARZENEGGER: Well, first of all, let me just say that ever since I've come to the United States, I have sworn to myself that I would do everything that I can in order for us in America never to adopt a system that they had in Europe in general, not just the Soviet Union -- because I didn't compare it with the Soviet Union, I compared it with Europe. And I think that Europe when I left, four decades ago, was mostly socialistic. And I've seen what effect it has on people and businesses and on new opportunities. And America was always known as the land of opportunity. And I've seen it first hand, what tremendous impact it had on me, to be able to have a successful body-building career, to have a successful acting career, to have a successful political career, to have a successful -- and a great family, and all of those things, making millions of dollars and all this.

So, I don't want to go and have America go in the direction of Europe, the way they were four decades ago.

Since then, Europe has learned. Since then, Europe has rolled back and has adopted a lot of the American ideas. So that's the right way to go, and so I want America to keep it this way.

Having said that, the rhetoric is over. I have made it very clear that now, since the election is over and the people have chosen Obama, that I will be 100 percent behind this man. Anything that he needs, we as a state will work with him. We want to make sure that he is successful, because then the country is successful. It has absolutely nothing to do with politics. I'm all about getting the job done, whatever party it is. Let's work together, Democrats and Republicans, and I think a lot of things can be accomplished.

KING: Any communication with you? Your name gets kicked around in Washington every now and then, say, for a cabinet job. Any interest? Any communication?

SCHWARZENEGGER: No. I also made it clear that I wanted to stay here until I'm finished with my term. There are so many different challenges that California has. It's the greatest state in the greatest country in the world, but we also have challenges like the rest of the country, with unemployment, with the housing crisis, the mortgage crisis. So, there's a lot of work ahead, and I want to make sure that we can put people back to work and to keep people in their homes and to stimulate the economy again. But we have to do that together with the federal government.

KING: You are facing many of the challenges he will face. You're chief executive of the world's seventh largest economy here in the state of California, and President Obama in just a few short weeks will be facing many of the choices you have to make. And at the moment, you have talked about the pain of the economic slowdown, to the point where you're proposing to raise the sales taxes, cut some services, because you need to balance the books.

When you look at the Obama agenda from the campaign, is there anything that he proposed to do that would make it worse for you?

SCHWARZENEGGER: I think it is important thing now not to analyze of what was said in the past, but what will be done in the future. Because we only can work off what is done in the future.

I think the most important thing for, you know, President-elect Obama is to go and, as he has said in his last press conference, to bring the economy back as quickly as possible, to stimulate the economy, and to get people back to work, and also to work on the housing crisis and to modify some of the loans so that we can keep people in their homes. It's very important, the loan modification, so we can reduce the payments, the monthly payments for people so they can stay there.

I think all of this is so important. And then to go and create health care reform, as he has talked about. It's very important also to go and to rebuild America, because America has fallen behind, way behind when it comes to infrastructure.

This is now the most perfect time to do that, to lay out a plan to rebuild America, just like Roosevelt has done, because it will stimulate the economy and it will create a tremendous amount of jobs. And I think this is one of the most important things to do.

KING: Can the country afford that right now?

SCHWARZENEGGER: Absolutely the country can afford it.

Look, I have heard that same dialogue a half a year ago when people talked about can the country afford infrastructure, and look how much money we have lost since then. So, the country can afford, because what it will do is it's an investment. It's not spending. It's an investment where you get twice the amount of money back, because it will bring people to work. You don't have to pay for unemployment insurance and benefits and all of these things. And it is what the American dream is all about, that you have home ownership, that you have a great job, and that you can make money and raise a family. These are the most basic things, and to have great health care. These are the most basic things, and I think these are the things that the new administration should shoot after.

KING: You just mentioned the American dream there. You mentioned your story. You are a compelling American dream story, your life is. As an American now and a governor now, a Republican, sure, but as a political leader, what was it like to watch -- he wasn't your candidate, but to watch an African-American get elected president?

SCHWARZENEGGER: I was touched by it. I thought it was so historic. And I maybe look at it a little bit from the outside, more so than Americans that were born here. As much as I watch this great nation in general, as an outsider, as an European, with a European mentality, and also with an American mentality. So to me it was a huge breakthrough, because it will have an effect worldwide on how much the African-American, you know, people have moved up and got the bump that I think they needed so badly, because they've been held down and held down for so long.

And I think this is a refreshing new thing. It gives them certain pride. And I think that's terrific. So, I mean, I was proud of it, of the American people went in that direction and that we didn't see the prejudice -- maybe a certain percentage, but not what people expected.

And so, I think it's great. It makes me, again, proud to be an American. KING: As someone who has come to power after a dramatic election, with great expectations, there are still difficult choices to make. Any advice for a President Obama? SCHWARZENEGGER: I think that if he does the things that he has promised and does the health care reform and be very strong on an energy policy, and to fight global warming and to do the kind of policy that we have done in California -- that's why I said we have to work together, because we want to share this knowledge that we have gained with our negotiations and research that we've done. Also to go and do the loan modifications, to get people back to work as quickly as possible, and also to deal with the world and with the problems that are facing him. Because there are some really very critical problems and big problems, if it is Iraq or if it is Afghanistan, if it is Russia or if it is China, if it is Africa, the Europeans, they are our allies, you know, how to deal with them. How to deal with, you know, South America and Central America, with those issues. How to deal with terrorism and protecting the borders.

So there's a lot of issues like that, that come together. So it's overwhelming in a way, especially when you have been in the Senate, where you don't really -- where you don't really run something.

So, but I think that he has good people on the campaign, and I think that he has good people around him now, and I think they're going to accomplish a lot.

And like I said, the important thing is that no one should look at this from now political. Even though that's what happens anyway, but it's just that the attempt should be not to look at it in that way.

Democrats and Republicans should do everything they can to help this man and his administration to be successful, because when he is successful -- because the people have already spoken that he's the president. So, when he is successful, then the nation is successful. And then the world is successful. So, we've all got to work together on this.

(END VIDEOTAPE)

KING: A much more bipartisan tone after the election from Arnold Schwarzenegger. Of course nice to know he's welcome now back in the bedroom.

We'll have much more of my exclusive interview with the outspoken governor in just a moment. We'll get his assessment of what the Republican Party needs to do to be able to say, "we'll be back." And later, the best political team on television on the Democrats' big week. Still, lots still ahead. Stick with "Late Edition."

(COMMERCIAL BREAK)

KING: Welcome back to "Late Edition." Let's get back to my exclusive conversation with the California governor, Arnold Schwarzenegger. He had a lot of suggestions about how to rebuild the Republican Party, but we began by discussing the changes his state has made this election season.

(BEGIN VIDEOTAPE)

KING: Let's look more closely at the election, looking back a little bit, I want your perspective on a number of issues, starting here in California. You won a very important political reform victory with the redistricting initiative. Now, many Americans might not quite understand, but this -- the way -- your victory now is that an independent commission will draw the House districts in the state of California. And in the past, these are done politically; some call it gerrymandering. But most House districts across the whole United States, they're pretty safe. If a Republican has it, a Republican will keep it. If a Democrat has it, a Democrat will keep it.

You have this new system now. What do you think the impact will be here in California, and will it, like many propositions and political reforms that begin in California, do you think it will be copied across the country?

SCHWARZENEGGER: Well, first of all, I think anything that happens in California has a tendency of getting copied across the country and in other places around the world. If it is environmental issues, or if it's biotechnology, our computers, high technology, all of those things just spread like wildfire. So I think that it will have the same impact with redistricting.

It's a very complicated issue, and it's not a sexy issue, so this is why it has failed so many times in other states and also here in California. But I think the most important thing is that it will enable for ordinary citizens to draw the district lines, so that the districts become more competitive between Democrats and Republicans, and, therefore, when it's competitive, it creates more performance. Because as soon as there's competition, there's better performance.

Because right now, even though the legislators have in California an approval rating of 22 percent, which is one of the lowest in the history of California and probably in the nation, but they get re- elected again, because it's a fixed system. Out of 314 legislative and congressional elections, only one changed party hands. So it just gives you an idea of how fixed the system is. And we laugh at Putin in Russia, how his system is, but the fact of the matter is, there's more turnover in the Kremlin than there's turnover here in California. So we have to fix it.

And luckily, the people this time were smart enough, and they have voted yes on Proposition 11. We will now have the redistricting done by ordinary citizens, and take that power away from the legislators. That's why they fought it very hard. They fought it and disseminated all kinds of misinformation, so we are happy we won.

And the interesting thing is that I was the leader of this movement of redistricting, and to have to win as a Republican in an overwhelmingly Democratic state, and when the wave goes in the Democratic direction, it just shows you what a huge victory this really was for Proposition 11 and for the people of California. KING: You lost on another one, on Proposition 8. It was not your idea, but you support same-sex marriage. And the proposition banning same-sex marriage passed. Many would look at California, which is viewed as this progressive, open-minded state, and say, why? What happened?

SCHWARZENEGGER: You know, I think that the people of California just, again, have spoken on this issue, and they went against it, just like they did in the year 2000, when they voted against it in Proposition 22. And here they had a chance again. And you know, they had a very, very strong campaign, the pro-Proposition 8 people, and I think that the people that tried to defeat it did not have maybe as good a campaign or had as much money behind it, whatever.

I think it is unfortunate, obviously, but it's not the end, because I think this will go back into the courts, this will go back to the Supreme Court and all this, because the Supreme Court very clearly in California has declared this unconstitutional. It's the same as in the 1948 case when blacks and whites were not allowed to marry. This is -- this falls into the same category.

So, I think that we will, again, you know, maybe undo that if the court is willing to do that, and then move forward from there and again lead in that area.

KING: As a governor, from a policy perspective, are those couples who were married, same-sex couples who are already married in California, are they in jeopardy in any way?

SCHWARZENEGGER: No, not at all. No. It's just from now on. You know, it's -- there is no marriage between a man and a woman, until, like I said, the court determines (ph) it over or does anything about that.

KING: Is it a generational challenge, in your view, that maybe five or 10 or 20 years from now, it will be an easier issue?

SCHWARZENEGGER: Well, it's also -- it's not just easier or harder. It's just a cultural issue, also, because as you could see, because of the big turnout amongst African-Americans and Latinos, that had an effect, also, which they did not expect. So there's all kinds of other things. And I think the religious groups have done a really, you know, big campaign, a lot of them, you know, to support Proposition 8 and so on. And, you know -- so it's a very, very difficult thing.

And it's -- when I was campaigning for Proposition 11, a lot of times press came to me and they said, "Governor, why are you doing that? It has failed five times before. Why a sixth time?" And I said, look, I learned the messages from lifting weights. Sometimes I tried to lift the weight 10 times and I failed, but the 11th time, I lifted it. I said, so I learned that you should never, ever give up. And I think it's the same with this issue with Proposition 11. They should never get up. They should be on it and on it until they get it done. KING: You are a rare figure in American politics, which is a very popular Republican in the wake of the last two elections, 2006 and 2008. So I want you to help me understand, from your perspective, what went wrong, starting here? California has been a blue state for some time. The Republican is not expected to win in the state of California. But John McCain lost by 24 points in this state, a bigger margin -- Barack Obama won by an even bigger margin than LBJ back in the '60s when he set the record. How? How could it be that bad?

SCHWARZENEGGER: Well, like I said, I think there's people that are experts in analyzing all of this. But one thing I can tell you, that you can win as a Republican in this state. That I know, because I've experienced it myself twice. And I think that you have to speak to the California people and you have to do exactly what they like to have done.

So, for instance, if the California people are very interested in the environment, to protect the environment and simultaneously protect the economy, then that is what you have to strive for. Don't go in the other direction. Don't just go in the direction of the environment and leave the economy behind. Don't just go in the direction and help the economy, but leave the environment behind. You will lose if you do that.

The same is if you are against health care reform. The people here, 73 percent of the people, have said they want health care reform. So you've got to go and start working with Democrats and Republicans to get health care reform.

So, this is a very important issues. The people in California want to have things done. Let's get things done. Let's clean our ocean, let's clean our water, let's clean our air, let's create health care reform, let's pass the budget, let's fix the budget deficit and the structural deficit. All of those things.

And to me, when I look at those issues, I don't look at them as Republican issues or Democratic issues. I look at them as people's issues. You've got to make decisions what is best for the people, not what is best for our party.

KING: And as we sit here today, the Republican candidate for president lost in the suburbs by double digits -- 12, 15, 18 points -- about 40 percent or more of the American people live in the suburbs. Overwhelmingly lost among the new, younger voters, who are energized in this election to come out and vote. And lost more than two out of every three Latino votes across the country. Is that a viable national party?

SCHWARZENEGGER: I think that, first of all, let me just say I think the Republican Party is a very good party, and I'm very proud of the party because of its principles, if it is, you know, getting government off your back, reducing the restrictions on businesses, you know, trading with the world, being strong on military, strong on law enforcement, keeping the criminals locked up, all of this, being fiscally responsible. All of those Republican principles are good principles. So we should never, you know, discredit that. But I think the important thing for the Republican Party is now to also look at other issues that are very important for this country and not to get stuck in ideology, in the ideological corners. Let's go and talk about health care reform. Let's go and strive towards having everyone have insurance and be insured so that they're covered. Let's make sure to go and to open up and to go and fund programs if they're necessary programs, and not get stuck on just the fiscal responsibility, but look at the reality of what needs to be done. And so I think the party has to open up and do more of the things that the American people right now need. Then, they can be again the party that they once were.

KING: So, then, what do you say to some conservatives, who after this election have come together and say, "our problem is that we lost our way and we need to go back to the basics," which is fiscal conservatism, but also social conservatism. And whether that's opposition to abortion or opposition to same-sex marriage, what do you say to those people?

SCHWARZENEGGER: Well, remember one thing that Eisenhower said, that politics is like the road to center, you can drive, and the left and the right is the gutter. And I think that's exactly what is true. Where the action is, is in the middle. And this is what I'm trying to do, and this is why we have been successful trying to bring Democrats and Republicans together in the center. And the times when we were not successful, it is because of the system, the way it's set up. So that, in order to win here in a Democratic district, you have to be way to the left. And in order to win in the Republican district, you have to be way to the right. And then they're so far apart, they can't get together in the middle. And that's why we are doing the redistricting and that's why Proposition 11 won.

KING: But you have been successful. But if you look to the east, there are no moderate Republicans, as we might call them, left in Congress from New England. Chris Shays was the last one. He lost in this election. Gordon Smith, the senator from Oregon out here on the West Coast, a man, who, like you, says let's meet, let's meet in the middle and try to get things done. He lost his election. There are some who say if there's no home for people like that in the Republican Party, if they are outcast, why not try something new? And I know you've had these conversations. Do you need a third party? You need to do something else. As you look at the debris of the Republican Party in these last two elections, not just the presidential election, is that a good idea, maybe try something new?

SCHWARZENEGGER: One can think about that. I'm not thinking about that. I'm happy with being a Republican, and I'm very happy that for instance like Charlie Crist, he's very successful in Florida. Huntsman is very successful. Jindal is very successful. I mean, there's a lot of people -- Michael Bloomberg, who has been up until recently a Republican, has run the city of New York in a very successful way, and he is an extraordinary leader. Because they all don't look things as a Republican versus Democratic issue. They look at it as people's issues. It doesn't matter -- forget all the parties. If you're a Democrat or if you're Republican, if you get stuck in ideology, you will not get things done. You've got to come to the center and you've got to work together. Both parties have to agree and compromise a little bit.

KING: So, who is the leader of the Republican Party at this moment?

SCHWARZENEGGER: I think there's a lot -- I just mentioned some of them.

KING: But there's no one leader...

SCHWARZENEGGER: Governors...

KING: There's no one leader at the moment.

SCHWARZENEGGER: We'll figure one out. There will -- you know, have someone emerge as the leader. But it always happens by itself. Someone will emerge again.

KING: Among those maneuvering to be the lead spokesman for the party is the former speaker, Newt Gingrich. Are you comfortable with him as the leader of the Republican Party?

SCHWARZENEGGER: Well, you know, I have only met Newt Gingrich twice, when he was in Washington, and he was a very nice man, with brilliant ideas and very innovative. And, you know, he's a thinker, and he knows this stuff inside and out. And I have not heard anyone talk about that, that he's trying to be the new leader or anything like that.

But, you know, I would like to see a whole group of Republicans get together, including him, and to talk about where the party should go in the future and to talk about how to include the issues that are very important to the American people, like infrastructure, building infrastructure or health care reform, and not always just say, then, this is spending, we can't do that. No, don't get stuck with that. We've heard that dialogue. Let's move on and let's look at that.

Yes, it does take spending, but there's a way of doing it that we can bring the health care costs down and we can insure everyone and provide health care for everybody. There's a way of rebuilding America where it's a great investment, not just spending, a great investment.

Look, we have made this commitment right here in California, $50 billion of infrastructure bonds we have been able to sell here, and to rebuild our roads and build our schools, and are fixing our levees for the first time, and doing all kinds of great things, building our prisons and so on.

So that's what we need to do nationwide. And I think the Republicans need to get behind that, to do the things that the American people, you know, want to have done.

(END VIDEOTAPE)

KING: Up next, the rest of my conversation with Governor Schwarzenegger. You'll want to hear his blunt opinion of fellow Governor Sarah Palin and her political future. Stay with "Late Edition."

(COMMERCIAL BREAK)

KING: Welcome back. When I sat down with California Governor Arnold Schwarzenegger this weekend, I took the opportunity to can ask him about his fellow governor, Alaska's Sarah Palin.

(BEGIN VIDEOTAPE)

KING: What about Sarah Palin? Does she have a future as a national leader in the Republican Party?

SCHWARZENEGGER: I have no idea if this is her goal and what her goal is. We know one thing, that she was a terrific mayor and has been a terrific governor. Imagine that when she started this whole vice presidential campaign, she had an approval rating of over 80 percent. And now even after all the this beating that she she's gotten and all the things that went on and with all the attacks, she still has 65 percent approval rating. People love her there. Why? Because she's doing a great job. So, I think that if she wants to do something nationally, I'm sure that people are ready to embrace her with open arms. I don't know if that's what she wants.

KING: But you didn't think that she was necessarily the most qualified Republican to be the vice presidential candidate.

SCHWARZENEGGER: I don't think that, you know, you get always the most qualified to get into that position.

KING: Was she ready to be president, in your opinion? Was she ready to president?

SCHWARZENEGGER: As I said, as fast as she has learned to become a great governor, that's as fast as she would have learned how to become a great vice president, and also, if there's an emergency, to become president.

I think she's a fast learner. I think that, you know, she has risen very quickly, and I think this whole thing has taken her back. Obviously, you know, when she ran for governor and she became governor, she had no idea that two years later, someone was going to come and say "you are our No. 1 choice for stepping into this position." It's a tough position to be in. And under the circumstances, I think that, you know, what she had to work with, she's done a great job.

KING: There are many who say that it was a bad judgment on John McCain's part. Do you agree?

SCHWARZENEGGER: It's always easy to be smart in hindsight. So, I don't want to get into that. I think that the bottom line is, as I said earlier, if the economy would have been different, if the economy would have been booming, I think McCain and Sarah Palin would be elected now. But that was not the case. And now we have a president, a new vice president, and now we have to support them 100 percent. That's the important thing. KING: What is your role? How do you see your role in the reshaping, the rebuilding of the Republican Party? You have a loud, strong voice. You are known as someone who if necessary, can bang heads. I mean that as a compliment, to get things done. Do you want a role in that? Because as you know, there are many who disagree with you, especially when it comes to a more moderate approach and an open approach to the social issues. How do you want to be involved?

SCHWARZENEGGER: You know, I never saw myself getting involved in rebuilding the Republican Party or anything like that. My dream always was to, when the recall came about in California, that I'm going to run, that I can do a great job, that I have a very clear vision of what needs to be done in California.

I have -- you know, I wanted to embrace both parties, bring them both together and do a great job for the people. That's it. I want to do the best job possible, so when people look back, they say, that guy got things done and he reformed the system and he, under the most difficult circumstances, pulled California back out again. Not to reform the Republican Party or to do anything nationally. Those were not my ambitions.

(END VIDEO CLIP)

KING: Always fun to sit down with Governor Schwarzenegger. Still ahead, we'll get the best political team on television's take on a fascinating presidential election and what's ahead for the Obama administration. Stay right here with LATE EDITION.

(COMMERCIAL BREAK)

KING: Welcome back to LATE EDITION. We'll get to our political panel in just a moment. But first, I'm joined by Campbell Brown, host of CNN's "CAMPBELL BROWN: NO BIAS, NO BULL." Campbell, first, let's listen to something you said earlier in the week.

(BEGIN VIDEO CLIP)

BROWN: To those top McCain advisers who leaked the little story about seeing Sarah Palin in a towel, to those who called her and her family Wasilla hillbillies while using her to stow class warfare with speeches and an anti-elitist message, to those who claim she didn't know Africa was a continent, to those McCain aides who say she was the reason they lost this election, can I please remind you of one thing? You picked her.

BROWN: You are the ones who supposedly vetted her and then told the American people she was qualified for the job. You are the ones who, after meeting her a couple times, told us she was ready to be just one heartbeat away from the presidency. If even half of what you say now is true, then boy, did you try and sell the American people a bill of goods.

(END VIDEO CLIP)

KING: An interesting perspective there, Campbell. Obviously you're dumping there and with good reason on some of the McCain aides who are trashing their own candidates, their own running mate. Sarah Palin has begun to fight back a little bit. How do you think she is handling this and does she have to walk a careful line in bashing back even?

BROWN: Well, I frankly think she'd be crazy not to push back a little bit right now, John, because, I mean, certainly this blame game takes place in every losing campaign. But the attacks against her have been uniquely nasty over the last week or so and in many cases false.

We know this to be false, some of these allegations they have made against her and people who have supported her within the campaign. For example, Randy Scheunemann, who is a foreign policy adviser to the McCain campaign who helped prep Sarah Palin for the debate and became a fan of hers and a supporter of hers and a critic of those within the campaign who were trashing her. It was leaked by some of McCain's top aides that he was fired. That was not true. We reported that on CNN. It was not, in fact, true. It never happened.

And there is a lot of misinformation out there and all of this stuff about her that's being thrown around. All I'm suggesting is as journalists, I think we have an obligation to vet some of this stuff before we just report it because it is, you know, very sexy, some of these accusations that are made, and it's turning into a game of he- said-she-said. She's denying most of it flat out, but again, I do think we have a responsibility to take a closer look at this.

KING: Infighting, you're right, is typical of losing campaigns. Where would you draw the line? Some people say they shouldn't be doing this to begin with. I think we can agree on that, if they're on the same team. But some of it she was ill-informed, unprepared. Some of it, I think in your view, and correct me if you don't think I'm fair in saying this, is sexist by saying she's a diva, she came out in a towel into a meeting, things like that. Where is the line? BROWN: I think those are absolutely sexist things. She wouldn't have heard anything like that remotely said about a man, if the vice presidential candidate had been a male.

But I think ultimately, look at where the responsibility lies. The vetting process as we have seen I think in previous campaigns was generally something that was take an little bit more seriously, that was handled by senior statesmen types who sat down with potential vice presidential candidates and really looked at whether or not this person was equipped to govern, was equipped to step into the presidency on day one, should that ever, you know, have to happen.

And clearly in this case from all the reporting that has been done from what we know about it, this was a very last-minute decision made by political operatives with minimal vetting.

And then, you know, you're going on and telling the American people this is someone who's qualified and ready to step into that job where now clearly they are saying that wasn't the case. And, you know, given that, I think you do have to look at, for all the things being said about her now, where the responsibility really lies, and that should be among the aides who were in charge of vetting her and accusing someone who was prepared to take on this job.

KING: We will watch as this saga continues. A good possibility we are told Sarah Palin may show up at a big Republican governor's meetings this week in Miami. So we will watch as this continues. Campbell, thank you. And don't forget "CAMPBELL BROWN: NO BIAS, NO BULL," airs weeknights at 8 p.m. Eastern right here on CNN.

Straight ahead, the election might be over, but the jockeying for power is in full swing. I'll sit down with three members of the best political team on television. We'll give you a preview of what's changing here in the nation's capital. Stay with LATE EDITION.

(COMMERCIAL BREAK)

KING: Welcome back to LATE EDITION. I'm John King sitting in today for Wolf Blitzer.

The election may be over, but the political maneuvering to say the least is just beginning. To handicap the field as the Democrats prepare to take power, I'm joined by CNN senior political analyst Gloria Borger with me here in Washington. I can't get the titles straight today.

BORGER: That's all right.

KING: Jessica Yellin is out in Chicago. The hostage crisis continues, covering the president-elect. And in New York, Rick Stengel, the managing editor of "Time" magazine. We should know that Mr. Stengel had the foresight to bring out "Time's" election edition a day early. We just checked in mint copies, mint copies are priced around 20 bucks on eBay. Rick, you saved us all a copy, right?

STENGEL: Yes, I have. In fact, I was leaving the office on Friday night and there was a newsstand that had one copy left and they were selling it for $25. I gave my one copy to a young woman who was trying to negotiate price down. And we've gone to press a couple of times now, and there a few hundred more thousand copies out there.

KING: The audacity of decency. What does that tell you? Let's start with that. What does it tell you that people are gobbling these up? Newspapers were disappearing the morning after the edition. This edition, which has the picture of Barack Obama, you know, essentially taking his victory speech on the cover. What does it tell you that people are racing to find these things?

STENGEL: I think people feel that's a truly historic moment, maybe the most historic presidential election in their lifetime. People feel like America can reboot itself now. Martin Luther King once said that the Constitution was a promissory note and I think a lot of people feel that that note is being repaid now. And they feel that it's historic, they want a piece of it, they want to tell their children about it and I think that's why people are collecting these things.

KING: Jessica, Rick says rebooting. As Barack Obama prepares to reboot the government after the Bush administration, we're getting some indications of what comes next, yet we're also getting a lot of caution. Although both Rahm Emanuel, the new chief of staff and John Podesta, the former Clinton chief of staff who is helping with the transition, say that out of the box will be ambition. They will have a stimulus program, millions of dollars to create new jobs. They will come out with a tax cut plan. Are they worried that they're going to try to do too much, too fast?

YELLIN: I think that their focus is on showing that they're taking action. I think they will be paced because it's Obama's nature to be deliberate, to take his time to mull things and the pressure and momentum within his staff will be to get items done quickly. So I think we'll see him overturn the Bush vetoes, the three big Bush vetoes, stem cell research, SCHIP, the Children's Health Insurance Program, and on torture. Those are three things he can get done easily in addition to the stimulus. Make it clear he's working on health care for the long term. And there will be ongoing momentum in the early days. They just want a clean break. They want it to happen after he takes office and make it clear he's not going to be the president until that date.

KING: Is there a risk in that, though, Gloria in saying we're not in charge? We just had a historic election and you may all be dying for somebody to reboot the government, even if you didn't vote me, you might think it's time for this, but everybody needs to chill?

BORGER: Well I think as Jessica was saying, they do need a little bit of time. However, it's not as if they haven't been planning this for the last three or four months, John, because they have. And the discussion that's going on inside Obama world right now is, are you better off using the momentum you have on January 21 and putting all your cards out on the table on energy, on health care, for example, on the economy, of course, issue number one? Or are you better off just focusing on the economy, doing something on, for example, children's health, as Jessica was saying, and then laying out what you intend to do? But don't start everything at once.

BORGER: They don't want to -- so, they're having that discussion now because they don't want to wind up in the same pickle the Clinton administration was in when there was this huge internal fight of, do you do welfare reform; do you do health care reform, with Hillary Clinton on one side and Bill Clinton on another. They don't want that.

KING: But, Jessica, you are as well-sourced as anybody in that operation. Are they concerned, at all, that, if they come out with a stimulus plan, a health care plan, a tax plan, and there's a lot of spending involved in that, that liberals in the House will take the signal that it's time to spend, and they'll have trouble controlling their own party?

YELLIN: This is exactly why Barack Obama picked Rahm Emanuel, because Rahm is a guy who both can stand up to those liberals in the Congress and say, hey, guys, don't worry; wait your turn; we'll get something for you that will make you happy, but you have to come on board with us.

He's also a guy that's been in a White House. He saw what the transition was like under Clinton, and will avoid it.

And he's the guy who helped shepherd Bill Clinton, on the policy side, through the Monica debacle. And Rahm, every day -- Emanuel -- there, was saying, let's come out with a new policy; let's come out with something substantive.

He knows how to focus a White House. And so I think there will be small steps on other key issues aside from the big tax plan, aside from the stimulus, early, and he will help pace that White House to get health care done, down the line, maybe not immediately.

KING: Rick, I was stunned -- off the (inaudible) not long ago, from a conversation with Arnold Schwarzenegger, who, before the election, was very critical of Barack Obama's policy.

In our conversation yesterday, last night, he was quite complimentary, quite conciliatory. Do you think Republicans in Washington, in Congress will speak the same language as Arnold Schwarzenegger out in California?

STENGEL: Yes, I think so, John. I mean, there's a spirit of kumbaya in the land, right now. I think, you know, we've seen, even in some of the post-election polls that Republicans, even though they might not have voted for Barack Obama, they feel proud that America voted for Barack Obama.

I think Obama himself will have very relentless bipartisan policy. I think he's going to bring Republicans into government. He's going to try to enlist Republicans in the House and the Senate.

And I think there is a spirit in land that people want people in Washington to do something. I mean, look at how low the estimation of Washington was from both parties.

I think both parties -- it's in the interest of both parties to do something that restores trust in government. And I think part of the explanation for Obama's election is that people do want to believe in government again.

KING: Everybody stay put, on the panel. Everybody please stay put at home. We'll have another round when we get back. "Late Edition," be right back.

(COMMERCIAL BREAK)

KING: Welcome back. We're talking politics with CNN's Jessica Yellin and Gloria Borger and Time Magazine's Rick Stengel.

Let's get back to the conversation. Jessica, from this moment on, one of the things -- I went up to talk to Harry Reid on Capitol Hill, and the Iraq question -- it was one of the reasons Barack Obama is the Democratic nominee. He was the most anti-war of the Democratic candidates.

I asked Harry Reid, what happens if a President Obama, like President Bush, says, no, we need more time; we're not ready to bring the troops home?

And Harry Reid said, the troops are coming home. Is there a mood in the Democratic party that would give Barack Obama leeway if he says he needs it?

YELLIN: He has enough good will on his side, right now, that they're not going to block him if he makes a strong case that he can't withdraw the troops right now.

I think that it would be surprising if Democrats stood in his way for anything he does in the first few months of his administration. I just would find it surprising if that were the position he'd take.

KING: But that was their problem -- their promise, too, Gloria, their promise...

(CROSSTALK)

KING: And all last year they tried, and George Bush said no.

BORGER: Yes. The Democrats' promise and Barack Obama's promised, and most people in this country don't support the war. So I think it's, kind of, a (inaudible) that Barack Obama's going to do that. And I think putting -- if he were to keep Robert Gates as secretary of defense -- there's a lot of talk about that, at least in the short term, keep him in the Cabinet for a year or so, if not longer, that would really help in that process.

And it would help bring Republicans along in that process -- honestly, not that he needs them, but it would help.

KING: Not that he needs them, Gloria says, Rick, but I assume he wants them, if he wants to prove that he is a bipartisan president, if he wants to send a message to his own party that we need to be careful, as Democrats, and not blow this great opportunity, where do you think a Republican makes the most sense -- or Republicans make the most sense in an Obama administration?

STENGEL: Well, I think -- I think Gloria's right. There's a lot of talk about Gates staying on. I think one of the things that we have learned about him is that he is ultimately a pragmatist. And one of the things, I think, both parties have to realize is that the American people want pragmatism.

I mean, I don't think that he probably would select a traditional Republican as secretary of the Treasury. That doesn't probably seem right. But I think there are other places in government where it doesn't necessarily matter -- you know, energy.

I mean, there's no -- there should not be -- there should be a bipartisan energy policy. There should be a bipartisan policy on the environment. Those are places where he can find a Republicans, and, I think, where Republicans will want to participate.

I mean, there's a divide in the Republican Party, now, between the two different types of conservatives. And the kind of McCain conservative wants to be in government and involved in those issues.

KING: Do you anticipate, Gloria, disagreements, public disagreements with the current president, as he goes into this economic summit or on other issues?

If George W. Bush does something that Barack Obama disagrees with, do you button up and wait until you take power, or do you deal with it?

BORGER: I think Barack Obama and his emissaries and his surrogates will disagree publicly if they need to -- I think more his surrogates than Obama.

I mean, by the way, President Bush has been extraordinarily gracious to Obama, bringing him into the White House tomorrow, setting up a whole transition apparatus.

But I do think, if there are differences, you will see them. And if Barack Obama doesn't think that a stimulus package, if there is one that emerges from the Congress, if it's enough, he'll say it, and he'll say, on January 21, we'll do another one. So I think you will see that. KING: Gloria Borger, here in Washington, Rick Stengel in New York, Jessica Yellin in Chicago, thanks all for joining us today.

And when we come back, I'll tell you why I'm in this chair instead of your usual host, Wolf Blitzer, when we come back.

(COMMERCIAL BREAK)

KING: Before I tell you why Wolf isn't here, one quick footnote to my conversation with Campbell Brown. She noted, rightly so, that there were reports that Randy Scheunemann was fired from the Dole (sic) campaign, those leaked by some of his former colleagues in the campaign. He was not fired, we learned, in the end, but he was disciplined for conduct that many aides in the campaign found to be damaging.

Now let's move on. Wolf Blitzer: You know him. He's the iron man of television news. So how could he take such an important Sunday off?

As it happens, he has an excellent reason. Last night, right here in Washington, he gave away his beautiful and only daughter, Ilana, in marriage to Joseph Gendelman. We can report that the wedding was spectacular. He is a proud father and danced the night away, something we'll bet he won't let us show you on CNN.

Congratulations to Wolf, his wife, Lynn, and our best wishes to the fantastic young couple. That's "Late Edition" for Sunday, November 9th. I'll be back with Barack Obama's transition to power. Thanks very much for watching.

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