Schwarzenegger's Green Challenge

President-elect Obama is 30 days from office. For a window on his future, turn west for a moment to a chief executive who is already up to his neck in the nation's troubles.

This month, Governor Arnold Schwarzenegger warned of financial Armageddon, as California faced a potential $40 billion deficit that threatened jobs, roads, schools and public safety. At the same time, he's pushing some of the world's toughest environmental laws to make California a leader on climate change.

The governor agreed to take 60 Minutes along during his most challenging times. How does he deal with it all? Well, what would you expect a former action hero to say?

Maybe it was acting. When 60 Minutes met Schwarzenegger at the state Capitol in Sacramento, he had just declared a state of emergency. His budget plan touched off a political firestorm which, of course, in California, would be accompanied by a real one.

Schwarzenegger and Pelley visited one Los Angeles neighborhood burned to ash just weeks before - evidence to Schwarzenegger that even in these times, the greatest threat is climate change. "It all happened so fast they couldn't save one single one of those homes. Over 500 homes here were destroyed within hours," Schwarzenegger explained as they walked through charred remains.

"You know, there's been a lot of research that suggests that there are more fires and there are hotter fires because the fire season has been extended by climate change," Pelley remarked.

"Well, we have been doing some research in that, and we have seen the changes. We don't have a fire season anymore. It starts in the beginning of the year and goes all year around and so it has created, of course, big challenges," the governor said.

Asked what he tells someone who says climate change is theoretical and questions the harm, Schwarzenegger told Pelley, "I always say, well there were people that were debating over if the world is a globe. They thought for a long time it was flat. And there's still people that think that they're flat. And there are people that still live in the Stone Age."

Schwarzenegger wants to revolutionize energy with aggressive limits on greenhouse gases. In a little more than ten years, a third of California power is supposed to flow from renewables, like solar energy. And he wants to cut tailpipe emissions 30 percent in eight years.

Asked if it's the wrong time to switch the way America uses energy - in light of the economic emergency, Schwarzenegger said, "I think that there's never the wrong time. There's always the right time. I will argue the opposite. Because we have seen that the industries that are performing well in California, even right now in this economic decline, is green technology. It's really spectacular to see those manufacturers coming up to me and saying, 'Our business is booming,' while there's an economic decline. So, green technology's where it's at."

He'd like to turn greener faster, but he's been fighting the Bush White House and, ironically, environmentalists.

"You can't build a solar power plant in the Mojave Desert in California because there's concern about an endangered squirrel?" Pelley asked, referring to the attempts to meet the renewable power standards.

"Well first of all, let me just say the Mojave Desert is the best place to have a solar field because it is the most sun they have sun all year round, it's the best place but, there's some that want to hold it up because they think that it will endanger some animal life there that is going overboard," Schwarzenegger said. "Because the environmentalists are the first ones to say, 'Yes, we need renewable energy. We should get rid of, you know, using our energy from coal and from natural gas,' and all those kind of things. But then when you say, 'Okay, let's do renewable, let's go that,' 'Whoa, whoa, whoa. Hold up, not so fast.'"

And when he tried to impose the cuts in tailpipe emissions, President Bush's EPA administrator Stephen Johnson said no. "I could tell in his eyes that he did not believe in it, that we would never get it, that he will create every obstacle. And the administration just had no interest in it," Schwarzenegger recalled.

So Schwarzenegger sued the administration. "What we wanted to do is just say 'Look, America, the United States, is not doing the right thing and is not moving this agenda forward, and is really trying to reduce greenhouse gas emissions or have an energy policy or an environmental policy. So, therefore we as a state are forced to create our own,'" he told Pelley.

He went as far as to create his own foreign policy. Last month, Schwarzenegger held a world summit on climate change in Beverly Hills.

He did what Washington would not do, signing an emissions declaration with government officials from the U.S., Canada, Mexico, Brazil, Indonesia, India and China. Then he took the delegates to the L.A. Auto Show, where they were no doubt impressed with the horsepower of his celebrity.

He owned the room, but in a sense he was behind enemy lines. The big three automakers had sued Schwarzenegger to stop cuts in tailpipe emissions. They lost. And he was here to grill them about their alternative fuel cars.

"I have been in Detroit in 2000 and have talked to the car manufacturers then to put hydrogen engines in the cars and start experimenting. And they said to me then, 'Well, this would take five to ten years to do something like that.' Well, that time has come now. Where are the cars?" Schwarzenegger questioned.

"When you came out in California with your stricter emissions standards, you know there were billboards all over Michigan which said, 'Arnold to Detroit: drop dead,'" Pelley remarked.

"Right, that's true. That was the best free publicity I could get. But actually I was not saying, 'Arnold to Detroit: drop dead,' I was just saying, 'Get off your butt,'" Schwarzenegger said.

Not many people know that Schwarzenegger personally invented the civilian Hummer. The maker of the military version told him that it could never be made street legal, so Schwarzenegger bought one and spent $100,000 of his money to show that it could be done.

Schwarzenegger's action helped launch the brand that is the very symbol of greenhouse gas gluttony.

That original Humvee, which Schwarzenegger still occasionally uses to ride around Los Angeles, has now been modified to run on cooking oil. "You can literally go up to a restaurant and get cooking oil," he told Pelley.

Now he has re-invented the vehicle with green that's more than skin-deep. He has one variation that runs partly on hydrogen, and this one has an engine modified to run on bio fuel. "I mean, it runs, basically, on anything. Anything natural," he said, as he took Pelley for a ride in it.

His point is that trying to chase Americans out of their big cars, what he calls "guilt-trip environmentalism," has failed. "And my point was is keep all of the stuff that you like. But change the technology," Schwarzenegger explained. "So I started really pushing that agenda in a positive way. Look at the great things that we can do. We can turn this whole thing around. The damage that we have created over the last 100 years, we can undo that."

This "have it all" philosophy leads some critics to say the governor sees green through rose-colored glasses, that he tends to underplay challenges involving cost and technology.

Pelley and the governor's drive ended where Schwarzenegger began, Venice Beach, where the body builders go. The cops came out with a picture that hangs in their station from back in the day when the future governor was Mr. Universe five times and Mr. Olympia seven times.

And he had a few tips, which were less about weight lifting than finding clever ways to plow though obstacles. The governor spotted while Pelley prepared to lift some weights. They were at a Venice Beach landmark, Muscle Beach, that Schwarzenegger helped make famous.

"And these are only 70s," Pelley remarked.

"But why so much weight?" Schwarzenegger replied.

"I usually do 75s," Pelley said.

"I mean, when you do it for the cameras you do only 50, so you take it easy. You don't kill yourself," Schwarzenegger replied, laughing.

Asked if that's the trick, Schwarzenegger said, "Oh yeah. Absolutely. I remember when I did this scene in 'Stay Hungry' at the squats with Sally Fields watching there. And I had to do it over and over again. And I had 225 pounds on it, as I learned very quickly, put on wooden plates."

"You're not telling me that's what you did in the movies?" Pelley asked.

"You can't. No, no, not me," Schwarzenegger said, laughing.

This is Schwarzenegger's 40th anniversary in America. Venice Beach is, in a sense, where he came ashore. Asked what he thought of America when he arrived in 1968, Schwarzenegger said, "You know, I felt that if there is such a thing as a before life and an afterlife, then definitely my before life I was an American. Because when I arrived here, when I got off the plane, I felt like I'm at home."

But now "home" is in trouble. California is the foreclosure capital, and unemployment is above eight percent. The governor proposed to close that budget deficit half with tax increases and half with budget cuts. Republicans and Democrats opposed him.

When 60 Minutes sat down with Schwarzenegger at the Capitol, he had just left the legislative leadership and he seemed in no mood. Before they got settled, Pelley was worried that the last thing the governor wanted to do was talk to him.

"I'm not sure that meeting went all that well. You seem pretty preoccupied. You got the 'Terminator look' on your face," Pelley remarked.

"It doesn't work on me. No psyching out," Schwarzenegger said, laughing. "It doesn't work."

"No, I was just being honest," Pelley said.

When the interview got going, Pelley asked about that morning's editorial in that most Republican of opinion pages, the Wall Street Journal.

Schwarzenegger had seen it.

"Savage. Savage. They said you were taxing and spending this beautiful state to ruin, to use their words. What do you think when you read that?" Pelley asked.

"I think this is part of the job, that you have people way on the left that will attack you for making cuts. You will have people way on the right that will attack you for your spending," the governor replied.

"If you read between the lines in the Wall Street Journal editorial, it's essentially asking, 'What kind of Republican are you?'" Pelley remarked.

"For me, the most important thing is, when I make a decision, is what is best for the people of California, and what is best for our economy, and what's best for the state, not what is best for my party. I'm not a party servant. I'm a public servant," Schwarzenegger said.

Schwarzenegger likes to call his way "post-partisan," and he just campaigned successfully through a controversial reform that makes traditionally Democratic or Republican legislative seats more competitive at election time.

But his approval rating has dropped from 60 percent two years ago to 40 percent now. Still, that's better than the legislature gets - 21 percent.

Running California means running the eighth largest economy in the world and with two years left as governor, Schwarzenegger will soon have to find an encore. Being born in Austria would seem to disqualify him from the next political step.

"Well, you're a man of no small ambition. If the Constitution was changed, you'd like to be president, wouldn't you?" Pelley asked.

"Yeah, absolutely," Schwarzenegger acknowledged. "I think that I am always a person that looks for the next big goal. And I love challenges. I always set goals that are so high, that are almost impossible to achieve. Because then, you're always hungry for climbing and climbing. Because it's always interesting. The climb is always interesting. When you get there you just have to pick another goal."

He's already won over the president-elect to his environmental goals. At Schwarzenegger's environmental conference, Mr. Obama sent a video message endorsing the California plan and said under this administration, the US would adopt similar greenhouse gas reduction goals.

But now Schwarzenegger still has to head off that budget disaster - to find middle ground that no one else can see - and keep up the appearance that the climb is a joy. "People think show business was in Hollywood but I think Reagan was absolutely right, if he wouldn't have the training in acting this would have been a very difficult job and I think that's what it is, that's reality," Schwarzenegger said.

Produced by Henry Schuster