CNN-TV INSIDE POLITICS

JOE JOHNS, CNN ANCHOR: Now to a controversy on the West Coast. Governor Arnold Schwarzenegger is under fire for having a multimillion dollar deal with fitness magazines that advertise nutritional supplements. Critics say that’s a conflict of interest, but the California Republican is pretty much ignoring them.

CNN’s Peter Viles reports from Los Angeles. (BEGIN VIDEOTAPE)

PETER VILES, CNN CORRESPONDENT (voice-over): It turns out the boss of California politics has a boss of his own.

GOV. ARNOLD SCHWARZENEGGER (R), CALIFORNIA: Give a big hand to David Becker and American Media.

VILES: Under this contract which wasn’t made public until this week, Becker’s American Media has been paying a consultant it calls “Mr. S” — and yes, “Mr. S” is Arnold Schwarzenegger — no less than $1 million a year.

DOUGLAS HELLER, FOUNDATION FOR TAXPAYER/CONSUMER RIGHTS: Governor Schwarzenegger has been secretly taking in millions without telling the public.

VILES: The governor gets a percentage of the ad revenue in the magazines “Muscle and Fitness” and “Flex,” much of which comes from nutritional supplements, pills like T-Bomb, Blitz, Blaze and Hot Rox.

And here’s the controversy. While under the contract, he vetoed a Bill that would have put state regulations on those supplements.

BILL ALLISON, CENTER FOR PUBLIC INTEGRITY: Here’s a case where a Bill coming before the governor, is he ruling on the merits or is he ruling on his own private financial interests? I mean, that’s as clear a case as you can have of a conflict of interest.

VILES: In vetoing the Bill, Schwarzenegger wrote, quote, “Most dietary supplements are safe.”

JACKIE SPEIER (D), CALIFORNIA STATE SENATE: The evidence would suggest that many dietary supplements are dangerous and have been linked to the deaths of more than 100 people.

VILES: The federal Food and Drug Administration does not regulate most supplements but has banned some considered unsafe.

The governor’s staff says his position is not new. He has always believed in supplements and complied with state law by disclosing last fall that he is paid by American Media, even if he never said how much money he’s making.

ROB STUTZMAN, SCHWARZENEGGER SPOKESMAN: You guys are asking me questions that you should have been asking me last fall, which actually, I think you did ask that we didn’t answer at the time. There is no technical conflict. I’m not sure anyone cares about it anyhow except all of you.

VILES (on camera): And for a big star like the governor, critics suggest there is another advantage to working for American Media. It’s a kind of scandal insurance because you’re now working for the same company that owns those aggressive tabloids, “The Star,” “The Enquirer” and “The Examiner.”

Peter Viles for CNN, Los Angeles. (END VIDEOTAPE)

JOHNS: Back on INSIDE POLITICS, the “Strategy Session” continues. With us today, James Carville and Rich Galen.

California governor Arnold Schwarzenegger is under fire for a multimillion dollar deal with a fitness magazine publisher. Critics say the deal poses a conflict of interest. An aide to Schwarzenegger defends it. (BEGIN VIDEO CLIP)

ROB STUTZMAN, SCHWARZENEGGER SPOKESMAN: The governor clearly, clearly told
everybody here, including all the people of California, that he had a business arrangement with a magazine that he’s been involved with for over 30 years. These are Joe Weider’s magazines. This is the man who brought him to America to chase his dream.

We disclosed that there was such an agreement. And that there was significant income involved. (END VIDEO CLIP)

JOHNS: So, is Arnold in trouble here at this point? Apparently, he vetoed a bill restricting the use of performance enhancing drugs in high school athletes. And sort of, the question is, if he hadn’t done that, would this even be an issue at all?

CARVILLE: Well first of all, he was in trouble before this. Now he had a 34
approval rating or something like that. So —

JOHNS: He’s in trouble anyway.

CARVILLE: Yes, he’s in trouble anyway. And yes, this is more, a storm, and I mean I think that the thing that his political capital was different, he was straightforward. And I mean, this is going to hurt him, how much I guess we could — how much more he can be hurt, with a number like that, we don’t know. And he’s got three proposals up — coming up on a ballot in November. And if they all three lose, he’ll really be hurt.

GALEN: Yeah. I’m not even sure that they’re going to get to the ballot. I mean the public polls are one thing. The Democrats who control the house and the senate in Sacramento are something else again, and they know that Arnold Schwarzenegger — what he really brings to the table isn’t whether or not he’s the broadest thinker on a lot of subjects, which he happens to be on a lot, but what he can do, because of who he is, is he can shine a spotlight on any issue he wants, and those guys know that. And members of legislatures like that, they don’t like too much light. So they are working on a series of compromises with the governor, even with his bad poll numbers, even with this stuff, the
Democrats in Sacramento still understand who owns the governor’s mansion, and he’s likely to be there again if he wants to be.

JOHNS: So I mean, why did it go so sour for him so fast?

GALEN: California’s California. You know I mean, in terms of this current thing, I’m not sure it was in that bill, I’m not sure it was performance enhancing drugs or nutritional supplements, which I suspect is right, so you’ve got a state here where a significant number of people want to legalize marijuana but make nutrisuitcals illegal. That’s kind of the working definition of a Californian.

CARVILLE: You know we can do what they want, you can give $8 million from a
magazine that has an interest in a piece of legislation and you veto it, look you’re going to get racked — i mean there’s no way that you can get around it. Maybe the people who — it’s nutri- whatever the hell it is, and not this. You take $8 million and veto a bill that those people would like for you to veto, you’re going to get racked anywhere in this country. I don’t care if you’re Arnold, or you’re in California, or you’re in, you know, Sheboygan, you’re going to get hit.