President Schwarzenegger?

It's been a year and a half since Californians recalled their governor, Gray Davis, and elected Arnold Schwarzenegger to replace him.

When Correspondent Morley Safer first reported on this story last October, Gov. Schwarzenegger (The Governator, as some called him) was riding high.

His straight talk, his promise to balance the state budget, and the sheer, unpolitical way he seemed to practice the art of politics seemed to have endeared him to the electorate.

Well, the honeymoon seems to be over. In a recent poll, Schwarzenegger's approval rating had dropped to 37 percent.

Californians are no longer amused by his macho-man approach. And he's feeling a touch of the Gray Davis disease, backtracking on a number of his pet projects.

But barely six months ago, Schwarzenegger was on top of the world.

"All of a sudden, I realized that, you know, I've done this. I've gotten to the top. I have done huge action movies. I've done all of those different things," says Schwarzenegger.

"So I said to myself, you know, 'I'm tired of the same things.' You know. Jumping over car hoods at three in the morning. And then going up to someone and says, 'I'm back.' You know and then blow him away or something. So all of this is great. But I mean, eventually it gets old."

Leaving the fantasy of Hollywood for the buttoned-down world of politics in Sacramento was not all that big a step. Both places have big egos. Both spend big money, and both are often economical with the truth. In politics, stardom works – but only up to a point.

"As the kind of movie star that you were, certainly you could be a dictator," says Safer. "You could say, 'I want it,' and it got done. You can't do that now."

"You're absolutely correct," says Schwarzenegger. "And now this is different. But look, this is the great thing about it, about adjusting from one career to the next. And the key thing always is, is to keep your eye on the ball."

Safer points out that it took a lot of balls to go cold turkey into politics.

"Yes ... But, you know, I've never had a lack of that," replies the governor with a laugh. "So, may I remind you. It makes no difference to me. Because I always say, 'What's the worst that could happen?' That you fail ... That's really not that bad."

60 Minutes first met Schwarzenegger two careers back, in 1977, when he was 30 and the king of the musclemen.

At the time, he said, "Through bodybuilding, I did a lot of things. You know, I mean, I got into the films …"

Even then, he now says, he was itching to move on.

"One day I stood there on the stage," recalls Schwarzenegger. "And I said, 'Why am I standing here with my little posing trunks, oiled up, trying to be the most muscular man? Why?'"

He was always a quick study. Back then he had already figured out the key element to his success — in bodybuilding, in the movies and in politics: "You can have the best product in the world but if you don't know how to sell it, and if you don't, if you don't have anybody who can sell it for you or tell the public, it's a waste of time, the whole thing."

Today, Safer tells him, "I guess you kind of proved your point, yes?"

"Oh, absolutely," replies Schwarzenegger. "And I still say that. Selling and communicating to the people is the most important thing ... You can't learn it. You have it or you don't have it."

He's clearly got it, to the consternation of critics who doubted he could survive in the cutthroat world of politics. In terminating his highly unpopular predecessor, Democrat Gray Davis, Schwarzenegger's timing, once again, was perfect.

"You could not have asked for a better opponent than Gray Davis — who was right on the ropes at that time," says Safer.

"He was a jewel," says Schwarzenegger, with a laugh. "He was good. I agree with you."

After a year in office, Schwarzenegger says he would score himself an 8 on a scale of 1 to 10.

"I think I fell short on some of the things. Probably the communications with the legislators," he explains.

He hit a rough patch with lawmakers during the summer, delivering a remark that was pure Arnold: "I hope that those who want to sell out to the special interests, those girlie men up there in Sacramento ..."

Girlie men. During a deadlock in budget talks, he aimed the line at Democrats in the legislature. Their leader, John Burton, was among those who thought the remark insulting. And Burton was in no mood to deal with the governor, saying, "Why would I possibly call him? What are you people, nuts? (pretends to hold phone to ear) 'Hi, this is the scumbag, girlie boy. How you doin'? Give my best to the kids.'"

"It drove them nuts," says Schwarzenegger. "But the interesting thing about it is, the following week they signed the budget exactly the way it was a week before."

He was trying, he says, to underscore his belief that the legislature was on an out-of-control spending spree, putting special interests ahead of the public good.

"I say, if you have the balls, you will go out there and say this to the people. If not, then you're a girlie man," he explains. "That's really what it's all about. I think they should have the guts to say that." This first year, he has run up a record as a pro-business, economic conservative with liberal views on social issues: guns, gay rights, the environment. He managed to reform the state's costly Workman's Compensation law. But on the issue that got him elected, California's huge budget deficit, the best he could do was refinance $15 billion in state debt. He was unable to get significant spending cuts through the legislature and was dead set against raising taxes.

He has taken some heat over the issue of balancing the budget. "That you, in the course of trying to pay the bills, you got deeper in debt," says Safer.

"Did we solve the problem in one year? No," says Schwarzenegger. "They have ruined the state for five years. They kept spending, spending and spending. We're talking here about addicts. And the people sent me to Sacramento to be the outside intervention."

But the honeymoon with voters and the state legislature came to a crashing halt earlier this spring. Democrats and public employee unions went on the attack over the governor's proposed belt-tightening. They dogged his steps with protests, and flooded the state with critical TV spots.

Schwarzenegger's approval rankings sank 20 points in three months, forcing him on the defensive.

Showing 60 Minutes around the governor's domain in the Capitol, he takes a kind of boyish pride in his Wall of Fame, great moments in the Schwarzenegger administration. In his office, he keeps his favorite movie weapon: the sword from "Conan the Barbarian," the film that made him a star.

He wheels and deals in his smoking tent, set up in an open-air courtyard near his office. It's a place to schmooze and cajole, light up the biggest cigar in the world and, for good measure, outrage health advocates.

His wife, Maria Shriver, has been a high-profile first lady, active in women's causes. But the governor is quick to point out their political differences.

When he showed Safer his wife's office, he said, "I'll show you Maria's office quickly, which is back here. She, of course, has to be further away from my office because she's a Democrat."

She's not just any Democrat, but a Kennedy.

That made it all the more unusual this summer when she went where no Kennedy had ventured before: The Republican National Convention, where she watched her husband wow delegates with a tried-and-true Schwarzenegger-ism: "And to those critics who are so pessimistic about our economy, I say, don't be economic girlie men!"

The governor parts ways with the president, and with his own California Republican party, on a number of issues — none more controversial than embryonic stem cells.

"I'm a religious Republican, too. I'm a Catholic. I go to church every Sunday," says Schwarzenegger. "But it doesn't mean that I'm against progress. We have to move forward with the stem cell research. This is the future of solving some of the serious problems that are existing in a medical area. And, why not?"

Normally, even a first-term California governor with Schwarzenegger's poll numbers and star power would be talked about as a potential future presidential candidate. But being foreign-born, he can't run. There are attempts to change that.

Would he like to be able to? Would he like to see an amendment to the Constitution?

"Yes. Absolutely," says Schwarzenegger. "I think, you know, because why not? Like with my way of thinking, you always shoot for the top. But it's not something that I am preoccupied with. I am not thinking one single minute about that. Because there's so many things I have to do in California, and my promise was to straighten out the mess in California."

60 Minutes concluded its visit with The Governator by showing him the last few seconds of their first encounter 27 years ago, back when Schwarzenegger was a 30-year-old on a very fast track.

Back then, Safer reported: "Arnold Schwarzenegger is a contented soul. He's happy as a clam, strong as a horse. And if you find bodybuilding a funny thing for a grown-up, intelligent man to be doing, so does Arnold. And he's laughing with you — all the way to the bank."

What does Schwarzenegger think of that today?

"That's funny. It's amazing to see that. So you have to get me a tape of that," says Schwarzenegger. "And I'm still laughing. Not all the way to the bank. My wife is screaming, 'Now you make no money because ...' But at least I have a good time. And it's a challenging job. And I am having the greatest time in the world doing this."