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All right, everybody. Welcome back to
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the All-In Interview Show. We're very
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lucky today to have a candidate for the
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governor of California who is extremely
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unique in a number of ways. First of
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all, he's a Republican. And second, he's
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a Brit. Welcome to the program, Steve
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Hilton. You've decided to increase the
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degree of difficulty
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in two ways, but you're polling
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fantastic. You've got five or six people
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in the polls. So,
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>> he's leading the field.
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>> You're uh leading the field. Obviously,
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it's going to get narrowed a bit when
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the Democrats shiv a couple more people
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and get them out of the race and then
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pick their eventual winner in their
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cobble um whenever that happens when
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Nancy Pelosi picks who's running. But,
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uh Steve, maybe you could start by
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Sorry guys, I got jokes. But, Steve,
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maybe you could introduce yourself a bit
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and tell us why you're running.
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>> Well, hang on. Can I just say just after
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that great intro where you just tried to
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kill my chances in just a couple of
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words. Thanks a lot, Jason. Really
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appreciate it.
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>> Let me actually tee this up. I've known
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Steve since 2012 2013 when he and his
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wife Rachel Wetstone moved to Silicon
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Valley. Rachel worked at Facebook
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initially and then she worked with you
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Jason at Uber and then has had a great
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run and then Steve similarly. And you
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said it in a funny way, but ultimately
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this is an incredible land of immigrants
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and Steve has a really compelling story.
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So before we jump into the questions, I
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know your background, Steve, but I do
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think it's important go back to your
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parents, your mom, how you grew up,
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>> and just set the stage for how you made
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it out from the way you started because
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I think that's important and then how
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you got to the United States and why.
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>> Thank you. Thank you. I appreciate that.
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And you're right. We've known each other
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a long time now. And it's a great joy to
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be here. By the way, just want to say
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it's a great joy to be on a show where I
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don't have to wear the the suit and
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shirt. And you know, that's one of the
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one of the things about running for
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governor that um I'm I'm loving most of
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it, but dressing up is not the favorite
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part for me. So, it's great to be with
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you. I thought for this show, you know,
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we got to get it right. I think that the
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back the more I think about my
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background, the more I think it is
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really important um in in terms of how I
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see things and what I want to get done.
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Um my parents are Hungarian. They were
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refugees from communism and I grew up in
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in England in a town called Brighton on
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the south coast and you know we just had
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a regular workingass
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um immigrant aspirational family story I
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guess. You know it was my my parents
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actually split up when I was young. My
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stepfather's also a Hungarian. He had an
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amazing story. He was um a refugee as
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well, but literally ran across the
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border. He grew up in a small village on
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the west side of Hungary. And in 1956
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when you had the Soviet invasion, he
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tells this amazing story. They heard on
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the radio, "The Russians are coming."
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And he and his brother and some friends
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from his school, he was 14 years old,
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like one year younger than my youngest
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son right now. Um and they just ran.
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They literally ran for they said,
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"Right, the we want our freedom." and
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they ran to the border, barbed wire
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fences, minefields got shot at by the
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guards. All that half of them were
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killed and he ended up in a refugee camp
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in Austria and from then to England. So
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all of that I guess just gives you that
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sense of real appreciation for actual
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for freedom for freedom and opportunity.
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And I grew up in England, worked very
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hard, ended up at Oxford University, but
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my first job was project manager for a
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construction company. I just wanted to
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earn money. I just wanted to, you know,
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get out. I think that's exactly the
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right phrase that you used and um that's
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been the story. You know, after Oxford,
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I went to work for a little bit of the
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Conservative Party in England. Then I
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worked all I worked for an big ad
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agency, worked all around the world,
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started my own business, couple of um
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offshoots of that, including a couple of
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restaurants. then went back into
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politics when my friend David Cameron,
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who I'd met many years before, um had
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gone into politics, got elected to
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parliament. I helped run his campaign
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for the leadership of the British
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Conservative Party, won that election
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and then wor with him to get the
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Conservatives elected when he became
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prime minister in 2010. Uh joined him in
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10 Downing Street. I was senior adviser
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to the prime minister. Most of my job
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was really focused on trying to
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implement our uh reform program. And
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then in 2012, that's when we met. We
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moved here because Rachel, actually
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before Facebook, she was at Google. Um,
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and she had this big global job at
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Google. She was running um comms and
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public policy for Google worldwide. I
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had my job in number 10. It was actually
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when our second son was born. Um, it
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just there was a lot, you know, the
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travel for her and the time difference.
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So that's why we moved here. And I don't
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know, should I stop there or do you want
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me to keep
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>> Well, you're also notably you became
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naturalized. You're a citizen of the
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United States now. So you have dual
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citizenship. less people are confused by
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the accent. You're running for governor
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and you're a citizen of
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>> Let's talk about your political setup.
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So, being a child of Hungarian
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immigrants raising communism, you're
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going to hear a certain version of what
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the role of the state is versus what the
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role of the family or the individual is.
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Then, growing up in the UK, I'm sure
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your attitudes either get cemented or
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change.
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>> Give us the setup. What is the political
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evolution of Steve Hilton? what did he
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believe and then what does he believe
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now and what has shaped these beliefs.
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>> It's really I think it goes back to just
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around the when I first really started
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thinking about it all it was just as
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Margaret Thatcher was coming to power
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and you'd had the 70s in England were a
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disaster and a decade that was just the
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the economy was completely stagnant and
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slurotic unions ran everything. Um there
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was this period called the winter of
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discontent in 1979 when you had massive
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strikes um famously you know the dead
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went unburied and trash was piled up in
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the street just real collapse of
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everything and that's what thatcher came
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in to fix and I really did identify with
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that as well as with the very clear
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stand against communism and so really
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she was funny enough when I was thinking
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about the the video that I made to to
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launch my campaign about a year ago now.
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We ended up putting that in there and I
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thought, well, actually that was the
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thing that got me going. I was totally
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inspired by her, but also the focus that
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she had on business and enterprise and
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hard work. And remember my stepfather, I
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mean, they weren't at all political, by
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the way. It wasn't like some household
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where we talked about politics. It
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really wasn't. But he had this thing
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that stuck in my mind when he talked
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about the like in in England you've got
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the Conservative Party equivalent of the
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Republicans and for the Democrats it's
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the Labor Party and I remember he just
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used to say Mrs. Thatcher's for the
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workers and labor are for the layabouts
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and I just this phrase stuck in my mind
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about the importance of work and hustle
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and I think about that all the time.
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>> Where do you think California is if you
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contrast? Well, this is the this is the
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point I was just about to get to is we
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really are there. There are so many
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things I see in California today that
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are exactly like the UK in the 70s.
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You've got the massive dominance of the
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unions in policym. You've got a slurotic
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economy. You've got massively high
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taxation. I mean it was higher then the
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at one point I think the top rate when
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you add in the wealth taxes in the UK
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was literally 98%. Um but you had that
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confiscatory taxation and top rate of
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60% and so on. So very very similar and
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actually funny enough um someone Mike
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Moritz actually sent me a report that um
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someone had done about the UK today and
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and again there's just these eerie
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parallels with just how how impossible
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it is to do anything in the UK to build
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anything. the overregulation. When I
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read this report, it just is exactly
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like California today. By the way, one
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thing, Jason, just to be clear, I am a
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proud American now, but I'm not I
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actually renounced my UK citizenship. I
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did that because
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>> I just wanted to be clear that I'm just
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to borrow the title of the show,
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>> you be all in. All in. Literally, I re I
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think it's really important everyone
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knows that and I am.
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>> And you have some to get into some maybe
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some policy. Thanks for the background
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there. You have some unique uh policy
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positions. Taxes, I think, is the most
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unique and dare I say pretty populist.
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You want to have no state tax in
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California for people with under
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$100,000 in income and then a flat tax
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for everybody over 100K of but 7.5%.
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>> How is that possible? And is that
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something you've studied? And where did
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this come from? the tax plan that um
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that I put out there, that was the first
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day of my campaign. I think of it as
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proworker and prog growth. And I think
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we need both of those things because if
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you look at what's going on in
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California today, just big picture.
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Obviously, you can look at the data
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that's a real economic disaster. I'm not
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sure people appreciate just how bad
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things are because hiding behind that
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data point of having the fourth largest
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economy in the world, which is true, and
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obviously I'm proud of that. I want
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California to be big and successful and
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growing. But that fourth biggest economy
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data point underneath that you've got
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this with the state with the highest
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unemployment rate in the country and the
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highest poverty rate in the country tied
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with Louisiana. There's a United Way
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report just the other about about a year
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ago. They do it every two years. sort of
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an assessment of of of of living
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conditions in California. And they found
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that over a third of Californians cannot
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afford to meet basic needs. And so the
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starting point for my tax plan is what
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can we do quickly to help people who are
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really struggling. Um if you think about
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it, the working poor who aren't
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particularly um being taken care of by
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the welfare system. They're working
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incredibly hard, but they're they're
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being squeezed by all these costs. We
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have the highest gas prices in the
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country as you know the highest electric
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bills everywhere except for Hawaii. Um
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housing costs the highest in the country
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insurance all these costs are so high.
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So what can you do to help working
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people quickly and so the starting point
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was and what's affordable the $100,000
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mark. I remember when when we I I was
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just playing around with numbers
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actually I did it with um some
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economists from the Hoover Institution
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where I was a fellow the first couple of
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years that we moved to I taught at
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Stanford um including in the public
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policy department also the D school at
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Stanford but I was also a fellow at the
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at Hoover and so we did the math on the
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tax plan there just just about a year
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ago and so the that first part first 100
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grand taxfree actually in many counties
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in California today the def the official
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definition for low income is 100,000.
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Um, which so that number may sound very
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high to people in other parts of the
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country. It's actually the definition in
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in a lot of counties of low income. So
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you've got people earning 70 grand, 80
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grand, 90 grand in California. They are
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paying 9.3% state income tax. That rate
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is higher than the top rate in most
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states in America. So to me that's
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ridiculous when you've also got all
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these other taxes that those exact
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people are paying sales tax, property
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tax, gas tax, all of those are the
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highest in the country.
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>> So cutting taxes this significantly
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means you have to then also cut
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spending.
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>> Yes. But can I just do the other part of
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it?
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>> I just did the other part which is the
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7.5% flat tax. I just thought, you know,
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when you look at the the the the facts
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about economic performance, the fact
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that, you know, for example, Chief
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Executive Magazine ranks us and has done
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for the last 10 years or so the 50th out
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of 50 for business climate. A big driver
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of that is tax. And I'm sure we'll get
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into the the insane proposed
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billionaires tax and you know, all these
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things that are driving wealth creation
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out of our state and business investment
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out of our state. So it's not enough
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just to take care of or give some relief
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to people who are on the lower end of
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the scale. You've got to actually have a
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pro-investment, progrowth tax framework.
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And so apart from anything else, the
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complexity is ridiculous of our tax
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system. These endless different rates is
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ridiculously complicated. Um and that
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itself is a cost. The bureaucracy and
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hassle associated with that. That's why
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I think a flat tax makes sense. Remember
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this is in you know in the context of
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federal taxes, all these other taxes.
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It's not the only component, but the
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cost is the to get to that cost, you've
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got to reduce spending exactly as you
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say. And basically the the the cost of
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that in total is about an 18.5%
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reduction in revenue, which takes us
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back it takes us down about 60 billion,
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something like that, which is not even
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going back to what the budget was just
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before the pandemic. They've actually d
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if you look at the budget of the state
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of California, it's nearly doubled in
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the last 10 years. is in the last 5
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years it's gone up something like 75%.
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And so this is just bringing the budget
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back to achieve that entire tax cut
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would bring the budget back just to
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where it was roughly before the
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pandemic.
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>> Let me just summarize. So if you make
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between 0 and $100,000 a year as a
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California resident under your plan, no
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tax,
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>> no state income tax.
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>> No state income tax. If you make
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$100,000 in a dollar and above, you pay
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7.5% flat tax.
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>> Yes, that's the concept.
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>> Okay. How many Californians
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does that impact? So, what percentage of
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the population now get that affordance
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if you were to
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>> million the tax numbers usually only
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households and so it's about 7 million
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households would benefit from from the
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under 100,000.
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Do you know how many that is as a
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percentage?
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>> Well, working house, we got 40 million
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people. I think that's about um probably
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just over a third, something like that.
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>> Okay. So, a third of homes now
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essentially go to zero tax.
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>> State income tax. Yeah, there's all
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these other taxes that
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>> now the push back would be if we then
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take it dollar for dollar from the
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operating budget, programs will suffer.
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>> And to to your point, your comment is
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I'm putting words in your mouth, but you
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filled them in. Well, not really because
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we're just going to go back to 2019 2020
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budgets and the difference was we spent
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a dollar in 2020, we now spend $2 and
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nothing has changed. So, yeah, go from
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$2 back to $150 and everything should be
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fine is your point.
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>> Yes. And I'd actually go further than
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that. So, first of all, what we've seen
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happen to the budget is basically the
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expansion that we saw in in the in the
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pandemic and afterwards is gone baked
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into the baseline, which is totally
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unsustainable. And so we got to get back
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to even even without tax cuts, I would
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argue you've got to get back to a more
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reasonable growth in spending because we
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go bankrupt. Um, as we're seeing with
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these deficits that that we're getting
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even when in times when we're not in
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recession and taking money out of the
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reserves, out of the rainy day fund to
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plug the gaps, which is what they're
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doing, totally irresponsible fiscally.
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But actually, it's more than that. Even
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if you just if if you don't change
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anything in the composition of the
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spending and just get back to where we
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were, that gives you scope for a major
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reduction in tax. But the other part of
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it is what we're discovering in terms of
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where the money is actually going. And
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so obviously the whole fraud story has
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exploded as a national political and
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economic story um ever since Nick
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Shirley's first investigation in
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Minnesota just around the time of
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Thanksgiving last year. Well, we've been
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making our own um contribution to that.
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So, a few months ago, I set up our I
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literally called it Cal Do California
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Department of Government Efficiency. I
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know that's a controversial brand, but
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you know, then the idea of it efficient
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government is something I think everyone
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would support. So, I thought why not use
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that because everyone knows what it is.
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So we've been just looking at the
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published data on spending to find
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examples and to make an estimate of the
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total amount of of fraud, waste and
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abuse in the system. And we've now
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published four separate fraud reports
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out of Cal Doge. When I say we, by the
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way, it's I mean this is a longer story
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we can get into, but one of the ways I
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think I'm running this campaign
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differently is that I'm actually putting
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together a team uh before the election
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of the of in terms of others who will
00:16:50
run with me for statewide office because
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you've got some very important positions
00:16:54
alongside the governor that are going to
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be crucial in putting us back on track.
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In this instance, the state controller
00:17:01
is very important because the state
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controller is an elected position has
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the legal power to audit any
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organization receiving state money and
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to stop the flow of money if there's any
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um suspicion of improper spending. So,
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there's a guy running with me called
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Herb Morgan and we've been doing this
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work together and we've published four
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reports now, three of them on individual
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examples of fraud. We can get into that
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in a second if you want to know some of
00:17:28
the examples are really shocking. And
00:17:30
then the fourth one was an estimate of
00:17:32
the total and we just went through
00:17:34
published data from the state auditor
00:17:37
from Medicaid error rates and so on to
00:17:40
make an estimate of the total amount of
00:17:42
fraud.
00:17:42
>> What did you find?
00:17:44
>> Give us a couple of examples.
00:17:46
>> Here's some specific examples. The
00:17:47
second fraud report um with it's a
00:17:50
classic $1 billion over the last 10
00:17:54
years 100 million every year since 2015.
00:17:58
This is from the climate change
00:18:00
mitigation fund which is part of the cap
00:18:03
and trade system. This is actually gas
00:18:05
taxes and search charges on electric
00:18:08
bills and so on. 100 million a year was
00:18:12
allocated to be spent on climate change
00:18:15
mitigation. In this case, it was solar
00:18:18
panels for lowincome apartment
00:18:20
buildings. So, we actually tracked that
00:18:22
money and um with an AI partner that can
00:18:25
get all the reports and of that 1
00:18:28
billion total in 10 years, the actual
00:18:30
amount spent on the purported benefit
00:18:34
here solar panel installation was 72
00:18:37
million. 928 million actually went to
00:18:41
nonprofits doing all all the usual
00:18:44
Democrat associated
00:18:47
[ __ ] frankly, voter registration,
00:18:50
um environmental justice campaigns, all
00:18:53
that kind of stuff. The actual thing was
00:18:55
mostly spent on that. That's $1 billion.
00:18:58
The the first one was the cannabis tax,
00:19:00
Proposition 64, legalizing cannabis.
00:19:02
There's a tax associated with that
00:19:05
supposed to be spent on um substance
00:19:07
abuse prevention. We found $350 million
00:19:11
that was supposed to be spent on
00:19:12
substance abuse prevention. Again, going
00:19:14
to this network of nonprofits, over 500
00:19:16
of them and small individual grants.
00:19:18
When you look at what each of those
00:19:20
organizations does, it's all the usual
00:19:22
stuff, voter registration, activism. So
00:19:26
the the third one was project home key
00:19:28
that we we looked into which was the
00:19:30
homelessness thing that they set up
00:19:32
after the pandemic which was buying up
00:19:34
property for homeless people um and
00:19:37
sometimes can building new property for
00:19:39
homeless people or converting hotels 3.8
00:19:42
8 billion that was on that one that we
00:19:44
found. I mean there others have found
00:19:46
other amounts um most of which went into
00:19:49
the pockets of developers without any um
00:19:53
real
00:19:53
>> the California budget if I'm not
00:19:55
mistaken 350 odd billion
00:19:58
>> 350 billion 349 this year. Yeah.
00:20:01
>> What percentage of it in your best
00:20:02
estimation with you and your team do you
00:20:04
think is inefficient fraudulent wasted?
00:20:07
Well, our number over the last five
00:20:09
years total our estimate was 425
00:20:12
billion. So averaged over the years it's
00:20:14
about 80 billion a year. So that's so
00:20:16
it's around, you know, 20% or so. That's
00:20:19
unbelievable.
00:20:20
>> Yeah. And now just to bring some reality
00:20:23
to the situation, you would have to get
00:20:26
through the legislature, which is both
00:20:29
controlled by Democrats. You can't
00:20:30
unilaterally as the governor just say,
00:20:33
"Hey, we're cutting these services." And
00:20:36
we had a governor Schwarzenegger who
00:20:38
tried this very thing. He had to move to
00:20:40
the center. You of course I believe in
00:20:43
California have a line item veto. So you
00:20:46
have some balance there.
00:20:47
>> But this is fantastic for people to
00:20:51
maybe get a reprieve from taxes. You're
00:20:54
going to get a major fight with
00:20:56
Democrats to cut any spending. What's
00:20:59
your plan there if you were to win?
00:21:02
>> So Jason, I a couple of things. You're
00:21:04
right about that. Um, and I'm very
00:21:06
thoughtful about the realities of these
00:21:09
things and I always make clear that I
00:21:11
think certainly on the tax plan that
00:21:14
taxes definitely you can't do that
00:21:16
without the legislature. I think that
00:21:18
actually we'll get a we there's a
00:21:21
possibility of a consensus around some
00:21:22
of these items where we can actually
00:21:24
work together with the legislature to
00:21:26
make it happen. One indicator of that is
00:21:29
actually one of my Democrat opponents in
00:21:31
the governor's race, Katie Porter. Um,
00:21:33
actually, you know, we were doing a
00:21:35
debate the other week in Fresno and she
00:21:38
just said, we were talking about
00:21:39
affordability or whatever it was and she
00:21:41
said, "Well, I'm I'm I've decided I'm
00:21:42
stealing Steve Hilton's tax plan. I
00:21:44
agree with him. First 100 grand
00:21:46
tax-free, and I think we should take
00:21:47
good ideas where we find them." So, this
00:21:49
is an interesting example that I think
00:21:51
that part of it I think we may be able
00:21:54
to actually persuade the legislature to
00:21:56
do.
00:21:57
>> And then I noticed she yelled at you and
00:21:58
said, "Get the hell out of her shot."
00:22:01
her video
00:22:02
>> except a stronger word than eight.
00:22:03
Exactly. Than hell. Um so the the
00:22:07
attitude that I've got on that whole
00:22:09
question of the legislature is that when
00:22:12
I'm elected that's and I'm sure your
00:22:15
eyebrows are raised and saying what are
00:22:17
you talking about? It's impossible for
00:22:18
Republicans to win and we'll get into
00:22:19
that. But I'm I'm doing this on the
00:22:21
basis that I will and I'm preparing to
00:22:24
actually start implementing the big
00:22:26
changes we need to make um in a
00:22:28
thoughtful manner on day one because
00:22:30
otherwise what's the point of doing
00:22:32
this? Steve, do you think that there's
00:22:33
legislative agreement or momentum to
00:22:37
give you the win? Even though to your
00:22:40
point, I think it's quite significant
00:22:41
that the Democrats would signal that
00:22:43
it's a legitimate policy proposal, but
00:22:45
do you think that if you win, people
00:22:48
would see the forest from the trees and
00:22:50
realize how important it would be to
00:22:51
take salaries under 100,000 to no state
00:22:54
income tax? Look, the we have I've seen
00:22:58
the, you know, the Democrat arguments
00:23:00
now up front many many times. We've done
00:23:03
a lot of events together, some of the
00:23:04
televised debates, many more that aren't
00:23:06
televised.
00:23:07
We're literally all saying the same
00:23:09
thing in all the in terms of the
00:23:12
diagnosis of the problem.
00:23:13
>> It's incredibly expensive to live here.
00:23:16
People can't, you know, people are
00:23:17
really struggling. The business climate
00:23:19
is a disaster. We're massively
00:23:21
overregulated. We can't build anything.
00:23:23
everything takes too long, everything's
00:23:25
too complicated. You know, there's a
00:23:27
there's a real consensus about
00:23:29
diagnosing the problem among all the
00:23:31
candidates. And so I think that that
00:23:35
doesn't mean that we agree, of course,
00:23:36
on the solutions. I would argue that the
00:23:38
Democrats all, you know, in some version
00:23:41
of more of the same actually, despite
00:23:43
what they say about the problems, but I
00:23:45
think that um there are certain things
00:23:48
where we will be able to get agreement.
00:23:50
I also think that when you have a
00:23:53
situation where you have the first
00:23:54
Republican governor elected for 20
00:23:56
years, that really will change the
00:23:58
dynamic in Sacramento, I think it'll it
00:24:01
actually may,
00:24:02
>> you know, loosen things loosen things up
00:24:05
a little bit because I think that there
00:24:07
are people there in the legislature who
00:24:10
really understand that things have gone
00:24:12
too far. Some of them have said it to me
00:24:13
personally, Democrats there, but they
00:24:15
feel constrained by the current
00:24:17
political situation, the machine being
00:24:19
in control. They can't really move and
00:24:21
and I think that'll shake things up a
00:24:23
little bit. That's one point. Secondly,
00:24:26
you know, I really do have experience
00:24:28
working across party lines like this. I
00:24:30
think that I'll be able to bring some of
00:24:32
that into play. I mentioned earlier I
00:24:34
worked in in 10 Downing Street, senior
00:24:36
adviser to the prime minister. He was a
00:24:37
conservative prime minister, but it was
00:24:39
a coalition government. Um, and I
00:24:42
literally shared an office in 10 Downing
00:24:43
Street with my opposite number from
00:24:45
another party and we would, you know,
00:24:47
hash things out and argue and, you know,
00:24:49
we were part of the team that negotiated
00:24:51
a coalition agreement and then tried to
00:24:54
implement it. And I think that those
00:24:57
skills of actually putting something
00:25:00
together where you don't agree about
00:25:02
everything, but you can make some things
00:25:04
happen. I think it'll be useful in this
00:25:05
situation. And I think we can I mean,
00:25:08
look, everyone agrees. we call going
00:25:10
like this in California.
00:25:11
>> And it's not farical to think a
00:25:13
Republican can't win here. Pete Wilson
00:25:15
did two terms. Schwarzenegger did two
00:25:17
terms. That's 16, I guess, of the last
00:25:19
36 years. It is completely conceivable
00:25:22
that a Republican could win. And you and
00:25:24
Katie Porter have the same plan. I think
00:25:27
Chad Biano has the same plan, which is
00:25:29
under 100,000. All of you agree no
00:25:31
taxes. That you're all attacking
00:25:32
affordability. They don't believe in
00:25:35
cutting services though. They want to
00:25:37
increase taxes on businesses, if I'm
00:25:39
correct. And so, why is that plan not as
00:25:43
good as yours, I guess, is the question.
00:25:45
Which one do you think would be more
00:25:46
more appealing to the voters? Would the
00:25:49
voters I think they'll all agree. Paying
00:25:51
less taxes, fantastic. Makes you more
00:25:53
competitive with Florida and Texas. But
00:25:56
if they had their brothers, they're
00:25:58
probably going to want to see Google and
00:25:59
Apple pay more in taxes and not lose
00:26:01
their services.
00:26:02
>> Yeah. But we're losing jobs. And I think
00:26:04
that that's the consequence of of of
00:26:07
squeezing
00:26:09
um businesses and high earners more and
00:26:11
more. And you're seeing it right now.
00:26:13
You're seeing the business exodus. Um if
00:26:16
the billionaire tax proposal goes
00:26:17
through, I mean that absolutely puts,
00:26:20
you know, I think that's a just complete
00:26:22
disaster for for the tech ecosystem and
00:26:25
what we've built in Silicon Valley over
00:26:27
the years and all the job creation and
00:26:29
and wealth creation that comes with
00:26:31
that. um you're seeing I mean I just
00:26:33
it's not just everywhere you go in the
00:26:36
state there are so many conversations
00:26:37
you sit down with business people you
00:26:39
know we we are we are on the brink of
00:26:40
leaving I don't think people realize
00:26:42
quite quite how near the cliff edge we
00:26:44
are um and if and it's I give you
00:26:48
another example we are I was just in
00:26:50
Pomona the other day down in Southern
00:26:52
California fantastic company sheet metal
00:26:55
um it's an HVAC duct manufacturing it's
00:26:57
exactly the kind of thing you'd want
00:26:58
here they're union jobs actually it's a
00:27:00
great um you know manufacturing facility
00:27:04
they are making the these HVAC systems
00:27:08
the air conditioning incredibly
00:27:09
important as as you know for uh TSMC and
00:27:12
these semiconductor factories and all
00:27:14
these the high-end manufacturing that's
00:27:16
happening in other states in and these
00:27:19
these facilities now massive amounts of
00:27:21
investment in the AI economy and and
00:27:24
tech more broadly but none of it's
00:27:26
happening in California I mean we just
00:27:27
published our policy report on that
00:27:29
today how we can get some of that that
00:27:31
full stack of those jobs in California.
00:27:33
But that company l they said to me since
00:27:35
the the facilities are all now being
00:27:38
built in other pl in other states. We're
00:27:41
on the brink of moving our facility to
00:27:43
be closer because what's the point of
00:27:45
making this stuff in California. It's
00:27:46
not going to be used because nothing's
00:27:48
happening nothing's going to be
00:27:50
happening in California. So you have to
00:27:52
stop this squeeze on business. You
00:27:54
really do.
00:27:54
>> Let me ask about the broader cost of
00:27:57
living for a second. Probably the most
00:28:00
impactful cost to people's lived
00:28:03
experience is the cost of housing.
00:28:06
>> Yeah.
00:28:07
>> Double click into that for a second. For
00:28:10
the 40 million residents of California,
00:28:13
what is going on? Why are rents so high?
00:28:16
Why are homes so expensive? And what can
00:28:21
actually be done to make the cost of
00:28:25
living and rent cheaper? So the thing
00:28:30
this particular issue I think almost
00:28:32
captures better than anything else the
00:28:34
underlying structural reasons why
00:28:37
everything is so difficult in California
00:28:39
and so expensive because you got these
00:28:41
three structural forces that I think
00:28:46
underpin the problem and show why a
00:28:49
Democrat can't fix it. And the three
00:28:52
things are union power, litigation and
00:28:56
climate dogma. and they all come
00:28:58
together in the housing story. The first
00:29:02
part of the story is that we're just not
00:29:04
building enough homes for the number of
00:29:06
jobs that we're creating and the size of
00:29:08
our population. It's a classic supply
00:29:10
and demand situation. Now, within that,
00:29:13
there are certain, you know, wrinkles.
00:29:15
You could point out that because of rent
00:29:17
control, which has got completely out of
00:29:20
control, there are a lot of empty
00:29:22
properties in California that could be
00:29:25
used to house people, but they're not
00:29:27
because landlords don't want to don't
00:29:30
want to do it because the the rights
00:29:31
have gone have swung so far in favor of
00:29:33
tenants. But I don't think that's the
00:29:36
major driver. The major driver is the
00:29:38
fact that we just haven't built enough
00:29:39
housing of different kinds. And if you
00:29:43
go through the reasons for that and why
00:29:44
it's so expensive, it brings into play
00:29:47
these three factors. First of all, it
00:29:49
just costs more to build anything in
00:29:51
California. The same exact floor plan,
00:29:54
house, apartment building, industrial
00:29:55
building, whatever it is, cost cost two
00:29:57
or three times more to build in other in
00:30:00
in California than in neighboring
00:30:02
states. The first reason is the building
00:30:04
codes, the actual requirements for
00:30:06
construction which is way more ownorous
00:30:08
driven by climate dogma that actually
00:30:10
doesn't really provide much specific.
00:30:12
What does that mean climate dogma?
00:30:14
>> Well, you have to install here we are
00:30:16
>> because like Nevada's hot and
00:30:18
droughtridden and Arizona has issues. So
00:30:20
what is it that we say that those states
00:30:23
don't say? So when you build apartments
00:30:26
or when you when you build parking you
00:30:29
have to put in EV charging
00:30:32
um and the scale of what's required for
00:30:36
the EV charging just makes it more
00:30:38
expensive. You have to you know like you
00:30:40
do a parking structure they have to
00:30:42
reinforce the floors. The bays have to
00:30:44
be wider just it adds you can have you
00:30:46
you have fewer bays per structure. Um
00:30:49
there's the specific cost associated
00:30:52
with that. um solar panels, we talked
00:30:54
about that earlier in terms of
00:30:56
low-inccome apartments that the that
00:30:58
taxes are paying for. Um developers have
00:31:00
to pay for that as well. Um insulation,
00:31:03
um energy efficiency, all these things
00:31:06
are good. And I think that's pretty much
00:31:07
the story of California, which is things
00:31:09
that start with good intentions actually
00:31:11
end up being taken to an extreme where
00:31:14
it just makes it too expensive to build
00:31:17
at a rate that people can afford to buy
00:31:19
the properties. And the other two are
00:31:21
really that SQA where anybody can sue on
00:31:23
behalf
00:31:24
>> exactly the private right of action
00:31:25
under SQA. So that and and but let's
00:31:27
unpack that because that brings together
00:31:29
the three things climate um litigation
00:31:32
and unions because see the California
00:31:34
environmental quality act itself is is a
00:31:37
nightmare in terms of this the amount of
00:31:39
regulation you have to comply with the
00:31:41
private right of action means anyone can
00:31:42
sue 70% of SQA lawsuits are used to
00:31:47
block housing most of those lawsuits are
00:31:50
filed by unions they're used as leverage
00:31:53
to negotiate pro what they call project
00:31:55
labor agreement ments where you have an
00:31:57
agreement for the site and usually they
00:31:59
have one or one of both one or two of
00:32:01
these components both of which sound
00:32:04
great skilled and trained workforce
00:32:07
which means union only so it's a closed
00:32:09
shop and prevailing wage again sounds
00:32:12
very good but it's two or three times
00:32:14
market rate wages so both of those
00:32:16
things inflate the cost often I've
00:32:18
spoken to many developers there aren't
00:32:20
enough union workers in in the area to
00:32:24
actually do the job so They have to
00:32:26
sometimes fly them in from other states
00:32:28
to do the job and the cost of travel and
00:32:30
accommodation. It's just
00:32:32
>> this is the key. There's no equivalent
00:32:34
to SQA in Texas uh where I now reside uh
00:32:37
after 20 years in California. The other
00:32:39
thing is the fees. It's 30,000 per door
00:32:42
in fees to the government. Exactly.
00:32:44
Yeah. To to build a door in California.
00:32:46
It's under a thousand in Texas. And in
00:32:48
California has three times the new units
00:32:52
per capita than California. So every
00:32:54
year we produce three times as many new
00:32:56
homes per capita.
00:32:57
>> Just a simple question though guys, put
00:32:59
this into chat GPT or whatever.
00:33:02
>> California's mandate with SQA is to
00:33:05
protect the air, protect the water,
00:33:08
protect the land by some measures.
00:33:12
Texas doesn't have it. Is it the case
00:33:14
that Texas's air is worse, the water is
00:33:16
worse, and the land is worse?
00:33:18
>> No, definitely not.
00:33:21
>> Yeah.
00:33:21
>> So is is it roughly the same? meaning
00:33:23
the particulate count, the pollen count,
00:33:26
is the air quality the same because if
00:33:28
it is then what is SQA doing other than
00:33:31
just slowing down and retarding the
00:33:34
progress of housing? Why hasn't that
00:33:36
study? Because I think again all of this
00:33:38
guys comes back to when the data is
00:33:40
presented in a way that's factual,
00:33:43
there's very little room for people on
00:33:47
both sides to argue it because they're
00:33:49
all relatively smart. It's when it's
00:33:51
presented either in a partisan way or by
00:33:54
somebody who reeks of partisanship that
00:33:57
I think people attack the messenger
00:33:59
versus the message. So I'm just trying
00:34:00
to understand why hasn't the California
00:34:03
government confronted this? It has the
00:34:05
highest rents in America. It has the
00:34:07
highest poverty rate in America and it
00:34:10
also has the highest regulation that has
00:34:12
the lowest and the slowest unit housing
00:34:15
growth. Steve, I guess what I'm asking
00:34:18
you is how does that not get to the
00:34:19
legislators more?
00:34:21
>> Okay. Well, I'll tell you it's I'm
00:34:23
afraid the answer is the corruption
00:34:26
within the system and the interest
00:34:28
groups that have taken over the system.
00:34:30
I'll tell you a story which is my first
00:34:32
I I know a lot about housing policy
00:34:34
because the first area of policy I
00:34:36
studied when I decided that I wanted to
00:34:39
get into the whole world of policy and
00:34:41
politics in California. I actually tried
00:34:42
to get a ballot initiative qualified for
00:34:45
the ballot that would have two elements
00:34:47
to it. One is what Jason just mentioned
00:34:50
capping impact fees which are now up to
00:34:53
about 20% of the cost of housing. Um I
00:34:56
wanted to do a statewide cap of 3% um of
00:35:00
construction cost and the second
00:35:02
component was eliminating the private
00:35:03
right of action under secret. I didn't
00:35:06
succeed in getting it on the ballot.
00:35:07
Didn't raise enough money in time. So
00:35:10
then I tried to pursue it through the
00:35:12
legislature said well let's see if we
00:35:13
can make some something happen in the
00:35:15
legislature. So I went to Sacramento I
00:35:17
took meetings with legislators started
00:35:19
to engage with Sacramento. There was one
00:35:22
meeting I had with the legislator who
00:35:23
was described to him is good on housing.
00:35:26
This is a person you need to talk to and
00:35:28
we had a great meeting. They said this
00:35:31
would be transformational.
00:35:33
I said great let's work on it together
00:35:35
bipartisan. You're Democrat. I'm a
00:35:36
Republican. That'd be great. People like
00:35:37
that. Oh, I couldn't support you
00:35:39
publicly. Why not? Well, the unions
00:35:42
would hate it. Why? Because if you take
00:35:44
away the private right of action, you
00:35:46
take away the union's leverage. And I
00:35:49
said, "Yeah, but you just told me it
00:35:51
would be transformational." We were
00:35:52
sitting in an office. You could see the
00:35:54
state capital down below, high up. They
00:35:56
just waved their arm around like this
00:35:58
and said, "Yeah, the unions run this
00:35:59
place." And that's the real reason. If
00:36:02
you look at for example Newsome touted
00:36:04
these two bills last year AB130 AB131
00:36:08
that were going to solve the housing
00:36:09
crisis. He said this is the moment where
00:36:12
we are embracing abundance and all the
00:36:14
rest of it big squa exemptions for
00:36:17
certain types of housing. But if you
00:36:19
look at the fine print tucked away in
00:36:21
it, you only get the exemptions if you
00:36:24
have these project labor agreements and
00:36:26
union union closed shop and prevailing
00:36:29
wage. So you're just writing back in
00:36:31
exactly the things that Sequ is causing
00:36:34
the cost increases from. So because the
00:36:36
UN and what let's follow all the way
00:36:38
through. If you look at Gavin Newsome's
00:36:41
political donations over the 16 years
00:36:44
he's been running statewide just as a
00:36:45
proxy for Democrat politicians by
00:36:48
category. The number one category
00:36:50
government unions, number two trial
00:36:52
lawyers, number three non-government
00:36:55
unions. So these are the that's why
00:36:57
nothing changes because the the
00:36:59
interests that benefit from this system
00:37:02
are funding the politicians that make
00:37:04
the decisions.
00:37:05
>> Yeah. And Chamat to your other question
00:37:06
of like is the environment better since
00:37:08
1970 when this regulation came into
00:37:11
pass.
00:37:12
>> California still has the worst air
00:37:14
quality in the country largely because
00:37:16
of the addiction to cars and traffic.
00:37:20
And then Texas as a comparison just has
00:37:22
industrial waste problems because we
00:37:24
have a lot of chemicals here or chemical
00:37:27
processing done here.
00:37:28
>> So we have a car loving culture in
00:37:30
California to your point Jason. It's
00:37:32
part of our cultural fabric driving down
00:37:34
Highway 1. It's just a very iconic thing
00:37:36
that's embedded in this state. Steve, I
00:37:38
have two questions. What has all of the
00:37:40
incremental regulations
00:37:43
done with respect to climate quality,
00:37:47
whether it's EV mandates or the ice
00:37:50
engine requirements? And then
00:37:52
separately, just as a more general way
00:37:53
to explain it,
00:37:54
>> why is gas in California 7 8 gallon and
00:37:58
why is it $3 everywhere else? Why is
00:38:00
ours more than 2x that it costs
00:38:03
everywhere else, including other states
00:38:05
that are also quite expensive to live
00:38:07
in? Well, also that they don't that we
00:38:09
we have the highest gas in the country,
00:38:12
including Hawaii in the middle of the
00:38:13
Pacific Ocean, even though we have
00:38:15
abundant oil reserves here. So, we have
00:38:16
way higher gas prices than states that
00:38:18
don't have oil reserves. We actually
00:38:20
have very significant oil reserves in
00:38:22
California. Um the the fundamental
00:38:24
reason that gas prices are so high is
00:38:27
because again in the name of climate,
00:38:29
but without actually in this case, it's
00:38:32
counterproductive to climate. um instead
00:38:35
of using the production that we have
00:38:37
here in California, I've been to the oil
00:38:39
fields in Kern County mainly near
00:38:41
Bakersfield. Um we are now importing
00:38:44
nearly 80% of the oil that we use over
00:38:47
the period of the since really this all
00:38:50
started in 2006 with the passage of the
00:38:52
global warming solutions act. That was
00:38:54
the sort of foundational climate
00:38:55
legislation in California. Over that
00:38:57
period, our use of fossil fuels has
00:38:59
declined by not that much. And the
00:39:02
proportion of our energy that's coming
00:39:03
from fossil fuels is is about 80% still.
00:39:07
The rest of the country it's about 81%.
00:39:09
So it's barely any different. But the
00:39:11
difference is we used to produce most of
00:39:13
what we use in state. Now we are
00:39:16
importing nearly 80%. And that has
00:39:19
driven up course you have to ship it
00:39:21
from halfway around the world. Our
00:39:23
number one provider is Iraq right now.
00:39:25
That's the number one source of oil.
00:39:28
>> Sorry, sorry.
00:39:30
The state of California
00:39:32
itself, we
00:39:34
are the wholly dependent on Iraqi oil to
00:39:38
sustain our economy.
00:39:39
>> Not wholly, it's it's the number one
00:39:42
provider. Yes. So if you look at the
00:39:44
sources of oil, number one, Iraq, number
00:39:48
two, I think it's Ecuador and Brazil.
00:39:50
But the the the broader point on that is
00:39:54
because the we used to have a let's just
00:39:57
go back a few steps. We had a really
00:40:00
strong energy industry and
00:40:02
infrastructure in California where we
00:40:03
produced most of the oil and gas that we
00:40:05
use and we had refineries about 40 of
00:40:08
them um around the state mostly in the
00:40:10
Bay Area down near LA that refined and
00:40:13
turned it into products that we use
00:40:14
gasoline and so on. Um now we're down to
00:40:16
seven refineries. One of the main
00:40:18
reasons for that is that we're not
00:40:20
producing what we what we what we could
00:40:23
be refining. we're shipping it in
00:40:25
instead because there are no pipelines
00:40:28
of of there are no oil pipelines into
00:40:30
California. Whatever we don't if we
00:40:32
don't use our own, we have to bring it
00:40:34
in by tanker. Um because of this and
00:40:38
because of the the the fact that the
00:40:40
refineries were built to to refine
00:40:43
California crude, which is known as
00:40:45
heavy crude. Um there different types
00:40:47
around the world. You got to have a good
00:40:49
match. Iraq provides Iraqi oil is a good
00:40:52
match. The other place whose oil is a
00:40:55
good match for our refineries is South
00:40:58
America. And so as a result of Democrat
00:41:01
climate policy, we are now expanding oil
00:41:05
drilling in the Amazon rainforest in
00:41:07
order to provide the right kind of oil
00:41:10
for California's refineries. I mean,
00:41:12
it's just so utterly insane and
00:41:14
incoherent. And of course in the process
00:41:16
we're spewing out carbon emissions
00:41:18
because the tankers run on what's called
00:41:21
bunker fuel which is the most polluting
00:41:23
form of transportation there is. And
00:41:25
just to make the whole insane scheme
00:41:27
work carb the California Air Resources
00:41:29
Board which is obsessed with having all
00:41:32
other businesses account for their
00:41:34
carbon emissions right down the supply
00:41:36
chain. Miraculously the carbon emissions
00:41:38
for the oil imports are only counted
00:41:40
from when they're 12 miles off the coast
00:41:43
of California. It's just so crazy.
00:41:45
>> Yeah. Change the finish line. Yeah.
00:41:47
>> The taxes add like a dollar a gallon and
00:41:50
then there's this carb standard.
00:41:52
>> It's about 60. Yeah. It's just It's more
00:41:54
like 61 I thought or 65. I can't
00:41:56
remember exactly. It's just going up
00:41:57
again. Yeah. Yeah.
00:41:58
>> Most of the most of the in most of the
00:42:00
$2 premium as it were for California is
00:42:03
regulatory, not taxes.
00:42:04
>> Yes. And most of the oil that's been
00:42:07
pulled out of the ground in California,
00:42:08
we got the easy stuff out. what's left
00:42:10
is generally dirtier or thicker
00:42:13
>> process. No, it's not right. I've had a
00:42:15
lots of conversation with the industry
00:42:16
on this and the the the problem is that
00:42:20
you've got fields that could be
00:42:23
producing but and actually it's a good
00:42:25
example of what you can do as governor
00:42:26
without the legislature because the way
00:42:29
that they've been shutting down
00:42:31
production is not legislatively is
00:42:33
through an agency of the state
00:42:34
government called Calgen the California
00:42:36
Department of Geologic and Energy
00:42:37
Management and it's simply a question of
00:42:40
refusing to issue permits for the
00:42:42
various stages of production including
00:42:44
including maintaining existing wells or
00:42:46
expanding. There's a process called
00:42:47
sidetracking where you can take a well
00:42:49
that's doing five barrels a day and
00:42:51
increase it to 100 whatever um and then
00:42:54
drilling new wells in existing fields
00:42:57
and they're denying permits for all of
00:42:58
that. Actually, you can pretty much turn
00:43:01
that around overnight by appointing
00:43:03
people who are pro- energy who will
00:43:06
issue permits because I think there's a
00:43:08
simple common sense rule here, which is
00:43:10
as long as we're using oil and gas in
00:43:11
California, let's use our oil and gas
00:43:14
rather than importing it. But the my
00:43:16
conversations with the industry is that
00:43:17
I said, "Look, what could what could we
00:43:19
do if we had a kind of green light from
00:43:22
a governor that and and a regulatory
00:43:25
framework that just says, "Let's do what
00:43:28
we can. Let's produce what we can." The
00:43:30
estimate that I've got from them is that
00:43:32
we can double production every two years
00:43:35
in California. If we're already one of
00:43:37
the big gas burning states with the
00:43:39
worst air or previously my state, you
00:43:42
know, then you're gonna get into the
00:43:43
circular conversation with the public of
00:43:46
do we want the air quality to decrease?
00:43:48
And most people would say the EV credits
00:43:50
were actually a good thing because we
00:43:51
had 20 years of smog going down. Even
00:43:55
though we're still worse, it's gotten a
00:43:57
lot better. So that smog is not to do
00:43:59
with carbon, but that there's a real mis
00:44:01
mis misunderstand. So the completely
00:44:03
agree on air quality and and one of the
00:44:06
major advances that has been made is on
00:44:08
picking the LA basin is on smog.
00:44:10
Obviously I wasn't here then but people
00:44:12
say you know it's really bad and now
00:44:14
it's not. You have clean skies and you
00:44:16
can see Mount Baldi or whatever. You
00:44:17
know it's like a really different world
00:44:20
but that's nothing to do with carbon
00:44:21
emissions. Um and so and that that's to
00:44:24
do with actually the the main driver of
00:44:27
this of the air quality improvements in
00:44:30
California actually car technology. Um
00:44:34
and if you look at EVs I mean EV
00:44:35
penetration even with all the subsidies
00:44:37
and so on. It's incredibly low in
00:44:39
California. So you can't you can't um
00:44:42
point it's about four or 5% something
00:44:43
like that tiny. So actually the
00:44:48
improvements in air quality, dramatic
00:44:50
improvements that you saw in LA were
00:44:52
nothing to do with EVs.
00:44:53
>> Steve, I want to switch topics to
00:44:55
education. This is a thing that
00:44:57
we on the pod talk about a lot. We're
00:44:59
all the byproduct of a pretty fantastic
00:45:02
education system, affordable education,
00:45:04
frankly, at every level. We had options
00:45:06
to pay for it.
00:45:08
>> We all had access to things like AP to
00:45:10
really distinguish ourselves.
00:45:12
>> Even Jason.
00:45:13
>> Yeah. Um,
00:45:14
>> that's true.
00:45:16
>> What's happening in the California
00:45:18
education system? Why are we stripping
00:45:19
away things like AP? And how do we tie
00:45:25
compensation to outcomes? Because I
00:45:26
think,
00:45:27
>> yeah,
00:45:28
>> a lot of us would want to pay teachers
00:45:29
triple, but we'd want to tie it to
00:45:32
something that says, "Wow, the test
00:45:33
scores are going up. Our kids can read.
00:45:35
Our kids can write. Our kids can compete
00:45:36
on the global stage." And it just feels
00:45:39
like we are moving backwards.
00:45:41
>> We really are. And it's just I mean the
00:45:43
numbers are horrific. I mean, you've got
00:45:45
we first of all, we we spend nearly the
00:45:47
most of any state per student right now
00:45:50
in this year. It's about 27,000 just
00:45:52
it's more than just over 27,000 per
00:45:54
student per year in California. If you
00:45:57
take the average out the money and we
00:45:59
get some of the worst results in the
00:46:01
country le I think the number for you
00:46:03
know 40 it's 47% that meet basic
00:46:05
standards in English and reading so less
00:46:08
than half meet basic standards for math
00:46:11
it's 35%.
00:46:13
So twothirds do not meet the standards.
00:46:15
It's just an insane level of failure
00:46:18
considering we spend nearly the most.
00:46:20
And I think again you've got to look at
00:46:22
this in a practical way. There's a
00:46:25
long-term structural reform that I think
00:46:27
we need because the the driver of this
00:46:29
is really the grip on the government
00:46:32
school monopoly of the teacher unions
00:46:34
who increasingly have been driven by
00:46:36
ideological factors. You saw that for
00:46:39
example in the pandemic when you saw the
00:46:42
you know the longest and most
00:46:43
destructive school closures in the
00:46:45
country and I was always struck by LA
00:46:49
the teacher union in LA when they put
00:46:51
out their demands for reopening schools
00:46:55
it was just a list of polit was a wealth
00:46:57
tax Medicare for all something about
00:46:59
Palestine you know it's just they've
00:47:01
completely become an organized political
00:47:05
interest group that's about their
00:47:07
members and broader political goals
00:47:09
rather than anything to do with the
00:47:12
interests of students and kids in
00:47:13
school. So I think that the fact that
00:47:15
you got this monopoly is of of the
00:47:18
public tool system controlled by the
00:47:20
unions. They of course in turn control
00:47:22
the politicians as I mentioned earlier
00:47:25
the number one donor to democrat
00:47:27
politicians of these government unions
00:47:28
including the teacher unions. And so you
00:47:30
got to break that grip. So I think that
00:47:32
long-term the answer is to move in the
00:47:34
direction of school choice which I've
00:47:36
always been a strong advocate of. You're
00:47:37
seeing that school choice revolution
00:47:39
across the country now. many states
00:47:41
moving very rapidly in the direction
00:47:43
with really good results. It's not a
00:47:45
panacea. Um but I think that that is the
00:47:48
long-term structural change you need,
00:47:50
but that takes a long time and it's
00:47:52
going to be very very hard to get that
00:47:54
moving in California given the fact that
00:47:56
the teacher unions basically control the
00:47:58
legislature through the Democrat
00:48:00
politicians they put there. So there are
00:48:02
some practical things that we've got to
00:48:03
do immediately to improve these basic
00:48:06
standards. And here we got to look at
00:48:08
what works elsewhere. And you see a lot
00:48:12
of lot of attention now on Mississippi.
00:48:14
Rightly so, because for onethird of
00:48:16
their spend per student than California,
00:48:19
their results are spectacularly better.
00:48:22
And it's really happened in the last 10
00:48:23
years. And there's some simple practical
00:48:25
things that they do. Number one is how
00:48:28
you teach kids to read. There's a
00:48:30
technique of to of reading instruction.
00:48:33
I mean, this was a debate I remember
00:48:35
having back in the day in England in the
00:48:37
'9s, and it's pretty much settled then,
00:48:39
which is there's a technique called
00:48:41
phonics. It's a way to teach kids to
00:48:43
read, and it's totally clearly
00:48:45
established as the most effective. It's
00:48:47
barely used in California schools at
00:48:49
all. It's like in a very small
00:48:50
proportion of schools of public schools.
00:48:52
So, that's something that the governor
00:48:54
can drive forward through the state
00:48:56
board of education where you appoint all
00:48:58
the members. Secondly, in Mississippi,
00:49:01
they introduce something very common
00:49:03
sense, which is, as everyone in
00:49:05
education says, up to about third grade,
00:49:07
you're learning to read. And then from
00:49:10
fourth grade, you're reading to learn.
00:49:11
And if you can't read, you can't learn.
00:49:14
And so there's widespread consensus that
00:49:16
reading by third grade, by the end of
00:49:18
third grade, is incredibly important
00:49:20
benchmark. In Mississippi, if you don't
00:49:22
read by, you not don't pass the basic
00:49:24
reading test by end of third grade. They
00:49:26
give you a bit of help over the summer
00:49:28
and if you still don't make it, you
00:49:29
repeat the year. They don't let you go
00:49:31
forward. That single change has
00:49:34
transformed their results. And then your
00:49:36
point about accountability also happens
00:49:38
there where they give and and this is
00:49:40
something else that we could implement
00:49:42
here which is taking the publicly
00:49:44
available test scores and data but
00:49:46
really assigning it in a very visible
00:49:49
way to individual teachers and
00:49:51
individual schools. And that's one of
00:49:53
the proposals I've got in my campaign,
00:49:55
which is a grade for every school and a
00:49:58
grade for every teacher so we can reward
00:50:00
the good ones and remove the bad ones.
00:50:02
>> Two more topics that Californians are
00:50:05
very passionate about and have a lot of
00:50:07
opinions about. I think one is pretty
00:50:10
challenging and the other one seems
00:50:12
pretty easy and other states have
00:50:14
handled it where it's easier. Crime and
00:50:16
then homelessness. uh crime obviously as
00:50:20
a society we've seen violent crime go
00:50:22
down over the long arc of our lifetimes
00:50:24
in the last 40 or 50 years but
00:50:26
California still 30% more violent than
00:50:30
the rest of the country so we definitely
00:50:31
have a violence problem specific to
00:50:33
California and if you live in the major
00:50:35
cities San Francisco Los Angeles they
00:50:37
let people out for petty crimes under
00:50:39
$850 there seems to and we see going to
00:50:43
a drugstore everything's locked up so
00:50:45
there is a feeling and a lot of debates
00:50:47
over the numbers that there's a lot more
00:50:49
property crime. Some people claim people
00:50:52
don't report it anymore. That was my
00:50:54
lived experience in California.
00:50:57
What is your take on crime and then
00:50:59
we'll go to homelessness?
00:51:00
>> Yeah, I mean it's just it's this classic
00:51:03
thing in California where they seem to
00:51:05
be brilliant at passing laws, right?
00:51:08
Every year more and more laws, more and
00:51:09
more bloat and bureaucracy, more on
00:51:12
nanny state nonsense. Last session, for
00:51:14
example, they passed, this is one
00:51:17
session, 1,118
00:51:20
bills. One that that's the number of
00:51:23
bills that the legislature passed. I we
00:51:25
did an thing outside the state capital.
00:51:27
I mean, I'm not very tall. We printed
00:51:29
them all out. It's like double my
00:51:31
height. I mean, just ridiculous. The
00:51:34
point I'm making is really good at
00:51:36
passing laws, but not very good at
00:51:38
enforcing them. there's just something
00:51:41
missing in terms of the app of the
00:51:43
willingness to just enforce the law.
00:51:45
That's going to be one of the main
00:51:46
points I make in terms of homelessness.
00:51:48
But when you get to crime, there's just
00:51:50
this attitude. I mean, there's something
00:51:53
off about how the left has has has seen
00:51:57
this issue. And just when you think
00:51:58
it's, you know, the worst excesses of
00:52:01
defund the police and all that have
00:52:03
receded, you've now got them popping up.
00:52:06
What is it this new thing? microl
00:52:08
looting, right? Oh, microl looting.
00:52:10
Isn't the New York Times and Slack
00:52:12
podcast are going on about, oh, it's
00:52:14
fine cuz it's just social justice and we
00:52:16
we're allowed to kind of basically steal
00:52:18
things cuz it's okay. It's just
00:52:19
unbelievable subversion of basic
00:52:22
>> um values and morality. Just
00:52:24
unbelievable on crime. It's very
00:52:26
decentralized in terms I mean there's
00:52:28
some state things that need to be d
00:52:30
remember the law that you're talking
00:52:31
about that legalized theft up to $950 a
00:52:35
day that has that part has been
00:52:37
overturned that was Prop 47 which was a
00:52:40
few years ago has been overturned by
00:52:42
Prop 36 which was overwhelmingly passed
00:52:44
in 2024 by about 70% but of course it's
00:52:47
not being properly implemented. Gavin
00:52:48
Newsome was against it and so were most
00:52:51
Democrats in the state. the people
00:52:53
passed it anyway, but now there's real
00:52:55
resistance to enforcing it, which is
00:52:57
ridiculous in terms of the overall
00:53:00
picture though, it is very localized.
00:53:03
You know, you've got local police forces
00:53:05
and sheriff's department and so on. So,
00:53:08
my focus has been well, what can you do
00:53:10
as governor? And the one of the biggest
00:53:12
drivers I think that's that's caused the
00:53:14
problem is is really started with Jerry
00:53:17
Brown before Gavin Newsome. Gavin
00:53:18
Newsome's accelerated it, which is the
00:53:20
prison closure program. They've they've
00:53:22
they've they've basically al also this
00:53:25
is classic California. They've reduced
00:53:27
the number of prison places by half.
00:53:30
Guess what happened to the budget? It
00:53:32
doubled.
00:53:34
>> Not quite not quite that bad, but like
00:53:35
it's a classic. They double they cut the
00:53:38
numbers in half. Double the budget. But
00:53:40
the point, the serious point is that
00:53:41
you've had tens of thousands of really
00:53:43
dangerous violent criminals either
00:53:45
released directly into the community or
00:53:47
more or or more, you know, um
00:53:50
destructively for this for the system
00:53:52
transferred to county jails which are
00:53:54
now completely overcrowded. Um and
00:53:57
therefore at the local level, the whole
00:54:00
system is aware that you've had all
00:54:02
these transfers from state prison. the
00:54:06
system is full and so there's no
00:54:08
capacity and that really undermines the
00:54:11
kind of accountability that judges and
00:54:13
prosecutors would want to seek at the
00:54:15
local level because they know the jails
00:54:16
are full and so that in turns undermines
00:54:18
law enforcement because they say what's
00:54:21
the point I mean I hear this term all
00:54:23
the time from law enforcement around the
00:54:24
state I'm traveling the state the whole
00:54:26
time they talk about catch and release
00:54:28
as the basic operating rule for local
00:54:31
for the kinds of crimes you're talking
00:54:33
about you catch them they just release
00:54:34
nothing happens
00:54:35
And so that that undermines law
00:54:38
enforcement. They think, why bother if
00:54:40
we're just going to bring these people
00:54:41
in and nothing's going to happen to
00:54:42
them. And that in turn undermines public
00:54:44
confidence because everyone sees that
00:54:46
and then they, as you just said, don't
00:54:48
bother reporting it. So a simple thing
00:54:50
we can do that is completely within the
00:54:52
governor's control is stop and reverse
00:54:54
the prison closure program, which is
00:54:56
what I've committed to doing is to
00:54:58
increase prison capacity in California.
00:55:01
That means that you can relieve the
00:55:02
pressure on county jails, but also that
00:55:04
means that you can use the prisons for
00:55:06
what they should be doing. Not just
00:55:07
bringing accountability. You commit a
00:55:09
crime, you should be punished, but also
00:55:11
rehabilitation. We've got one with not
00:55:14
the worst, but one of the worst
00:55:15
recidivism rates in the whole country.
00:55:18
And if you had if you if we did one of
00:55:20
the best one of the best states is
00:55:22
Virginia, they're they're less than half
00:55:24
what we have. that would massively
00:55:26
reduce crime if you could just get, you
00:55:27
know, there's that, you got to take
00:55:29
seriously the rehabilitation part. I
00:55:31
mean, a huge proportion of prisoners in
00:55:33
these jails, they can't read properly.
00:55:34
Many have dyslexia. You know, you you've
00:55:36
got to have a really serious view on it.
00:55:38
And they just don't. They have an
00:55:40
ideological view. I think that is the
00:55:42
problem with so many of these issues.
00:55:44
It's ideology. In this case, it's
00:55:46
decarceration. Can't have people in
00:55:48
prison. Prison is racist. Criminal
00:55:50
justice reform. All this ideology
00:55:52
instead of just practical things to keep
00:55:54
people safe.
00:55:54
>> Newsome shut down four or five of the
00:55:56
California state prisons. You're
00:55:58
absolutely correct. Uh, according to my
00:56:00
notes, and then it peaked in 2006.
00:56:03
California had 165,000 people in state
00:56:05
prisons. Now 93,000 people. So, it is
00:56:08
definitely a trend. Uh, and I think a
00:56:10
lot of folks who are living here or who
00:56:12
were living in California where I used
00:56:14
to live are not in favor of that. Uh,
00:56:17
looking at homelessness, is it
00:56:19
intractable in California?
00:56:21
>> One thing I'll just point out if people
00:56:22
are interested in digging in further to
00:56:25
some of the things I've been saying.
00:56:26
There's a couple of places you can go
00:56:28
for real depth on this, which is the
00:56:31
last three years, um, I've been
00:56:32
traveling the state and kind of learning
00:56:34
about this stuff and developing
00:56:35
solutions. And I had a policy
00:56:37
organization for that called Golden Toto
00:56:39
together. goldento together.com and you
00:56:42
can find policy reports on many of these
00:56:44
areas we've discussed and more including
00:56:47
one on homelessness called ending
00:56:48
homelessness. And actually my real
00:56:50
partner in developing that was someone
00:56:51
called Michelle Ste who's done a lot of
00:56:54
work on this. She actually run um
00:56:56
homeless shelters and and really at the
00:56:59
at the kind of street level of this for
00:57:02
many many years. also someone called Tom
00:57:03
Wolf who's given me a lot of great
00:57:05
advice. He's in San Francisco, a
00:57:06
recovering addict um a recovered addict
00:57:09
who's who's just fantastic.
00:57:10
>> He's very vocal on Twitter and uh very
00:57:13
common sense approach. Yeah.
00:57:15
>> Yeah. Exactly. Okay. So, it's very
00:57:16
simply I'll try and sort of capture it
00:57:18
simply. It's a it's three points. Number
00:57:20
one, it actually already is illegal to
00:57:22
live on and the homeless encampments
00:57:24
already are illegal. They've always been
00:57:26
illegal. Um it's another example of
00:57:28
where we just got to enforce the law. Um
00:57:30
for years local politicians in
00:57:33
California hid behind a court ruling
00:57:36
that is called the Boise ruling from
00:57:38
many years ago which stated it's the
00:57:39
ninth circuit ruling applies to the
00:57:41
western states which is that the the
00:57:44
statement there was you can you can't
00:57:46
remove people from the street unless you
00:57:48
have sufficient shelter available
00:57:51
locally. And they used this to say we
00:57:53
can't remove people because we don't
00:57:55
have enough shelter. It didn't define
00:57:56
what shelter was. They defined it as
00:57:59
these permanent supportive housing units
00:58:01
costing $900,000
00:58:04
a door, but it could have been, you
00:58:06
know, a camp with CS. You know, there's
00:58:08
no reason. But even that excuse has been
00:58:12
lifted because there's a Supreme Court
00:58:13
case called Grants Pass versus Oregon in
00:58:16
2024 overturned that. So there's no
00:58:19
excuse. you you these people running
00:58:22
local governments what they they they
00:58:24
have the power and the legal authority
00:58:26
to remove every single homeless
00:58:27
encounter and they should and my
00:58:30
argument is I'll give that once I'm
00:58:31
elected I'll give them a certain amount
00:58:33
of time and if they haven't done it then
00:58:34
I'll use state law enforcement resources
00:58:37
to take people off the streets and then
00:58:38
you get to point two and three of the
00:58:40
plan which is what do you you got to
00:58:42
give people help in a compassionate way
00:58:43
help them get their lives back on track
00:58:45
so over 80% of people who are homeless
00:58:48
have drug or alcohol problems s
00:58:50
addiction or me severe mental health
00:58:52
problems. So you got to deal with that.
00:58:53
So the second part is drug and alcohol
00:58:56
recovery. Got to you got to get people
00:58:57
into recovery. That used to be the rule
00:58:59
in California, rehab or jail. And we got
00:59:02
to get back to that. It can't be an
00:59:03
option. You got plenty of service
00:59:05
providers who can do it. You got to
00:59:07
require it. I mean last year even the de
00:59:10
going back to our point about the
00:59:11
legislature even the democrat
00:59:13
legislature passed a bill called the
00:59:15
sober housing act which would have taken
00:59:17
a certain proportion of homeless
00:59:19
spending and allocated it to uh shelter
00:59:22
where you had a requirement was
00:59:24
sobbriety vetoed that bill. It's
00:59:27
unbelievable. So we got to have it 100%
00:59:30
um sober requirement for any kind of
00:59:33
state services on homelessness. The
00:59:35
third part is mental health where
00:59:37
honestly going back to the jails
00:59:38
conversation, you talk to sheriffs
00:59:40
around the state, they the number
00:59:43
varies, but they say 50 I've heard as
00:59:46
high as 70% of the people in their jails
00:59:49
have severe mental health problems.
00:59:51
That's where we are actually treating
00:59:53
people with mental health problems.
00:59:54
Either they're on the street or they're
00:59:56
in jail is totally barbaric. And one of
00:59:58
the reasons is that we when you're
01:00:00
talking about the homeless population,
01:00:03
obviously low-income people. So it's
01:00:04
very much entwined when you talk about
01:00:06
mental health care with Medicaid, with
01:00:08
the federal system. And there's a rule
01:00:10
in Medicaid that was set up right at the
01:00:12
beginning when it was founded in the
01:00:14
mid60s called the IMD rule, institutions
01:00:17
of mental disease. And this was a time
01:00:19
when they didn't want large mental
01:00:21
asylums and whatever. The idea was you
01:00:23
have small facilities in the community.
01:00:25
So the rule is there is no Medicaid
01:00:27
reimbursement to the states for any
01:00:30
mental health care provided in a
01:00:32
facility with more than 16 beds. It's a
01:00:34
16 bed rule. Of course, that makes the
01:00:37
whole thing incredibly uneconomic and
01:00:40
inefficient. Imagine if hospitals could
01:00:42
only be 16 beds. How inefficient that
01:00:44
would be. The first Trump administration
01:00:46
created a waiver, the IMD waiver that
01:00:49
states could apply for so you could get,
01:00:51
you know, get around the rule.
01:00:52
California. A lot of other states have
01:00:54
have taken that up. California hasn't.
01:00:57
There's plenty of money in the system.
01:00:58
Like we've been saying, the budgets have
01:01:00
are there. They've just been diverted
01:01:02
into the wrong places. So, the third
01:01:03
part of the plan is to take the money
01:01:06
that's currently going into the homeless
01:01:07
industrial complex, these ridiculous
01:01:09
apartment units for people who should be
01:01:12
either getting mental health care or
01:01:14
recovery treatment. Take that money and
01:01:16
put it into modern largescale mental
01:01:18
health facilities. And then we can treat
01:01:20
people.
01:01:21
>> That's broad work. That's a great place
01:01:22
for you to put a big magnifying glass
01:01:24
because that's where there's massive
01:01:26
amounts of corruption. People cannot
01:01:28
believe how much we spend in this
01:01:30
>> or we spend in California on
01:01:33
>> homeless and if you pay for something
01:01:35
you will get more of it and they're
01:01:36
getting a lot more of it. Yeah.
01:01:38
>> Steve, as we wrap up, give us the
01:01:40
quarterback view of your path to
01:01:41
victory. Walk us through the sequence of
01:01:44
events, the key moments leading up to
01:01:46
the primary vote and then from primary
01:01:48
to election day. what has to happen for
01:01:50
you to get to Sacramento?
01:01:52
>> So, we have the top two system. Um, for
01:01:55
those who I mean, another crazy
01:01:58
California thing where you end up with
01:02:00
two candidates going through to the
01:02:02
general election regardless of party.
01:02:04
The idea of this was to have more
01:02:06
moderate politics. Ever ever since it
01:02:08
was introduced, the state's gone further
01:02:10
and further to the left. Um, and so
01:02:13
you've got various scenarios that are
01:02:15
possible. Right now, I'm leading in all
01:02:17
of the polls. Um, on the Republican
01:02:20
side, there's one other candidate. I I
01:02:22
think with the president with President
01:02:23
Trump's endorsement of my campaign, I
01:02:25
think we can expect um I'm pretty
01:02:27
confident that we can make it into the
01:02:30
top two. It's not certain. We we're
01:02:32
we've got to, you know, fight very hard
01:02:34
over the next month or so. The ballots
01:02:35
go out next week, early May. Um, but I
01:02:39
think that we're going to have a a top
01:02:41
two with myself and one other Democrat.
01:02:44
And right now it looks as if it's going
01:02:46
to be one of Tommy Styer, Katie Porter,
01:02:50
or Javier Basera. And all of those three
01:02:54
represent either no change from what we
01:02:56
have now or a move even further to the
01:02:59
left in the wrong direction. So I think
01:03:02
broadly the argument is going to be very
01:03:04
straightforward, which is are you happy
01:03:07
with the way things are going in
01:03:08
California? Do you want more of it? And
01:03:10
if you do, you vote Democrat or do you
01:03:12
think we need a change? So that's it's a
01:03:15
classic, you know, change versus more of
01:03:17
the same election. Getting into the the
01:03:20
numbers, it's I know a lot of people
01:03:22
look at California and say it's
01:03:23
impossible for a Republican to win. And
01:03:25
Jason was pointing out we've had
01:03:27
Republicans in the past, but that was,
01:03:29
you know, a long time ago. And you could
01:03:31
say special circumstances cuz Arnold
01:03:33
Schwarzenegger was elected in a recall
01:03:35
election and so on.
01:03:37
>> And he was a celebrity who was highly
01:03:39
and loved in Los Angeles, half the
01:03:41
state.
01:03:41
>> Exactly. All of those things are true.
01:03:43
But and so I've always said from the
01:03:45
beginning of this that it's not going to
01:03:46
be easy to win. It's going to be very
01:03:48
difficult because of the structural
01:03:50
factors in California. But it's not
01:03:51
impossible. And given the seriousness of
01:03:54
our predicament and how much I think the
01:03:57
whole country depends on a a successful
01:03:59
growing thriving leading California,
01:04:02
then we should go for it because getting
01:04:04
things back in a common sense direction
01:04:06
is just a really important thing. I
01:04:08
always say California means to America
01:04:10
what America means to the world. And so
01:04:13
this matters. If you look at the numbers
01:04:16
on the on the some people look at the
01:04:18
voter registration numbers and they say
01:04:20
Democrats outnumber Republicans 2 to1
01:04:23
and that is true, but when you look at
01:04:25
actual voting, the gap is a little bit
01:04:27
closer. Over the last 20 years where you
01:04:29
haven't had Republicans elected, the the
01:04:31
the pretty much the average Republican
01:04:34
vote has been just over 40%. So it's
01:04:37
been like a 6040 split. Obviously,
01:04:39
that's not close, but the gap is perhaps
01:04:41
not as wide as some people might think.
01:04:43
But then you look at a couple of factors
01:04:45
that I really think are different this
01:04:47
year. First of all, there's a
01:04:50
dissatisfaction
01:04:51
with the way things are going that
01:04:53
wasn't there before. If you look at that
01:04:54
basic number, is the state on the right
01:04:56
track, wrong track? In the even four
01:04:59
years ago in the last governor's race,
01:05:01
the wrong track number was kind of mid
01:05:03
to high 40s. Now it's mid to high 50s.
01:05:07
So there's a majority for change in
01:05:09
California, just put it that way, which
01:05:11
is a good environment to be going into
01:05:13
as a candidate representing change. The
01:05:16
second point is if you look at the
01:05:18
actual votes you're going to need to
01:05:20
win, this is a midterm election 2026. If
01:05:25
you try and get some kind of sense of
01:05:27
how many votes will be cast in the
01:05:30
midterm election this year, take the
01:05:32
average of the last two, 2018 2022, you
01:05:35
get a total of 11.7 million total votes
01:05:38
as an estimate. So to win, you're going
01:05:40
to need just over half of that. Call it
01:05:42
5.9 million. Now, when people say there
01:05:44
aren't enough Republicans in California
01:05:46
to win, in the in 2024 in the
01:05:48
presidential race, President Trump in
01:05:50
California, without even campaigning
01:05:52
here or spending money on ads or
01:05:54
anything, wasn't a targeted state, got
01:05:57
6.1 million votes. In other words,
01:06:00
there's more than enough people who just
01:06:02
voted Republican for President Trump.
01:06:04
Now, of course, you're not going to get
01:06:07
100% of a presidential year turnout in a
01:06:10
midterm election, but the reason I make
01:06:12
that point is that the votes are there
01:06:15
actually, even with just Republicans.
01:06:17
Now, I don't think we're going to get
01:06:19
there just with Republican votes, but
01:06:21
that's the starting point is a strong
01:06:23
campaign to turn out Republican votes.
01:06:26
And a big driver for that this year that
01:06:28
again is a unique feature this year is
01:06:30
the fact that in November we're going to
01:06:32
have voter ID on the ballot. that just
01:06:34
qualified for the ballot. Um, and
01:06:37
Republicans particularly are
01:06:38
enthusiastic about voter ID. I'm going
01:06:40
to help us get a big turnout. And then
01:06:43
in terms of the coalition for victory, I
01:06:45
think that you've got a real opportunity
01:06:47
to put together the kind of multi-racial
01:06:50
workingclass coalition that President
01:06:53
Trump put together because it's as going
01:06:56
right back to where we started. It's
01:06:57
workingclass people who are really
01:06:59
really struggling and being hammered the
01:07:02
most by these policies. They get to vote
01:07:04
directly for no taxes. No state income
01:07:06
taxes.
01:07:07
>> Exactly. Because that's my tax plan. I I
01:07:08
just put this out there just the other
01:07:10
day, which is no and and no tax on tips.
01:07:13
That's the other part. I mean, which has
01:07:14
been implemented at the federal level,
01:07:16
but California won't do it at the state
01:07:18
level. Just my whole plan is geared
01:07:20
toward $3 gas. I call it Californable.
01:07:23
$3 gas. Cut your electric bills in half.
01:07:26
Your first 100 grand taxfree. A home you
01:07:29
can afford to buy. really simple,
01:07:31
practical, common sense things that
01:07:33
particularly help the people who've been
01:07:36
hurt the most over the last few years.
01:07:39
And I think that's how we pull this off.
01:07:40
>> Steve, on behalf of all, I just want to
01:07:42
say thank you for being so incredibly
01:07:44
candid and open with us. We're wishing
01:07:47
you the best of luck.
01:07:48
>> Thank you for joining us.
01:07:50
And just from my seat, if if you want
01:07:54
>> moving back.
01:07:55
>> No, I mean if you want it just I left
01:07:57
for a reason and part of it was the
01:07:59
dysfunction of the state and if you want
01:08:02
things to continue I think you know
01:08:04
having an unbalanced government that's
01:08:06
all in one party is a way to do that.
01:08:08
You got to try to find some balance here
01:08:10
and I think why not give it a shot? If
01:08:12
you're in California, you have nothing
01:08:14
to lose. The state is in a massively
01:08:16
dysfunctional
01:08:18
situation. So, I wish you great luck,
01:08:20
Steve Hilton.
01:08:21
>> Thank you, guys. Great to be with you.
01:08:23
>> All right. Cheers. Now,
01:08:40
>> I'm going all in.
