California Update: First Couple Under Investigation; Wealth-Tax Deal Underway?

- It is Thursday, June 18th, 2026, and you're listening to Matters of Policy and Politics. A podcast devoted the discussion of policy research from the Hoover Institution and issues of geopolitical, national, and local concern. I'm Jonathan Movroydis, and every month I have the privilege of, of moderating a discussion on politics and the economic situation of the Golden State with two Hoover fellows and experts on these issues. Bill Whalen and Lee Ohanian. Bill Whalen is the Virginia Hobbs Carpenter, distinguished Pauls fellow in journalism and the regular host of the show. And Lee Ohaning is a Hoover Senior Fellow and professor of Economics at the University of California Los Angeles, both bright for Hoover's web channel, California on your mind. Gentlemen, how are you both doing? Doing great, Jonathan. Doing great, Lee. How are you, Lee? Yeah, I'm, I'm well. California's blowing up though. Blowing up. Well, not blowing up literally, but all sorts of news coming outta California since we last met. Let's get to it. So there's big news from Sacramento. Governor Newsom and his wife are under investigation by the Justice Department. According to news reports, there's a possibility of Jennifer Sibel Newsom, the first lady of California having committed tax of fraud and tax fraud and tax evasion. Is there anything to this bill, or is this Trump wanting to take out a potential adversary for one of his successors, JD Vance, Margo Rubio, or somebody else? Yeah, so Jonathan Lee, this was a very big bombshell by Sacramento standards, Eddie State Standard, where the governor of a state says that he is under investigation by the federal government, but Gerstein famous, he said, there's no there there for Oakland. So the question is, what there is there with regard to this story, the governor came out and said that he is under investigation by the Trump Justice Department. They're coming after him because he is one of Donald Trump's mortal political enemies. Well, that's maybe not the case. Apparently the US attorney in Sacramento has been looking into these matters for about a year. But now the question Lee in Jonathan is what exactly are they looking into? And you mentioned it's both the governor and the first partner, Jennifer Siebel Newsom. We don't know exactly what this pertains to. We don't know if, if this pertains to hurt the nonprofit she's involved in, we don't know if it pertains to the practice called behest or a special interest give money on the governor's behalf to programs, including the first ladies, first partners, nonprofits. We don't know if it entails the governor or not. We don't know how long this is gonna go on. In other words, you know, Donald Roosevelt said, you know, there are knowns and unknowns, a lot of unknowns to this. Frankly, I look at it this way in the short term right now for June of 2026, this is a gift for Gavin Newsom in this regard. If we, if we think, if we assume the Governor Newsom is running for president in 2027, and we think that that race is gonna be determined largely by which Democrat can claim that Donald Trump hates them the most boys, he been given a gift because now, like he can say, I am under investigation, he could use Lawfare the same way that Donald Trump used Lawfare quite effectively in 2024. So short term, that makes sense. And sure enough, about 24 hours after he announced this news, he was sending out fundraising solicitations on his email account. So he's trying to monetize it. But long-term, Lee, I think this is problematic. I wanna get your thoughts on this in this regard. The Newsom defense is, you know, I want transparency with the Justice Department. This is an administration terrible at transparency. It does raise questions that the media want to look into it as in how exactly the governor's finances work. And this is a governor and a first partner who never released their tax returns. So there's a question of how they manage to live high off the hog as a humble public servant. So it answered questions. And Lee, when you run for president, it's a different game and a different set of rules, controversies explode. The press is much more diligent, the press is much more antagonistic. So I think long term, this could be, you know, sort of like a piece of tissue paper on the governor's heels. Remember in Hillary Clinton, bill Clinton and Hillary Clinton were running for president in 1992. She got bogged down by questions about the Rose law firm and billing practices there. And this carried on to the administration didn't torpedo the Clinton campaign, but it was just a problem that wouldn't go away. So I don't know, Lee, do you think there's any there, there, here? Well, bill, you know, it's interesting because there's, yeah, so little information's been provided other than they are under DOJ investigation. Then as you noted, apparently this was the result of a whistleblower in Sacramento. It was not coming from d from the D-O-D-O-J in dc. And my understanding is that there was at least one investigation that was began under, that began under Biden. And that involved his, his former campaign manager, or I guess it was his former chief of staff, It was Dana Williamson, the former chief of staff. And this was involving an account that belonged to Javier Becerra, who's the democratic nominee for governors. So it's a octopus in that regard. Yeah, yeah. No, there's a interesting interconnection there between Becerra and Newsom and Daniel Williamson. So my guess is that they, this may be related to Beed payments and, and that's kind of the gray area in politics in which a government official can behest or ask an organization to make a donation to a, a nonprofit or a government agency on behalf of the public. Good Newsom has, you know, according to Cal Matters, which is, which I believe is a re reliable source, they, they estimate about 321 million in behest payments By Newsom from roughly the time he took office up through 2024. So a third of a, a third of a billion dollars. And some of those millions went to the first partners nonprofit. So if I had to guess, my guess would be that that is, that is one area they're gonna be, they're gonna be looking at. But for a presidential run, and it's interesting, bill in his, he quickly put together a, I dunno what you wanna call it, a press release video, where he was very indignant about the Trump administration going after him for political reasons. I think that was the first time he's acknowledged that he was what, considering running for President. Yeah. So, so, so that casts outta the bag. Not that we were, not that we were surprised by that, but no, a Justice Department investigation cannot be good if you get to 2028. And his opponents on the Democratic side, whoever those will be, Pete Potage, I don't know if it'll be a OC Mark Kelly, Wes Moore from Maryland, they're not gonna leave that alone. So this is not, th this is indeed a long-term issue, problematic issue for Newsom, and, and these things can drag on for a long time. Yeah. And a final observation of this before we move on, it's problematic for the governor in this regard. It's the question of his wife and how exactly she handles this. The last time we saw Jennifer Siebel Newsom in public behind a microphone with her husband, it was not a good scene because she was at an event with, I believe Lee and Jonathan, planned Parenthood of California. And she got very huffy and very indignant about the fact they were not asking questions to her and Planned Parenthood. They were asking her husband questions instead. And there was kind of a, sort of a Marie Antoinette, you know, attitude of why aren't you here on my behalf? So the point is just, it gets back to Hillary Clinton and the Rose law firm, remember the, the Clinton White House had her do a press avail on this, and it did not work very well. She's playing defense on a matter like this, and he'll have to play defense on this as well when it comes to, to money and so forth. So it's just, you know, not a, not a good look long term, I think for them that regard. No, no. And even if nothing comes with this, still, the fact that behest to Payments went to his wife's nonprofit, what is, what is that called Bill? Was it First Partner Productions? Is, is, is, is a, is a filmmaking company? Oh gosh, I'd have to, I'd have to hook it up. You're right. Okay. Okay. In any case, if everything's ends up being perfectly legal, that's still an issue that I think a lot of voters will be skeptical of. Yeah. And there's one other angle list that I, we will move on after this. It may also prompt reporters to look into her body of work with her documentaries. And there's a lot of toxic male talk and things like that that maybe don't play well in sweepstakes, Lee. No, no, those are, I can't imagine that being all that popular in Ohio, Pennsylvania, Wisconsin, et cetera. Yeah, well, you know, we, we may or may not do a podcast in June, depending on everybody's schedule and what's going to Sacramento. But we might be back on the air if this thing has legs. So to be continued, Gentlemen, let's talk about the primaries earlier this month. The process around it garnered munch attention, largely due to a, a few factors hovering over the election system. One is that every registered voter gets a mail-in ballot in California. Number two, completed ballots could be mailed in seven days after the election. Day number three, interest groups are permitted to harvest ballots. And number four, as the late arriving ballots get counted, it could make for some funny math post post-election reality TV show Star Spencer Pratt was bounced from the la mayoral race. There's a cons conspiracies floating out there that hundreds of ballots supporting him were found in a dumpster. The problem is, according to the California Post, the dumpster is located in a fictional area called San Recto. The matter might get worse if, if the Supreme Court overturns a Mississippi law allowing ballots to be counted if they arrive after election day. Gentlemen, how do we fix elections in California to erase the clouds of conspiracy and uncertainty? Bill, I'll throw a few thoughts at you, but first, you know, it's the, so the conversation in California goes like this, the returns come in, you see results on election night, and then come a week later, or come a few days later as more ballots get counted, the numbers move. And you mentioned this hurt Spencer Pratt. This traditionally hurts conservatives and Republicans across the state. Republicans tend to vote early. The Democrats, Democrats vote later. So the numbers move against Republicans. And this day and age where everybody thinks that their conspiracy afloat, somebody says the fix is in. Now election officials with California will get very huffy and defensive about this Lee and Jonathan, and they'll say, you know, do you want speed or do you want accuracy? And that's how they defend. That's how they defend the prolonged count saying there's choice between the two. I think that's kind of a false narrative. The state of Florida manages to count a lot of ballots, Ty split. So I think if you've done differently, okay, so I could play Mad Monk for a second. What would I change here? I think the first thing needs to be changed. We need to, we need to end the practice of everybody gets a ballot in the mail. This is a vest of the COVID era. It was done in 2020 when there were legitimate concerns about, about health crises. If everybody went piling into boots on election day, could you spread COVID? Well, that's six years in the rear view mirror. You know, you can allow mail-in ballots if you want to, but make it optional. So that's step number one. Second thing I would do, I would get rid of ballot harvesting. Why? Voting is supposed to be a private matter. That's why we draw curtains at at at ba ballot, boots ballot harvesting becomes very public. That's Lee and Jonathan hitting me up and saying, have you voted yet? How do you plan to vote? Can I help you vote not being done that way? And then thirdly, and this ties to the Supreme Court case. The Supreme Court may rule that in states like Mississippi, you cannot vote account ballots and arrive after election day. That's gonna cause chaos in California where votes are counted up to seven days after the election. I think it's pretty simple. If you haven't handed in your ballot by election day, you gotta go down to your station and hand it in person or vote in person. And legislature would have to decide how many days beforehand you can send into your mail-in ballot. And if you don't get it in tough snuggies if you will. But you know, we have a problem in California here, and it's just one of institutional confidence. It's hard to look at the system right now and see the numbers dances they do and just believe that is a good system. What, what, say you Lee, We align almost perfectly on this universal mail. Ballots became permanent in 2021 when it was offered in 2020 because of COVID. There really there, there was really the presumption that this was gonna be an emergency situation due to health concerns. But now we have universal mail ballots, we have same day conditional registration. And as you noted, what I find perhaps the most, the most troubling is, is ballot harvesting. Right? You know, there's a DOJ attorney is looking into voter fraud in Los Angeles. I've seen media reports indicating these is found 7,000, roughly 7,000 ballots. I don't know if that will make a difference for Spencer Pratt or not, but once you open the door to, yeah, mailed in ballots conditional registration, I believe, up to election day and ballot harvesting, that was simply not, that was simply not the way society viewed voting back in the day and back in the day, meaning simply five or 10 years ago. And I would throw in one more bill, which would be voter id. I know that's very provocative, or at least very controversial, but it's a position that certainly most poll show Americans overwhelmingly with supporting. It's a requirement that is in an awful lot of countries. I don't see a good reason why we wouldn't have voter identification. But that of course is, is a no-go in California. Although I believe we're gonna have a ballot proposition coming in in November about this. It is, it is qualified for the Novera ballot leave. So we'll see if those polls are accurate. Yeah. Now the question, Jonathan, you're gonna ask, so I'll answer it ahead of, you're asking what chances to any of these reforms have taking place in California? And I would give it the same odds as, as Donald Trump's birthday becoming a state holiday, why the system benefits Democrats. Democrats control everything. Why would they change anything that works perfectly to their advantage? So next Gentlemen, let's talk next about the California Governor's race. California's next choice for governor after these primaries is either former State Attorney General or a Health and Human services secretary, Javier Becerra, or former Fox News personality, Steve Hilton Hilton's campaign measures is straightforward act one party rule in California, which which you just commented on, oh, bill, be it taxation, spending, bureaucracy, housing, public safety. But how Javier Passera runs isn't so clear. He's opposed to wealth tax, he doesn't support single payer care. He's kind of seen as a continuum of Governor Newsom without the flare. He would be the first son of immigrants in the modern political era. But he, he seems very, very conventional. If elected though. Do you see him being more cautious like a Jerry Brown or more of a showboat like Newsom? This is a great question because Serra's big break in California politics was after decades of serving in the house. And he goes back to, I think 1990 when he first took off, as he is, I think 68 years old. So he's not, not a young man necessarily, but his first big break, if you wanna call it, that was when Jerry Brown elevated him to Attorney General after Kamala Harris was, Kamala Harris was elected to the US Senate. And from then from there, he got the, the gig in Washington as healthcare Secretary now coming back to run his governor. Every indication would show that he would be cautious, maybe more Jerry than Gavin in this regard. And you just look at his platform, he does not support the billionaire wealth tax. He is against single payer care, which Gavin Newsom supported when he ran in 2018. So Besser is always being realistic about that. And he doesn't to be kind of the person who's gonna run a firearm brimstone campaign that's gonna get Democrats hearts beating faster. Yes, he'll talk about suing Donald Trump. Seven ways to sundown. He is Attorney general, but he doesn't really kind of appeal to youth or imagination in that regard. So it could be just a very mechanical exercise as governor's race, and I'm looking back to 2002, Lee and Jonathan, when Gray Davis not very popular at the time, ran for reelection and kind of backed into a second term. I think he won by about five points defeating Bill Simon, the Republican candidate, but just a race that didn't really excite Californians, if you will. And so it's just very funny, after eight years of Gavin Newsom's very kind of stylish campaigning and high profile fights and so forth, California could be in for four or eight years of something much more relaxed. And you know what? That's maybe not such a bad thing. Leap. I consider Xavier Becerra as a, is a politician who's always been in the right place at the right time. Yeah, As you noted, he's a, he's a career politician. I think this, I think it goes back to about 1990. He was in the HII believe that he was in the house for an awful long time. 20, 24 years. Okay. 24 years. So that's 12 terms, if I do my, my math right. He was not particularly distinguished in the house, but then he was in the right place at the right time. Harris left, he was appointed by Jerry Brown to be Attorney General, then he was appointed to be head of Health and Human Services by Biden. Right. Although, you know, it's interesting, if you look at, if you look at the video Biden introducing the Sarah, oh my God, I don't think he even knows who he is. He completely mangled Baer's last name. You get you, you, you totally get the feeling that he doesn't even know who this person is as head of Health and Human Services is. He came under a lot of fire. There's a New York Times story about him that is controversial about him losing, you know, critics will say he lost some 80,000 undocumented kids and offered things to happen to some of these kids. He will defend that by saying, well, you know, we perhaps could have done better follow up, but you know, we, we made phone calls and you know, they weren't returned. Nevertheless, you, if you look inside the Biden White House, he was not as far as I can tell, highly regarded, according to some aides in media reports, Biden was unhappy with him moving too slowly regarding undocumented kids. He was, he seemed to be sidelined, at least during part of the COVID period under Biden. You know, bill, it's interesting, Biden did not endorse Besera before the primary. He chose not to. And then, you know, again, talking about being in the right place at the right time, Becerra entered, I Besara declared his candidacy, I believe March or April of 2025. He was polling at about three to 5%. You go one year later, March to April of 2026, he was still polling three to 5% right there. USC was going to host a governor, a governor debate in late March, which they canceled at the 11th hour for one reason being that Becerra and Tony Thurmond, and I believe Betty Yee, who all would be considered candidates of color were left off of the debate in favor of including San Jose Mayor Matt Mahan, because their were poll numbers were too low. So now some suddenly Besera goes from three to 5% in which he could not get above that ceiling. He was simply, largely unknown. And now he is in, now he is gonna be on the ballot in November after, after Swalwell left. And Bill, you know, there's some interesting stories about fake social media accounts that seem to be related to the Besera campaign that were very critical of his closest Democratic contestant, Tom Steyer, and these fake social media accounts, apparently were criticizing Steyer and pushing Besera forward. So he's a guy that's been in the right place at the right time. He does not appear to be a strong capable manager. And the reason I say that is that he was in the house forever. He wasn't responsible for managing a big organization when he was responsible for managing a big organization, HHS, pretty much everything you read about it is not a strong leader. And if California needs anything right now, it's a strong leader with, with common sense priorities and a sense of advancing efficiency and effectiveness and fiscal discipline. You know, bill, you mentioned that he was not for Medicare for all, but on the other hand, California getting that done within an, within a Trump administration is literally zero. There'd have to be all sorts of deals made with Washington. I don't see the Trump administration wanting to spend any time getting California healthcare for all. So, you know, I'm, so anyway, that's my take on Besera. I don't think it will be, I don't expect him to be a particularly distinguished governor if he beats Hilton. And I think right now he's got about 20 point lead on Hilton with about 20% of voters being undecided. Yeah, I'm glad you mentioned Eric Swalwell, the former congressman who rather spectacularly flamed out of this race. After all sorts of Todd aspects, his personal life came to surface. One perk of being a California governor Lee and Jonathan is you have the ability to appoint people to boards and commissions, some of these very nice lazy six figure jobs. And you know, he owes Swalwell, maybe he'll put Swalwell on one of those posts. But you know, the recovering speech writer, and he looks at two things. One, assuming he's elected, one his inaugural address will be. And it could be a wonderful, you know, aspirational moment. Because as Jonathan mentioned, he is the son of immigrants. He went to Stanford, I think he has both the Stanford undergrad and law degree. This is California upward mobility. It's best. So good for him. But then the speech writer me wants to know what he's gonna say when it's time for the state of the state address. And because again, you know, he is not offering a lot of big ideas like Newsom did in 2018. Remember Lee Newsom offered what he wanted, a single payer care. He also had what you've written about time and again the Marshall Plan for housing 3 million new housing units. But Sarah just doesn't have any big ideas like that. And I think part of it is just that just might play his mo that he's just not gonna be that kind of big dreamer. And again, this is not a bad thing for a California governor because whoever takes that office in 2027 is in a very funny position. On the one hand, the economy is printing money for the governor, especially if we have I AI IPOs coming up in the next few months. On the other hand, the more ai, the fewer jobs in California, there's just still devastating income inequality. Underlying questions Lee, as to homelessness in the state, you know, infrastructure and so forth. And then that governor's also have to help figure out the next bear of Los Angeles what to do about the Olympics, which are also become a headache as well. So, you know, again, maybe understated is not such a bad thing for California. I think the gubernatorial debates becoming less and less watched as we go from one cycle to another. But for those of us who did watch those debates, you saw that perhaps the most content in terms of substance came from Matt Mayhem, who has been an accomplished San Jose mayor. Democrat. You didn't really see an awful lot of content or substance from Becerra. What I remember the media pointing to was not any of his ideas, as you noted, but rather I believe he called Hilton. I believe he said Trump was Hilton's daddy, right? That was, you know, so I think that was probably the most memorable line by Besera. He just is not a guy. I don't think that he doesn't have Newsom's ambition. Newsom came up with, you know, all of those ideas, Marshall plan for housing, we're gonna end homelessness. The high speed rail. When Becerra is asked about that, he has relatively amorphous answer such as, well, we'll build high speed rail and we'll get it on time and we'll, you know, we will get it done. But how is he gonna do that? I don't know of any specifics. He says, well, you know, we're gonna build more houses. Well, you know, good luck with that. Gavin's Marshall Plan has turned out to produce fewer private housing permits on average in Newsom's governorship than the year before he took office. There's probably been perhaps close to 200 laws passed in California to promote housing. It hasn't made a difference. So again, you know, west ER's idea to break the continual problem, you know, you're just not, you know, you're not seeing any specifics. I believe he doesn't think he needs any specifics to be Hilton in a one party race. So, bill, I'm, you know, if he, if he's elected, you know, I certainly hope you're right about, about that. He will do less than try to do more. You know, California has had shifts in governors before. I'm thinking back to 1982, when after eight years of Jerry Brown Californians were retired and they went in a very different direction with a law and order Republican named George Ian. This is not as dramatic a shift going from Gavin Newsom to Javier Becerra, but in terms of style, it would be a shift. And also, you know, if Becerra, even though he has very limited executive skills just to stay in Washington, which didn't work out too well, but if he turns out to be an effective administrator, maybe he'll be much better at what Gavin Newsom has failed as governor, which is actually solving problems. Newsom is terrific at rhetoric. He's great at, you know, unfurling big ideas and, and being very showy on the stages of peacock, but he is terrible to follow through. So maybe, maybe a little dullness in the governor. Better results is good. And speaking of which, well, I mentioned that Becerra owes Eric Swalwell writ large. He owes Gavin Newsom at large because Newsom's political team came in and helped rescue him, has said money his way. And this is very important to Gavin Newsom. Why if you had an antagonist, a governor in California in 2027, he or she would just make Gavin Newsom's life miserable just on a daily basis, pointing out what is wrong with California. Whereas I mentioned Javier Becerra to, I would say, hardly a peep about what's wrong with California. Instead, how can we make things better? Thanks to gaba Doso. Gentlemen, let's drill down into the primaries a little bit more devoting time to some of the candidates who didn't make it out to the general election. Let's start with Spencer Pratt. He ran a campaign that garnered a ton of attention with clickbait click Beatty AI generated content, but he didn't get enough votes to make the runoff with Karen Bass. What went wrong? Is it a simple math of being a Republican in a democratic dominated city? The very fact that, hi, the Councilman Councilwoman Anithia Ramen was better at ballot harvesting and targeting a socialist base in, in that city bill. Yeah, I, i, I kind of by that, that argument that, that this is ultimately as a mechanical exercise. I know it's very tempting to say the fix was in Pratt, was hosed by the system, phony votes, blah, blah, blah. But you know, elections do come down to just simple mechanics. My my first experience with the California election was watching Pete Wilson get reelected in 1994. I remember sitting on a campaign meeting where his people rolled out a map of the state and showed exactly what percentage of the vote he needed in each of the 58 counties to, to win the election. And I imagine running for mayor of Los Angeles is very much the same way. As much as Spencer Pratt got attention for the Gonzo advertising, he was very brilliant on message, I would say was very good at debates, just a political force I would to see coming. I don't know if his campaign was very strongly in Jonathan at what, at ballot harvesting at, at targeting who they needed. And sometimes it is possible in politics, you get way more attention than you do votes. Just the one outweighs the other. So, I dunno, Lee, are you buying that or are you on the conspiracy trade? No, no, no. Con no conspiracy. I think prat, so right now I think the numbers are something like 34%. And I think well have, they, have they counted all the vote, or I guess effectively they counted all the vote. So bass is around 34. Ni Ramen who entered at the, what was it, the 11th hour? Yep. Comes in around 29 and Pratt is 25 or 26. So about 30,000 votes separates Pratt from Ramen. You know, are they able to find 30, 30,000 fraudulent votes will make a difference. You know, I doubt it. Bill Deley says, who's the DOJ attorney? I think he has indicated that there's, he found evidence of 7,000, which is substantial in a, in a race that where Ramen and Pratt aren't so far different. But though I think what the issue for Pratt was, is that he was strong on the west side, which of course is where the Palisades fire had the most, had the most effect, and he was strong in the valley. But as you get close to downtown la, south, central la those areas, I think people had no idea who he was. So I think that's probably what, what hit him. And you know, no, it's interesting. Bill Bass received, I believe something, or like around 290,000 votes, Right? The voter eligible population of Los Angeles City. Those 18 and above believe it's about 3.1 million. So you do the math and you'll see that bass received less than 10% of voter eligible votes. So it leads me to a couple conclusions. One is that people in LA just, you know, for some reason just don't seem to care or are so uninformed that they're not willing to fill out their mail-in ballot. That even if they just voted for mayor, that's gonna take you, what, about three minutes? Yeah. So that's the, that's a real concern. And One final observation about, about this boy moved to our next, also Rand, for those who think this is something new and unusual in Los Angeles, the vote shift, the last Bears race in 2022, Rick Caruso, former Republican running as a a democrat, he was ahead by five points on election night. A week later he trailed by seven points. So we've seen these swings before. It's just too easy to play goods bears here. Yeah, yeah, yep. No, no, no. I'm not in any way suggesting conspiracy regarding this. What I am suggesting is that voters have gotta become informed. I don't think that is, so I see two dangerous trends. One is that voters becoming less informed, and the second is that we really need higher quality political candidates. Yeah. The days of getting a person like Tom Bradley or Rick Rearden or Schwartzenegger, those days are over. But I think we need somebody who's gonna be more competent than what we're seeing right now. That's what we're gonna see in November. I agree. Our next also ran is Tom Steyer who did, who doesn't suffer from the same, I mean, he's not, he's not a Republican. Like Spencer didn't run as Republican like Spencer. Spencer Pratt had the campaign funds to run a well organized campaign. He spent $555 million of his own money, including ads all over TV and the internet. But it didn't move the needle where he needed it. Did he over promise? Was it over exposure or was he just not plain likable Lee? Yeah, Jonathan, I'm gonna take answer c He just, no, he does not come across as a very likable candidate. He, and it's not that he was brash or he was argumentative. You watch him in the, you watch him in the debates and he doesn't come across as a particularly likable person. And I think that that coupled with the fact that he has him in a politician, he doesn't have a political background that he can draw on, that he can build base off of. And I don't know, bill, you know, I don't think he was Newsome's favorite among that crowd. So those, those are hard things to overcome, even if you do spend $200 million. And he had a lot of ideas that I think pushed some people in the middle the wrong way. You know, I, again, I I mean, bill, you've, you've, you've been in the role of implicit or explicit advising political candidates for a long time. I just don't know why you would go so hardcore on the trans issue with Steyer. Did that just doesn't seem to be a winning, that just doesn't seem to wait to, I irrespective to how you feel about it. He made that one of the centerpieces and it just seems obvious that's not gonna be a winning solution. Yeah, it might be as simple lead, Jonathan, is the idea of coming on too strong on a first date. People are getting their first look at you and you just kind of promised the moon and the sun. It doesn't seem credible. I saw a great analogy for the Steyer campaign. They said, this is why like watching Oprah Winfrey giving everybody the audience a car. You get a car and you get a car. So you get a billionaire wealth tax, you get single payer care, you get to bust up utilities. It's just not credible. On top of that, I'm just not sure how credible the look and feel of a billionaire bashing the billionaire class and bashing the wealth class of which he is part of. And then also I think the advertising against him was very effective in that they would just kind of, you know, pull out the straws on him. For example, they nailed him for investing in prisons in California, for example. That's, that's problematic. But you know, Jonathan, you point out the man has now spent $558 million on what essentially are two vanity exercises running for president, running for governor. I believe in karma. I don't believe on dancing on people's graves. But I hope this does mark the political grave of Tom Starr Enough. Next up is Scot choc Cho, as I'm pronouncing that properly, former tech engineer and a OC Alexandria Ocasio-Cortez aid who finished third in the primary to replace Nancy Pelosi as San Francisco's representative to Congress. Was she too much of a socialist for San Francisco? That's hard to believe, but that's, but at the same time that city's enjoying a new era of more pragmatic governance. Governance under Mayor Daniel. Lori, what do you say? What say you, bill? Yeah, I think you stumbled onto the answer there, chakra body. He is a, a former engineer in Silicon Valley. He was an aide to a OC and he was trying to bring that kind of flavor to San Francisco. And the timing might've been wrong because as you mentioned, the new mayor, Daniel Lurie is being a much more pragmatic mayor than we've seen in the past. So maybe a little too, too socialists hot for local taste. But, you know, Lee, I wanna get your thoughts on this. What fascinates me now is the runoff between Scott Weiner, who's a democratic state senator, and Connie Chan, who is a city supervisor. Ms. Chan has a very powerful proponent in her, in her corner. And that is Nancy Pelosi. And why is Nancy Pelosi supporter? Maybe she likes her positions. But you know what Scott Wiener did last year? Lee Scott Weiner announced that he was running against Nancy Pelosi whether she was gonna quit commerce or not. So, you know, politics are personal Lee, and I think Nancy Pelosi is one final accurate might to make it her mission to make sure Scott Wiener does not get her seat. Yeah, I don't think she wants to see that as her, as her effective Swan song. I don't know how strongly she feels about Chan. I suspect she probably had hoped for a, a, a better candidate than Chan, who's, who's very far left. San Franciscans have already, I mean essentially what they're voting for Lurie and, and other recent votes, I think they've effectively said, no, we don't want this anymore. I also wonder how much is Wiener's legislative background Bill? You know, he's pushed or tried to push through a lot of housing bills that reflect his own preferences, which is let's just really mess up housing around transit stops and let's put in more high density housing where there's already high density housing. This hasn't, you know, as I mentioned a few minutes earlier, this just hasn't moved the needle. And, you know, Wiener was one of the strongest proponents when SB 3 57 was repealed, which was, which made it possible for police to arrest people for loitering for the intention of prostitution. And many have concluded that rip the repealing of this, which makes it now not possible to arrest for lording, has led to more teen trafficking and just horrendous things. I believe there was a article maybe in the New York Times about this. So, you know, that's not a particularly good look for him anyway. I don't, I mean, what do you think? I would, Pelosi pulls a lot of weight, but I don't know, I'd be, I'd be surprised if c Chance elected, yeah, I would be too, Lee, because Nancy Pelosi look obviously has been, you know, a steady force in San Francisco politics. Let, she's held that office, what, 40 years? But there's a question of transferability and if the city has changed in those 40 years, which I think we all three could agree it has. So I'm not sure the Pelosi endorsement and the Pelosi muscle was quite what it used to be. So we'll see a fundraise, you know, I, I look at legislation kind of like you look at the product and see where it's made. You know, is it made in China? You know, uhoh, when I see a bill that has Scott Waiter's name on it, I should think Uhoh this is trouble. So again, it's gonna be a fascinating local race to watch. Yeah, yeah. I wonder, I wonder how, I wonder how much she'll she'll come out to rallies and events. Oh, that's a very good point. And then gentlemen batting cleanup on our team. Also around Matt May, may current San Jose mayor who ran for governor. Was he just too late for the gubernatorial race and too moderate that he didn't do enough to call out the status quo in Sacramento. Bill Jonathan, can we add all of the above to our multiple choice questions here? Yes. He entered the race way too late. His campaign had internal divisions, consultants, disagreeing on how and where to spend money and what message exactly. They invested quite heavily in him selling the message of, look, what a great job I've done for San Jose. The rest of California doesn't care much about San Jose. I hate to say my apologies, a good people is San Jose, but San Francisco and Los Angeles, he and San Diego captured the state's imagination much more in that city. I would quibble with his ads. He looked a little too ish in his ads, a little too tech chic walking around with a scruff on his face and his shirt untucked didn't really speak to, to executive style. But let me offer something positive to Mayor Mahan in this regard. He is only 43 years old and he is the same age as my former boss, Pete Wilson was when Wilson, in 1978 was the mayor of San Diego Wilson ran in a Republican gu Toto primary that year. He finished a very distant fourth, but four years later he ran for the Senate against Jerry Brown and got elected and eight years after that he became governor of California. The problem for Matt Mahan, though, if you want to use the Wilson formula, is simply this, most statewide offices being open in this election will therefore be closed in the 2030 election, assuming the incumbents all run for their second term limited term. This is, unless he wants to challenge Alex Padilla in 2028, challenging an incumbent US Senators, an uphill struggle, I would argue, Lee, that his best bet might be to lay back and hope that there is a Democratic president come 2029 and that Matt Mahan like Mayor Pete, who you mentioned earlier, might get a job in Washington. But Lee here is the big wrinkle. If Gavin Newsom somehow becomes president, I pretty much would wager you Lee Gavin Newsom will not give him wash a job in Washington because they have a lot of policy difference over homelessness. And one of the assumptions of the, of the Mayhan campaign and didn't play out was that he was gonna be a critic of Newsom. So, I dunno, what do you think, Lee? Yeah, bill Newsom was not happy with Mahe criticism of him, or even though the criticism was in many ways implicit or implied or subtle, he had a lot of money. I believe he had about $20 million. You know, I think that was more than Becerra had. They did, But didn't. They did, but they wanted to raise 35 and I don't think they could get there. So that was another problem, just trying to pump the prime and then where to spend the money. But yeah, he wasn't, he wasn't destitute. Right. And a lot of that money came from a relatively narrow group from, from the tech industry. You know, when you watch his ads, you watch him in debates. I personally felt he was the most competent among the Democrats. But he came across maybe a little too bookish, a little too, I hate to say this thoughtful in an, in an era where you have to kind of jump out and scream at people regarding politics. He may have had a better, he may have had a better chance pulling a star and, and saying, look, housing's broken, here's why. My plan is I've already fixed San Jose crime, crime issues. That's a problem. Here's how I fix things that I think he had to pick, you know, two or, you know, maybe one, two or maybe three issues and just say very directly, here's exactly what I'm gonna do and here's why it's going to work. But he, I think he, yeah, it seemed like he was getting different types of advice from different types of people. You noted there was some division in his political campaign. No, that never, that never goes Well, I wish he had, you know, I wish he had pulled a little bit better and put some pressure on the front runners regarding better ideas. But, but that didn't happen. He is young. He's obviously very intelligent, very competent. And for people like that today, they may just go on to, they may go on to the, the private sector rather than, rather than continue running in a for public office. Yeah. You know, he ran Lee and Jonathan in a very crowded field of candidates. When Swalwell dropped out of the race, swallows the front runner, it became a question of next man or next woman up. And the next man up was Javier Becerra, not man Mayhan. So that made Mayhan really the odd man out of that regard. But again, he's 43 years old and you know, you know, he didn't really go after Newsom. And that's a sign I think Lee and Jonathan, that he, somewhere in the back of his mind was thinking, you know, I live to fight another day. And so we'll see. We'll see what that other day is. Gentlemen, let's wrap up this podcast by talking about Governor Newsom and the new state budget Newsom and the state legislature working at the last details of the budget. There's a second deal that may or may not happen. The backers of the Billionaire Wealth Tax, they're pulling their initiative from the November ballot if they, if they find common ground with lawmakers. Bill, can you take us through the political complexities of why the billionaires tax may be in jeopardy? Right. So a very quick prime on initiatives. You, Jonathan or Lee wants to do an initiative in California. They write up the proposal, it goes to the, it goes to the Secretary of State and Attorney General. If it passes constitutional muster, then you have a limited time to collect signatures. This billionaire wealth tax. What this proposes is every billionaire in California, 200 plus of them have to pay a 5% of their wealth to the state over the course of five years. The bagger of that initiative, which is the healthcare wing of SEIU, they have now handed in the, the, the signatures. They've been certified now. So they are on the ballot if they so choose, circle this date on your calendar, it's June 25th, and that is the last day for qualified campaigns to, to indicate if they want to be on the ballot or not. So that's what's going on right now in Sacramento. You have the governor lawmakers special interest SCIU all sitting down and talking about maybe making a deal to keep it off the ballot. The politics are fascinating in this regard. It is rare that you see unions opposed to the idea of more money going into state government. And a lot of it go into state government if you tax 5% of all billionaires. But why do other unions oppose this? It's very simple. They don't get any of the sugar. About 90% of the revenue from this league goes to healthcare spending, not education on other special interest. So the unions will tag up and try to kill this as best as they can, given the chance the tech community wants to kill it. Billionaires wanna kill it, the governor wants to kill it. So, and maybe SEIU wants it to, to go away as well, because if you look at the polling, it's around 53, 50 4%. That's a tipping point in California. So we'll see a week from now, deal or no deal. Well Bill, bill brings up some interesting issues regarding the governor's leadership. So here we are a week before the deadline and now the governor and some other unions are trying to squash this. I thought that Newsom should have been very active, proactive about this back in this summer and been talking to the SEIU and telling them, under no circumstances will you have my will, you have my support for this? And in fact, I'm gonna work actively against this. So when we think about governor's leadership and unions, you know, there's this data point, there's the data point. Back in 2021 when he had trouble getting teachers unions to come back and reopen classrooms. He's facing other problems now where state workers do not want to do, not want to come back to in-person work. You know, that those three data points are informed, at least in my mind, about his lack of ability to kind of get people on the same page. So within the next week, bill, I wonder what the S-E-I-S-E-I-U is gonna ask for. They've been trying to get their hands into the dialysis industry for at least one or two cycles, or are they gonna get promised some support for that? It's all very discouraging. There's, I think every economist, I know I've been doing this 30 years, so I know a lot of economists. I, I haven't found one economist that thinks this is a good idea, including many Democrat economists. So it went, you know, it's gone far too long. It should have never seen the light of day. And because of it we preemptively lost Sergey Brin co-founder of Alphabet. We used to be Google Larry Page of Google Alphabet. We lost Peter Thiel to Florida. Travis Lannick, UCLA student who, who founded Uber. We need those people in California. We need 'em for a lot of reasons. And we've lost them just preemptively because of the threat of this, of this task. Let Me tell you one other thing. California missed out on Lee and that was the SpaceX. IPO. I think something like 4,000 people working for SpaceX are now millionaires on paper. Yeah. A lot of capital gains tax money California will not be seeing. And so this is part of the price of what happens when you, we start killing the golden geese. You don't get so many golden eggs. But getting back, so you mentioned, okay, what can be a deal? The governor could say, look, we have IPOs coming down the road, A lot more money's coming into Sacramento next year. We promised a lot of money for healthcare. What's the problem with that, Lee? He's not gonna be around to be good on the promise. So maybe SEIU doesn't want it. But you mentioned the, the situation with state workers and maybe this is part of the deal as well. 'cause SEIU is involved with that as well. The union has laid out what I find just some almost comically laughable suggestions. The issue here is returning everybody to work full-time. So what SCIU has proposed is that every state worker who reports for work gets $25 a day. So just, you know, you're paying people to show up to work. Great. On top of that, they've said, if you commute, then we'll give you $25 a day for your commuting fees. Or if you drive in, if you're not taking public transportation, we'll give you $500 a month for garage fees, if you will. So, you know, maybe new will will sign off on that, but then it just gets into presidential politics, Lee, that's a bad look for a presidential candidate just, you know, saying, we'll pay you $25 just to show up. It's like a participation trophy. So to be continued, but again, you know, it's just gonna be fascinating negotiating because this is one of those where instances where I think they would all probably like to see it go away because I don't think other side is really confident about the outcome. Yes. And you know, more broadly, Jonathan, you were talking about the budget under Governor Newsom's watch, my recollection is that he inherited a $201 billion budget from Jerry Brown. Right? I think what came through the state legislature is about 357 billion, 3 56, 3 50 7 billion. That's about a 75 to 77% increase. There's simply no rationale for how the state should be struggling with revenue. But the legislative analyst office has warned about continuing chronic fiscal problems. And you know, bill, again, when we think about Newsom's political aspirations presiding over a 75 to 77% budget increase when Florida Witch is growing. Had nothing like that when Texas Witches growing, had nothing like that, is gonna be a really bad look, particularly when it still appears that California, California leadership is continues to be revenue starved. So, I don't know, do you think we're going to, are, are they voting today on the healthcare, on the, on the additional healthcare tax? They are voting on that today, and we are, as we get closer to the election, we're gonna have to do a podcast on various taxation measures. There's this, the Jarvis Foundation has a taxation measure, which would go back and kill the Mansion tax in Los Angeles. So a lot of, a lot of moving parts on that. But you know, Lee and Jonathan, there's probably one very agile political consultant out there and he or she has made a lot of money at the, at the expense of Tom Steyer, who spent about 215 or $250 million, whatever the final count is on a scuba tutorial run. And if that person is deaf, they will now jump onto the bandwagon to kill the Billionaire tax, which will probably have a hundred million dollars to play with as well. So someone at the election's gonna have a nice beach house somewhere in California. Before we go, our thanks to Bill Whalen and Leo Hanney for another thoughtful conversation. Thank you gentlemen. Thanks fellas. Thank you. You've been listening to matters of policy and politics at podcasts at the Hoover Institution. Don't forget to subscribe to this podcast wherever you might hear it. Also, get alert to new episodes of the show and the latest articles at California on your mind from Bill and Lee by signing up for the Hoover Daily report at hoover.org/hdr. I'm Jonathan Roy sitting in for Bill Waylon, who will be back for another episode of Matters of Policy and Politics. Thank you for listening. This podcast is a production of the Hoover Institution, where we generate and promote ideas advancing freedom. 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