California Update: Prop 50 Legalities, L.A. Fire Confusion . . . and Bad News for Billionaires?

After a lopsided victory earlier this month, can California’s redistricting Proposition 50 survive a legal challenge? And why do last January’s devastating fires in Los Angeles continue to raise unsettling questions?

Hoover senior fellow Lee Ohanian and distinguished policy fellow Bill Whalen, both contributors to Hoover’s California on Your Mind web channel, join Hoover senior product manager Jonathan Movroydis to discuss the latest in the Golden State including former House Speaker Nancy Pelosi’s pending retirement, what the indictment of a former Newsom chief of staff says about Sacramento’s political culture, plus a tech-rich Northern California county’s search for more tax revenue – and, speaking of wealth, the politics and sensibility of a 5% wealth tax on California billionaires possibly headed for next year’s ballot.

Recorded on November 18, 2025.

Episode Transcript

(00:03):
- It is Tuesday, November 18th, 2025,
and you're listening to Matters of Policy
and Politics, a podcastdevoted to discussion
of policy research fromthe Hoover institution
and issues of geopolitical,national and local concern.
I'm Jonathan Movroydis. Everymonth I have the privilege
of moderating discussion on politics
and the economic situationof the Golden State
with two Hoover fellows andexperts on these issues.

(00:24):
Bill Whalen and Lee Ohanian.
Bill Whalen is the VirginiaHobbs Carpenter distinguished
policy fellow in journalism
and the regular host of the show.
Lee Ohanian is a Hoover Senior Fellow
and Professor of Economicsat the University
of California Los Angeles, both right
for Hoover's web channel,California on your mind.
Good day, gentlemen. How you doing?
- Good. Good. Yeah, doing well.
Fell a lot of, lot ofmaterial to talk about today.

(00:46):
- Let's recap. Election period.
Most notably, and I, thereis news on this front
that I'd like you both to comment on,
but most notably, proposition 50
or the Election Rigging ResponseAct was passed on a special
ballot by a majority of 64%
of voters effectively amendingthe California Constitution.
The proposition redraws thestate's congressional districts

(01:08):
away from the one outlined
by the bipartisan CaliforniaRedistricting Commission.
This is a major victoryfor Governor Newsom,
which came a week before hiscolleagues in Washington caved
to the Trump White Houseand the Republicans
and agreed to end the government shutdown.
The presidential election is way off,
but Polly Market hasGovernor Newsom far in a way
as the front runner forthe Democratic Presidential

(01:29):
nomination in 2028.
Just to start off, bill, canNewsom sustain the momentum
and rack up future Ws
and who are some of the otherpotential winners in the
Proposition 50 follow up,
but maybe just comment on the news
regarding Proposition 51st.
- Sure. So the news today is
that a a three judge panel inTexas federal panel in Texas

(01:52):
shot down Texas'redistricting plan, which is
what started Prop 50.
Newsom decided to redrawthe Congressional Maps
of California response to Texas redrawing
as congressional Maps maps.
Texas wanted to add fiveRepublicans in that state
to help improve the Republicans chances
all in the house next year.
So Prop 50 responds byredrawing California

(02:13):
and adding five Democratic seats.
So now Texas will go back to its old map
and business as usualfor the 2026 midterm.
And the question becomes, what happens
to proposition in Cal 50 in California?
Yes, you have the governorsaying during the summer
that he would stand outof Texas stood down.
But what is noticeablyabsent from Proposition 50?

(02:35):
If you read the fine printof the measure Democrats,
when they were debating this,they considered putting in
what they call trigger language.
And the trigger language saidthat if Texas does not go
through with its policy change,
its congressional map change,
California will not gothrough with its change.
But then lawmakers thought, eh,
why do we wanna do the trigger?
Maybe that's not a good idea.
So there's no trigger in prop 50.

(02:57):
So the Texas ruling does notreally affect Proposition 50.
Now that said, prop 50 is notentirely out of the woods.
The judges in Texas shot downthe Texas Redistrict plan
for one simple reason, theydeemed that it's tantamount
to racial gerrymandering,
and that's what it's issuein California as well.
There are at least twolawsuits pending right now, one
by conservative activists

(03:18):
and the other by theTrump Justice Department,
and they claim the same thatthis amounts to stand amount
to racial gerrymandering.
So we will see what happenswith those two court cases.
So you could have, ironically,sadly, I would say, given
how much money was spentin California on this,
on this ballot measure,you could ironically, kind
of like a Roadrunner cartoonend up with the coyote kind

(03:39):
of back on the cliff after all the,
the craziness in the past few months.
In other words, Californiamay end up going back
to its original map,Texas, its original map.
But what's complicates all this guys is
that the clock is tickingon California already
with the redrawn maps.
You have members now all overthe state trying to decide
what district to want in, so to run in.
So you have Republicansmoving into new districts.

(04:01):
In some cases, Democratsmoving into districts,
Democrats versus Democrats,Republicans versus Republicans.
I cannot begin to fathom thechaos that would ensue if the,
if a court came in and said,prop 50 is null and void.
So anyway, stay tuned.
It's supposed to be a quietNovember here and an off year.
It's not. December's supposed to be quiet,
but the courts could throw
yet another wrinkle into this plan. Lee.

(04:22):
- Yeah, bill, this is, youknow, I look at this as
what happens when a bad idea goes too far?
- Yeah, - So, so, you know,so just as a little bit
of context, Texas hadenormous population growth
between 2010 and 2020.
They received some extra receipts.
They red redo their, theyredrew their districts

(04:44):
as states are supposed to do after, since
after a decade census is Texas,
put forward a redistricting plan that,
that was sued in 2021.
They needed to redo it.
They came up with this new plan,
which was now struck downa federal district court
because it violates theVoting Rights Act in 1965,

(05:05):
which holds that the, thatdistricts cannot be drawn
to suppress racial minorities.
So I'd be surprised if, if,if, if this holds up for Texas
and that they have to go backto earlier maps for the 2026
for the 2026 House electionsand other elections.

(05:25):
And of course it built, as you know,
did California advertiseProp 50 as battling Texas.
So they were trying to get fiveextra seats for Republicans
and California was gonna offset that
by getting five more seats for Democrats
and the whole issue.
And I recall the governorsaying, well, you know,
Texas started this.
And then the whole issue was, well,

(05:47):
we'll stand down if Texas stands down.
Well, Texas is standing down
because of federal district court,
but as you note, the text of
50 has no trigger language.
There's nothing about Texas in there.
So now California Prop50 overwhelmingly passes,
bill, you got that right.
I got that wrong.

(06:09):
You know, it's interesting,bill, the, the Republican
know campaign on this,
I thought was just not well organized
and it really didn't get thevote out for Republicans,
which was required if thishad any chance of passing
turnout was about 50%.

(06:30):
My my sense is the Democraticturnout was higher than
Republican turnout.
You know, on the Democratic side,
they had a very effective campaign.
They spent an awful lot of money on it.
Former President Obamadid a commercial for it.
On the Republican side,
there was former GovernorSchwarzenegger, who
the citizens Commission
for non nonpartisandistricts was his baby.

(06:53):
He made I thought, some very powerful ads.
But at the end of the day,Republicans had to get out
and vote and, and they did it.
And you know, bill one, I thinkmy favorite new district is
one that extends from theabsolute northeast corner
of California all the way tothe northwest corner, which is
according to MapQuest, is about 430 miles.

(07:16):
Then you drive about over300 miles down from the tip,
you know, from the northwestborder of California, Oregon
down to Marin, which is
where our governor'srelatively new house is.
And you know, the ci theCitizens Commission was,
was founded on the ideaone person would vote and
therefore putting togetherdistricts that were roughly

(07:39):
of equal size and amongcommunities of interest.
And I can't imagine much incommon between the people
that live in the corner ofNortheastern California and,
and Mill Valley, which isin, which is in Marin County.
So the, there,
there are multiple suitsagainst California's Prop 50.

(07:59):
There are emails that suggestthat the districts were drawn
to emphasize Latino votersthat could be interpreted
as being, as violating theVoting Rights Act of 1965.
And there's, and the Trumpadministration, I believe was
provided with some information on voters
who are no longer active,moved out of state

(08:21):
or no longer registered who, who voted.
So yeah, that's where we stand.
But I hope both in my own opinion,
we should have one vote,one person representation
and I hope both of them go down.
But, but again, just thehundreds of millions of dollars
of the spent on this, just alot of, at the end of the day,

(08:43):
this, this may just be a,just a gargantuan waste.
- So for those keeping score at home,
there are six states inAmerica that have now fiddled
with redistricting inthe middle of the decade,
California and Texas.
We mentioned also Utah, Missouri,Ohio, and North Carolina.
The Scorp board reads as follows, this is
before the Texas decision.
Today before,

(09:03):
before the court reversed Texas's plan,
Republicans actually hada nine to six advantage.
That includes the five in Texasplus four, the combination
of Missouri, Ohio, and North Carolina.
California is plus five for Democrats,
plus Democrats get an extraseat in Utah of all places.
Now you take Texas outta the equation
and now Democrats have a netgain of two seats, six to four.

(09:25):
If you took Californiaout of the equation,
you're now looking at anet gain of four to one
for, for Republicans.
So more to be continue.
But you know, Lee, lookingat the, the tactics
behind Prop 50 was very fascinating
'cause I think it's a windowin perhaps the next phase
of politics in California.
This includes a candidateabout to run for governor.

(09:46):
It seems we'll get to in a minute.
Prop 50 ran circles around theopposition for two reasons.
One was just better organization,a much more focused,
organized campaign on the Yes side,
the no side was actually twocampaigns at times competing
with each other at timesbeing inconsistent on message.
If you followed the, theone campaign run by the,

(10:09):
by the physicist, CharlieMunger based here in Palo Alto,
he put $30 million of hisown into the campaign.
He paid for the Schwarzenegger ads
that was about good government.
And you're right, that wasa good message by Arnold
that was on, on brand for him.
If you looked at the othernote campaign though,
they were talking about all the horrors
to come from handing overCalifornia to Democrats,
illegal immigration and soforth, just conflicting messages.

(10:32):
They were horriblyoutspent in terms of money,
but they really were just kindof pounded on social media.
And this is the change towatch for in California.
We had been so wed to whatI would call Vestige media,
and that's a combination of newspapers,
radio and television.
And as long as I've been inthe state, 30 plus years,
television has always been king.

(10:52):
You have to go on the air,you have to go on the air late
before an election and move voters.
Well, that's no longer the case
because first of all, ballotsare handed out a month
before elections in California.
So if you wait until a week
before the election, you're losing a bunch
of people who have already voted.
But secondly, people arechanging their news habits.
They're not so much tuninginto the nightly news.
They're going on theirphones in the computers

(11:13):
during the daytime and they're searching
for news on social media feeds.
And here the Yes side justhad a far better social media
campaign than the No Side did in terms
of just being spot onin terms of Cy pounding,
Donald Trump finding just kind of ways
to bait the conversation every day.
So, you know, I give themcredit where credit is due,
they simply outmaneuvered the opposition

(11:34):
and that's why I thought thething would pass to begin with.
But you know, again, the tragedy here is,
as you mentioned Lee, you know,
it cost at least a couplehundred million dollars,
maybe $300 million justto pay for the election.
You tap in, you know, 150
to $200 million morespent by the two sides.
That's a half a billion dollars, give
or take a few, take a few.
We can just sit here all day long

(11:55):
and talk about better usesfor that money in California.
So, boy, it would just be very sad if
after all of this that weended up back at square one.
- Yeah, you know, bill,Republicans are only about 25%
of the state's electorate,the Democrats 40 something,
and then niche parties
and no party preference are another 25.
And on the Democraticside, you've got 2.7,

(12:15):
roughly 2.7 million unionworkers in the state,
- Right?
- That by itself, that'sa big voting block.
And they're very well organized.
And when campaigns comeup like this, they,
I suspect, get a lot ofinformation and get a lot of nudges
and pushes to go out and voteand, and vote for Prop 50.

(12:35):
So it's an awful lot forRepublicans to push up against,
but they were never gonna have a chance
unless there was enormous turnout.
And I think an awful lotof people just had no idea.
And we see roughly a 65%, 35%
voting on this, on this proposition.

(12:57):
So yeah, we'll wait and seewhat, what the courts say,
but yeah, half a billiondollars, a lot of airtime
and a lot of politicalenergy spent on something
that may be absolutely zero.
So stay tuned on this,
- Right?
But even with the turnoutlead, you're gonna lose
because this wasultimately a referendum on

(13:18):
Donald Trump, plain and simple.
And Donald Trump is notpopular in California.
And so this shows theextent to which, you know,
Trump hatred fuels things, by the way,
in case you guys are curiousif to see now a kinder,
gentler Kevin Newsom as aresult of the Texas ruling.
I just got an email from hiscampaign for Democracy Pack.
I'm on their mail list, I'ma glutton for punishment,
this kind of stuff, but I always like

(13:38):
to see what emails are.
So here's our governor nowasking for people to give money
to something in Missouricalled people, not politicians.
What they're trying todo is they're trying
to kill the redistrictingeffort in Missouri,
but this is Governor Newsom,
this is his presidentialcampaign right now.
He's sending out these emails,he's trying to build lists
and he is building anational network by doing so,

(13:59):
and very clever politics on his part.
And so, you know,
this is a very ascendedGavin Newsom right now,
but it goes back to youroriginal question, Lee, about,
you know, his, about his, hishis his standing right now,
you know, presidentialpolitics sometimes is a case
of the tortoise and the hare, if you will.
And we see somebody two to three years out
and we kind of, you know,obsessed with that person

(14:20):
to think they're the nextgreat thing in politics.
Do you remember a guynamed Scott Walker? Lee,
- Yeah.
Governor of Wisconsin.
- Yeah. So going intothe 2016 campaign, no,
going into the 2012 campaign,I'm sorry, date myself here.
But going into the 2012 campaign,
he was the next great thingin Republican politics.
Why governor of a swing state?
He fought unions over, over,
I think union dues in, in Wisconsin.

(14:41):
There was a big kerfuffleover the legislature not
competing to vote on this stuff.
And conservatives thought that,boy, he was the next thing
for Republicans and he ran
and he was just a hot mess when he ran
and it collapsed, his campaignfell apart, not always good
to peak early in politics right now.
And that's a risk for noamount to maintain this,
this drumbeat of his for thenext, for the next, you know,

(15:03):
year or so because he does,by the way, have to govern,
which we're gonna get toin a few minutes as well.
So can he maintain this kindof frenetic anti-Trump pace?
At what time does, atwhat point does he have
to put beat on the bones, not just being,
not just being the Democrat
who Donald Trump hatesthe most presidentially,
but just what's he gonna runon in terms of policy ideas

(15:23):
or maybe I'm just a dinosaur here
and you know, Kevin, the realization
that in 2028 maybe ideas don't matter,
it's just gonna be a aa campaign decided over
who hates Trump the most.
- Yeah, that's a powerfulforce in California.
You just bring up Donald Trump
and it seems like it gives you, you know,
10, 15, 20 points just right off the bat.
And that's just an awfullot to, to overcome.

(15:47):
You know, Newsom is, Newsomis, as Jonathan mentioned,
he's hot right now interms of what being on top
of the democratic polls that,you know, for an election
that's still two years out.
But, you know, bill, it'sinteresting, there's a,
there's a techie politicalconsulting polling firm called
Decision Desk,
and they aggregate pollresults over various kinds

(16:10):
of po over various politicians.
And they aggregatedapproval ratings for Newsom
over 67 polls roughly the last two months.
Favorability comes in at 35%.
So, you know, so I'd look at that number
and now it is, it is up from 25%,

(16:33):
which was back in the springwhen Newsom was, I think being,
taking a lot of criticismabout the, the LA fires.
So it's up to 35%.
He seems to be on top of theDemocratic polls right now.
That seems to suggest to me just the,
the Democratic party in terms
of finding national candidates is having a

(16:53):
really difficult time.
- Yeah, they are. So in 2027,look for this with Newsom,
you know, he had a big winin California, prop 50.
He is cashed in on that.
He, he went off to Brazil
for a climate conference afterwards.
He did a rally in Texasalong the way to just show
that he has kind of anational scope, if you will.
But you might have noticed inthis year's a gubernatorial

(17:14):
races, he did not campaign in Virginia
for the Democratic candidate.
He did not campaign in New Jersey
for the Democratic candidate.
And I'm not sure he wasinvited in, in either case.
And there were othergovernors who were invited,
especially to New Jersey.
So this is a question
of bringing California into other states,
and it's a, it's legitimate concern,
especially when you start looking at the
industrial upper Midwest.

(17:35):
And the question of howNewsom is a California
and you know, is, you know,
translated in those states as well.
So look for this in 2027,Democrat in 2026, first
of all, beginning of the year,
democratic organizations acrossthe country have usually,
they used to be calledJackson Day dinners.
So I think Andrew Jackson'sbeen canceled now,
so they have some other phrase for it,
maybe they were Obama dinnersor something like that.

(17:56):
But these are fundraisingefforts in the States
and they like to bring out big sexy names.
And so I'm guessing GavinNewsom's gonna be in popular
demand for those dinners.
But the question Lee andJonathan's gonna be come October
and November of next year,
where is Governor Newsomgonna be campaigning
and will he be campaigningin those seven swing states
that Donald Trump pickedup from Kamala Harris

(18:17):
or is gonna be campaigning inrather safe blue spots or not?
That's gonna tell you reallyhow he translates, I think,
as a presidential candidate.
- And you know, it's interesting, Virginia
and New Jersey are bluer thanupper Midwest Rug Belt Rust
Belt states, and,
and they ended up winningdespite not having
Gavin going to bat for them.

(18:38):
So yeah, I think they feellike they can do just fine
with without him and with
and with a governor's race coming up
for us just one yearout, he seems to be kind
of taking up a lot of air inthe room that I think some
of democratic candidatesprobably wish they could have.

(19:01):
- Yeah, and the other thingabout news, I could move on
after this is I'm stilltrying to figure out
what exact lane he fits into in,
in the greater Democratic race.
In other words, think of the primaries
as kind of a swim meet.
And each of these candidates has their own
assigned lane to swim in.
I'm not sure what lane he is in right now.
They're, they're only anti-Trump Lane.
It's like, it's like, you know,kitty swim in that regard.

(19:21):
But is he gonna run assomething of a hybrid
between a mainstream andan a OC kind of candidate?
He's gonna drift further to a OC you know,
other way to mainstream or not.
I'm just trying to figure out Lee,
where his niche is in that field.
- Yeah, yeah. He's gonna have
to find something other thanjust the loudest voice in the
anti-Trump camp
because that one is, that'sa crowded phone booth.

(19:44):
- Yeah. So Governor Newsom,
after his victory lap onProp 50, he went to Brazil
for the COP 30, the UNClimate Change Conference.
And during his visit,
he blamed the wildfiresearlier this year in January
on climate change.
Not sure how the squares withan October 8th press release

(20:06):
from the governor's office,which pointed to the arrest
of the arsonist who started the Blaze Lee.
In your latest column forCalifornia on your mind,
you discussed the LA fire Department's
after action report on theJanuary, 2025 wildfires.
You write what is mostnotable about the report is an
omission of any discussion ofwhether the Palisades fire,
which began January 7th,could have been prevented,

(20:27):
had reasonable measures,had been taken thong,
the containment of the Lacman fire,
which burned about eightacres in the Palisades on
January 1st last week, twoRepublican US Senators Rick Scott
and Ron Johnson held afield hearing in front
of Palisades residents in whichthey stated that they could,
they would lead a probe into the fire,
investigate whether itcould have been prevented.

(20:47):
Lee, your thoughts on thefield hearing whether the fire
could have been prevented
and also the the complicatedcleanup process in Altadena
and the, and the, and the Palisades.
- Yeah, we know this, this is the story
that just won't go away.
And you know, the reasonit won't go away is
because there's a handful ofpeople, Palisades residents
who lost their homes,who, you know, who are mad

(21:10):
as heck about policy and about governance.
And they seem to be on a mission of trying
to uncover what happened.
And the reason we havethis federal ation now
with Scott from Florida andJohnson from Wisconsin, is
because I handful these people.
They're on social media all the time.
They are, they are,
they are followingwhat's going on in court

(21:33):
with the various lawsuitsagainst the city of Los Angeles
and also the state of California.
You know, sky's comingfrom Florida, a state
that has just enormous nu nnumbers of natural disasters.
You know, they're, they're inthe middle of hurricane, they,
they're hurricane central
and they've made a lot ofchanges in recent years in terms
of preparation, in termsof protection, in terms

(21:55):
of delivering efficientoutcomes, being able
to protect their con, being able
to protect their constituents.
And so they,
and what was interestingis no one from California
or the city of Los Angelesattended this hearing.
And a number of Palisades residents
who lost their homes spoke, you know,
in a heartbreaking termsabout, about what happened.

(22:18):
Scott and Johnson concluded,well, you know, this,
this should never happen.
We send enormous numbers,amounts of federal dollars
to California for fireprotection, protection,
you know, how did this happen?
So there's a federal investigation,
but you know, when thisfirst happened in January,
January 7th, the narrative was

(22:38):
big winds, super dry conditions,what could, you know,
there was nothing anyone could do.
And so climate change was the headline
that everybody was discussing.
Now we're here 10 months later
and the narrative has changed enormously.
So federal investigators have concluded
that a small brush fire that was set

(23:01):
by an arsonist on New Year's Eve reignited
to become the Palisades fire.
A few days later there hasa whistleblower has come
forward, and some
of these people on socialmedia have received phone texts
from LA fire department peoplewho were at the burn site

(23:22):
and who allegedly reportaccording to these text messages
and the whistleblower
that the fire may notbe completely put out.
And they also report thattheir battalion chief
or supervisor told them to come back.
And, you know, just this morning some
of this material was releasedbecause it's in a lawsuit.

(23:44):
So I'm just with me for about 30 seconds
where while I read this, so this is for,
this apparently is from textmessages on January 1st,
after the LAFD had put outa roughly an eight acre fire
called the Lacman fire.
Still feels warm inspots. Rock pile is hot.
We should hit this again,no use of thermal imaging.

(24:07):
Those are text messages.
LAFD, the fires extinguished,the mop-up is complete
January 2nd, they go back.
Fire department personnelat the burn site text.
This is a bad idea. Weshouldn't be leaving.
There's heat in the duff.
I don't know what duffmeans, but that's the quote.

(24:29):
We didn't run thermal imaging.
The LA fire department,
they agreed they didnot use thermal imaging.
They called it a judgment call.
At least one fire expert hascalled that a critical mistake.
But it seems that no oneeven needed thermal imaging
because there's a video

(24:50):
that was discussed in theSan Francisco Chronicle
that apparently shows smokecoming from the burn site.
There are reports
to local city council fromher constituents reporting
smoke on the burn site.
Now we get to January 7th,
which is when the Palisades fire started,

(25:11):
text message from firedepartment is the same area.
It re-lit. Told them it wasn't cold.
How did this get past thesupervisors? We left it hot.
Now look, and and the rest is history.
So this is, this is part
and parcel of the lawsuits thatare going forward with the,

(25:31):
against the LA city and against the state.
Now, governor Newsom's office is trying
to distance himself from all of this
because the fire occurred onessentially state park land.
There's language thatindicates the state park is
responsible for making surethese burn areas are cleaned up.

(25:53):
There's no further danger.
The governor's office or the state,
I can't remember whichsaid we didn't even know
about the Lacman fire.
The, the, the parkdepartment didn't even know
about the Lacman fire.
Now in court hearings, the state
parks department provided a one page,
almost fully redacted documentabout an action report

(26:16):
related to this fire,almost fully redacted.
The plaintiffs in the case find evidence
that the state park people were there.
There's a photo of a person
with the state park windbreakeron that was reported by KFI.
And this is really important
because what's also comingfrom either whistleblowers

(26:37):
or text messages is thatthey were not allowed
to bulldoze this area.
Obviously bulldozing is gonna
facilitate putting the fire out.
So this is looking,
this has the pen potential about coverup.
It has the potentialabout gross negligence.
And based on if theseallegations are correct,

(26:59):
yes, the fire could have been prevented
and potentially the very low cost.
- So there is a documentarycoming out in early December,
Lee and Jonathan, it'scalled Paradise Abandoned.
And it claims
that authorities divertedresources during the fire.
It alleges that although thearea was in a quote region
of maximum fire, not a sparefire truck was deployed.

(27:20):
In other words, it could gothrough a list of horribles
and lay a lot of this atthe feet of Governor Newsom.
Newsom will probably respond,
this is Newsom derangement syndrome.
We'll probably tie it into Fox News.
And you know how that goes.
This is what I find frustratingabout this situation.
We have a very richtradition in this country
of forming commissionsto investigate tragedies.
I'm normally not a fan of process,

(27:40):
but when something very bad happens
that the challenger disaster,John Kennedy is killed nine 11
or something like that, youcould be in a panel of experts
and you find out what exactlyhappened, what went wrong.
You get to the, you get to the answers.
And here we are right nowabout to enter into December
and we've, there's still a lot about this,
this fire, we don't know.
And there's still a lotgoing around in terms

(28:02):
of urban mitts, real
or not, MITs, the question
of firetrucks being deployed continues
to be a physical matter.
The matter of fire hydrantsand the Palisades Lee,
and one that never seemsto go away is the question
of whether or not reservoirs were empty.
We just, you know, you'rein Southern California, Lee,
where it's been raining,you know, cats and dogs
and more than a few people have said
sarcastically on social media.

(28:23):
Gee, maybe the res maybe thereservoirs will be full now.
So to me, as a Californian, this is
what I really bothers meabout this whole process.
We still don't know exactly what,
what wrong back in January, we,
it seems we were still playing catch up.
So could the state, could thecity just put together a panel
of experts and get the answers?
- Yeah. You know, whenthese, the LA Times has

(28:45):
probably a half a dozenarticles about this.
I don't know if they've beeninterviewing the whistleblower
or the people, the fire, the firefighters
that sent those texts.
But you know, when this came out,
it took these LA Times storiesfor, for for mayor bass,
- Right?
- To say, well, thissounds just outrageous.
We really need to look into this.

(29:06):
Well, she's, you know,
recommissioning her own firedepartment to look into this.
This needs to be an independent body
and, you know, build thatreservoir that was empty.
My former home in LA used to have a, used
to have a view of that reservoir.
And when it was full, it was beautiful.
It looked like you'relooking out in a lake.
That reservoir had been emptied

(29:29):
for approximately 10 months
because they were waitingon a repair, on a cover.
The, the reservoir's cover.
And I don't know how you,why you need to 10 months
to get a, to get a, areservoir cover repaired.
But yes, that was empty.That's been acknowledged.

(29:49):
The fire hydrants became depressurized.
And you know, bill,ironically, that reservoir
that was built was right
after the Bell Air fires inthe early, early mid 1960s
because they recognizedcity of LA recognized.
Well the Palisades is Palisadeslooks a lot like Bel Air,
lots of trees, lots of chaparral.

(30:09):
We better do something there.
And they built an enormousreservoir right there
to protect that area.
- Jonathan, there's a, there'sa famous photo, Jonathan,
Richard Nixon on the roof of his house in
Southern California.
- Spring water. Yeah,spring water. Yeah, yeah.
Spring water. Yeah.
So yeah, we're playing catchup,
we still don't know what happened.
And there's some suggestions of coverup.

(30:31):
And again, you noted urban myths,
but you know, this,this lawsuit, you know,
discovery will be very interesting
and I think the judge inthis case will be, well I,
I hope they look at scans thatheavily redacted documents
because so far we're seeing,we're seeing of some of that.

(30:52):
But again, enormoustragedy, tens of billions
of dollars in damages, people dying,
people's lives being turned upside down.
And if only, according to these reports,
if only LAFD
who were saying weshouldn't be coming back,
there's still hotspots.
If only they had done whatthey went there to do.

(31:14):
- Well, look, I think a moreresponsible mayor would've
created a commission to look into this.
A more responsible governorwould've created a commission.
A more responsible legislaturewould've looked this
because he would get answers
and also mayberecommendations about how not
to relive this experience.
But I think politicsweighs over everything.
The mayor is up for reelection next year.
It's gonna be a contentious race.
We know our governor wantsto run presidentially.

(31:36):
He doesn't want to be tied to this.
So I think it's just a shame though,
we're just not gonna get allthe answers we deserve here.
- Yeah, and the idea ofnot using thermal imaging,
which has become standardin firefighting, presumably
that would have identified the hotspots.
The LAFD says, well maybe not necessarily.
They claim thewhistleblower is inaccurate.

(31:58):
They claim the site was declared cold
text messages say otherwise.
So again, stay tuned on this,
this is not gonna go away. Yep.
- Gentlemen, moving back up toSacramento, Dana Williamson,
a former chief of staff to Governor Newsom
and former CaliforniaAttorney General and Health
and Human Services SecretaryJavier Bera has been indicted

(32:21):
on 23 counts of bankfraud, wire fraud filing,
f false tax returns,
and claiming phony deductionsfor things like luxury travel
and purchasing Fendi and Chanel handbags.
This doesn't have anything to do with
Governor Newsom other thanthe fact that Ms. Williamson,
a lot of this activity occurred
during her time workingin the governor's office.

(32:42):
Bill, could you explain howMs. Williams might be an
Achilles heel for Governor Newsom?
Should he seek to pursue higher office?
- Well, she becomes anAchilles heel in this
regard in Jonathan.
So she has been charged with 23 counts
of bank and wire fraud.
And that's not including tax fraud as well
for the Ford mentioned write off.
She was claiming thiswill lead her to trial

(33:04):
and it will not be a very pleasant trial
because the prosecutors coulddrag the governor into it
and make 'em testify, if you will.
But what I think a trial wouldproduce would be her talking
about her role in the governor's office.
And she bragged to people thatin the second half of 2024,
she was basically running the show
because the governor is off running
around the country quasicampaigning for the presidency.
So it's a bad look forNewsom, it comes across

(33:26):
as an absentee governor
and it ties in some other potential newsom
weaknesses in this regard.
The idea that as chief ofstaff prior to being a chief
of staff, that she wasinvolved with conspiring
to create false backdatedcontracts related
to the paycheck protection program.
This ties into a problem
with California phonyunemployment claims during COVID,

(33:47):
for example, just itpoints to sloppy government
and I think leads something like
what $55 billion inphony unemployment claims
came during COVID.
And then it also ties into favors done
by the governor's office.
So one thing which he istied into is this a lawsuit
that the state had againsta Santa Monica based company
called Activision Blizzard.

(34:09):
Your kids probably don't knowwhat Activision Blizzard is,
but they certainly knowsome of its products.
They're, they're creators of Call of Duty,
candy Crush, world Warcraft.
And frankly a lot of stuff
that I don't want my grandnephews watching on the screen
anyway, it's a big money maker operation.
The state was going afterthem on, I think hostile
on workplace misconduct
and Williamson allegedlykind of squashed it.

(34:30):
She bragged about gettinga state lawyer fired.
She also apparently wasinvolved Lee in the Panera Bread
controversy, which we've talked about on
this podcast before.
The question of who, youknow, got favorable treatment
for Panera Bread when theywere doing the carve out
for fast food, higher minimum wages.
And apparently she helpedout on that as well.
So she's, you know, sheties to various problems
with Newsom, but it's as simple as this.

(34:52):
Lee and Jonathan, even thoughNewsom was not a cahoots
with her, even though he has a lot
of deniable culpability here,
the one problem though isthis happens on his watch.
And so every day former Newsomchief of staff on trial,
it's just gum on the shoe in that regard.
- Yeah, you know, I mean she was,
she was what chief of staff?
- She was as chief of staff.
So her, she has interesting background.

(35:12):
So she made her rise throughin Sacramento politics.
She was connected to awoman named Nancy McFadden,
who was ultra powerful chiefof staff for Jerry Brown.
So she worked for JerryBrown, she then went off
and did consulting, publicrelations, lobbying.
And then she came back,kind of surprised people
that she came back and worked for Newsom,
but she went in there
and was just a real power chiefs

(35:34):
of staff are very powerful in Sacramento.
Very a story in that regard.
But she is a verydifficult personality to,
to be polite about it.
The word bully is used often.
It kind of segues to ourconversation about Katie Porter a
few weeks ago, if you will.
But she very rough on people
and so some people in Sacramento say,
this is karma comingback in a very big way.

(35:55):
So again, it's just, it's a very bad look
for a governor trying to run
for president when aformer chief of staff,
even if you're not tiedto it, is on trial.
Begs the question of what is
going on through state government.
And Lee, it ties to this larger question,
which I think we shouldget into about just certain
practices and one which I knowyou've been keenly interested
in is the constructionof the capital annex.
Do you, do you wanna explainwhat's going on there, Lee?

(36:16):
- Yeah, so the, the constructionof the capital annex is
not just behind schedule,
but we don't know howmuch it's going to cost.
And some reporters,
particularly Ashley Zavala atthe Sacramento NBC affiliate,
KCRA has been submitting Freedomof Information Act requests

(36:37):
during a Newsom press conference.
She asked Newsom directly, do you approve
of me not getting information?
And he said, well no, of course you
should have that information.
Well governor, can you facilitate that
because I just keep getting stonewalled.
I don't know, she used the word stonewall,
but that's what she meant.
And she, as far as I know,she still hasn't received
that information.

(36:58):
The, the last number from afew years ago was, I believe
around 1.1 or 1.2 billion
for a capital annex
- Triple its estimated cost. Yeah,
- Yeah, yeah.
And again, this, you know, allof this just coming together,
it's just really, I thinkit sheds just a little bit
of sunlight on the unseemlyunderbelly of Sacramento

(37:21):
where there's, where there'sthis interaction between those,
we elect those who are onstaff, including chief of staff
political lobbyists who were,who were very influential,
including unions, environmental groups.
And you know, once again,Newsom has remarked, you know,
hey, that's how the sausage is made,

(37:43):
but you know, the sausage,the sausage is coming out
with an awful lot of problems in it.
And you know, bill, what NewsomI think may also face some
face, some problems with is that when she,
I believe she resigned fromher position as chief of staff
and, you know, on social media,

(38:04):
he sent out I think a veryglowing, very glowing summary
of her time with him,even though he, he knew
that she was under FBI investigation.
So I can't imagine thisnot being used against
him by candidates in 2028if he chooses to run.
And, you know, bill, werealready an Activision.

(38:26):
Maybe this was, maybe this was her,
but, you know,
there were complaints comingfrom the attorneys saying, Hey,
you know what, the governor's office is
interceding here, right?
And the response fromthe governor's office,
I believe in 2022 was absolutely not.
And I don't know if that was just her
or who in the governor'soffice made that statement,

(38:47):
but it is just, it is avery bad look, you know, it
it, it reflects on thecompany, the people you keep,
the responsibilities you give them
and you know, the, the quote of, Hey,
I was running the government.
That's just not a good look for him.
This is, I my opinion, this isgonna hurt him down the road.
- You know, this is a badlook, Lee is getting back

(39:10):
to the capital annexproject, the use of NDAs,
non-disclosure agreements.
2100 people who've been workingon this project have signed
non-disclosure agreements.
And you have to ask yourself,what are you hiding?
You're using taxpayer dollars and you're,
and you're just hiding the details.
And this is, you just imagineall the headaches it's gonna
come out in terms of whatornate marble is being used

(39:31):
and you know, bathroom fixturesand that kind of stuff.
But it's all secrecy.
So even if, you know,Ashley wanted to get the
inside stuff on this, allthese NDAs gonna keep her away.
I think 2100 people signed NDAs Lee,
and I think three lawmakers signed NDAs.
And sure enough, there'slegislature coming around
and now realizing, okay, we have a
perception problem with NDAs.
So they passed the bill AB 1370,send it to Newso signs, it,

(39:53):
it bans lawmakers using NDAs,
but it doesn't apply to thecapital annex, if you will.
So it's, you know, Sacramentojust trying to kind
of show you, we, we see the problem,
but they're not reallysolving that regard.
So yeah, so you, you spendingjust a ridiculous amount
of money on this capital annex
and we're not gonna ever findout what it's being spent on.
- No. And this taxpayer money,

(40:14):
and this just goes back tothat, that shadowy area of,
of legislators policymakers, their staff lobbyists
who make decisions andspend an awful lot of money
and who, as you noted, whoare going to great risks
and extents to hide what they're doing
and to hide how much it costs.
And you know, bill, you'reasking yourself, Hey,

(40:37):
why is a guy laying carpet?
Why is he signing an NDA, you know,
why is a glass installer signing an NDA?
Why, why, why, why is a painting
and plastering company havingto sign an NDA how often, how,
how often do tradespeoplesign an NDA when it comes
to public, when it comesto public infrastructure?
I mean, it's just ridiculous.
It's, it's absolutely ridiculous.

(40:58):
- It means it's for Newsom
and the Trump bashing to, to continue.
He's gonna have to treadlightly when it comes
to bashing Trump on theWhite House Ballroom.
- Yeah, which is private,which is private money
and not, not public money.
And, and meanwhile youlook at the people again,
you look at the people from the fires,
I think only about 4%

(41:18):
of those in Malibu havereceived a building permit,
have received a buildingpermit, yet no certificate
of occupancy.
I think Palisades just recordedtheir first certificate
of occupancy in the last week or so.
So one fa after 10 months,one family is back and,
and yet you look athow Sacramento operates

(41:41):
and it, I think personally,
I think it's in just aninsult to the voters.
And if voters understood this,I think they might, you know,
maybe make some different choiceswhen it came time to vote.
- Bill, let's talk about yourlatest column in California on
your mind in which youtalk about two significant
Bay area developments.
One is the retirement ofNancy Pelosi this year.

(42:06):
The big question isthere, what impact does
that have on Congressand who succeeds her?
The other is a newmeasure approved by voters
of Santa Clara County, thenation's second richest county
where Stanford and the HooverInstitution reside, measure A
boosts the county sales tax to 9.75%.

(42:27):
The challenge for this county is
that spending is up 69% while the local
population has remained stagnant.
Bill, could you talk aboutthese two developments?
Let's begin with Nancy Pelosi.
- Let's quickly do Pelosi,'cause I think actually prop A
and then Lee a question
of a wealth tax comingCalifornia's way in 2026.
I want to get your thoughts on that.
So Nancy Pelosi, shegets the win on Prop 50

(42:51):
and then at age of 85 announcesthat she's calling it a day.
She will not run again after 2026.
And now we're gonna havesomething very rare in San
Francisco, a competitivecongressional primary
because it's a one party town
and in a company like Pelosi'sjust never threatened.
So the Tants include a state senator
who is very heavy Lee onhousing and Ybi issues.

(43:13):
And he is up against avery wealthy tech guy,
sent a million who's claimed to fame.
He's a former A OC campaignmanager slash chief of staff.
So here we have kind of apreview of what's gonna happen
to Democrats WR large in 2028.
Presidentially a question ofhow you position yourself.
And Scott Weiner, heis the estate senator,

(43:33):
he's gonna run very hard on a record
and do gooding for San Francisco.
Chaat Chakrabarti, he is theformer a OC campaign manager.
He is gonna go very hardleft in the good people
of San Francisco will haveto decide accordingly.
Pelosi doesn't have a dogin the hunt right now.
She's not set. Interestingenough, her daughter
who people thought foryears that Pelosi was kind

(43:54):
of setting up to run for this job,
her daughter backed out of it.
Probably sensing that maybe this day
and age people are a little tired
of dynasties and maybe not a good thing.
That's Christine Pelosi, thedocumentary author by the way.
So now you have this kind ofdemocratic litmus test in San
Francisco, if you will.
Wiener, by the way, I wouldnote Lee, he has the backing
of the State Attorney General Rob Bonta.

(44:16):
So he would seem the establishment favors.
So we'll see who prevails then.
But Lee, it's, it's setClara County in Measure A
that I want to get your thoughts on.
And what measure A was, long story short,
it was a tax increase.
It boosted the countywise sales tax to 9.75%.
And what Lee, what fascinated me here is
that Santa Clara Countyis this bastion of wealth.

(44:40):
It is obviously, it used to be, used
to be one giant fruit orchard is
where you'd come for for produce.
Now the local fruit is this,
this fruit symbol you see onthe back of laptops like mine.
So you know what that company is,
it's become a verywealthy corner of America.
You look at the billionairesfloating around here,
but yet the county has adeep financial problem.
And why is that? If you lookat Santa Clara County lease

(45:02):
since 2019,
I did the numbers on thiscounty spending is up 69%.
At the same time thecounty spending is up 69%.
The state has become hookedon federal health money.
And this is the what was at the heart
of the shutdown in Washington, whether
or not to extend Obamacare subsidies.
So along the come, so alongcome the county planner deciding

(45:22):
that we're gonna pass measure A
and we will increase the sales tax
and that money will go to healthcare.
Well, two problems here, Lee.
Number one, it's builtas a temporary solution.
Well, getting back to ourrather cynical discussions about
taxes in California, nothing is temporary.
So that's probably here to stay.
But secondly, Lee, there's now a fight
going on inside the county.
A district attorney now wantsto investigate the backers

(45:45):
of the the measure
because why the measures went
around the county telling people, people
who might vote againstit, special interest, no,
don't worry, it's gonna go to healthcare,
but you'll get your cut tonow you have public safety
officials in the countysaying, wait a second,
we're hearing now the money's all gonna go
to healthcare and not public safety.
So there's a problem here,Lee, there's a problem
with spending in the county,but there's a problem

(46:07):
with taxation and how youuse taxation in California.
- Yeah. You know,everybody wants their cut.
That's, that's what, youknow when there's a big pile
of money, it just, they justcome out of the woodwork.
You know, I checked the,
I checked the government salary records
and I looked at SantaClara County employees
And I estimate that their totalcompensation, including wage

(46:30):
and salary and then benefitsincluding healthcare,
was about $200,000.
The meeting was about$200,000 in the latest data.
So when you say, yeah, theyneeded, they needed to pass a,
they needed to pass a tax cut, well
that's a pretty expensive,
that's a pretty expensivecounty government that those,

(46:51):
the the median, the medianearner in Santa Clara County
government probably iswithin the top 3% in the
United States.
So yeah, you've gotta figureout how to be a better steward
of public finances and tax revenue
because people are trusting you with that.
They're trusting you, you'remaking reasonable decisions

(47:12):
and you're providing, you'reproviding high quality public
goods and services
and they're not gettingtaken advantage of.
And you know, bill, there wasa video that was going around
on some news stations of,
of like a yes on a yes on aparty and people jumping up
and down when it looked like it was going
to, it was going to win.

(47:34):
You know, usually youdon't, you don't root
for tax increases.
But yeah, the, the county has some fiscal,
has some fiscal challenges, 9.75%.
And you know, bill, when you think about
the highest earners in SantaClara County, W2 earners,
and you think abouttheir total tax burden,

(47:54):
you think about federal taxburden, state tax burden,
and then after theypay their federal taxes
and their state taxes, and now they go out
and they buy somethingin Santa Clara County
and they pay a sales tax,
you put those three tax burdenstogether and it's over 50%.
And you, you have to really, you have

(48:15):
to really start askingquestions about, eh,
are we living in a representativedemocracy dysfunctional
that has sufficient freedomwhen over 50 per over
50 cents of the dollar
that I earn is going to someone else.
- It's a, it's just a reallyfascinating topic, Lee,

(48:35):
because here you have the countybasically claiming poverty.
It can't afford its basic services.
We don't have enough revenue.
At the same time though, you just look
around Santa Clara County,Jonathan mentioned,
this is where Stanford is.
Stanford is of course oneof the world's most elite
and wealthiest university worldsare endowment third in the
country, I think behind Harvard and Yale.
So Stanford's not exactly a poverty case.
And if you look at theresidence of Santa Clara County,

(48:57):
I looked it up, the average,the average wholesale,
the average household inSanta Clara County is about
$95,000.
Meaning that most of the peoplein the county would not get
the $2,000 tariff dividend
that Donald Trump is, is proposing.
But in Santa Clara County,you know, California has,
I think 220 billionairesstatewide right now.
And Santa Clara County has its share.
We have the Google Twins, Larry Page

(49:19):
and Sergi Bryn, we haveMark Zuckerberg of Met fame.
He had a good day today.
I guess meta gets to hold ontoInstagram that's good for,
for Mark's business.
And then you have thevideo with Jetson Wong.
And Wong is actually thepopper in this crowd.
His net worth is a poultry $176 billion.
So there's dizzying wealth here.
But Lee, let's use that
to segue into the next fightin California next year,

(49:42):
which is gonna be taxing billionaires.
SEIU. The state employee union wants
to place a 2026 BillionaireTax Act on the November ballot.
They're out qualifying it right now.
This would be a one-time5% le on approximately 200
billionaires living in California.
The real estate holdings would be exempt.
But Lee, what they'd be doingis they're pursuing assets

(50:03):
like stocks, artwork,
and intellectual propertyrights rather than income.
So, and the money raised fromthis would go specifically
to healthcare, but here's the catch, Lee.
It would go to healthcarefor about five years,
just each year go to healthcare.
Then what happens after year five?
Well, we've seen this movie,they'll just extend it.
But Lee, is there any evidence anywhere

(50:24):
that a wealth tax is effective policy?
- You know, several Europeancountries had wealth taxes at
one time or another and they dropped them,
- Had had past tense.
Right. And why was that? And why was
- That?
Yeah, they had them atone time or another and,
and they're, then they're gone.
You know, I can't recall if it's Finland
or Norway still has a wealth tax.

(50:45):
And there's some, there'ssome analyses of those
and indicate that they'reactually, you know, I
- Think Norway, Norway Ithink still has their lead.
But the problem is Norwegians fled the
country like crazy. That's
- Right.
Yeah, yeah, exactly.
Norway has a wealth taxand is pushing people out.
So, you know, the, the,the first, you know, in,
in economics, the first ruleof public finance is that,

(51:09):
you know, I can't say it in French
because I forgot my French,
but this was said by a French
politician a long, long time ago.
But it basically said,don't kill the golden goose.
- Right?- And yep, Sergey Brin, mark Zuckerberg,
those are the golden geese.
You don't want them leaving.
And why wouldn't they leave after this?
Because for those people,it's incredibly easy

(51:30):
to establish residentsin, in another state.
Many very wealthy Californians have,
I believe Larry Allison has done that.
Elon Musk has done that.
You can come back to California
and spend time in California.
You're just no longer a resident.
So you don't pay, youdon't pay state taxes.
So this is economically, in myopinion, it's an awful idea.
I suspect it would beruled unconstitutional

(51:53):
because I believe courts wouldlook at it as a direct tax
going back to an 1893Supreme Court ruling,
direct taxes have to bebased on apportionment,
which is population.
So I think this wouldprobably be dead on arrival.
And again, bill, youcould imagine, you know,
tens perhaps hundreds of millions
of dollars being spent on this.

(52:14):
- So a reporter called meabout this earlier today
and asked my thoughts, andI said, this is good news
for people in two lines of work.
Number one, tax attorneys.
Just imagine Leah, Jonathan,if the state's gonna come
after you on stocks and artwork
and intellectual propertyrights, just think
how creative you're gonna have to get
with your money in terms ofjust stashing it elsewhere,
giving it to your kids, whatever it does

(52:34):
to get off of your plate.
And so avoid getting taxed on that.
I'd also, I by the way, ifyou're taxing assets like stocks
and intellectual property rightsstocks, especially, again,
going back to to Justin Wong,you know, we're in the middle
of the a ai ai bubble right now.
AI stocks have been very volatile lately.
So what you think you mightget out of Mr. Wong in June?
Maybe not what you'regonna get outta December.
So a question there.

(52:55):
So yeah, good news fortax attorneys and Lee
and Jonathan, excellent news,
if you sell high end propertiesin Florida and Texas,
because you know,
if a certain point a abillionaire is just gonna say,
you know, it's not enough that I put up
with taxes here in California.
It's not enough thatit's a challenging place
to do business, but you want know 5%
of my money enough, it's enough.
I'm out here and they're gonnago to Texas, Florida. Yeah.

(53:15):
- And you know, bill, your,your, your comment about,
I think, what did you mentionthat awful lot of pe a lot of,
an awful lot of householdsin Silicon Valley,
Santa Clark County have household incomes
of under a hundred thousand.
- Yeah, yeah. No, $95,000 is the means.
So that takes into accountboth ultra rich and ultra poor.
But it just, it shows you,you know, for example, we,

(53:37):
you know, got to get to off topic here,
but I was having a conversationearlier today about Trump
wanting to get people $2,000in a, in a, in a refund.
And the limit would probablybe a hundred thousand
dollars on personal income.
Well, when California did itsmiddle class tax refund a few
years ago, I've stillgot my credit card here.
They def they definemiddle class in California
as $250,000 for individual.

(53:59):
So we're just, we're on adifferent level of wealth
and income than other states.
Plain and simple, what otherstates would see is very
wealthy, is not so wealthy in California.
- Well, you know, this,this, this opens the door to,
I think perhaps what's gonnabe California's biggest
problem in the future.
And I hope this somethingthat we at Hoover will,
will pursue in some, in some depth

(54:21):
because they're just an awful lot
of people living in California
that probably can't realistically afford
where they're living right now.
And so when you think aboutall those people living under
$95,000 in Silicon Valley,
like good luck good luck on living on
that income in Silicon Valley with,

(54:42):
with rents the way theyare, with costs of,
of services the way they are.
You know, I looked at, Ilooked at the distribution
of household incomes in California.
Now this might be a coupleyears, this could be,
the data may be one or two years old,
but it looked likenearly one out of three,
or about th about 30%

(55:03):
of households were earning under $50,000.
So there's 13,000households in California, so
that's about 4 millionhouseholds earning under
$50,000 a year.
It's just no, what, you can'tlive in California on $50,000
a year unless you're gettingan awful lot of public support
and there's only so much public support

(55:26):
that can be provided.
So this is gonna be an ongoingproblem within California as,
as the, as the years go by.
And, and Bill you mentioned, hey, this,
this wealth tax isgonna be for five years.
Well, what happens whenthat five years is over?
So this is a, this is a huge problem
for California from a fiscal standpoint.
And, and if you push outthe Mark Zuckerberg's

(55:47):
and the Sergei Brins,
you are gonna be in even deeper trouble.
I simply don't see
how the state would finda way to deal with that.
- So back in 1913,
the federal government had adebate over renewing income
taxes that had been dormant,I think since the 1870s.
And they passed the revenue Act of 1913
and they sold it to Americanswho don't care for taxes
by saying this applies toabout 3% of the population.

(56:10):
Well, you fast forward to 2025, 60%
of households in America, Ibelieve now pay income taxes.
I mentioned this because ifyou successfully invoke a
billionaire tax in California,someone's gonna say, well,
let's redefine wealth from billionaires.
Let's move it down to millionaires.
And there are about 1.15millionaire households

(56:31):
in California as well.
Now, Lee, this gets very complicated
because a lot of thosemillionaire households are
driven by real estate.
So maybe if you take real estate outta the
equation, not really millionaires.
My point is just the state
and it is just a ceasing appetite
for revenue is just gonna keep looking
for it in every wealthypocket. It could fund
- The state and counties
and cities are looking atpotentially big deficits.

(56:53):
You know, they're, they're like,who's the fellow that said,
you know, what was it?
Why do you rob trains? 'causethat's where the money is.
Yeah. They're looking where the money
is. That's Willie Sutton.
- That's, that's Willie Sutton money run
- Willie Sutton.
That's the Willie Sutton.Yeah. So our Willie Suttons.
So look where the money is
and 200 billionaires, you know,

(57:13):
maybe not quite big enough of a tax base.
I mean a small number of people.
Let's get, you know, let'smove it on down the state's.
Incredibly progressive.
There's always thistemptation to say, look,
Zuckerberg's got enough.
You know, we could take, we could
take a hundred million from him.
He wouldn't even, he wouldn'teven know it was gone.
There's that temptation always exists.

(57:34):
- Okay, so Lee, getting backto what I said about Newsom,
what lane he runs in, backin 2020, Elizabeth Warren ran
for president and part ofthe Warren campaign was a 2%
wealth tax centerpiece for campaign.
Actually Ami elected mayor of New York,
he ran on a wealth tax, taxmillionaires, I believe.
What do you think Kevin Nuso players Lee?
I, I already know the answer,
but do you want to guess what it is?

(57:54):
- Yeah, well he's, I think
that politically he's gonnahave to come out against it.
- He has, yes. Yeah,- Yeah, yeah.
It would be that that would, I think
that would just kill any chance he had.
I think probably in the backof his bind, he knows that.
Yeah. You know, just atthe, at the state level,
it's gonna be unconstitutional.
It's not gonna be resolvedfor a long, long time.

(58:15):
Even if fatigue in theballot and was passed.
But that, yeah, that would not be in his
political best interest.
And I suspect among that two, you know,
those 220 people you mentioned,there's a few big donors
to Gavin's gamma causes among that group.
- Well, there are. Sohe has set up a campaign
to fight this to his credit.
And Newsom's been, you know, as much
as we criticize him on his podcast,
he has been goodconsistently on wealth taxes.

(58:36):
He has, he has shot the down in the past
and he said he will go to theballot and fight this one.
This is the benefit though, of being
in your last year in office.
You could, you could dothis and leave office
and be curious to seeif there's any residue
from labor running behind.
But he's on the right side of it.
- Yeah, interesting. Yeah,the SCIU has always been a big
supporter of his and nowhe's going against them,
but, you know, he's gota year left and Yeah.

(58:59):
Yeah, I think it wouldbe, yeah, he can't, yeah,
he can't align himselfwith them on this one.
Simply can't
- Thank you gentlemen.
Always fascinating. Looking forward
to picking this up again next month.
- It was a, it was a busy November.
- Good talk guys. There's a lotof stuff we didn't get into.
We didn't talk about Eric Swalwell,
so maybe in the next PO podcastwe'll talk about Congressman

(59:20):
Swalwell who apparentlyis running for governor,
which means they're gonna bereintroduced to Fong Fong.
So
- Yeah.
Is he what's going onwith his residency deal?
- Okay, well let's take an
extra minute here and get into it.
So, so Eric Swalwell is, was front
and center of Prop 50 rallies.
He's apparently gonna run for governor.
He's on Jimmy Kimmel.

(59:41):
By the time this comes out,he will bet on Jimmy Kimmel.
So maybe he announces then it'spresumed he's gonna jump in
the race and he is going to run
as the alternative to Katie Porter.
This gets back to what I saidthough about the intensity
of Trump hatred in California.
He, it used to be a timewhen you'd run as I'm the,
I'm the candidate Republicans sphere
the most on the candidate.
Democrats fear the most,his campaign's gonna be,

(01:00:01):
I'm the Democrat who Trump hates the most
because the Trump, the TrumpJustice Department is going
after him now on residency.
And long story short, hebought a home in Washington,
it's claimed as primary residence.
You do so, so you can getall kinds of nice tax breaks
and mortgage breaks and so forth.
And the question is, is thatreally his primary residence
since he is a California congressman

(01:00:22):
and what he's saying, he'sbeing hounded by Donald Trump,
which is probably a verypotent democratic primary,
not a very likable man.
But again, this will test the depth
of Trump hatred in the Democratic field.
And Lee, I wrote a piece ofthe Washington Post on this
recently kind of askingthe question, you know,
is policy dead in California
because all theseDemocrats wanna be governor
and nobody has a policy solution right
now, or was just running on Trump.

(01:00:43):
- Nobody has a policy solution.
And what is it right now in polls?
I mean, it's such a crowdeddemocratic field, what is it?
Eight or nine? Eight or nine people.
And Porter I think,
I think is Port is stillthe leading Democrat,
but I think she's down to 11%.
That's, I mean, theDemocratic party's gonna have
to figure out a way tothin out that field.
'cause right now it's,it looks very uninspiring

(01:01:04):
and I think about halfof voters are undecided.
They, you know, they're justnot reacting to the names in
that, in that group and oh myGod, you know, God help us.
- Yeah, we'll have to clearup. But after maybe one
or two more Democrats jumpin, that would be Rick Caruso,
the LA developer we've talkedabout in past episodes.
And Tom Steyer who ran ads on Prop 50,

(01:01:26):
those interesting Steyers adspolled about the worst of 'em.
All the ads on Prop 50,not a terribly likable guy.
So yeah, there's some youto get back to our fires
and forest, they need to cleanup the forest a little bit
and get some of the deadwood outta the field.
- Yeah, you know, it'sinteresting, Caruso, I,
Caruso hasn't entered the race,
but you know, he, he did back Prop 50

(01:01:46):
and I can't really imagine him doing
that if he didn't have futurepolitical considerations when
the demo within theDemocratic Party in the state.
I mean, he has been aRepublican in past incarnations
and he has been no party preference.
He is, you know, certainlywhen he ran for LA Mayor,
he was not, he did not receivevirtually zero backing from
the party le from the NationalParty leadership at the

(01:02:07):
state party leadership.
So I see that yes, on 50 as as
a precursor of what'sthe comfort politically,
- If you look at RickRusso's social media feed,
it's fundamentally confusing.
One day he is lamenting aboutthe state of California.
The next day he islamenting on the conditions
of Los Angeles back and forth.
He goes, but you know what?Thanksgiving is coming up
and hopefully everybodywill have a nice big meal

(01:02:28):
and maybe some of themwill get some closure
on what to do politically.
- You've been listeningto matters of Policy
and Politics, a podcast,the Humor Institution.
Don't forget to subscribe to this
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Also, get alerted tonew episodes of the show
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I'm Jonathan Movroydis issitting in for Bill Whalen,

(01:02:51):
who will be back for anotherepisode of Matters of Policy
and Politics Next week.
Thank you for listening.
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