0:00 what on earth is going on in California.
0:02 >> Voters in this blue state will choose among dozens of candidates.
0:05 >> And it is likely
0:06 that one of the two victors going to November's runoff will be a Republican
0:10 endorsed by Donald Trump. >> going to make life,
0:12 as I put it, Californiatable.
0:14 >> What does the battle in California mean for the future of the state
0:18 and for the state of national politics?
0:20 I wanted to talk to you about whether this caricature of California is being
0:24 absolutely dysfunctional,
0:25 whether it is fair.
0:28 >> There are definitely fair criticisms to make of the state.
0:30 You know, voters passed ballot measures decades ago
0:34 that have um tied budgets in knots
0:38 and distorted housing markets.
0:40 Um the state has endless regulations that um make, you know,
0:46 building housing and infrastructure really slow and and tie the bureaucracy in knots.
0:51 But I think the Republican Party also has an incentive to portray the state
0:55 as a kind of um dystopian hellhole
0:59 because California represents a kind of alternative governance for America.
1:05 And if Republicans want to, you know, win elections against people like Kamala Harris,
1:10 um it behooves them to portray the state
1:12 that they come from um
1:14 as one that is run very poorly.
1:16 >> There's also, though, these endemic problems to California.
1:20 And I just want to get a bit of a sense of the scale
1:22 of these.
1:23 Maybe it's not as bad as people say um some of these problems are.
1:27 And then whether you think Democrats who've been in charge are to blame for
1:31 that or is it
1:32 because of these ballot initiatives it's actually California voters who've been uh setting these
1:37 restrictions and various policies
1:39 that lead the the state on a path toward dysfunction.
1:42 >> To talk about the biggest issue in the race, which is affordability,
1:46 housing plays hugely into that.
1:48 California's got some of the highest housing costs in the country,
1:52 in large part because the state has made it
1:54 so hard to build over the past 50 years
1:57 or so.
1:58 Some of the laws that we're talking about that make it hard to build,
2:00 they were passed in the 1970s.
2:02 So, this predates, you know,
2:04 any of the modern politicians that we're going to talk about today.
2:08 Um and they were passed in the name of good governance,
2:12 in the name of protecting the environment, things like that.
2:14 But, the way that they have been implemented over the years,
2:20 and I would say co-opted by groups who would use them to their own
2:25 gain,
2:26 um environmentalists, labor groups, neighbors who don't want housing,
2:30 has been extremely detrimental to the state, and this has become, you know,
2:33 California's existential crisis, where you have people moving away,
2:37 which dilutes democratic power in um Congress.
2:41 And so, that that's really kind of the backdrop for this election.
2:44 >> The caricature of California is
2:46 that it is a state
2:47 that is teetering on the edge of financial ruin,
2:50 and that bloated government
2:51 and the uh steady accretion of rules over time have just led the state
2:56 to a place that's absolutely untenable
2:58 and is contributing to these problems
2:59 that you laid out uh with people leaving the state
3:02 because the tax burden is
3:03 so high to sustain this huge bloated government,
3:06 and so forth.
3:07 I- Is that criticism fair?
3:09 Can you describe the state's fiscal standing?
3:11 >> The The size of the state budget has absolutely exploded under Gavin Newsom.
3:17 It's remarkable, and a recent report from the Legislative Analyst's Office found it.
3:23 It's not really new programs that's pushing up costs.
3:27 It's like inflated costs of existing ones, and the cost of um you know,
3:32 paying state employees more, things like that.
3:35 Um and it's led to structural deficits.
3:37 Every year Gavin Newsom has to find more money, basically,
3:41 to to plug a hole in the budget.
3:43 So, I think you're you're completely right, Charlotte,
3:46 to point to that as a problem.
3:47 >> It's interesting, Erin, cuz hearing you talk,
3:49 I haven't heard anything that really debunks the caricature of California, right?
3:54 I mean, the state budget is enormous
3:57 and uh the state's not on solid fiscal ground.
4:00 There are these persistent problems of housing.
4:02 There are these persistent problems of good governance in the state where there are
4:08 minor goals that are getting in the way of pursuing bigger ones.
4:11 >> I think all of that is true.
4:13 It's also true that California is America's economic powerhouse, right?
4:17 I don't want to disregard that fact,
4:20 the fact that it's home to Silicon Valley and Hollywood.
4:23 It's got this incredible manufacturing and agricultural industries.
4:26 Like all of that is true.
4:27 It's system of higher education.
4:29 But there are there really these really persistent intractable problems
4:33 that the next governor will have to deal with.
4:35 That's part of the reason why we're paying so much attention to this race.
4:39 >> James, you've been looking at candidates across the country,
4:42 whether they're running for the Senate, for Congress, uh for a governor's seat.
4:46 What do you make of Tom Steyer's campaign in California's?
4:49 >> I mean, I I just think Charlotte is a it's he's testing the
4:53 limits of what a self-financed campaign can look like under our crazy campaign finance
5:00 system.
5:00 The AP's reported he's spending 20 times
5:03 as much on advertising
5:05 as his nearest um uh competitor uh Becerra.
5:10 And he's spending hundreds of thousands dollars on social media influencers,
5:14 which is the new way of campaigning, of course.
5:16 And it it may well work in the end.
5:18 We'll see.
5:19 Maybe it's a consequence of being the billionaire in the race,
5:22 but he has taken the most progressive positions.
5:25 And if he actually governed that way,
5:28 um he would be in some ways fulfilling the Republican caricature of what of
5:33 what governance in California looks like,
5:35 or is that too strong, do you think?
5:37 Would you expect him to be more pragmatic
5:39 as as in in office than he sounded on the trail?
5:42 >> He has He has consistently antagonized corporations on the campaign trail.
5:48 His favorite One of his favorite campaign lines is
5:51 that like he's the candidate
5:53 that big oil is trying to take out
5:55 or that the um the three big energy utilities in California don't want to
5:59 win.
6:01 Um he has advocated consistently for a single-payer healthcare.
6:05 There's huge questions about how much that would cost,
6:09 how you would implement something like that.
6:11 Um but he has also, I would say, been wonkier than I expected.
6:17 Um we were talking earlier about ballot measures that distort California's housing market.
6:22 He has a plan to to reform one of them um in a way
6:26 that that makes a lot of sense,
6:27 actually.
6:28 Um so but I I think one of the interesting things is
6:32 when I was in Santa Barbara,
6:34 people brought up the fact
6:35 that he was a billionaire to me before I even asked them about it.
6:40 They're the the support
6:41 that he has is people kind of holding their nose
6:44 and voting for him anyway
6:46 because he offers the progressive choice in the race.
6:50 Um but they're not thrilled about it.
6:53 >> What do you make of Becerra?
6:54 I mean, is he someone who now seems credible as both a candidate,
6:59 but also as a leader of this giant economy?
7:01 >> He has this great resume.
7:03 He was a congressman.
7:04 He was attorney general.
7:05 He was secretary of health and human services under Joe Biden.
7:10 But he carries around this reputation in Washington,
7:12 there's no polite way to say it, of of kind of being a lightweight,
7:16 you know, that he was good at constituent service as a congressman.
7:20 He was good at performative kind of lawsuit filing as an attorney general.
7:24 He was sort of good at the the politics of that,
7:27 but not that effective.
7:29 >> I'm still very uncertain what Becerra's plan is besides becoming governor of California.
7:36 Um he consistently dodges giving specifics on tackling affordability, tackling the housing shortage.
7:45 Um and other candidates will kind of make slight about this behind his back.
7:50 They're all together so much
7:52 that they're um kind of nitpicking each other
7:55 when they're talking to reporters.
7:56 And I think post Swalwell
8:00 and the fact that there was this panic over two Republicans possibly making it
8:05 into the runoff,
8:07 people kind of rushed to a candidate that they felt was safe,
8:11 that would do a good enough job.
8:14 And I think that's a question, you know,
8:16 that the media kind of have to reckon with.
8:17 Did we blow this possibility of Democrats being shut out of the general election
8:23 out of proportion and it spooked people?
8:25 Is it encouraging tactical voting rather than people just voting for who they think
8:30 would do the best job?
8:31 >> To that point, how is it
8:33 that we got this group of people who are kind of fine,
8:36 right?
8:36 I mean, is is the is the general description of for the people running
8:40 to have the highest office in this enormous state?
8:44 >> I think part of this is
8:45 that California for 23 years at this point has had a succession of superstar
8:54 governors and Arnold Schwarzenegger,
8:57 Jerry Brown, and Gavin Newsom.
8:59 They've all been stars on the national stage in their own right for,
9:02 you know, very different reasons, obviously.
9:04 And so, after then, yeah, this group of candidates, there's no star among them,
9:10 right?
9:11 They're all like much lower-level figures.
9:15 Gavin Newsom did not have an heir apparent.
9:17 Um that said, I don't think that means they're necessarily bad candidates,
9:23 not all of them at least.
9:26 Um there are good ideas that have been brought up during this campaign.
9:30 It's very exciting to see all of the Democrats talk about the ways in
9:34 which they're going to try to build housing.
9:36 So, I'm not as pessimistic about the field as as some other folks.
9:40 >> We are going to turn to the Republican party next
9:44 and hear from Steve Hilton,
9:45 who is Donald Trump's pick for the governor of California.
9:49 Donald Trump, of course, being historically unpopular in the state,
9:52 but nevertheless using his weight and throwing it behind Steve Hilton.
9:55 >> Our British listeners will remember Steve Hilton from his time in Westminster.
9:59 He was a top advisor to David Cameron, the former Prime Minister.
10:04 After that role, he moved to California,
10:07 where that chapter included hosting a show on Fox News.
10:10 He became an American citizen.
10:12 Now, he is running to be the state's next governor.
10:15 He is endorsed by Donald Trump, as I've said,
10:18 and it looks like he's going to make the runoff.
10:20 When I spoke with him earlier this week,
10:21 I asked him why he wanted the job.
10:24 >> I love California so much.
10:25 I think it's literally there's nowhere better in the world than California,
10:28 but I think everyone can see
10:30 that it's gone gone off the rails somewhat in recent years.
10:33 When you look at the data on how we're performing as an economy,
10:37 our education system, homelessness, there are so many problems that need to be fixed.
10:42 And over the years that I've been here,
10:44 I just felt more
10:45 and more um that I want to get get into the thick of it,
10:49 as it were.
10:49 >> Right now, we're in the country of Donald Trump,
10:52 who has endorsed you and is deeply unpopular in California.
10:55 So, are there any areas of policy where you diverge from this president?
10:59 >> Well, of course, um there's another way of looking at it,
11:02 which is that he got more votes in California than any other state.
11:05 And then, in fact,
11:06 if everybody who voted for the president in 2024 votes for me for governor
11:11 in 2026,
11:12 then I'll be elected with hundreds of thousands of votes to spare.
11:15 I think you saw the seeds of what's become known
11:17 as the populist movement in um in in the US
11:22 and certainly in the UK
11:23 and another places.
11:25 And it seemed to me that that Trump,
11:28 alone among the candidates in either party, was really speaking to that in 2015.
11:34 And I think that still remains the sort of central point of commonality
11:38 and really the focus of what I want I'm trying to do here
11:40 because it's the same story in California today.
11:43 >> Well, so let's talk about that about your tax proposal, right?
11:45 Which is no income tax, is this correct?
11:47 Up to $100,000 and then flat >> No state income tax, yes.
11:50 >> No state income tax and then flat above that.
11:52 So so that has a clear um uh benefit, I guess,
11:57 for the people who are below 100,000.
11:59 And many of them would be getting big refunds.
12:02 But above 100,000,
12:03 the benefit would seem to be for those who are billionaires in the state,
12:07 not for middle class families.
12:09 So tell me how
12:09 that goes after the problem
12:10 that you described that President Trump identified.
12:13 >> Well, I I think you're making rather a big leap.
12:16 I think you're making rather a big leap from someone who's let's say earning
12:19 110,000 a year to calling them a billionaire.
12:22 >> No, but a flat tax it's a flat tax, right?
12:25 >> Of course, but I just
12:26 but there's a lot of there's many people in California.
12:29 I mean, let just to put it in context for those who may not
12:31 be aware of just how bad it's gotten in 16 years of Democrat one-party
12:37 rule where one party has controlled absolutely every part of the government.
12:41 So in those 16 years,
12:43 we've now got to a point where
12:45 as I mentioned we have the highest poverty rate in the country.
12:47 But let's just be clear what's happening.
12:49 And you've got people in California who are earning the the starts at 72%
12:54 so at 72,000.
12:56 So people earning 75, 80 grand, 90 grand, 95 grand,
13:00 which is under the official poverty level in many counties,
13:03 paying 9.3% state income tax.
13:06 That is a higher rate than the top rate of tax in most states
13:09 in America.
13:10 So I think the case for removing those people from state income tax is
13:14 inarguable.
13:15 But then you just go above that, you got people earning 150,000,
13:17 200,000, 300,000 it we're really struggling financially in California.
13:23 And so we need to reduce their taxes as well.
13:25 And and and the way I think about my tax plan is
13:29 that it's pro-worker but also pro-growth.
13:31 We are driving away entrepreneurs
13:33 and and the people who are going to create the jobs
13:36 and wealth and opportunity.
13:37 We've got as I repeat, the highest unemployment rate of all 50 states.
13:42 Why?
13:43 Because we're driving away businesses and wealth creators because of our high tax rates.
13:49 And so that has to change.
13:51 Obviously it has to change.
13:52 I don't think people have appreciated the extent to
13:54 which California is in an economic crisis.
13:58 It's a crisis.
13:59 >> Erin, are you surprised
14:00 that Steve Hilton is doing
14:01 so well in California
14:03 or do you think you know,
14:05 actually he's pretty compelling?
14:07 >> I'm I'm not surprised.
14:09 I think also the fact
14:10 that there's some malaise in the state feeling like the state is too expensive
14:16 expensive to live in gives him arguments
14:19 and wait.
14:21 Um that said, the Republicans who have come closest to winning statewide in recent
14:27 years and and no Republican has actually won statewide since Schwarzenegger um have been
14:33 moderate centrist Republicans.
14:36 Um and I don't think with Steve Hilton's ties to Donald Trump,
14:40 some of the things
14:41 that he's said about immigration um we can consider him part of
14:46 that group.
14:46 >> Erin, that's part of what jumped out at me about your conversation with
14:50 him is so interesting.
14:52 It's it's just such an illustration of the predicament of a Republican trying to
14:56 run right now.
15:00 Um Erin, I think Democrats have like a two-to-one advantage in California in terms
15:04 of voter registration and
15:06 then there's I think a number of independents that's roughly equal to the number
15:10 of Republicans.
15:12 Um and as you say,
15:13 Republicans in the past have been able to overcome that obstacle.
15:17 And I think one of the ways they've done it is the the we're
15:20 hearing from Steve Hilton,
15:21 which is are you happy with 16 years of Democratic governance here?
15:25 Are you happy with the outcomes you're getting from one-party rule?
15:29 Why don't we try something different?
15:31 And then you'd make an argument for a new pragmatic centrist kind of governance.
15:36 But you know, Charlotte,
15:39 you asked him several times where he would disagree with Donald Trump on any
15:43 particular policy and each time he avoided answering
15:46 that question because he can't.
15:49 Um if he does uh open up serious daylight between him and the president,
15:53 maybe the president will take a different approach in the general election campaign,
15:57 but it's unlikely based on what we've seen in other states.
16:00 Um he'll come after him.
16:03 And so it gives him it doesn't give him the political running room he
16:06 needs to be able to really present himself
16:10 as an independent-minded um candidate in California.
16:14 And that just seems like a very heavy burden for him to be carrying
16:17 into the general election campaign.
