The Manosphere Report

0:00Matt Mahan, welcome to All In.

0:02Thanks, David. I have no idea who you are.

0:04Who are you? I mean, you're a guy who kind of popped up running for

0:08governor of California last minute.

0:10How'd that come about? And who is Matt Mahan?

0:13Well, David, like everybody, I'm frustrated with a state that keeps spending more and seemingly

0:17getting less, which is why I jumped in.

0:19But to back up, I grew up in a little farming town here in California,

0:22a town called Watsonville, where your strawberries come from.

0:24I do work in Watsonville.

0:25Driscoll berries, you know it well.

0:27I got greenhouses. Yeah. Yeah, exactly.

0:29Working class family, mom was a teacher, dad was a letter carrier.

0:32My lucky break in life was getting into a great college prep high school on

0:35a work study scholarship. I took buses about two hours each way, worked my way

0:39through high school and college, and came back as a public school teacher through the

0:44Teach for America program. Always was very community oriented, was interested in politics, wanted to

0:49know how to make our city, our world a better place.

0:53Ended up in the tech sector and spent about a decade building civic tech tools

0:57to help people navigate their democracy.

0:59What did you build? I was involved with an early Facebook application called Causes, and

1:04then went on to start a platform called Brigade that was sort of like LinkedIn

1:08for voters. And the whole premise was to build grassroots bottom -up power by connecting

1:13voters around issues they're passionate about, outcomes they want to see, and help them organize

1:19to hold their elected officials accountable.

1:21After about a decade in the civic tech space, our company was acquired, I decided

1:27to run for city council, and I went out and knocked on 10 ,000 doors,

1:30got yelled at for a lot of things that I wasn't necessarily responsible for, but

1:35I got a real feel for the common sense of the residents of California who

1:40would ask questions like, if I'm paying $20 ,000 a year in property taxes, why

1:44haven't my local roads been paved in the last 15 years?

1:47And I thought that made a lot of sense, so I went to City Hall

1:50to try to find out.

1:51How dysfunctional is California, and how did it get this way?

1:55Pretty bad. I'm really worried, which is why I jumped in.

1:58I think the state is heading toward an inflection point past which there may be

2:03no return. We have increased spending in state government by 75%, put that in perspective,

2:09that's $150 billion more this year than six years ago.

2:14And as far as I can tell, none of the outcomes have gotten better, never

2:18mind 75 % better. Many of them are flat or down over the same time

2:22period. So there is a real lack of accountability in government.

2:27We don't have a money problem in Sacramento.

2:30We have an incentives problem.

2:32We have a structure that allows us to keep shoveling more money into things that

2:37aren't working. Just take high -speed rail.

2:39If a startup took 20 years, spent $14 billion, and didn't deliver a product, people

2:44would have been fired a long time ago.

2:45And we're just not seeing that level of accountability in our state government.

2:50Is this theft? Where does the money go?

2:53$14 billion. Who has that $14 billion today?

2:57It's contractors. It's lawyers. Some of it has gone into actually building the project.

3:01But belatedly, what happens in California, and the reason we can't build, we can't do

3:06big things anymore, is that we've got endless process, years of environmental review, the most

3:13litigious environment imaginable. Anybody can sue under CEQA.

3:17You don't even have to be a resident of California to sue under CEQA.

3:20And so you just get years of litigation, bureaucracy.

3:24When it comes to housing, just to slightly switch topics, the fees that cities can

3:29assess, one -time fees can add 20 % to the cost of a project.

3:33So we've just, we've bureaucratized the state to the point where it's total paralysis.

3:38keep spending more and more and not getting anything for it.

3:40It's like, I'm trying to understand as a citizen and a taxpayer, I pay a

3:4453 % tax rate living in California.

3:46I pay my federal tax and my temporary California tax, which I've been temporarily paying

3:50for 11 years. And I'm paying 53 cents of every dollar I earn to the

3:55state and to the federal government.

3:57I'm like, where'd my money go?

3:59It's such a mind boggling number.

4:01Pick the high -speed rail project alone.

4:03$14 billion. Spent. Spent. We don't have a rail.

4:08We don't have anything. Is it lawyers that made $14 billion?

4:13You mentioned contractors. Is this just like, there's a whole bunch of people that are

4:17all making 20, 30 grand and it all adds up to 14 billion?

4:20Just help me understand where my money went.

4:23So on that project specifically, and I haven't done the line item by line item

4:28analysis to be totally clear, but you have years of consultants doing environmental reviews and

4:34doing all of these studies and reports of the impacts it might have.

4:39So tons of consultants. You have the cost of litigation.

4:42You have an entire cottage industry of people doing design and studies and reports and

4:50managing litigation and buying right of way and managing community engagement processes.

4:55And we just, we take years to do anything.

4:59And so it just gets vacuumed up into this sea of little groups of things.

5:03And so there isn't like one big thief, like the grandmaster thief of California that's

5:09taken all the money. And then it's just like the dysfunction is just like everyone's

5:13getting a little pizza. That's my sense.

5:14I mean, let's be clear.

5:15There is fraud. There has been fraud, very well documented in California and other areas.

5:20During the last five years or so, roughly during the pandemic, unemployment claims in California

5:26that were fraudulent totaled over $30 billion.

5:29That is well documented. There's emerging research right now that shows that there are hundreds,

5:36if not thousands of hospice providers who may or may not exist.

5:41I mean, we're just getting this information now.

5:43This is very real time investigative journalism.

5:45So there's fraud. I think by an order of magnitude, there's even something bigger here,

5:52which is waste and inefficiency, is a system where you just keep incrementally growing headcount,

6:01growing the size of programs, growing the grants that we give out to nonprofits.

6:06And we're funding and managing around process, not outcomes.

6:11And I've tried to approach it very differently in San Jose.

6:14And I think it's why without raising taxes, in fact, our revenue has actually slowed

6:18a bit the last couple of years just because the economy is cyclical.

6:21Real estate is struggling. We're very dependent on local property taxes.

6:25But without raising taxes, we have dramatically changed the outcomes we're getting.

6:30We have led the state in reducing crime and become the safest big city in

6:33the country. We've reduced unsheltered homelessness, many people living outside in tents and vehicles by

6:38about a third in the last few years.

6:41We've unblocked housing production. We're seeing thousands of new homes under construction.

6:46In all of those cases, we had to change existing process that was in the

6:51way, reduce fees, and cut funding for programs that weren't delivering so that we could

6:56fund other solutions that were more efficient.

6:59Well, let me also ask about legislation.

7:01If you look at Washington, D .C., we have our nation's Congress, the House and

7:07the Senate, and there's Republicans and there's Democrats, and they fight.

7:11And they fight so much they don't get anything done, which, by the way, may

7:14be a good thing. Because in California, In California, the legislature passes hundreds and hundreds

7:19of bills a year, and they all come from one party, the Democrat Party.

7:25Gavin Newsom, on average, vetoes 15 to 20 percent of these bills every year, which

7:31says something. But maybe you can just explain a little bit your view on how

7:37are all these laws getting passed in California?

7:40How does the legislature in Sacramento, where you're vying for a seat to have the

7:44right to veto and the right to push back, how are they making decisions and

7:48what's motivating the California state legislature?

7:51Yeah, and just to be clear, as governor, veto even more of these bills because

7:55there's a total lack of accountability.

7:58And I think too many of our legislators think that their measure of success is

8:02how many bills they can write, get to the governor, and ultimately get signed.

8:05What you see as you actually read what these bills do, they generally just add

8:11more cost and more process.

8:14And what the legislature needs to be told by our next governor is that we

8:19are not going to fund failure.

8:21We're going to publicly set goals.

8:23We're going to measure the performance of every dollar we spend.

8:27We're going to audit the heck out of existing programs.

8:30Right now, 75 % of the audit recommendations from the state auditor never get implemented.

8:36So there isn't a feedback loop with the public or an accountability for the outcome.

8:43There is a lot of performative politics, a lot of discussion of how much good

8:47we're trying to do, how we're trying to be responsive to everyone.

8:50We have a tendency, particularly in the Democratic Party, to want to be empathetic and

8:56tell everyone that we're working on everything.

8:57We try to be everything to everyone all at once, rather than very strategically saying

9:02some things matter more than others.

9:04The high cost of housing, the high cost of energy, the quality of our public

9:08schools, the safety in our neighborhoods.

9:10These are the things people care about and think that they should be getting when

9:14they pay taxes. But despite increasing spending in the state by 75%, none of those

9:20outcomes have actually gotten better.

9:21Some have gotten worse. The irony is that sometimes it may be the case, and

9:25I think it's very often the case, that less government solves the problem better than

9:29more government. Trying to do more to create housing may make housing more expensive.

9:34Sounds ironic. Trying to do more to make education accessible makes education more expensive.

9:39The more government gets involved, the more prices seem to skyrocket.

9:43How do you get over that with all the interested groups that are getting themselves

9:47elected in the California state legislature by saying, I'm going to do more.

9:51I'm going to do more.

9:51I'm going to do more because that's how you get elected.

9:53How are you possibly going to come in and say, we should do less?

9:56And that's how we're going to fix some of this stuff.

9:58Yeah. Well, certainly, if you're in a hole, don't keep digging.

10:00And sadly, one of my opponents in this race, Eric Swalwell, just in a debate,

10:05said it a couple times now in debates, when asked what his top three, we

10:09were all asked what are our top three priorities for the state, said revenue, revenue,

10:13revenue. And to me, that is just, that is a mindset that doesn't get what

10:18has broken down in the state.

10:20You're absolutely right. As Democrats, we have to own the outcomes we're getting in this

10:24state. And for too long, our reflexive answer has been, we need more revenue.

10:28If we just have more money, we'll solve this problem.

10:32I just don't believe that.

10:33And I say that as the only current executive in this race.

10:38I'm the mayor of the largest city in Northern California, San Jose.

10:41And because of a quirk of history, we were built as a bedroom community for

10:45the job centers just north of us.

10:48We actually have significantly lower revenue per capita than many other cities.

10:53We're not a job center.

10:55So with Prop 13, our tax revenue goes up more slowly and it is smaller.

10:59Our revenue is about a third less than some of our neighboring cities and we're

11:03delivering huge increases in sheltering people, getting housing built, reducing crime by thinking differently.

11:10But it all starts with being willing to set a goal publicly and allow the

11:17public to hold you accountable for spending dollars in a way that actually achieves outcomes.

11:22And that sounds so simple.

11:23I know most of your audience I've been listening for years are in the private

11:27sector and it almost seems so obvious that why would you even need to say

11:30it? But the truth is, as elected officials, we almost never set public goals where

11:35we can actually be held accountable.

11:37Heaven forbid in your next election, you might get called out for not actually reducing

11:41homelessness or reducing crime or getting housing built.

11:44And instead, to your point, we pass bill after bill showing that we're doing something

11:49and half the time with the law of unintended consequences, we make it slower and

11:53more expensive to do the very thing that we want.

11:55Right. Well, let's talk about maybe some of the competing interests that want to get

11:59capital, that want to pull capital through the government for their base, and that would

12:04be labor unions. They're a very powerful lobbying, coordination, set of groups in California.

12:12They have significant influence over who gets elected in the legislature, who gets elected in

12:18city mayors' races, and who gets elected in the governor's seat.

12:22Tell me your view on the role that labor unions play in California politics today

12:27and some of this dysfunction in government and unaccountability in spending.

12:31Because I know that this might be a very controversial topic to talk about because

12:34you don't want to piss off the labor unions, but I'd love to hear your

12:37candid views on their role.

12:39Yeah. Let me start by saying I am not afraid to take on any organized

12:44interest, and it is not just labor, though.

12:47Let's talk about the role of public sector unions.

12:49It's not just labor that is highly organized.

12:52You have trade associations. You have the doctors and the dentists.

12:56You have the public sector unions.

12:58You have the oil and gas industry.

13:01Tech has actually been late to the party.

13:03Tech is starting to organize.

13:05So the way that I look at the landscape in Sacramento, and I think it's

13:08largely true in Washington as well, is you have well -resourced, highly organized, professional advocacy

13:15lobbying and political operations that essentially defend the status quo.

13:21And you are absolutely right that the single biggest spender in Sacramento when it comes

13:27to advocacy lobbying and elections is organized labor, and particularly public sector unions.

13:32I don't think it's a monolith.

13:33I have a great relationship with our public sector unions.

13:35Our building trades want to see the economy grow.

13:38So many unions are very pragmatic, and all of them are doing what they're supposed

13:43to be doing. It's spineless politicians who cave to their aggressive demands who are the

13:48root cause of the problem here.

13:50So when the teachers union organizes and says, we don't want more accountability, we don't

13:56want to be told to use evidence -based curriculum, we don't want more technology in

14:00the classroom, whatever it is they may advocate for, presumably on behalf of, or at

14:06least what they perceive to be the interests of their members, it's our elected officials

14:10who need to step up and say, well, for the good of the community, we're

14:14going to push you on that.

14:15We're not just going to give you a pass.

14:17We're not just going to veto that legislation or stay quiet when we know that

14:21for what we're spending, we aren't getting what we should be.

14:24We've gotten to the point where Mississippi and Louisiana are doing a better job of

14:29helping low -income kids get on grade level for reading than we are in...

14:33The very well -resourced, very progressive state of California, that is a function of a

14:40system that is more responsive to the highly organized interests than the people we're elected

14:45to serve. That's the fundamental dysfunction.

14:50Some see it as corruption, and I don't think that's too strong of a word.

14:53I don't mean it in the narrow sense of anyone breaking the law or stealing

14:59money. But the system has become, again, back to the core point here, that the

15:04incentives are all wrong. The incentive for an elected official is to cater to highly

15:09organized interests who disproportionately spend money in elections, follow what's happening up in the legislature,

15:16draft the bill language, draft the friendly amendments, get legislators to do their bidding.

15:23And I'm running against the system because it doesn't matter if you're a Democrat, a

15:29Republican, an independent. We need a high -functioning government that delivers lower housing costs, lower

15:37energy costs, better schools, safer neighborhoods, and end of street homelessness.

15:41We have the resources to do it.

15:43What we haven't had is the political will and accountability to do it.

15:47And I don't think that's a partisan point.

15:49And frankly, if the Democratic Party doesn't start to wake up and be more responsive

15:54to the needs of our constituents and deliver with the resources we've got, we're going

15:59to see the pendulum swing all the way the other way.

16:01And you're going to see a MAGA -like movement happen here in California.

16:04If I look at California, I can understand we're not solving certain problems.

16:09But what I'm trying to grok is how did some of these problems become the

16:13worst in the nation? So there are statistics, and you can debate per capita statistics

16:18versus absolute number of people.

16:20But number one in poverty, number one in unemployment, nearly half the nation's homeless live

16:26in California. How did California go from being bad and not solving these problems to

16:32making them worse? Well, I think my grandmother used to always say that the road

16:38to hell is paved with good intentions.

16:40And I do think, generally speaking, people have had good intentions but have been unwilling

16:45to look at data and react when the things that they're championing aren't working.

16:49On homelessness, we've, well, first of all, we've broken the housing market, which we should

16:53talk about as its own issue.

16:55We've also been incredibly lax when it comes to dealing with cycles of addiction and

17:01mental illness. We've sort of deluded ourselves into thinking that leaving someone to choose to

17:08live however they'd like, even if that means suffering and misery on the streets and

17:13ultimately dying of an overdose, is somehow more important than intervening and saving their life.

17:18And that's how we've ended up in this horrific situation that, frankly, has been underreported.

17:22Over the last decade, we've had 50 ,000 people die on our streets in California,

17:27about half from overdose and suicide.

17:29These are people with deep behavioral health issues where we're kind of just watching them

17:35deteriorate and die because we're so precious about protecting civil liberties.

17:40It may also be an excuse for not spending money in new ways.

17:44In San Jose, we had to move away from spending a million dollars a door

17:48to build a brand new apartment to get someone off the streets and pivot to

17:51buying sleeping cabins that can be deployed in small communities on publicly owned land, hooked

17:57up to utilities, all in cost of $85 ,000 a unit.

18:01We've added over 2 ,000 shelter beds in my first three years as mayor and

18:06led the state in reducing unsheltered homelessness.

18:09But we had to overcome an incredible...

18:12out of opposition from advocates, affordable housing developers, and much of it well -intended, maybe

18:18some of it self -interested, but we either are going to be committed to solving

18:22the problem or we're going to cave to highly organized interests or a progressive ideology

18:28that needs to be willing to revise itself when its ideas and practice aren't working.

18:34Yeah, I mean, it just feels, some of the policies are just crazy.

18:37I always commented on the managed alcohol program for homeless in San Francisco.

18:41They give away free alcohol to alcohol -addicted, unhoused people, and I can't imagine that

18:48that disincentivizes people to, right?

18:51It's like, you go to San Francisco, you get needles, you get free alcohol.

18:57I mean, you get these things, so it incentivizes people to go to San Francisco.

19:01The whole thing just seemed absolutely nuts to me.

19:04Let's get into the housing question.

19:05I mean, what is the core of the housing affordability problem in California?

19:09Is it that we don't have enough houses?

19:11Because I see a lot of homes for lease, a lot of houses for sale,

19:14a lot of houses for rent, or is it that we have regulation that makes

19:18it hard to maintain a house and it's expensive?

19:22Or is there something else going on that's making housing unaffordable in California?

19:26Like, what's the core here?

19:28Look, I think it's fundamentally a supply problem.

19:31We've seen most recently in Austin, we saw in Seattle, we've seen dozens of markets

19:35around the country that when we remove barriers to the market investing in housing to

19:41meet growing demand, you slow down cost increases.

19:44It's economics 101. Part of our challenge is that we've also made it impossible to

19:50build affordably. So part of the challenge was zoning, high fees, all of the things

19:56government imposes that block housing from getting built.

19:59But we also have a building code that's incredibly cumbersome.

20:03I mentioned litigation earlier when it came to high -speed rail.

20:07Same thing is true for housing.

20:08We're not building condos in California, partly because construction defect liability allows a trial lawyer

20:15to come in in year nine of a project.

20:18And if they see that the paint is starting to bubble, they'll file a suit

20:22and they care about the fees.

20:24Their incentive is to generate fees.

20:27And we've created a legal framework that allows them to do that.

20:32And if you try to change it, another highly organized interest in Sacramento, the trial

20:37lawyers will push back on that.

20:39I think this is so important.

20:40People don't understand how expensive.

20:42Someone told me it was like a sizable percentage of GDP in the United States

20:47is spent on litigation and trial lawyers, and that they are the largest donor in

20:53certain state elections all over the country to try and create a legal framework that

20:58allows them to pursue litigation and earn significant fees.

21:02I mean, it's a multi -multi -multi -billion dollar industry.

21:04That's right. And California is very much at one end of the spectrum.

21:07I mean, I've talked to municipal leaders in cities that are settling at such a

21:12high amount for a trip and fall that now they can't afford to maintain the

21:16rest of the sidewalks in the city for the next few years.

21:19So they're going to have more trip and fall cases.

21:21We are going to risk of allowing trial lawyers to sue the state into oblivion.

21:26So that is a, it is a major issue.

21:28And on condos, it may seem like a peripheral issue, but traditionally that has been

21:33how young people get some equity in society, become a homeowner for the first time

21:38and build that nest egg to eventually perhaps trade up into a townhome or a

21:42single family home. We've essentially taken that rung of the ladder away by making it

21:48cost prohibitive to build. good luck getting financing or insurance to build a new condo

21:53building in California right now.

21:54Right. Is it fair to say we have a regulation crisis, not a housing crisis

21:58in California? I mean, is there a way to kind of reframe this?

22:01I think that's fair. I think regulation, bureaucracy, a set of codes and laws that

22:08don't work for people and work for the special interests in Sacramento.

22:11I interviewed this guy, Adam Carolla.

22:13You know him? I know of him.

22:15Yeah. Dr. Drew. What was the term?

22:18Oh, very inappropriate. He called it gyno -fascism.

22:21He said that all of the regulatory is a safety thing and it's like a

22:24very feminine safety protective kind of origin in a lot of the regulations that have

22:29been passed that make it impossible.

22:30Everything's about safety and more regulation, more regulation, more regulation.

22:34And as a result, you can't get anything done and the lawyers show up and

22:37everything gets sued. What's the right way to think about the origin?

22:41Because his argument is that there's a mindset of safety and protectionism that's driven this.

22:45Is it just the trial lawyers or like why does someone keep passing, why do

22:49the legislators keep passing laws over and over and layers and layers and layers and

22:54layers that make it impossible to build and make it super expensive to maintain because

22:58otherwise you'll get sued? Yeah, look, I would take the gender content out of it,

23:03but I think the deeper point that we suffer from safetyism, it's actually easier to

23:10add one more rule, one more process.

23:12I see this play out every day with our city council at the local level.

23:15And I think it's even a greater temptation at the state level where you're not

23:19able to point to a concrete service that you're delivering.

23:22So much of the implementation happens at the local level.

23:25Every time there is a negative story about something bad happening in the world, there

23:32is an impulse for a legislator to say, let's create a new rule.

23:36It could always be a little bit safer.

23:39Let's add another check, another balance, another process, another rule, another fee, whatever it is.

23:46And the reason for that, in my view, is that we have not created an

23:51incentive structure in government to reward actual performance and outcomes.

23:58And so we are by default rewarding the performativeness of showing that we're doing such

24:04a lot of activity without a lot of impact.

24:07And I just, I think that we have to help voters be smarter about analyzing

24:14what their elected officials are doing and whether or not it's working.

24:16That's why I want to be held accountable.

24:18I came into office running on dashboards.

24:21I mean, I put up public facing dashboards and said, here's our baseline.

24:25Here's how we compare to others.

24:27Here's the goal we're setting.

24:28We're going to reduce homelessness by 10 % year over year.

24:31We're going to reduce crime.

24:32We're going to remove barriers and get housing built.

24:34We're going to speed up permit reviews.

24:36I want to be held publicly accountable because I would rather, frankly, have a feedback

24:41loop with the people whose doors I knocked on than whichever group doesn't like that

24:46we're trying to change something.

24:47What's your metric for being governor of California as it relates to housing?

24:50What's the dashboard you're going to put up and what's your goal?

24:52So I think that the ultimate outcome has to be that we're building more housing,

24:57but that we're building it more affordably.

24:59We have to pull the cost out of building because as long as the state

25:02of Colorado can build the exact same home at half the cost of what it

25:06is in the Bay Area, we're never going to be able to compete.

25:10So I want to see more housing in absolute terms get built.

25:13We need to start moving in a better direction.

25:15We've gone from about 100 ,000 units a year to about 80 ,000 a year.

25:18You go farther back, it was 150 ,000 a year.

25:21What do you want to get to in your term?

25:23I think we need to get well over 100 ,000.

25:26And I think the right way to think about it though, is it's really a

25:28rate. show with jobs. For every two jobs an economy creates, you need at least

25:32one home. Part of the reason the Bay Area and particularly Silicon Valley is so

25:37unaffordable for working people and we're seeing displacement of working families is that over the

25:42last 20 years, this incredible economy here, the engine of innovation for our country and

25:48really the world has created about eight jobs for every one new home we've built.

25:53That is a completely unsustainable ratio.

25:56So I'm a little hesitant to come out and say we're going to build 10

25:58million homes. I think it's a ratio thing.

26:01It's a rate of change.

26:02We need to be building more year over year.

26:04But importantly, we need to pull back the fees, the long timelines, the overly complicated

26:10building codes. So each of those get a metric.

26:12Yeah, each of those get a metric because ultimately the per square foot cost of

26:16building needs to go down.

26:17What does that need to get to?

26:18Where is it today? What does it need to get to?

26:20Oh, it varies dramatically by product type and market.

26:22So I don't, I mean, it's a good question.

26:24I think we should lay that out.

26:26But I just visited a modular construction factory, factory built housing.

26:31They can bring down the cost per unit by 20%, speed up overall project timelines

26:37by up to 50 % by just industrializing the production of housing.

26:42So we need to pull the cost down.

26:43We should be able to drop the cost on a per square foot basis by

26:47at least a third with actions that are within our control as regulators.

26:52If you become governor, you're going to be fighting against a legislature that's got all

26:57of the various vested interests tied up in keeping this from happening.

27:00How do you take action without partnership with the legislature?

27:04Because what I think might be very hard is, again, to wind things back that

27:08all these incentive systems have been created to deliver.

27:11Yeah. Are there emergency powers or action you can take as governor that can just

27:15say, you know what, I'm going to fix this in a year?

27:18Or do you have to work with the legislature to solve these problems?

27:21A bit of both. I mean, the governor has certain levers that are very powerful

27:24driving the budget process. There's the veto, the bully pulpit, just kind of naming and

27:28shaming is really powerful, executive orders.

27:32The appointments, I mean, the governor appoints 3 ,000 people who run all of these

27:37commissions that have incredible discretion over how to implement regulations.

27:42But there's no doubt that ultimately you need the legislative branch to change.

27:47And I think that a lot of Democratic legislators, many of whom I know personally

27:51in private, will admit that things are broken, that things aren't working.

27:55There just hasn't been that willingness publicly to name what is going on, say that

28:01the system's broken, the incentives are completely backwards.

28:04I think, you know, as governor, I'd be in a position to change the conversation,

28:09help either persuade existing legislators to think differently or elect different legislators.

28:14Do you think it's also because if they're public about it, they'll lose their donors

28:19and they'll lose their donor class that's supporting them?

28:21Well, it's hard to step out on a limb without knowing if you're going to

28:26have support for it. It is difficult to just go direct to voters in an

28:30environment where money talks. It's a very large state.

28:34It's expensive to deliver a message.

28:36Social media has lowered barriers.

28:38That's part of my bet, is that we can go straight to the voters with

28:40this message and get traction around the truth, around what it takes to actually solve

28:46our problems. But it's, you know, I understand why people go with the sure thing.

28:52And it's not fun to be labeled.

28:54They will call you everything when you fight for change.

28:57You're a corporate sellout. You're racist.

29:01You're whatever. I mean, there's always some label that people will ascribe when you try

29:05to fight for change. But I try to stay laser.

29:07focused on the real world outcomes, housing costs, energy costs, quality of schools, public safety,

29:14the things that people care about in neighborhoods like the one I grew up in.

29:18That has to be the North Star.

29:19Yeah. What causes homelessness? It's a big question.

29:22There are a few things.

29:23I mean, one, you can't ignore our broken housing market because in places where housing

29:28is cheap and widely available, you can have high rates of addiction and mental illness,

29:33and most people can remain indoors even with those challenges.

29:38Typically what happens if you actually look at it as a life cycle issue is

29:43someone who's already vulnerable for some reason, could be of their own choosing, could be

29:48circumstances, but job loss, health issues, addiction, mental illness, domestic violence.

29:54There's a range of really awful things that happen to people and that people sometimes

29:58do to themselves. And in these circumstances, if the rent is $3 ,000 a month,

30:05you are just one medical bill, you know, layoff away from really having, you know,

30:13ending up in your car very quickly.

30:14And people, working people in California especially, don't have a lot of savings.

30:18They don't have something they can fall back on.

30:20So the macro cost structure of California, the highest housing costs, second highest energy costs

30:26with the highest gas prices, which disproportionately hurts working people, an educational system that is

30:33preparing far too few of our children for the jobs of the future.

30:36We can go through that list, but that is creating these conditions of sort of

30:42vulnerability or fragility that means that people living on the edge are much more likely

30:45to end up in their car.

30:47But I would add that we have a massive public policy failure.

30:50Not only did we break the housing production market, which is the macro challenge, but

30:54we haven't built shelter and treatment beds.

30:56So for folks for whom an addiction or mental health issue is the thing that

31:01has them on the edge, we have far fewer beds than other states.

31:05And then when people do become homeless, it ought to be brief and it should

31:08not be outdoors. And yet we lead the nation in unsheltered homelessness.

31:14Over 40 % of the people living outside in tents in the entire country live

31:19in California, which is only about 12 % of the country's population.

31:22We haven't built shelter. We haven't built treatment.

31:25We're not doing what we need to do to rapidly rehouse people, connect them to

31:29a case manager, give them tools to turn their lives around and hold them accountable

31:33for turning their lives around.

31:34If there's mental illness, should they be committed to some facility to help them recover

31:39from their mental illness? Yes.

31:41In short, I think you have to be able to involuntarily hold people for addiction

31:47treatment, mental health care. If someone is repeatedly refusing help, if they are harming the

31:55broader community, which is often the case, whether that's vandalism, retail theft, it's been a

32:00battle here in our downtown where windows are constantly being broken by people who clearly

32:05are suffering from serious addiction and mental health issues.

32:09I think we should give people opportunities to accept help.

32:13It needs to be dignified.

32:15They need to be alternatives to the streets.

32:16We've stood up over 2 ,000 indoor placements, interim housing placements, almost all individual rooms

32:23with doors that lock, giving people privacy.

32:25These are low barrier alternatives to the streets.

32:27Bring your partner, your pets, your possessions.

32:30We're really trying to meet people where they are.

32:32The good news, two thirds of people say yes.

32:35The bad news, the other third is so deep in the throes of addiction to

32:40substances like meth and fentanyl that they can't make a rational decision about.

32:45Thank you all. their own self -care.

32:46I believe that that is, that it is not compassionate or progressive to leave them

32:51to endlessly cycle between streets, emergency rooms, jails, and ultimately die of an overdose.

32:57I think we have a moral duty to intervene, help them detox and get connected

33:02to a counselor and give them a chance to turn their lives around.

33:05Drugs are coming from somewhere, fueling this crisis.

33:09Can the governor address the drug crisis?

33:12Can the governor get drugs off the street, arrest drug dealers?

33:15Is that a federal issue?

33:16How do we resolve the fueling of fentanyl, methamphetamines, prescription painkillers, et cetera, that have

33:22made their way onto the street?

33:23It has to be all levels of government, all hands on deck.

33:26So much law enforcement is done at the local level.

33:28We have a police department with about a thousand officers out on the street enforcing

33:33local laws. They're on the front lines of this crisis, as are our firefighters, social

33:37workers, certainly having federal tools and state.

33:43We have the National Guard.

33:45We have CHP. We have a variety of tools here.

33:48What I do know, though, is that we can reduce demand by intervening in public

33:55drug use and getting people into treatment and holding them accountable for turning their lives

34:00around. If we get people into recovery, that's one more customer not available out on

34:05the streets to buy these dangerous products.

34:07And how many times do they cycle through before they have to be held more

34:10permanently? Well, I think it has to scale up over time.

34:13With Prop 36, I was the first Democratic mayor in the state to come out

34:17in support of Prop 36.

34:18The rule of thumb there is on your third public drug offense, you can be

34:23given a choice between treatment and incarceration, and that's bringing a consequence to a decision

34:28that doesn't just affect you.

34:30We can talk about civil liberties, but when you are actively choosing not to engage

34:34in treatment, you are more often than not creating imposing real costs, real harm on

34:40the broader community. We've seen businesses shutter in our downtowns, parks where families can't play.

34:45So we - It's direct and indirect.

34:47That's right. And I think a lot of people don't account for that, which is

34:49critical. I want to shift topics to energy costs.

34:53There's an Iran war going on, so there's an acute spike in energy gas prices

34:57in the state. But over the last number of years, California Governor Newsom and the

35:01state legislature have pursued an effort to drive green energy policy in the state.

35:06California has a 70 cents per gallon, roughly, tax rate.

35:11The California price for gasoline this week is $5 .50 compared to $3 .50 in

35:17the rest of the country.

35:18Did we get it wrong?

35:19Should we have taken a different path in the state versus fighting for green, chasing

35:23Chevron out of the state?

35:24Chevron's now relocated to Houston.

35:26They're shutting down the largest refinery on the West Coast because of the policies and

35:30the bureaucracy. And, you know, how do we balance this climate change, green interest with

35:36the real hard cost for everyone on the price of living in the state?

35:39Yeah, I do think we've gotten our regulatory solution here approach wrong.

35:45I would reject the notion that it's either or.

35:47I don't think it has to be.

35:48I think innovation is the middle path, the way to do both.

35:51Look, Texas is providing dramatically cheaper power that is cleaner than California.

35:58You see places like China leaning heavily into solar, wind, storage, EVs.

36:04The path is investment in innovation and infrastructure, a smarter grid.

36:09What we've done in California is another classic case of well -intended regulations leading to

36:17massive unintended consequences. Let's just take the example of our refineries.

36:21The state has lost most of its refineries.

36:24over the last decade because we have intentionally regulated them out of existence.

36:31And so what's actually happened is we still import oil and gas.

36:37We've just pushed refineries. We had the cleanest, best regulated refineries with some of the

36:42highest paying jobs in the sector.

36:44We pushed that out of state.

36:46Now we're importing the same amount of gas from thousands of miles away.

36:50It is dirtier. It has a bigger carbon footprint.

36:52We lost those good, high -paying jobs.

36:56We lost the tax base of those companies paying local taxes.

36:59It has been a hit on every level.

37:01And actually, because climate and climate change is a global phenomenon, we've actually made the

37:07problem worse while hurting ourselves economically.

37:10So that's the opposite of what we need.

37:11We need win -wins. We should be paying EV owners today in the middle of

37:15the day, strongly incentivizing them to charge their vehicles the middle of the day when

37:20power is so cheap and abundant in California that we sometimes pay Arizona to take

37:25our excess solar and then have them plug in at night to power the grid

37:29and get through that roughly 5 p .m.

37:31to 9 p .m. evening peak where we've got to start firing up gas power

37:36plants because there just isn't enough power on the grid.

37:39So we need to be smarter.

37:40We need to invest in innovation and infrastructure, not regulate energy sources out of state

37:46that we still rely upon.

37:47But it's hard. So now we've got the $0 .70 a gallon tax in California.

37:51The legislature has passed a series of bills to make that tax go up and

37:55up and up. Now they're talking about increasing it even further.

37:58It's the most regressive tax imaginable because it's even worse than a sales tax, which

38:02is already fairly regressive. But as you know, higher income, wealthier people have already adopted

38:09EVs. They're not paying this tax.

38:11It's working folks, particularly in towns like Watsonville, where I grew up.

38:15When I was in high school, I had to go 50 miles one way for

38:18high school. My parents went 50 miles the other way for their jobs.

38:21And so it disproportionately hurts working people.

38:24My proposal is that we, to start, temporarily suspend our gas tax to provide immediate

38:30relief to working families who are paying the price for a war that they didn't

38:34ask for. And they're disproportionately paying the price.

38:37I would temporarily suspend it.

38:39But we have to be intellectually honest about this.

38:41It is our primary source of revenue for paving and maintaining roads and our transportation

38:48infrastructure. We will need to shift how we do this rather than being a gas

38:54tax. First of all, the general fund is up 75 % in the last six

38:59years. So I'm pretty confident in a state that's spending $350 billion, we can afford

39:05to pave our roads without punishing working families.

39:08But I also think over time, as EV adoption increases, we'll have to find a

39:12smarter way of charging a basic user fee so that people who use the roads

39:16pay to maintain them. One of the other big costs in California related to housing

39:20and related to this climate change question is the cost of insurance for your home.

39:25We have this massive wildfire that spread, destroyed a large part of areas in Los

39:31Angeles last year. And as a result, many of the home insurance companies have left

39:36the state. I just lost coverage on my home because I live near a bunch

39:40of trees. So my house is deemed too risky to have coverage.

39:44And I'm fortunate in that I don't have a mortgage that I've got to deal

39:47with the loss of insurance coverage.

39:49But this is becoming an increasing burden for the state of California because the states

39:53had to step in and create a bigger and bigger insurance pool that financially and

39:58accounting wise, the state can't really afford.

40:00Yeah. How do we solve this problem?

40:02How do we solve this problem?

40:02Of the cost of homeowners insurance, what's the right structural solution here for either incentivizing

40:07the return of insurance companies, creating an insurance pool that's well capitalized and can actually

40:12afford to make the payouts, instead of needing to go to the federal government when

40:15there's a crisis and ask for a bailout?

40:17How do we fix this problem in California?

40:19I think there are a few components to the strategy going forward here.

40:23Number one, we have to rebuild the private marketplace.

40:2690 % of homeowners, maybe more, can be covered by private insurance affordably.

40:33And we have to rebuild that part of the market by bringing them back, allowing

40:37them to appropriately price risk and creating more granularity.

40:41If you're willing, and you may not be, but if you're willing to remove those

40:43trees within 100 feet of your home, you should pay a lower premium.

40:47If you prefer to have the trees there, you should pay the higher premium.

40:50So more granular pricing, allowing appropriate pricing of risk, it's just really important.

40:56Now, for the 5 % to 10 % of homes that are up in the

41:02hills, heavily wooded areas where there's lots of vegetation, we'll have to have higher, first

41:09of all, when you build, there's a question of how much more we should be

41:12able to build out there.

41:13Probably not a lot. What materials you use, they need to be fire resistant.

41:17And you'll have to pay much higher insurance just to cover the true cost of

41:22the likelihood of a fire and the cost of replacement.

41:24The other piece of this, though, is the state has to take more ownership for

41:30vegetation management. We spend $8 in fire response and recovery for every $1 we spend

41:38on prevention. And there are plenty of urbanized areas that are at risk because they're

41:42proximate to dense vegetation that the state has not taken ownership for clearing.

41:47And yes, it should be in partnership with the federal government.

41:49If they're federal lands, we should hold the federal government accountable for doing it.

41:52But I just toured Altadena and Palisades, met with the homeowners there who are incredibly

41:57frustrated about the lack of rebuilding.

42:01No one is quarterbacking this.

42:03And if you go walk the Palisades today, you will see, once again, vegetation that's

42:07five feet tall that hasn't been managed in an area where people are trying to

42:10rebuild their home. So the state has to step up.

42:14As governor, I would create a task force that just focuses on fixing the insurance

42:21market. And if the state will invest in vegetation management to reduce the risk of

42:25catastrophic loss, you're going to see premiums go down over the long term.

42:28I mean, I think it's insane that the state sets rates and then tells the

42:32insurance companies how much to charge and assumes they're going to stick around and keep

42:35charging it. If they can't make money doing it, why not let the market decide?

42:38There's hundreds of insurance companies that if they were able to set their own rates

42:41and not have to have the state dictate the rate, they would compete for price

42:45and price would come down.

42:47This idea that the state should be determining what companies should charge for anything is

42:51a problem. But fundamentally, in the insurance markets, it's literally chased every insurer out of

42:55the state. I just don't understand how this is not so obvious.

42:58Yeah, these kinds of price controls don't work in practice as we've seen.

43:02And that's what I mean by saying we have to be able to appropriately price

43:06risk. Insurance companies need to be able to charge rates that reflect the true risk

43:10and cost. I think they should be strongly incentivized, if not held accountable for allowing

43:16homeowners to adopt best practices and thereby reduce their premiums.

43:21And I think there's a subset of folks who may need to be on and

43:25pay into a public option of some kind because they just won't be covered by

43:29the market. Or perhaps they have to choose that based on where they live, they

43:33won't have insurance. I don't know, but I don't think you can force everybody else

43:38to pay exorbitant rates to ensure that we cover the last rate.

43:41miskiest home that's going to be the most expensive to cover.

43:44It's just, it's an illogical setup.

43:46Well, look, let's shift to one of the other big liability questions in the state.

43:51It's the one I care.

43:52I wouldn't say the most, but it's one that I've observed may end up being

43:55a big driver for what's ahead for us.

43:57California's public employee retirement system, so CalPERS and CalSTRS, they provide the retirement benefits to

44:04roughly 3 million California public workers.

44:06And there's roughly a trillion dollars of capital in those two investment funds that are

44:12meant to support those retirees.

44:14They've been making about 7 % a year compared to the S &P making 11

44:17% here. And the current accounting estimates that they're going to be short by some

44:22estimates, 250 to 300 billion by other estimates as high as a trillion dollars in

44:26the years ahead in paying out the benefits that they're legally obligated to pay to

44:31public employees as they retire.

44:33And you can't just change those benefits.

44:35There's a state Supreme Court case that's made that known that you can't go in

44:39and rescind benefits that you've promised someone.

44:42So you are stuck with that liability.

44:44And because they're public entities, California state taxpayer is ultimately going to be stuck with

44:50a trillion dollar liability if that's what it comes to.

44:52How do we fix this frigging problem?

44:54Yeah, I'm worried about it as well.

44:56And I'm intimately familiar with it because we've had to tackle pension reform in San

45:00Jose. We were sort of the canary in the coal mine quite a few years

45:04ago as our unfunded pension liabilities began eating up our general fund.

45:10Even today, after pension reform, 19 % of our general fund in San Jose this

45:17year goes to paying an unfunded pension liability that just comes off the top.

45:22That is one out of every $5 goes first to our obligation to retirees.

45:27And again, I don't blame the retirees or those who advocated.

45:30It's politicians who didn't do the math, didn't recognize when the math wasn't working out,

45:35and swept it under the rug because they knew they'd be long gone by the

45:38time the bill came due.

45:41And so, look, there's really only two options here.

45:45One is to move toward a defined contribution model as we have in the private

45:52sector. You see all over the world.

45:54The employer and the employee pay in.

45:57It's put in the market.

45:58It needs to grow over time.

46:00People need to calculate their savings and their - You see your account.

46:03You track it. You track it.

46:05You can up your contribution level.

46:07If we were to move to that, the private sector, I'm sorry, the public sector

46:11would need to be a strong match.

46:14And I think the challenge is this.

46:16I don't think politically that's likely to happen.

46:18What we've done in San Jose, which could be a roadmap for the state, is

46:23we negotiated. Well, we had to go to the ballot.

46:26There were lawsuits. It was a very messy process.

46:29I think it needs to be better handled.

46:30But effectively, we created a different pension system for new employees that said, as you

46:36come in, this is what a right -sized pension system needs to look like.

46:40We're going to have the employee and the employer pay in more upfront.

46:43We will be more realistic about the returns we're expecting.

46:48We'll adjust over time faster if the returns are underperforming.

46:52We've brought in better fund managers who are heavily incentivized to make smart investments and

46:58grow the investment. And then most importantly, if the returns fall short, the delta, the

47:09gap, is covered 50 -50 by the city, meaning the taxpayers, and the employee in

47:14terms of lost benefits. So there's shared pain on the backside if we - our

47:20targets. And what do we do for what we have now?

47:22Well, what that has allowed us to do because of the legal limitations that you've

47:25mentioned is, and I'm not saying it's perfect, but this is just legally and politically

47:30what we were able to get to is the best outcome we were able to

47:33get is that we're on a long glide path of paying off all of the

47:38unfunded liabilities for the tier one employees, all of those older employees.

47:43It's a 20 year process.

47:45By the early 2040s, San Jose will have cleared the debt.

47:49Our general fund's going to be flush.

47:51We're going to be increasing staffing and service levels.

47:53And you'll start to feel that here much sooner.

47:56We are actually roughly at peak cost for unfunded liabilities today because we took the

48:01medicine and now we'll start that slow glide path where each year there'll be a

48:05little more room in our general fund because we've actually bit the bullet and took

48:08this on. Well, I think that's like, how do you fund that glide path?

48:13It may be the case that our budget has some margin for error, let's say,

48:17because of how much we're spending.

48:19Let's just do the statistics.

48:20California Governor Newsom has proposed a $349 billion budget this year in the state.

48:26That's up from $209 billion.

48:28So almost 2x, 60%, 70%, 80 % more, 75 % more than the year before

48:35COVID. And that's up from $110 billion 10 years prior.

48:38So we went from $110 to $350, $3 .5x is how much we're spending since,

48:44you know, it feels like yesterday, like just a couple of years ago.

48:48Despite having the nation's highest tax rates, the largest revenue base, we're still looking this

48:53year at a $35 billion deficit California state budget.

48:57What happened? Like, how did this get so bad?

49:00And how much of this do you think is this term of fraud, waste, you

49:06know, abuse? Like, where's this money going?

49:09Well, part of what we've done is something we talked about earlier, which is we

49:14have increased our pay for public sector employees and our pension obligations and post -retirement

49:23health benefits at a faster rate than we could actually afford.

49:27And we haven't been honest with ourselves about that.

49:30Part of where the money's gone, though, is really just a sprawling bureaucracy that when

49:36we, in good years, have more money, we create new programs, we add headcount.

49:41The state's population has stayed flat over the last six years.

49:45Spending is up 75%, as you point out.

49:49And headcount in state employees is up, I believe, over 20%.

49:52So we're adding more state workers, we're pouring more money into public programs that aren't

49:59starting from the premise of what is the outcome we need and how do we

50:02most efficiently get there? I mean, it's time for California to go through an exercise

50:07of zero -based budgeting and say, what are the outcomes we need?

50:10And are we actually spending dollars to achieve those outcomes?

50:13Or are we just funding a sprawling, bloated bureaucracy where it's just easier to add

50:182%, 3 % headcount every year, give everybody a 4 % raise, and call it

50:23a day? And I think that's generally been the approach, is whenever revenue's up, we

50:27just kind of give everybody a raise, hire more people, initiate a few new programs.

50:31We never go back to basics and say, well, if these are the resources we

50:35have and these are the outcomes we need, are we really optimizing our spend for

50:38those outcomes? And the answer is no, we're not.

50:40Can you do that, RIF, restructuring, zero -based budgeting as governor, or do you need

50:46to do this in partnership with the legislature that all has their special programs that

50:50they fired up, where money's flowing to their local county, money's flowing to their friends,

50:54money's flowing to their donors?

50:55How do you actually execute this?

50:58As governor, I think, yeah, as I said before, I think electing a pragmatic, independent

51:04minded governor who's willing to who understands this problem and is willing to tackle it

51:10is step one and is necessary but insufficient.

51:13Ultimately, we have to build a more moderate coalition of legislators who understand how broken

51:20the system is, who are willing to do to do hard things.

51:23I don't think that this just happens overnight, but the governor has a lot of

51:27tools that he or she can choose to use.

51:30You know, you do drive the budget process.

51:32Ultimately, you need legislative support for it.

51:35You have the bully pulpit.

51:36You have the ability to manage state agencies in a very different way.

51:40The governor appoints 3 ,000 people to run state bureaucracies that can either come in

51:44with the mindset of business as usual.

51:46I'm going to sit behind a desk.

51:48We're process oriented or can be held accountable.

51:51And maybe it should be 3 ,000 employees.

51:53Maybe we should slim how many people it is, but can be told, here are

51:57the outcomes we need. Tell us, you know, go ground truth these, go down to

52:01the local level, spend time with the school boards, the cities and the counties where

52:05all the money actually meets the constituent, where the rubber hits the road.

52:08And come back with answers on how to reform these systems to get more for

52:14what we're spending. And if you can't hit more aggressive goals, we'll bring in someone

52:18else who can. We need a different mindset for how we operate our government agencies.

52:22What you're saying is starkly different from what others are saying.

52:25And one of the biggest points that others are making right now is that they

52:28want to increase programs and increase spending, particularly in health care.

52:32So what's your view on government provided health care?

52:36Should all health care in California be free?

52:39There's a big movement, a big legislative effort to try and make this the case.

52:42Does this make economic sense?

52:44Can we afford it? How do we actually do it?

52:45Or do you think that this should remain a private market effort?

52:48I don't think it's realistic for California to create a single state run free health

52:57care for all system. I just I don't understand.

53:00And I know my many of my opponents in my party, Democratic Party, are proposing

53:07this. I think we have a pretty good sense of how to reduce cost.

53:12We just have to be willing to do it.

53:14Price transparency and competition could bring down costs in health care by five to ten

53:19percent. Preventative care. We should be incentivizing insurers and health providers for helping someone get

53:30healthier and reducing their overall demand on the system over the course of their lifetimes.

53:36Things that may seem small, but getting 100 ,000 plus people off of our streets

53:41and into shelter dramatically reduces the burden on our health care system.

53:47And I just I think that prevention.

53:51Take another one. Nurse practitioners can do so much more than we often allow them

53:55to do, which, again, is a function of this behind the scenes negotiation in Sacramento

54:00over what are doctors allowed to do?

54:01What can nurses do? Nurse practitioners providing preventative upstream care in clinics in communities can

54:08be far more effective at preventing long term chronic illness than what we do today,

54:12which is end up with everybody in the emergency room needing care after they're already

54:16really sick. So we need to restructure our health care system.

54:19California should be demanding and investing in innovation and better ways of doing things and

54:25bend the cost curve, not fall back on this lazy answer that we're just going

54:30to find a way to raise taxes more to fund free services that will ultimately

54:35break. just break the bank.

54:38You've been criticized by many for being against the billionaire tax.

54:41I think you're the only candidate running for governor right now that has spoken out

54:45against it. I've heard your comments on it.

54:48Obviously, I think I was probably the first to identify it and bring it up

54:50on my show when it first came out the day it was filed.

54:54For me, it's fundamental to private property rights.

54:56If you can take people's assets after they've paid taxes on it, there's no stopping

55:01that train. I mean, why not take everyone's assets at some point?

55:05You pay your income tax, that's your private property, you get to keep it.

55:09Shouldn't be that the legislator can later say, I'll take 10 % of what you

55:12own. That just seems wrong to me.

55:14Do you think we need to have a continued increase?

55:17Do you think we need to maintain the temporary high income taxes in California?

55:21What's your general view on revenue?

55:23We've talked a lot about, you think, hey, we don't need to rely on growing

55:26revenue. But based on the current tax system in California, what else do you think

55:30needs to change? Or do you think it's just like, let's leave it as is,

55:33no billionaire tax, no new taxes, but let's just not go back?

55:36Yeah, let me say a couple of things.

55:37One, I think where this push is coming from is a deep concern about economic

55:44inequality and declining social mobility.

55:47And I think these are real issues.

55:50I am worried about economic inequality.

55:53I think in the long run, it's a threat to democracy.

55:56I think there are a number of better solutions to this than the proposed wealth

56:02tax, which is, as you point out, setting aside even the philosophic arguments, it simply

56:07won't work. Certainly not at the state level.

56:09Half the people I know have already left the state.

56:11Right. We've seen over a trillion dollars of capital flight.

56:14Our ongoing revenue going forward is now going to be lower.

56:18The dirty secret of this proposal is that it won't be the billionaires who pay

56:22higher taxes. It'll be middle class and working families who are left holding the bag.

56:27So that's why I just immediately felt that I had to say something because it's

56:33working people who are going to be hurt by this.

56:35It's not going to be billionaires.

56:36They're the most mobile people in society.

56:39So look, I think, first of all, there are things we can do to make

56:42the tax code fair. I think there's a legitimate debate about what should the absolute

56:46rate of capital gains tax be.

56:48There's the phenomenon of very wealthy individuals borrowing against appreciated assets where you're effectively avoiding

56:57paying capital gains. I think that's a loophole we can close.

57:00There's the step up in basis upon death.

57:03I'm not sure that it's very fair for somebody.

57:07Well, let me just use an example.

57:08I'll just say this. I don't think Elon Musk should be able to pass on

57:11$500 billion of appreciated but untaxed stock wealth to his children.

57:17And the moment that they inherit it, it's rebased at current market value and no

57:21one ever pays the capital gains on it.

57:22I mean, there are a lot of things we can do to capture billions in

57:26revenue to close loopholes in the tax code.

57:28This is, of all the proposals, the worst, the least likely to work, the most

57:32likely to hurt working people.

57:34But I also think we have to acknowledge in a state that keeps asking for

57:39more before we do better, we've got to acknowledge that social mobility is down because

57:44of public policy failures first and foremost.

57:47Public schools that aren't performing, housing that isn't affordable, energy that isn't affordable, when half

57:53of people, sorry, when most Californians are spending over a third of their income on

57:58housing, many spending over half of their income on housing, that hits social mobility a

58:05lot more than the fact that the tech sector has had a bunch of growth.

58:10It's just, these are fundamental public policy failures and the sooner we...

58:15own them and think differently about our regulatory environment and our policies so we start

58:20fixing them. The better for California, the better for the Democratic Party, most importantly, the

58:26better for the people we serve.

58:28But what you're saying makes a lot of sense, but I think people hate other

58:32people's success. I think there's a lot that's been going on, this fueling that's going

58:36on with the lack of social mobility, but seeing a small segment of the population

58:39accelerate. Technology's really had that, driven that.

58:42I'll be the first to admit there's a small population in California that's done extremely

58:46well, while most of Californians have been left behind.

58:49Do you think you're electable in this sense?

58:51I mean, you're not fueling the populist sentiment that I think every one of your

58:55candidates has found they can tap into, and that may put you at a big

58:59disadvantage in this race. Look, I do think we need to take economic inequality and

59:05social mobility much more seriously than we have.

59:09I think we need to ask and ultimately demand our wealthiest individuals, our tech sector,

59:17industries that do well to be structured in a way that works for people.

59:22I'm curious what you think.

59:24Maybe I'll turn the tables for a moment.

59:26I think that we need a shared prosperity that includes people having some sort of

59:35equity from or more direct benefit in the incredible gains that tech has produced.

59:40AI is scaring a lot of people because it could lead to the elimination of

59:46jobs, further concentration of wealth.

59:49What do you think is the appropriate role for the tech sector and those who

59:52have profited immensely from it to ensuring a level playing field or at least some

59:58semblance of equality of opportunity?

1:00:02That's a longer conversation, but I do think giving more people more ownership is important.

1:00:07But I'm not sure people are going to want to or need to work at

1:00:10big companies anymore with AI.

1:00:13It's a longer conversation. But in the same way that Instagram, Shopify, Etsy created a

1:00:20TikTok, created new jobs, almost like new roles, new ways that people could earn.

1:00:26I think AI is going to create a thousand times more new ways for people

1:00:29to earn than they do today.

1:00:31And they're not going to have to have the job that they feel like they're

1:00:34stuck with today. And AI is actually going to accelerate more people up the ladder

1:00:38faster than anyone's really realizing.

1:00:41And I can give you countless examples of this that I've seen recently.

1:00:44But I think we're all going to wake up pretty happy with the next advance

1:00:47and economic mobility that's going to be unleashed because of AI, not in spite of

1:00:51it. I hope that's true.

1:00:52It's a very optimistic read.

1:00:53I do think my read of history is that technological change, while ultimately producing greater

1:00:58abundance, if you will, often is really hard on people.

1:01:02For a period, yeah. And that's why in San Jose, at least, we've created AI

1:01:06upskilling courses for our workers.

1:01:09We've gotten AI companies to come into our libraries and provide tools and training.

1:01:13We're really trying to figure out how we lower barriers to learning how to use

1:01:18these tools, apply them in people's lives, start those new businesses, create the new jobs

1:01:23of the future. The cool thing is AI can teach people how to use AI.

1:01:26That's true. Which is where I'm starting to see a lot of people learn how

1:01:30to use these tools on their own by asking the AI and engaging.

1:01:33And then there's this moment where it's almost like you lit a match on a

1:01:36bunch of Tinder for the first time.

1:01:38And you're like, whoa. And I've seen this in person.

1:01:41I'm watching people get knocked down like bowling pins in terms of, whoa.

1:01:45That whoa moment that I've been visibly seeing people just in the last couple of

1:01:49months is making me very optimistic.

1:01:52That's good. It does, though, get...

1:01:53Back to this basic point that we need our public education system to teach people

1:01:58to think critically when half of our kids aren't on grade level for reading or

1:02:02math proficiency. It's going to be very hard for them to be lifelong learners.

1:02:06I mean, curiosity and asking questions and learning how to think, not teaching them knowledge,

1:02:11is a massive problem that we're dealing with in education in the United States, in

1:02:15my opinion, on its own.

1:02:16Kids are not being taught how to question how to build.

1:02:19They're being taught facts. Those facts are irrelevant because they all exist in AI now.

1:02:24You don't need to know all those facts.

1:02:26It's good to have basis, but what are you really trying to get?

1:02:28A curious mind, an engineering mind, a creative mind, a thoughtful mind, and teach individuals

1:02:33agency in a world where they have infinite capacity.

1:02:36That's what AI gives all of us.

1:02:38Yeah. But what do you think of Donald Trump?

1:02:39I'm not a fan. My concern with Donald Trump, even if he may get certain

1:02:47issues right, I think he's channeled the frustration of working Americans who feel that they've

1:02:54been left behind, is that I don't believe he really understands what makes our country

1:02:59great. I think that he has created a lot of fear and division around immigration,

1:03:05doesn't recognize how many people we have had in this country, in part because both

1:03:10Democrats and Republicans wanted access to cheap labor in places like Watsonville, where I grew

1:03:14up, who have been here 20, 30 years, working hard, paying their taxes, otherwise playing

1:03:19by the rules, raising children who are U .S.

1:03:21citizens who are now living in terror because they're worried their family is going to

1:03:25get ripped apart. I don't understand and don't support this war in Iran that I

1:03:31think is a huge, huge blunder and is going to drive up energy costs.

1:03:34And it's not clear to me why we're losing American lives over there.

1:03:39I just, you know, I think tariffs, yes, I do believe China, this is something

1:03:44I think he's gotten right, has been competing unfairly with the U .S.

1:03:48I think a targeted approach to tariffs focusing on that issue would have made a

1:03:52lot more sense than the general inflation we've seen.

1:03:56So, I mean, I can go issue by issue, but I just, I worry mostly

1:04:00about the health of our democracy.

1:04:01I think it requires a real honest dialogue, a respect for rule of law and

1:04:09the independent judiciary. I just, yeah, I have deep concerns that this, not just populist,

1:04:17but reactionary, quasi -authoritarian rhetoric and mindset is the outcome of declining trust in government

1:04:27when we don't hold ourselves accountable for delivering for working people.

1:04:32I think it's predictable and I think you're seeing an equal and even, I'd say,

1:04:37equally risky rise in populism on the left in reaction.

1:04:41And these two are playing off one of one another.

1:04:43And part of the reason I jumped into this race was to offer a third

1:04:46way, a pragmatic alternative. I'm a Democrat, but I also recognize that something's broken in

1:04:54California. The incentives are all wrong.

1:04:58The highly organized interests in Sacramento are being taken care of.

1:05:02Sacramento is working great for highly organized interests.

1:05:05It is not working great for regular people.

1:05:08And I think the best antidote to that is to get back to basics, be

1:05:12competent, be data -driven, deliver results for people.

1:05:15Because I'm worried that if we don't, we're going to see this epic populist battle

1:05:20on the right and the left where people are offering really easy answers, not the

1:05:24honest answers that we need.

1:05:26Rate Governor Newsom and the job he's done as governor of California.

1:05:29Carolina. I think that Governor Newsom has Governor Newsom has been a bulwark against some

1:05:33of the worst ideas coming out of the legislature.

1:05:36You mentioned that he's vetoed 10 to 15 % of the bills coming out of

1:05:40the legislature. Many of those vetoes I agree with and I think have averted real

1:05:48harm. My critique has been around not doing enough to take on the entrenched interests

1:05:56in Sacramento and we've disagreed very publicly on certain policy issues.

1:06:03Prop 36, recovery housing, some energy policy points, but it's always, I mean, I try

1:06:11to attack problems, not people.

1:06:13I'm not really interested in evaluating somebody's intentions or their ideology so much as the

1:06:22results of their actions. And I think he's done some really good things.

1:06:26I also think he could do even more and that's been my appeal to him

1:06:30is let's work together to drive even more change faster.

1:06:35But some of the things he's brought forward like care court, right idea, now we

1:06:39need to execute it. We need to actually make sure that care court's actually getting

1:06:41people with addiction and mental illness into care.

1:06:44I think he's got the right idea, right intention, but we've got to follow through.

1:06:48And as governor, I would make sure that Prop 36, Prop 1, care court, a

1:06:53number of things he's put in place are actually used to deliver the intended outcome.

1:06:56Governor Newsom's put out a lot of these memes kind of making fun of Donald

1:07:01Trump by doing tweets sort of like the way Trump does truth social posts and

1:07:05so on. It's very antagonistic to the president, at least publicly antagonistic.

1:07:10At the same time, California relies on federal funding and requires a lot of federal

1:07:13cooperation, a lot of federal land in the state.

1:07:16How would you interact with President Trump?

1:07:18And talk a little bit about how the governor has interacted with President Trump publicly.

1:07:22Look, I understand what the governor's doing.

1:07:25He's, you know, been holding a mirror up to Donald Trump and both fighting for

1:07:33California's values, which I appreciate.

1:07:35I think there's also just back to incentives.

1:07:38I mean, he's running for president.

1:07:39And that's where I think this approach is coming from.

1:07:44I would take a different approach in the sense that as governor focused on delivering

1:07:50for Californians, I will fight the Trump administration through the courts, through the bully pulpit

1:07:57whenever necessary to protect our values, to protect our people, to protect state funding.

1:08:03I also think, though, that we need to find places where we can achieve a

1:08:10win -win with the federal administration.

1:08:12I'll give you the example that's top of mind for me.

1:08:14I just spent time walking through Altadena, the Palisades, where people have lost everything.

1:08:20Over 10 ,000 homes lost between the two.

1:08:23People are desperate to rebuild.

1:08:25They're not getting the help that they need.

1:08:27And part of the reason they're not getting the help that they need is this

1:08:30hyper -partisanship in which California and Washington are fighting rhetorically and politically, and the people

1:08:39who are being hurt are the families who have lost their homes, who are waiting

1:08:43on the $40 billion of federal aid that's been promised, and that if it weren't

1:08:49for this political battle, would have already flowed to help those neighborhoods rebuild.

1:08:53And I just, as governor, yeah, I will absolutely fight for our values, but I'm

1:09:00committed to fixing our problems, which means finding a way to make it a win

1:09:05for this president and this administration to rebuild Los Angeles.

1:09:08That we have to put the people.

1:09:10before our politics. And as it relates to ICE and immigration enforcement, do you consider

1:09:17undocumented immigrants in the state of California, individuals that you would represent as governor?

1:09:23Is it part of your job to protect undocumented immigrants who came here illegally, but

1:09:28ICE would like to remove?

1:09:29Yes, unless they're committing serious and violent crime.

1:09:33Look, if you're here, you're not documented.

1:09:36You're committing violent felonies. I think you should be deported.

1:09:40But like many of the people I grew up with, if you were essentially, if

1:09:46maybe tacitly welcomed here, because we had an ag industry or a construction industry that

1:09:52needed low cost labor, and you came, started a family, started working, paid taxes, raising

1:09:59kids here who were born here, who are US citizens.

1:10:02The only practical and ethical solution is for parties to put the hyper -partisanship aside,

1:10:09come together, and come to a grand bargain in which we secure the border.

1:10:12We deport those committing violent crime who are undocumented, and we create a pathway to

1:10:17some sort of legal status.

1:10:19If citizenship is a bridge too far for that older generation that came earlier, so

1:10:24be it. But their kids are US citizens, and they deserve to still live with

1:10:30their parents. And I think we've got to find that the approach that respects people's

1:10:35humanity and is practical and ethical.

1:10:38And I'm incredibly disappointed, frankly, with both parties for years of kicking the can down

1:10:43the road. And I will absolutely stand up to protect undocumented residents who are playing

1:10:49by the rules, who are doing the most American thing.

1:10:52And I get all the arguments around lawful immigration.

1:10:55Let's secure the border and set up a proper system of lawful immigration going forward,

1:11:00and not create a bad incentive.

1:11:02So let's do that, and then create this pathway to legal status.

1:11:06But what we've seen play out in Minneapolis is horrible for the country.

1:11:11We're seeing citizens arrested, even killed.

1:11:14This is not working, and I don't think it's ethical.

1:11:18Let me give you the pushback that the Republican Party leadership would give, which is

1:11:22that many of these individuals will end up voting for Democrats.

1:11:26The vast majority of them will vote for Democrats.

1:11:27And that the border was opened, they were allowed in here, and now this inevitable,

1:11:31due to humanitarian conditions, path forward to citizenship will ultimately increase the Democratic Party's voting

1:11:37base and lock them into power in D .C., lock them into power in these

1:11:41states, turn more states blue, et cetera.

1:11:43How do you respond to that concern and pushback?

1:11:46Put the humanitarian piece aside, but that the reason the border, and every Democrat I

1:11:50ask about this cannot answer the question, why was the border opened?

1:11:53Was it to lower labor costs?

1:11:55Was there some other reason that we did it?

1:11:57Was it to increase the voting base?

1:11:59I mean, what was the motivation, and how do we address the response that's going

1:12:02to come for the many years ahead from a Republican Party that's going to have

1:12:06issue with this? So my sense growing up in an ag town that historically has

1:12:11probably been about a third undocumented is that the primary incentive for the parties to

1:12:17not solve this problem is that a lot of people became very wealthy, a lot

1:12:22of industries did very well by having access to low -cost, abundant labor, and plenty

1:12:28of the business interests that did really well in ag construction and otherwise.

1:12:34I mean, historically, this would have been, say, the meatpacking industry, right?

1:12:39They're donors to the Republican Party.

1:12:41So I think both sides have been complicit.

1:12:43But I think, back to incentives, I think Democrats and Republicans have played to their

1:12:48base and actually We've been politically incentivized to not solve the problem, and as a

1:12:53pragmatic moderate, my approach is to say, you're both wrong, but there's something true in

1:12:58what you're both saying. Republicans are right that we should know who and what comes

1:13:04in and out of the country.

1:13:05We should have a secure border, and we should take away any incentive for people

1:13:10to come here illegally, especially in a moment where we've got a fentanyl crisis, we've

1:13:16got international terrorism, we've got nukes that are getting smaller and smaller, we should have

1:13:21border security, absolutely. If you're not here lawfully and you're committing serious and violent crime,

1:13:27deportation is the minimum expectation of what should happen.

1:13:31So let's do that. But I think both parties have been complicit.

1:13:36We can sit around and say, who wins electorally or economically?

1:13:39We can play that game and continue to have this incredibly divisive and unproductive situation

1:13:45where millions of people are living in fear, living in the shadows, or we can

1:13:49fix it. And when I say legal status, maybe that legal status doesn't come with

1:13:55a right to vote. Maybe it's a green card.

1:13:58I mean, I'm for compromise and problem solving and moving the country forward.

1:14:03Both sides are going to have to give if we're going to solve this problem.

1:14:05I think that's the best idea possible for how to solve this, which is a

1:14:09path to residence without a path to voting.

1:14:12And that could solve everyone's concerns.

1:14:14And lastly, I just want you to compare and contrast your Democrat opponents, Swalwell, Steyer,

1:14:20Porter. Let's just do those three.

1:14:22Give me a sense on your view on each of the three of them.

1:14:24Well, look, I've been in enough debates with them now to understand that those three

1:14:33other leading Democratic candidates are vying for the same lane.

1:14:38It is the more of the same lane.

1:14:41It's a platform that says that the answer to our problems is more revenue.

1:14:47It's revenue, revenue, revenue, as represents Swalwell's top three goals.

1:14:52And look, we need to think differently.

1:14:55What I'm offering is an approach that's been working in Northern California's largest city.

1:15:01I call it getting back to basics.

1:15:03It's focusing on fewer things, the things that are most foundational to opportunity and quality

1:15:10of life for everyone. It's being humble about what government can actually do, not thinking

1:15:16that the answer to every problem is more revenue in another government program.

1:15:19It's being radically more transparent and accountable about how we spend dollars and rooting everything

1:15:24in results or measurable outcomes and just bringing a new politics of pragmatism as an

1:15:32antidote to this incredibly destructive populism we're seeing on the right and the left that

1:15:37really risks the Democratic, lowercase d, Democratic project of this country.

1:15:43And I think that California has, throughout its history, been the innovative state that has

1:15:50led the way and changed the world.

1:15:53And I am hopeful that Californians are ready for a different kind of politics that

1:15:57focuses on problem solving. I jumped in this race because all of the other candidates

1:16:03across the spectrum had already been in for a year.

1:16:07And I didn't hear anyone speaking honestly about our problems and how to solve them.

1:16:12And I thought that I had a unique voice in this race.

1:16:15And we're seeing that. It's a short runway.

1:16:19But as I travel around the state, go to, you know, see the sewage crisis

1:16:22in the Tijuana River on the border that shut down all the beaches down there,

1:16:25walk all to Dina. or go through the tenderloin in San Francisco, people are responding

1:16:31because all they really want is for their tax dollars to be used responsibly.

1:16:36They want their government to work.

1:16:37They want their life to get better when they send so much of their money

1:16:41to their government. And that's my commitment.

1:16:44Mayor Matt Mahan, thank you for being here with me today on All In.

1:16:48Really appreciate the time and good luck in the governor's race.

1:16:51Thanks, David. I enjoyed it.

1:17:07I'm going All In

How Matt Mahan Thinks He Can Save California