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All-In Podcast

How Matt Mahan Thinks He Can Save California

Complete 1:17:13 min youtube 2026 Week 13 Mar 23, 2026 🇬🇧 EN

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TL;DR

San Jose Mayor Matt Mahan presents his run for California governor as a bid to make government focus on measurable results, spending accountability, and core concerns such as housing, public safety, schools, and energy costs.
He argues that excessive process, regulation, and influence from organized interests contribute to high costs and weak outcomes; he describes San Jose initiatives and proposes reforms while acknowledging that some changes require legislative cooperation.
The interview also covers pensions, taxes, health care, AI, immigration, and relations with the federal government, with the host challenging some of Mahan’s assumptions and proposals.

Research summary

▶ Mahan’s background and case for running

The host asks who Matt Mahan is and why he entered California’s governor’s race. Mahan describes growing up in working-class Watsonville, attending a college-prep high school on a work-study scholarship, working through school and college, teaching through Teach for America, and spending about a decade in civic technology. He describes work on Causes and the voter-organizing platform Brigade, then says that after his company was acquired he ran for San Jose City Council and knocked on 10,000 doors. He recounts residents questioning why roads remained unpaved despite property taxes. Mahan argues that state spending rose 75%—about $150 billion more than six years earlier—without corresponding improvement in outcomes, and says the underlying problem is weak accountability and incentives rather than simply inadequate money. He cites high-speed rail as an example of delayed delivery and says consultants, reviews, litigation, and bureaucracy absorb resources; he notes he has not done a line-by-line analysis of that project’s spending. He alleges documented pandemic-era unemployment fraud exceeding $30 billion and says emerging reporting suggests some hospice providers may not exist, while identifying waste and inefficiency as broader problems. He says San Jose, without raising taxes, reduced crime, reduced unsheltered homelessness by about a third, and enabled thousands of homes to enter construction by changing processes, reducing fees, and redirecting funding from programs he says were not delivering.

▶ Legislative incentives and organized interests

Asked why California passes many bills and how the legislature is motivated, Mahan says he would veto more bills as governor, arguing that legislators often measure success by bills passed while measures add costs and process. He proposes public goals, measuring results for every dollar, and auditing existing programs; he says 75% of state auditor recommendations are not implemented. He argues that government tries to address too many priorities at once instead of focusing on housing and energy costs, schools, and neighborhood safety. The host suggests that government intervention can raise costs and asks how Mahan would resist pressure to promise more programs. Mahan criticizes an opponent’s reported answer of “Revenue, revenue, revenue,” and says San Jose produces results despite revenue per capita about a third below some neighboring cities. He emphasizes public goals and accountability, saying bills can have unintended effects that make the intended activity slower and more expensive. On organized interests, he says public-sector unions are Sacramento’s largest advocacy, lobbying, and election spender, while stressing that labor is not a monolith and that other industries and associations are organized too. He places responsibility on politicians who yield to demands, and argues that policy can respond more to organized interests than to residents. He cites reading outcomes for low-income children in Mississippi and Louisiana as better than California’s, in his account. Mahan describes his candidacy as challenging a system he says is not delivering lower costs, better schools, safer neighborhoods, and an end to street homelessness, and warns that continued failure could fuel a MAGA-like movement in California.

▶ Homelessness, housing supply, and building costs

In response to the host’s question about why California’s poverty, unemployment, and homelessness are so severe, Mahan attributes worsening conditions to policies that are not revised when they fail. He says the state has broken the housing market and has been too lax in responding to addiction and mental illness. He cites 50,000 people dying on California streets, about half from overdose and suicide, and says San Jose shifted from housing projects costing a million dollars per door to sleeping cabins on public land with utilities at an all-in cost of $85,000 per unit. He says the city added more than 2,000 shelter beds during his first three years as mayor and reduced unsheltered homelessness, despite opposition from advocates and affordable-housing developers. The host criticizes San Francisco’s managed-alcohol program and raises housing affordability. Mahan calls housing primarily a supply problem and argues that barriers to building, including zoning, fees, cumbersome building codes, and litigation, raise costs and limit production. He says construction-defect liability discourages condo building and describes trial lawyers as an organized interest opposing changes. Mahan agrees that regulation and bureaucracy can be reframed as a housing crisis, and attributes rulemaking to a safety-first tendency and incentives that reward visible activity over outcomes. He says he uses public dashboards with baselines, comparisons, and goals, including a goal of reducing homelessness 10% year over year, reducing crime, building housing, and speeding permit reviews. For a gubernatorial housing agenda, he wants more homes built affordably, says California building has fallen from about 100,000 units annually to 80,000 and previously reached 150,000, and says production should rise well above 100,000. He frames the target partly as a jobs-to-homes ratio, noting his claim that the Bay Area created about eight jobs per new home over 20 years. He also wants metrics for fees, timelines, building codes, and per-square-foot costs, and says regulators should be able to reduce those costs by at least a third. He cites factory-built housing as potentially lowering per-unit costs 20% and project timelines by up to 50%. On implementation, he lists budget control, vetoes, public pressure, executive orders, and appointments as gubernatorial tools, but says legislative change is ultimately needed.

▶ Causes of homelessness and responses to addiction

Mahan describes homelessness as having multiple causes: high housing costs can leave people with little buffer after job loss, health problems, addiction, mental illness, or domestic violence. He also cites high energy costs and school outcomes as sources of vulnerability. He says California has built too few shelter and treatment beds and too often leaves people outdoors; he states that over 40% of people living outside in tents nationwide are in California, which he says has about 12% of the U.S. population. He argues for rapid rehousing, case management, and accountability. Asked about involuntary commitment, he supports involuntary holds for addiction treatment or mental-health care when people repeatedly refuse help and harm the community. He says San Jose has created more than 2,000 indoor interim placements, mostly private rooms with lockable doors, and that two-thirds of people offered placements accept. He says the remaining third may be too deep in meth or fentanyl addiction to make rational decisions about self-care, and argues that intervention, detox, and counseling can be compassionate. On drug supply, he says all levels of government have a role, citing local police and possible state and federal tools. He argues that reducing public drug use and connecting people to treatment can reduce demand. He supports Proposition 36 and says its rule of thumb allows a choice between treatment and incarceration on a third public drug offense; he argues consequences are warranted when untreated conduct harms businesses, parks, and the broader community.

▶ Energy costs and homeowners insurance

The host cites gasoline at roughly $5.50 per gallon in California versus $3.50 elsewhere in the country, a roughly 70-cent-per-gallon state tax, refinery closures, and Chevron’s relocation, then asks whether California’s green-energy approach was mistaken. Mahan says the regulatory approach was wrong but argues innovation can support both cleaner energy and affordability. He claims Texas provides cheaper, cleaner power, and advocates investment in solar, wind, storage, electric vehicles, grid infrastructure, and smarter charging. He says California regulated most refineries out of existence while continuing to import oil and gas, which he argues brings dirtier fuel, lost high-paying jobs, and a smaller local tax base. He proposes encouraging EV owners to charge when midday solar power is abundant and support the grid at the evening peak. He calls the gas tax regressive and proposes temporarily suspending it to help working families, while acknowledging it funds road maintenance. He says a state spending $350 billion should be able to pave roads and that California will need a road user fee as EV adoption grows. On home insurance, Mahan proposes rebuilding the private market by allowing risk-based, more granular pricing and bringing insurers back. He gives tree removal within 100 feet of a home as an example that could affect premiums. For the riskiest 5–10% of homes, he anticipates higher premiums, fire-resistant materials, and limits on further construction in some areas. He says the state should take greater responsibility for vegetation management, noting a claimed $8 spent on fire response and recovery per $1 on prevention, and argues prevention could reduce premiums over time. He proposes a gubernatorial task force on insurance. After the host criticizes state rate controls, Mahan agrees that price controls do not work in practice and says insurers need to price risk appropriately. He supports incentives for homeowners to adopt risk-reducing practices and says a public option may be needed for some of the homes the market will not cover, rather than making everyone pay exorbitant rates to cover the riskiest properties.

▶ Pensions, the state budget, and health care

The host raises CalPERS and CalSTRS, describing roughly $1 trillion in assets for retirement benefits to about 3 million public workers, returns of about 7% annually versus 11% for the S&P, and estimates of future shortfalls ranging from $250–300 billion to as much as $1 trillion. Mahan says he is worried and describes San Jose’s experience: even after pension reform, 19% of the city’s general fund goes to unfunded pension liabilities. He says politicians failed to do the math and presents two approaches: a defined-contribution model, which he considers politically unlikely, and a San Jose-style system for new employees with higher contributions, more realistic return assumptions, quicker adjustments when returns underperform, incentivized fund managers, and a 50/50 sharing of shortfalls between taxpayers and employees through lost benefits. For existing San Jose liabilities, he describes a 20-year payoff glide path, with the debt expected to be cleared by the early 2040s; he says the city is near peak cost now and expects more room in its general fund over time. The host cites a proposed $349 billion state budget, growth from $110 billion ten years earlier, and a $35 billion deficit. Mahan attributes spending growth partly to public employee pay, pensions, and post-retirement health benefits rising faster than the state could afford, and partly to an expanding bureaucracy, programs, and headcount. He says state population has been flat over six years while spending rose 75% and employee headcount more than 20%, and proposes zero-based budgeting oriented around outcomes. He says a governor can shape the budget and agencies but needs legislative support and a coalition willing to make changes. Asked about publicly provided health care, he says a free, state-run system for all is unrealistic. He favors price transparency and competition, which he says could reduce costs 5–10%, prevention, broader use of nurse practitioners, and reducing emergency-room demand by getting people off the streets and into shelter. He argues for restructuring care and investing in innovation rather than raising taxes to fund services he believes could become unaffordable.

▶ Taxes, inequality, and AI’s economic effects

The host asks about Mahan’s opposition to a proposed billionaire tax, invoking private-property concerns and asking about high-income taxes. Mahan says economic inequality and declining social mobility are real concerns, but argues the wealth tax is a poor solution and could lead to capital flight and lower future revenue, with working and middle-income families left bearing the cost. These are Mahan’s assertions in the interview. He says other tax-code changes could be considered, including changing capital-gains rules and closing loopholes involving borrowing against appreciated assets and step-up in basis at death; he gives an example involving inherited, appreciated stock. He argues that housing, energy, and school policy failures are major constraints on social mobility, citing Californians spending over a third of income on housing and many spending over half. The host challenges Mahan’s electability and says many Californians feel left behind despite technology-sector gains. Mahan says wealthiest individuals and successful industries should be structured to work for people and asks about shared prosperity and ownership amid AI-driven job risks. The host responds optimistically that AI may create many new ways to earn and accelerate mobility, while Mahan says technological change can be difficult for workers. He describes San Jose AI upskilling courses and companies providing tools and training in libraries. Both discuss AI as a tool people may learn to use, and the host advocates education that teaches curiosity, critical thinking, creativity, and agency. Mahan says weak reading and math proficiency makes lifelong learning harder.

▶ Trump, Newsom, and federal cooperation

Asked about Donald Trump, Mahan says he is not a fan. He credits Trump with channeling working Americans’ frustration and says Trump has identified unfair Chinese competition, but criticizes what he describes as fear and division around immigration, the Iran war, and broad tariffs; he favors a targeted tariff approach. He expresses concern about democratic institutions, rule of law, and the judiciary, and says declining trust and poor government results could fuel populism on both the right and left. He presents his candidacy as a pragmatic alternative focused on competence, data, and results. On Governor Newsom, Mahan says Newsom has blocked some harmful bills through vetoes, while criticizing him for not doing enough to challenge entrenched interests and citing disagreements over Proposition 36, recovery housing, and energy policy. Mahan says CARE Court is a good idea but argues it needs to be implemented so people with addiction and mental illness actually receive care; he would seek follow-through on CARE Court, Proposition 36, Proposition 1, and other measures. Asked how he would deal with Trump as governor, Mahan says he would fight through courts and public advocacy when needed to protect California’s values, residents, and funding, while seeking areas of cooperation. He cites promised $40 billion in federal wildfire aid for Los Angeles-area neighborhoods, arguing that partisan conflict is delaying help for people seeking to rebuild more than 10,000 lost homes in Altadena and the Palisades.

▶ Immigration and a proposed compromise

Asked whether undocumented Californians are among the people he would represent, Mahan says yes except for those committing serious and violent crimes, whom he says should be deported. For people who came for work, paid taxes, raised U.S.-citizen children, and have been in the country for years, he proposes a bipartisan bargain: secure the border, deport undocumented people committing violent crimes, and create some form of legal status. He says citizenship could be too far for an older generation and suggests legal residency without voting rights as a possible compromise. He criticizes both parties for failing to resolve the issue and says he would protect undocumented residents who are following rules. The host raises the Republican argument that legalization could increase Democratic voters and asks why the border was opened. Mahan says, based on his experience growing up in an agricultural town, both parties had incentives not to solve the problem because industries benefited from low-cost labor and business interests supported both parties. He says Republicans are right to seek border security and to remove incentives for illegal entry, and agrees serious violent crimes warrant deportation. He argues both parties must compromise to resolve the situation rather than leave millions living in fear or in the shadows.

▶ Opponents, closing case, and sign-off

The host endorses the idea of legal residence without voting rights and asks Mahan to compare himself with Democratic opponents Eric Swalwell, Tom Steyer, and Katie Porter. Mahan says they occupy a lane that relies more on revenue, while his approach is to focus on fewer foundational priorities, use government humbly, and make spending transparent and accountable through measurable outcomes. He calls this a politics of pragmatism and says he entered the race after other candidates had been running for a year because he did not hear an honest account of California’s problems or how to solve them. He says people respond to his message as he visits issues including the Tijuana River sewage crisis, Altadena, and San Francisco’s Tenderloin, and says residents want tax dollars used responsibly and government to work. The host thanks him and wishes him luck in the governor’s race; Mahan thanks the host. The transcript ends with the host saying he is going all in, followed by the phrase “all in.”

Full transcript

[00:00] Matt Mahan, welcome to All In. >> Thanks, David. >> I've no idea who you are. Who are you? I mean, you're a guy who kind of popped up running for governor of California last minute. How'd that come about, and who is Matt Mahan? >> Well, David, like everybody, I'm frustrated with the state that keeps spending more and seemingly getting less, which is why I jumped in. But to back up, I grew up in a little farming town here in California, town called Watsonville, where your strawberries come from. >> I do work in Watsonville. >> Driscoll berries, you know it well. >> greenhouses, yeah. >> Yeah, exactly. Working-class family, my
[00:30] mom was a teacher, dad was a letter carrier. My lucky break in life was getting into a great college prep high school on a work-study scholarship. I took buses about 2 hours each way, worked my way through high school and college, and uh came back as a public school teacher through the Teach for America program. Always was very community-oriented, was interested in politics, wanted to know how to make our city, our world a better place. Ended up in the tech sector and spent about a decade building civic tech tools to help people navigate their democracy. >> What did you build?
[01:00] >> I was involved with an early Facebook application called Causes, and then went on to start a platform called Brigade that was sort of like LinkedIn for voters. And the whole premise was to build grassroots, bottom-up power by connecting voters around issues they're passionate about, outcomes they want to see, and help them organize to hold their elected officials accountable. After about a decade in the civic tech space, our company was acquired, I decided to run for city council, and I went out and knocked on 10,000 doors,
[01:30] got yelled at for a lot of things that I wasn't necessarily responsible for, but I got a real feel for the common sense of the residents of California, who would ask questions like, "If I'm paying $20,000 a year in property taxes, why haven't my local roads been paved in the last 15 years?" And I thought that made a lot of sense, so I went to city hall to try to find out. >> How dysfunctional is California, and how did it get this way? >> Pretty bad. I'm really worried, which is why I jumped in. I think the state is heading toward an inflection point, past
[02:02] which there there may be no return. We have increased spending in state government by 75%. To put that in perspective, that's a $150 billion more this year than 6 years ago. And as far as I can tell, none of the outcomes have gotten better. Never mind 75% better, many of them are flat or down over the same time period. So, there is a real lack of accountability in government. We don't have a money problem in Sacramento, we have an incentives problem. We have a structure
[02:33] that allows us to keep shoveling more money into things that aren't working. Just take high-speed rail. If a startup took 20 years, spent $14 billion, and didn't deliver a product, people would have been fired a long time ago. And we're just not seeing that level of accountability in our state government. >> Is this theft? Where does the money go? $14 billion. Who has that $14 billion, sir? >> It's contractors, it's lawyers. Some of it has gone into actually building the project, but belatedly, what happens in
[03:03] California, and the reason we can't build we can't do big things anymore, is that we've got endless process, years of environmental review, the most litigious environment imaginable. Anybody can sue under CEQA. You don't even have to be a resident of California to sue under CEQA. And so, you just get years of litigation, bureaucracy. And when it comes to housing, just to slightly switch topics, the fees that cities can assess, one-time fees can add 20% to the cost of a project. So, we've
[03:33] just we've bureaucratized the state to the point where it's total paralysis. We can keep spending more and more and not getting anything for it. >> It's like I'm trying to understand as a citizen and a taxpayer, I pay a 53% tax rate living in California. I pay my federal tax and my temporary California tax, which I've been temporarily paying for 11 years. And I'm paying 53 cents of every dollar I earn to the state and to the federal government. I'm like, where'd my money go? It's such a mind-boggling number. Pick the high-speed rail project alone. 14
[04:04] billion dollars spent. Spent. We don't have a rail. We don't have anything. Is it lawyers that made 14 billion dollars? You mentioned contractors. Like, is this just like there's a whole bunch of people that are all making 20, 30 grand, and it all adds up to 14 billion? Like, just help me understand where my money went. >> So, on that project specifically, and I haven't done the line item by line item analysis to be totally clear, but you have years of consultants doing environmental reviews and and
[04:35] doing all of these studies and reports of of the impacts it might have. So, tons of consultants, you have the cost of litigation, you have an entire cottage industry of people doing design and studies and reports and managing litigation and buying right of way and managing community engagement processes, and we just we take years to do to do anything. And so, it just gets vacuumed up into this sea of >> little groups of things. So, there isn't like one big thief.
[05:06] Like, the grand master thief of California that's taken all the money and then it's just like the dysfunction is just like everyone's getting a little piece of the pie. >> sense. I mean, let's be clear. There is fraud. There has been fraud, very well documented in California and other areas. During the last 5 years or so, roughly during the pandemic, unemployment claims in California that were fraudulent totaled over 30 billion dollars. That is well documented. There's emerging research [snorts] right now that shows that there are hundreds,
[05:36] if not thousands, of hospice providers who may or may not exist. I mean, we're just getting this information now. This is very real-time investigative journalism. So, there's fraud, I think by an order of magnitude there's even something bigger here which is which is waste and inefficiency. It's a system where you just keep incrementally growing head count, growing the size of programs, growing the grants that we give out to nonprofits, and we're funding and
[06:08] managing around process, not outcomes. And I've tried to approach it very differently in San Jose, and I think it's why without raising taxes, in fact, our revenue has actually slowed a bit the last couple of years just because the economy's cyclical, real estate is struggling, we're very dependent on local property taxes. But without raising taxes, we have dramatically changed the outcomes we're getting. We have led the state in reducing crime and become the safest big city in the country. We've reduced unsheltered homelessness, meaning people living outside in tents and vehicles, by about a third in the
[06:39] last few years. We've unblocked housing uh production. We're seeing thousands of new homes under construction. In all of those cases, we had to change existing process that was in the way, reduce fees, and cut funding for programs that weren't delivering so that we could fund other solutions that were more efficient. >> Well, let me also ask about legislation. If you look at Washington, D.C., we have our nation's Congress, the House and the Senate, and there's a Republicans and there's Democrats, and
[07:10] they fight. And they fight so much, they don't get anything done. Which by the way may be a good thing, because in California, the legislature passes hundreds and hundreds of bills a year. And they all um come from one party, the Democrat Party. Gavin Newsom, on average, vetoes 15 to 20% of these bills every year, which says something. But maybe you can just explain a little bit your view on how are all these laws getting passed in California? How are
[07:40] these How does the legislature in Sacramento, where you're vying for a seat to have the right to veto and the right to push back? How are they making decisions and what's motivating the California state legislature? >> Yeah, and I I would just to be clear as governor veto even more of these bills because there's a a total lack of accountability and I think too many of our legislators think that their measure of success is how many bills they can write, get to the governor, and ultimately get signed. What you see is you actually read what these bills do, they generally
[08:11] just add more cost and more process. And what the legislature needs to be told by our next governor is that we're not going to fund failure. We're going to publicly set goals. We're going to measure the performance of every dollar we spend. We're going to audit the heck out of existing programs. Right now, 75% of the audit recommendations from the state auditor never get implemented. So, there's just there isn't a feedback loop with the public or or an accountability
[08:42] for the outcome. There is a lot of performative politics, a lot of discussion of how much good we're trying to do, how we're trying to be responsive to everyone. We have a tendency, particularly in the Democratic Party, to want to be empathetic and tell everyone that we're working on everything. We try to be everything to everyone all at once, rather than very strategically saying some things matter more than others. The high cost of housing, the high cost of energy, the quality of our public schools, the safety in our neighborhoods. These are the things people care about and think that they
[09:13] should be getting when they pay taxes, but despite increasing spending in the state by 75%, none of those outcomes have actually gotten better. Some have gotten worse. >> The irony is that sometimes it may be the case, and I think it's very often the case, that less government solves the problem better than more government. Trying to do more to create housing may make housing more expensive. Sounds ironic. Trying to do more to make education accessible makes education more expensive. The more government gets involved, the more prices seem to skyrocket. How do you get over
[09:44] that with all the interested groups that are getting themselves elected in the California state legislature by saying, "I'm going to do more. I'm going to do more. I'm going to do more." Cuz that's how you get elected. How are you possibly going to come in and say, "We should do less, and that's how we're going to fix some of your problems." >> Yeah, well, certainly if you're If you're in a hole, don't keep digging. And sadly, one of my opponents in this race, Eric Swalwell, just in a debate uh said it a couple times now in debates, when asked what his top three We were all asked what our top three priorities for the state, said, "Revenue, revenue, revenue." And to me, that is just That
[10:15] is a mindset that doesn't get what has broken down in the state. You're absolutely right. As Democrats, we have to own the outcomes we're getting in the state. And for too long, our reflexive answer has been, "We need more revenue. If we just have more money, we'll solve this problem." I I just don't believe that. And And I say that as the only current executive in this race. I'm the mayor of the largest city in Northern California, San Jose. And because of a quirk of history, we were built as a bedroom community for the job
[10:46] centers just north of us, we actually have significantly lower revenue per capita than many other cities. We're not a job center, and so with Prop 13, our tax revenue goes up more slowly, and it is smaller. Our revenue is about a third less than some of our neighboring cities, and we're delivering huge increases in sheltering people, getting housing built, reducing crime by thinking differently. But it all starts with being willing to set a goal publicly and allow the public to
[11:17] hold you accountable for spending dollars in a way that actually achieves outcomes. And that sounds so simple. I mean, I know most of your audience I've been listening for years are in the private sector, and it almost seems so obvious that why would you even need to say it? But the truth is, as elected officials, we almost never set public goals where we can actually be held accountable. Heaven forbid in your next election you might get called out for not actually reducing homelessness or reducing crime or getting housing built. Instead, to your point, we pass bill after bill showing that we're doing
[11:49] something and half the time with the the law of unintended consequences, we make it slower and more expensive to do the very thing that we want. >> Right. Well, let's talk about maybe some of the competing interests that want to get capital, that want to pull capital through the government for their base, and that would be labor unions. They're a very powerful lobbying, coordination, uh set of groups in California. They have significant influence over who gets elected in the legislature, who gets elected in city mayors races, and who
[12:20] gets elected in the governor's seat. Tell me your view on the role that labor unions play in California politics today and some of this dysfunction in government and unaccountability in spending, because I know that this might be a very controversial topic to talk about, cuz you don't want to piss off the labor unions, but I'd love to hear your your candid views on their role. >> Yeah. Let me start by saying, I am not afraid to take on any organized interest, and it is not just labor, though let's talk about the role of public sector unions. It's not just
[12:50] labor that is highly organized. You have trade associations, you have the doctors and the dentists, you have the public sector unions, you have the oil and gas industry. You Tech has actually been late to the party. Tech is starting to organize. So, the the way that I look at the landscape in Sacramento, and I think it's largely true in Washington as well, is you have well-resourced, highly organized, professional advocacy, lobbying, and political operations that essentially defend the
[13:20] status quo, and you are absolutely right that the single biggest spender in Sacramento when it comes to advocacy lobbying and elections is organized labor and particularly public sector unions. I don't think it's a monolith. I have great relationship with our public sector unions. Our building trades want to see the economy grow. So, many unions are very pragmatic and all of them are doing what they're supposed to be doing. It's spineless politicians who cave to their aggressive demands who are the the root cause of the problem
[13:50] here. So, when the teachers union organizes and says "We don't want more accountability. We don't want to be told to use evidence-based curriculum. We don't want more technology in the classroom." Whatever it is they may advocate for, presumably on behalf of or at least what they perceive to be the interests of their members, it's our elected officials who need to step up and say, "Well, for the good of the community, we're going to push you on that. We're not just going to give you a pass. We're not just going to veto that legislation or stay quiet when we know that for what
[14:21] we're spending, we aren't getting what we should be." We've gotten to the point where Mississippi and Louisiana are doing a better job of helping low-income kids get on grade level for reading than we are in the very well-resourced, very progressive state of California. That is a function of a system that is more responsive to the highly organized interests than the people we're elected to serve. Right. That's the fundamental dysfunction. Uh some see this corruption and I don't
[14:52] think that's too strong of a word. I don't mean it in the narrow sense of anyone breaking the law or or um you know, stealing money, but but the system has become again back to the core point here that the incentives are all wrong. The incentive for an elected official is to cater to highly organized interests who disproportionately spend money in elections, follow what's happening up in the legislature, draft the bill language, draft the friendly amendments, get legislators to do their bidding
[15:23] and I just I'm running against the system because it doesn't matter if you're a Democrat, a Republican, an independent, we need a high-functioning government that delivers lower housing costs, lower energy costs, better schools, safer neighborhoods, and end the street homelessness. We have the resources to do it. What we haven't had is the political will and accountability to do it. And I don't think that's a partisan point. And and frankly, if the Democratic Party doesn't start to wake up and be more responsive to the needs
[15:55] of our constituents and deliver with the resources we've got, we're going to see the pendulum swing all the way the other way and you're going to see a MAGA-like movement happen here in California. >> If I look at California, I can understand we're not solving certain problems. But what I'm trying to grok is how did some of these problems become the worst in the nation? So, there are statistics and you can debate per capita statistics versus absolute number of people, but number one in poverty, number one in unemployment, nearly half the nation's
[16:25] homeless live in California. >> Yeah. >> How did California go from being bad and not solving these problems to making them worse? >> Well, I think my my grandmother used to always say that the road to hell is paved with good intentions and I do think generally speaking people have had good intentions but have been unwilling to look at data and react when the things that they're championing aren't working. On homelessness, we've Well, first of all, we've broken the housing market, which we should talk about as its own issue. We've also been
[16:56] incredibly lax when it comes to dealing with cycles of addiction and mental illness. We've sort of deluded ourselves into thinking that leaving someone to choose to live however they'd like even if that means suffering in misery on the streets and ultimately dying of an overdose is somehow more important than intervening and saving their life. And that's how we've ended up in this horrific situation that frankly has been underreported over the last decade. We've had 50,000 people die on our
[17:26] streets in California, about half from overdose and suicide. These are people with deep behavioral health issues where we're kind of just watching them deteriorate and die because we're so precious about protecting civil liberties. May also be an excuse for not spending money in new ways. In San Jose, we had to move away from spending a million dollars a door to build a brand new apartment to get someone off the streets and pivot to buying sleeping cabins that can be deployed in small communities on publicly owned land
[17:56] hooked up to utilities. All in cost of $85,000 a unit. We've added over 2,000 shelter beds in my first 3 years as mayor and led the state in reducing unsheltered homelessness, but we had to overcome an incredible amount of opposition from advocates, affordable housing developers, and and you know, much of it well-intentioned, maybe some of it self-interested, but we either are going to be committed to solving the problem or we're going to cave to highly organized interests or a
[18:27] progressive ideology that needs to be willing to revise itself when when its ideas and practice aren't working. >> Yeah, I mean, it just feels some of the policies they're just crazy. I always commented on the managed alcohol program for homeless in San Francisco. They give away free alcohol to alcohol addicted unhoused people. And I can't imagine that that disincentivizes people to >> No. >> Right. It's It's like you go to you go to San Francisco, you get needles, you get free alcohol. You I mean, you get
[18:57] these things. So, it incentivizes people to to go to to go to San Francisco. The whole thing just seemed absolutely nuts to me. Let's get into the housing question. I mean, what is the core of the housing affordability problem in California? Is it that we don't have enough houses? Cuz I see a lot of homes for lease, a lot of houses for sale, a lot of houses for rent. Or is it that we have regulation that makes it hard to maintain a house and it's expensive? Or is there something else going on that's making housing unaffordable in California? Like what's
[19:27] the the core here? >> Look, I I think it's fundamentally a supply problem. We've seen most recently in Austin, we saw in Seattle, we've seen in dozens of markets around the country that when we remove barriers to the market investing in housing to meet growing demand, you slow down cost increases. It's economics 101. Part of our challenge is that we've also made it impossible to build affordably. So, part of the challenge was zoning, high fees, all of the things government imposes
[19:57] that block housing from getting built, but we also have a building code that's incredibly cumbersome. We I mentioned litigation earlier when it came to high-speed rail, same thing is true for housing. We're not building condos in California partly because construction defect liability allows a trial lawyer to come in in year nine of a project and if they see that the paint is starting to bubble, they'll file a suit and they they care about the fees. Their incentive is to generate fees and we've
[20:27] created a legal framework that allows them to do that. And if you try to change it, the another highly organized interest in Sacramento, the trial lawyers will push back on that. >> I think this is so important. People don't understand how expensive Someone told me it was like a sizable percentage of GDP in the United States is spent on litigation and trial lawyers and that they are the largest donor in certain state elections all over the country to try and create a legal
[20:57] framework that allows them to pursue litigation and earn significant fees. I mean, it's a multi-multi-multi-billion-dollar industry. >> That's right. And California is very much at one end of the spectrum. I mean I've talked to municipal leaders in cities that are settling at such a high amount for a trip and fall that now they can't afford to maintain the rest of the sidewalks in the city for the next few years. So they're going to have more trip and fall cases. We are going to risk of allowing trialers to sue the state into oblivion. So that is a It is
[21:27] a major issue. And on condos, it may seem like a peripheral issue, but traditionally that has been how young people get some equity in society, become a homeowner for the first time, and build that nest egg to eventually perhaps trade up into a townhome or a single-family home. We've essentially taken that rung of the ladder away by making it cost prohibitive to build. You Good luck getting financing or insurance to build a new condo building in California right now. >> Right. Is it fair to say we have a regulation crisis, not a housing crisis
[21:58] in California? I mean, is there a way to kind of reframe this? >> I think that's fair. I think regulation bureaucracy say a a set of codes and laws that don't work for people and work for the special interests in Sacramento. >> I interviewed this guy Adam Carolla. You know him? >> I know of him. I don't >> Yeah. Dr. Drew. What was the term he Oh, very inappropriate. He called it gynofascism. He said that all of the regulatory is a safety thing and it's like a very feminine safety protective kind of origin in a lot of the regulations that
[22:29] have been passed that make it impossible. Everything's about safety and more regulation, more regulation, more regulation. And as a result, you can't get anything done and the lawyers show up and everything gets sued. What's the right way to think about the origin? Cuz his argument is that there's a mindset of safety and protectionism that's driven this. Is it just the trial lawyers? Or like, why do someone keep passing Why do the legislators keep passing laws over and over and layers and layers and layers and layers that make it impossible to build and make it super expensive to maintain cuz otherwise you'll get sued.
[22:59] >> Yeah, look, I I would take the the gender content out of it, but I think the the deeper point that we suffer from safetyism, it's actually easier to add one more rule, one more process. I see this play out every day with our city council at the local level, and I think it's even a greater temptation at the state level where you're not able to point to a concrete service that you're delivering. So much of the implementation happens at the local level. Every time there is a negative story about
[23:29] something bad happening in the world, there is an impulse for a legislator >> law. >> to say, "Let's create a new rule. It can always be a little bit safer. Let's Let's add another check, another balance, another process, another rule, another fee, whatever it is." And the reason for that, in my view, is that we have not created an incentive structure in government to reward actual performance and outcomes.
[23:59] And so we are by default rewarding the performativeness of showing that we're doing so it's a lot of activity without a lot of impact. And I just I think that we have to help voters be smarter about analyzing what their elected officials are doing and whether or not it's working. That's why I want to be held accountable. I came into office running on dashboards. I mean, I put up public-facing dashboards and said, "Here's our baseline. Here's how we compare to others. Here's the goal we're setting. We're going to
[24:29] reduce homelessness by 10% year over year. We're going to reduce crime. We're going to remove barriers and get housing built. We're going to speed up permit reviews. I want to be held publicly accountable because I would rather, frankly, have a feedback loop with the people whose doors I knocked on than whichever group doesn't like that we're trying to change something. >> What's your metric for being governor of California as it relates to housing? What's the dashboard you're going to put up and what's your goal? >> So, I I think that the the ultimate outcome has to be that we're building more housing, but that we're building it more affordably. We have to pull the
[24:59] cost out of building because as long as the state of Colorado can build the exact same home at half the cost of what it what it is in the Bay Area, we're never going to be able to compete. So, I want to see more housing in absolute terms get built. We need to start moving in a better direction. We've gone from about 100,000 units a year to about 80,000 a year. You go farther back, it was 150,000 a year we were doing. >> you want to What do you want to get to in your term? >> I think we need to get We need to get well over 100,000. I think the right way to think about it though is it's really a ratio with jobs. For every two jobs an
[25:31] economy creates, you need at least one home. Part of the reason the Bay Area and particularly Silicon Valley is so unaffordable for working people and we're seeing displacement of working families is that over the last 20 years, this incredible economy here, the engine of of innovation for our country and really the world, has created about eight jobs for every one new home we've built. That is a completely unsustainable ratio. >> Yeah. >> So, I'm a little hesitant to come out and say we're going to build 10 million homes. I think it's a ratio thing. It's
[26:01] a It's a rate of change. We need to be building more year over year, but importantly, we need to pull back the fees, the long timelines, the overly complicated building codes. >> of those get a metric. >> Yeah, each of those get a metric because ultimately, the per square foot cost of building needs to go down. >> need to get to? Where is it today? Where does it need to get to? >> Oh, it varies dramatically by product type and market. So, I don't I I I mean, it's a good question. I think I think we should we should lay that out, but I just visited a modular construction fact- factory factory-built housing.
[26:31] They can bring down the cost per unit by 20%, speed up overall project timelines by up to 50% by just industrializing the production of housing. So, we need to pull the cost down. We should be able to drop the cost on a per square foot basis by at least a third with actions that are within our control as regulators. >> If you become governor, you're going to be fighting against a legislature that's got all of the various vested interests tied up in keeping this from happening. How do you take action without
[27:02] partnership with the legislature? Cuz what I think might be very hard is again to wind things back that all these incentive systems have been created to to deliver. >> Yeah. >> Are there emergency powers or action you can take as governor that can just say, "You know what? I'm going to fix this in a year." Or do you have to work with the legislature to solve these problems? >> A bit of both. I mean, the the governor has certain levers that are very powerful driving the budget process. There's the veto, the bully pulpit, just kind of naming and shaming is really powerful, executive orders, the
[27:33] appointments. I mean, the governor appoints 3,000 people who run all of these commissions that have incredible discretion over how to implement regulations. But there's no doubt that ultimately you need the legislative branch to to change. And I think that a lot of Democratic legislators, many of whom I know personally and private, will admit that things are broken, that things aren't working. There just hasn't been that willingness publicly to name what is going on, say that the system's broken, the incentives are are completely
[28:03] backwards. I think, you know, as governor, I'd be in a position to change the conversation, help either persuade existing legislators to think differently or elect different legislators. >> Do you think it's also cuz if they're public about it, they'll lose their donors and they'll lose their donor class that's supporting them? >> Well, it's hard to step out on a limb without knowing if you're going to have support for it. It is difficult to just go direct to voters in an environment where money talks. It's a very large
[28:33] state. >> [snorts] >> Uh it's expensive to deliver a message. Social media has lowered barriers. That's part of my bet is that we can go straight to the voters with this message and get traction around around the truth, around what it takes to actually solve our problems. Uh but it's it's, you know, I understand why people go with the sure the sure thing. And it's it's not fun to be labeled. They will call you everything when you fight for change. You're a corporate sellout, you're um you're racist, you're whatever. I mean, there's always some label that
[29:03] people will ascribe when you try to fight for change. But I try to stay laser-focused on the real-world outcomes. Housing costs, energy costs, quality of schools, public safety, the things that people care about in neighborhoods like the one I grew up in. That has to be the North Star. >> Yeah. What causes homelessness? >> It's a big question. There are a few things. I mean, one, you can't ignore our broken housing market because in places where housing is cheap and widely available, you can have high rates of addiction and mental illness and most
[29:33] people can remain indoors even um even with those challenges. You know, typically what happens if you if you actually look at it as a life cycle issue. If someone who's already vulnerable for some reason, could be of their own choosing, could be circumstances, but job loss, health issues, addiction, mental illness, um you know, domestic violence. There's a range of really awful things that happen to people and that people sometimes do to themselves. And in these circumstances, if the rent
[30:03] is $3,000 a month, you are just one medical bill, you know, layoff away from really having you know, ending up in your car very quickly. And and people working people in California especially don't have a lot of savings. They don't have something they can fall back on. So, the macro cost structure of California, the highest housing costs, second highest energy costs with the highest gas prices, which disproportionately hurts working people. >> [snorts] >> Um an educational system that is
[30:33] preparing far too few of our children for the jobs of the future. We can go through that list, but that is creating these conditions of of sort of vulnerability or fragility that means that people living on the edge are much more likely to end up in their car. But I would add that we have a massive public policy failure. Not only did we break the housing production market, which is the macro challenge, but we haven't built shelter and treatment beds. So, for folks for whom an addiction or mental health issue is the the thing that has them on the edge, we
[31:03] have far fewer beds than other states. And then when people do become homeless, it ought to be brief and it should not be outdoors and yet we we lead the nation in unsheltered homelessness. Over 40% of the people living outside in tents in the entire country live in California, which is only about 12% of the country's population. We haven't built shelter, we haven't built treatment, we're not doing what we need to do to rapidly re-house people, connect them to a case manager, give them tools to turn their lives around, and hold them accountable for turning
[31:33] their lives around. >> If there's mental illness, should they be committed to some facility to help them recover from their mental illness? >> Yes, or support them through that. In short, I I think you have to be able to involuntarily hold people for addiction treatment, mental health care, if they're repeat If someone is repeatedly refusing help, if they are harming the broader community, which is often the case, whether that's vandalism, retail theft. It's been a battle here in our downtown where windows are constantly being
[32:03] broken by people who clearly are suffering from serious addiction and and mental health issues. I think we should give opportunities to accept help. It needs to be dignified, they need to be alternatives to the streets. We've stood up over 2,000 indoor placements, interim housing placements, almost all individual rooms with doors that lock, giving people privacy. These are low-barrier alternatives to the streets. Bring your partner, your pets, your possessions. We're really trying to meet people where they are. The good news,
[32:33] 2/3 of people say yes. The bad news, the other third is so deep in the throes of addiction to substances like meth and fentanyl that they can't make a rational decision about their own self-care. I believe that that is that it is not compassionate or progressive to leave them to endlessly cycle between streets, emergency rooms, jails, and ultimately die of an overdose. I think we have a moral duty to intervene, help them detox, and get connected to
[33:03] a counselor and give them a chance to turn their lives around. Drugs are coming from somewhere fueling this crisis. Can the governor address the drug crisis? Can the governor get drugs off the street, arrest drug dealers? Is that a federal issue? How do we resolve the fueling of fentanyl, methamphetamines, prescription painkillers, et cetera, that have made their way onto the street? >> It has to be all levels of government, all hands-on deck. So much law enforcement is done at the local level. We have a police department with about a thousand officers out on the street enforcing local laws. They're on the
[33:34] front lines of this crisis as are our firefighters, social workers. Surely having federal federal tools and and and state we we have the National Guard, we have CHP, we have a variety of of tools here. What I do know though is that we can reduce demand by intervening in public drug use and getting people into treatment and holding them accountable for turning their lives around. If we get people into recovery, that's one more customer not available out on the
[34:05] streets to buy these dangerous products. >> And how many times do they cycle through before they have to be held more permanently? >> Well, I think it has to scale up over time. With Prop 36, I was the first Democratic mayor in the state to come out in support of Prop 36. The rule of thumb there is on your third public drug offense, you can be given a choice between treatment and incarceration. And that's bringing a consequence to a decision that doesn't just affect you. We can talk about civil liberties, but when you are actively choosing not to engage in treatment, you are more often
[34:36] than not creating imposing real costs, real harm on the broader community. We've seen businesses shutter in our downtowns, parks where families can't play. So, we >> It's direct and indirect. >> That's right. And I think a lot of people don't account for that, which is >> critical. I want to shift topics to energy costs. There's an Iran war going on, so there's an acute spike in energy gas prices in the state, but over the last number of years, California Governor Newsom and the state legislature have pursued an effort to drive green energy policy in the state.
[35:06] California has a 70 cents per gallon roughly tax rate. The California price for gasoline this week is $5.50 compared to $3.50 in the rest of the country. Did we get it wrong? Should we have taken a different path in the state versus fighting for green, chasing Chevron out of the state? Chevron's now relocated to Houston. They're shutting down the largest refinery on the West Coast because of the policies and the the bureaucracy and, you know, how do we balance this climate change green interest with the the real hard cost for
[35:37] everyone on the price of living in the state? >> Yeah, I do think we've gotten our regulatory solution here approach wrong. I would reject the notion that it's either-or. I don't think it has to be. I think innovation is the is the middle path, the way to do both. Look, Texas is providing dramatically cheaper power that is cleaner than California. You see places like China out leaning heavily into solar, wind, storage, EVs. The the path is investment and innovation and
[36:07] infrastructure, a smarter grid. What we've done in California is is another classic case of well-intended regulations leading to massive unintended consequences. Let's just take the example of our refineries. The state has lost most of its refineries over the last decade because we have intentionally regulated them out of out of existence. And so what's actually happened is we still import oil and gas.
[36:37] We've just pushed refineries. We had the cleanest, best regulated refineries with some of the highest paying jobs in the sector. We pushed that out of state. Now we're importing the same amount of gas from thousands of miles away. It is dirtier. It has a bigger carbon footprint. We lost those good high-paying jobs. We lost the tax base of those companies paying local taxes. It has been a hit on every level and actually because climate and climate change is a global phenomenon, we we have not actually made the we've
[37:07] actually made the problem worse while hurting ourselves economically. So that's the opposite of what we need. We need win-wins. We should be paying EV owners today in the middle of the day, strongly incentivizing them to charge their vehicles the middle of the day when power is so cheap and abundant in California that we sometimes pay Arizona to take our excess solar. And then have them plug in at night to power the grid and get through that roughly 5:00 p.m. to 9:00 p.m. evening peak where we've got to start firing up gas power plants because there just
[37:37] isn't enough power on the grid. So we need to be smarter when you invest in innovation and infrastructure, not regulate energy sources out of state that we still rely upon. But it's hard so now we've got the 70 cents a gallon tax in California. The legislature's passed a series of bills to it to make that tax go up and up and up. Now they're talking about increasing it even further. >> It's the most regressive tax imaginable because it's even worse than a sales tax, which is already fairly regressive. But as you know, higher income wealthier people have
[38:08] already adopted EVs. They're they're not paying this tax. It's working folks, particularly in towns like Watsonville where I grew up. I mean, when I was in high school, I had to go 50 miles one way for high school. My parents went 50 miles the other way for their jobs. and so it disproportionately hurts working people. My proposal is that we, to start, temporarily suspend our gas tax to provide immediate relief to working families who are paying the price for a war that they didn't ask for, and they're disproportionately paying the price. I would temporarily suspend it,
[38:39] but we have to be intellectually honest about this. It is our primary source of revenue for paving and maintaining roads and our transportation infrastructure. We will need to shift how we do this. Rather than being a gas tax, first of all, the general fund is up 75% in the last 6 years. So, I'm pretty confident that a state that's spending $350 billion, we can afford to pave our roads without punishing working families. But, I also think over time, as EV adoption
[39:10] increases, we'll have to find a smarter way of charging a basic user fee, so that people who use the roads pay to maintain them. >> One of the other big costs in California and related to housing and related to this climate change question is the cost of insurance for your home. We had this massive wildfire that spread, destroyed a large part of areas in Los Angeles last year, and as a result, many of the home insurance companies have left the state. I just lost coverage on my home because I live near a bunch of trees, so
[39:41] my house is deemed too risky to have coverage. And I'm fortunate in that I don't have a mortgage that I've got to deal with the loss of of insurance coverage, but this is becoming an increasing burden for the state of California because the state's had to step in and create a bigger and bigger insurance pool that financially and accounting-wise the state can't really afford. >> Yeah. >> How do we solve this problem of the cost of homeowners insurance? What's the right structural solution here for either incentivizing the return of insurance companies, creating an insurance pool that's well-capitalized
[40:11] and can actually afford to make the payouts instead of needing to go to the federal government when there's a crisis and ask for a bailout? How do we fix this problem in California? >> I think there are a a few components to the strategy going forward here. Uh number one, we have to rebuild the private marketplace. 90% of homeowners, maybe more, can be covered by private insurance affordably, and we have to rebuild that part of the market by bringing them back, allowing them to appropriately price risk, and creating more granularity. If you're
[40:41] willing, and you may not be, but if you're willing to remove those trees within 100 ft of your home, you should pay a lower premium. If you prefer to have the trees there, you should pay the higher premium. So, more granular pricing, allowing appropriate pricing of risk, is is just really important. Now, for the 5 to 10% of homes that are up in have, you know, in the in the in the hills, heavily wooded areas where there's lots of vegetation, we'll have to have higher First of all, when you build, there's a question of
[41:11] how much more we should be able to build out there, probably not a lot. What materials you use, they need to be fire resistant, and you'll have to pay much higher insurance just to cover the true cost of of the likelihood of a fire and the cost of replacement. The other piece of this, though, is the state has to take more ownership for vegetation management. We spend $8 in fire response and recovery for every $1 we spend on prevention, and there are plenty of urbanized areas that are at risk because
[41:42] they're proximate to dense vegetation the state has not taken ownership for clearing. And yes, it should be a partnership with the federal government if they're federal lands, we should hold the federal government accountable for doing it, but I just toured Altadena and Palisades, met with the homeowners there, who are incredibly frustrated about the lack of rebuilding. No one is quarterbacking this. And if you go walk the Palisades today, you will see, once again, vegetation that's 5 ft tall that hasn't been managed in an area where people are trying to rebuild their homes. So, the state has to step up. As
[42:14] governor, I would create a a task force that just focuses on fixing the insurance market. And if the state will invest in vegetation management to reduce the risk of catastrophic loss, you're going to see premiums go down over the long term. >> I think it's insane that the state sets rates and then tells the insurance companies how much to charge and assumes they're going to stick around and keep charging it. If they can't make money doing it, why not let the market decide? There's hundreds of insurance companies that if they were able to set their own rates and not have to have the state dictate the rate, they would compete for
[42:45] pri- and price would come down. This idea that the state should be determining what companies should charge for anything is a problem, but fundamentally in the insurance markets, it's literally chased every insurer out of the state. I just don't understand like how this >> Yeah, these kinds of price controls don't work in practice as we've seen. And when I That's what I mean by saying we have to be able to appropriately price risk. Insurance companies need to be able to charge rates that reflect the true risk and cost. I think they should be strongly incentivized, if not held
[43:15] accountable for allowing homeowners to adopt best practices and thereby reduce their premiums. And I think there's a subset of folks who may need to be on and pay into a public option of some kind because they just won't be covered by the market or perhaps they have to choose that based on where they live they won't have insurance. I don't know, but I don't think you can force everybody else to pay exorbitant rates to ensure that we cover the last riskiest home that's going to be the most expensive to cover. >> Yeah.
[43:45] >> It's just it's an illogical setup. >> Well, look, let's shift to one of the other big liability questions in the state. It's the one I care I wouldn't say the most, but it's one that I've observed may end up being a big driver for what's ahead for us. California's public employee retirement system, so CalPERS and CalSTRS. They provide the retirement benefits to roughly 3 million California public workers. And there's roughly a trillion dollars of capital in those two investment funds that are meant to support those retirees. They've been making about 7% a
[44:15] year compared to the S&P making 11% a year. And the current accounting estimates that they're going to be short by some estimates 250 to 300 billion, by other estimates as high as a trillion dollars in the years ahead in paying out the benefits that they're legally obligated to pay to public employees as they retire. And you can't just change those benefits. There's a state Supreme Court case that's made that known that you can't go in and rescind benefits that you've promised someone. So, you are stuck with that liability. And because
[44:45] they're public entities, California state taxpayer is ultimately going to be stuck with a trillion-dollar liability if that's what it comes to. How do we fix this freaking problem? >> Yeah, I'm worried about it as well, and I'm intimately uh familiar with it because we've had to tackle pension reform in San Jose. We were sort of the canary in the coal mine quite a few years ago as our unfunded liability began eating up our general fund. Even today, after pension reform, 19% of our general fund in San Jose this
[45:17] year goes to paying an unfunded pension liability. That just comes off the top. That is one out of every $5 goes first to our obligation to retirees. And again, I don't blame the retirees or those who advocated. It's politicians who didn't do the math, didn't recognize when the math wasn't working out, and swept it under the rug because they knew they'd be long gone by the time uh the the bill came due. And so, look, there's there's really only two options here. One is to move toward a
[45:48] defined contribution model as we have in the private sector. You see all over the world the employer and the employee pay in. It's put in the market. It needs to grow over time. People need to calculate their savings and their >> You see your account, you track it. >> You track it, you can up your contribution level. If we were to move to that, uh the private sector, I'm sorry, the public sector would need to be a a strong match. And I I think the challenge is this, I don't think politically that's likely to happen.
[46:19] What we've done in San Jose, which could be a road map for the state, is we negotiated Well, we had to go to the ballot, we went to There were lawsuits. It was a very messy process. I think it needs to be better handled. But effectively, we created a a different pension system for new employees. It said, as you come in, this is what a right-sized pension system needs to look like. We're going to have the employee and the employer paying more up front. We will be more realistic about the returns we're expecting. We'll adjust
[46:49] over time faster if the returns are underperforming. We've brought in better fund managers who get who are heavily incentivized to make smart investments and grow the the the investment. And then most importantly, if our if the returns fall short, the the delta, the gap, is covered 50/50 by the city, meaning the taxpayers, and the employee in terms of lost benefits. So, there's shared pain on the backside
[47:19] if we miss our targets. >> And what do we do for what we have now? >> What Well, what that has allowed us to do because of the legal limitations that you've mentioned is And I'm I'm not saying it's perfect, but this is just legally and politically what we were able to get to was the best outcome we were able to get is that we're on a long glide path of paying off all of the the the unfunded liabilities for the tier one employees, all of those older employees. It's a 20-year process. By the early 2040s, San Jose will have cleared the debt, our general
[47:50] fund's going to be flush, we're going to be increasing staffing and service levels. And And you'll start to feel that here much [clears throat] sooner. We are actually roughly at peak cost for unfunded liabilities today because we took the medicine and now we'll start that slow glide path where each year there'll be a little more room in our general fund because we actually bit the bullet and took this on. >> Well, I think that's like how do you fund that glide path? It may be the case that our budget has some margin for error, let's say, because of how much we're spending. Let's just do the statistics. California Governor Newsom
[48:22] has proposed a $349 billion budget this year in the state. That's up from 209 billion, so almost 2x, 60%, 70%, 80% more, 75% more than uh the year before COVID. And that's up from 110 billion 10 years prior. So we went from 110 to 350, 3 and 1/2 x is how much we're spending since, you know, uh it feels like yesterday. Like just a couple years ago. >> Yeah. >> Despite having the nation's highest tax rates, the largest revenue base,
[48:52] we're still looking this year at a $35 billion deficit, California state budget. What happened? Like how did this get so bad? And how much of this do you think is this term of fraud, waste, you know, abuse? Like where's this money going? >> Well, part of what we've done is something we talked about earlier, which is we have increased our our pay for public sector employees and our our pension obligations and and post-retirement health benefits at a
[49:25] faster rate than we could actually afford, and we haven't been honest with ourselves about that. Part of where the money's gone though is is is really just a sprawling bureaucracy that when we in good years have more money, we create new programs, we add head count. The state's population has stayed flat over the last 6 years. Spending is up 75% as you point out. And head count in state employees is up, I believe, over 20%. So, we're we're adding more state workers, we're pouring
[49:56] more money into public programs that aren't starting from the premise of what is the outcome we need and how do we most efficiently get there? I mean, it's time for California to go through an exercise of zero-based budgeting and say, "What are the outcomes we need and are we actually spending dollars to achieve those outcomes or are we just funding a sprawling, bloated bureaucracy where it's just easier to add 2%, 3% head count every year, give everybody a 4% raise and call it a day." And I think it's it's that's generally been the approach is whenever revenue's up, we
[50:27] just kind of give everybody a raise, hire more people, initiate a few new programs. We never go back to basics and say, "Well, if this is if these are the resources we have and these are the outcomes we need, are we really optimizing our spend for those outcomes?" And the answer is no, we're not. >> Can you do that with restructuring, zero-based budgeting as governor or do you need to do this in partnership with the legislature that all has their special programs that they fired up where money's flowing to their local county, money's flowing to their friends, money's flowing to their donors? How do you actually execute
[50:57] this? >> Well, I think yeah, I as I said before, I I think electing a pragmatic, independent-minded governor who's willing to who understands this problem and is willing to tackle it is step one and is necessary but insufficient. Ultimately, we have to build a more moderate coalition of legislators who understand how broken the system is, who are willing to do to do hard things. I don't I don't think that this just happens overnight but the governor has a lot of
[51:27] tools that he or she can choose to use. The you know, you do drive the budget process. Ultimately, you need legislative support for it. You have the bully pulpit. You have the ability to manage state agencies in a very different way. The governor points 3,000 people to run state bureaucracies that can either come in with the mindset of business as usual, I'm going to sit behind a desk, we're process-oriented, or can be held accountable, and maybe it shouldn't be 3,000 employees. Maybe we should slim how many people it is, but can be told, "Here are the outcomes we
[51:57] need. Tell us, you know, go ground truth these, go down to the local level, spend time with the school boards, the cities and the counties where all the money actually meets the constituent, where the rubber hits the road, and come back with answers on how to reform these systems to get more for what we're spending. And if you can't hit more aggressive goals, we'll bring in someone else who can." We need a different mindset for how we operate our government agencies. >> What you're saying is starkly different from what others are saying, and one of the biggest points that others are making right now is that they want to
[52:28] increase programs and increase spending, particularly in healthcare. So, what's your view on government-provided healthcare? Should all healthcare in California be free? There's a big movement, a big legislative effort to try and make this the case. Does this make economic sense? Can we afford it? How do we actually do it? Or do you think that this should remain a private market effort? >> I don't think it's realistic for California to create a a single state-run, free healthcare-for-all
[52:58] system. I just I I don't understand. I I know my many of my opponents in my party, Democratic Party, are proposing this. I think we have a pretty good sense of how to reduce cost. We just have to be willing to do it. Price transparency and competition could bring down costs in healthcare by 5 to 10%. Preventative care. We should be incentivizing insurers and and health providers for
[53:30] helping someone get healthier and reducing their overall demand on the system over the course of their lifetimes. Things that may seem small, but getting a hundred thousand plus people off of our streets and into shelter dramatically reduces the burden on our health care system. I I just I I think that prevention I'm taking another one. Nurse practitioners can do so much more than we often allow them to do which again is a function of this behind the scenes negotiation in Sacramento over what are doctors allowed
[54:01] to do, what can nurses do. Nurse practitioners providing preventative upstream care in clinics in communities can be far more effective at preventing long-term chronic illness than what we do today which is end up with everybody in the emergency room needing care after they're already really sick. So, we need to restructure our health care system. California should be demanding and investing in innovation and better ways of doing things and bend the cost curve, not fall back on this lazy answer that we're just going to find a way to raise
[54:31] taxes more to fund free services that will ultimately break just break the bank. >> You've been criticized by many for being against the billionaire tax. I think you're the only candidate running for governor right now that has spoken out against it. I've heard your comments on it obviously. I think I was probably the first identify it and bring it up on my show when it first came out the day it was filed. For me, it's fundamental to private property rights. If you can take people's assets after they've paid taxes on it, there's no stopping that train. I
[55:02] mean, why not take everyone's assets at some point like that you know, you pay your income tax and that's your private property you get to keep it. Shouldn't be that legislator can later say I'll take 10% of what you own. That just seems wrong to me. Do you think we need to have a continued increase? Like do you think we need to maintain the temporary high income taxes in California? What's your general view on revenue? We've talked a lot about you think hey, you know, we don't need to rely on growing revenue, but based on the current tax system in California, what else do you think needs to change or do you think it's just like let's
[55:32] leave it as is. No billionaire tax, no new taxes, but let's just not go back. >> Yeah, let me say a couple of things. One, I think where this push is coming from is a deep concern about economic inequality and declining social mobility. And I think these are real issues. I am worried about economic inequality. I think in the long run it's a threat to democracy. I think there are a number of better solutions to this than the proposed wealth tax, which is
[56:03] as you point out, >> Let me say aside even the philosophical arguments, it simply won't work. Certainly not at the state level. We've already seen >> people I know have already left the state, right? We've seen over >> a trillion dollars of capital flight. >> Our ongoing revenue going forward is now going to be lower. The the dirty secret of this proposal is that it won't be the billionaires who pay higher taxes. It'll be middle-class and working families who are left holding the bag. So that I mean that's why I just immediately felt that I had to say something because it's
[56:33] working people who are going to be hurt by this. It's not going to be billionaires. They're the most mobile people in society. Um so look, I I think first of all, there are things we can do to make the tax code uh fairer. I think there's a legitimate debate about what should the absolute rate of capital gains tax be. There's the phenomenon of very wealthy individuals borrowing against uh appreciated assets where you're not you're sort of you're effectively avoiding paying capital gains. I think that's a loophole we can close. There's the step-up in basis upon death. I'm not
[57:03] sure that um it's very fair for somebody Well, let me just use an example. I'll just say this, I don't think Elon Musk should be able to pass on $500 billion of appreciated but untaxed stock wealth to his children and the moment that they inherited it's rebased at current market value and no one ever pays the capital gains on it. I mean there there are a lot of things we can do to capture billions in revenue to close loopholes in the tax code. This is of all the proposals the the worst, the least likely to work, the most likely to hurt
[57:33] working people. But, I also think we have to acknowledge in a state that keeps asking for more before we do better, we've we've got to acknowledge that social mobility is down because of public policy failures first and foremost. Public schools that aren't performing, housing that isn't affordable, energy that isn't affordable. We I mean, when half of people Sorry, when most Californians are spending over a third of their income on housing, many spending over half of their income on housing, that hits
[58:03] social mobility a lot more than the fact that the tech sector has had a bunch of growth. It's just These are fundamental public policy failures, and the sooner we own them and think differently about our regulatory environment and our policy so we start fixing them, the the better for California, the better for the Democratic Party, uh most importantly, the better for the people we serve. >> But, what you're saying makes a lot of sense, but I think people hate other people's success. I think there's a lot
[58:34] that's been going on, this fueling that's going on with the lack of social mobility, but seeing a small segment of the population accelerate. Technology's really had that driven that. I'll be the first to admit, there's a small population in California that's done extremely well, while most of Californians have been left behind. Do you think you're electable in this sense? I mean, you're not fueling the populist sentiment that I think every one of your candidates has found they can tap into. And uh that may put you at a big disadvantage in this race. >> Look, I I do think we we need to take economic inequality and
[59:05] social mobility much more seriously than we have. I think we need to ask and ultimately demand our um our wealthiest individuals, our tech sector, industries that do well to be structured in a way that works for people. Um I I'm curious what you think. Maybe I'll turn the tables for a moment. I think that we need a shared prosperity that includes people having some sort of equity from
[59:36] or more direct benefit in the incredible gains that tech has produced. AI is scaring a lot of people because it could lead to the elimination of jobs, further concentration of wealth. What do you think is the appropriate role for the tech sector and and those who have profited immensely from it to ensuring a level playing field or at least, you know, some some notion some semblance of of equality of opportunity? >> That's a longer conversation, but I do think giving more people more ownership
[60:06] is important. But I'm not sure people are going to want to or need to work at big companies anymore with AI. It's a longer conversation. But in the same way that Instagram, Shopify, Etsy created a TikTok created new jobs, almost like new roles, new ways that people could earn. >> Yeah. >> AI is going to create a thousand times more new ways for people to earn than they do today. And they're not going to have to have the job that they feel like they're stuck with today. And AI is
[60:36] actually going to accelerate more people up the ladder faster than anyone's really realizing. And I can give you a countless examples of this that I've seen recently. But I think we're all going to wake up pretty happy with the next advance in in economic mobility that's going to be unleashed because of AI, not in spite of it. >> I hope that's true. It's a very optimistic read. I do think my read of history is that technological change, while ultimately producing greater abundance, if you will, >> Yeah. >> often is really hard on people. >> yeah. >> And that's why in in San Jose at least we've done we've created AI upskilling
[61:07] courses for our workers. We've gotten AI companies to come into our libraries and provide tools and training. >> Totally. >> We're really trying to figure out how we lower barriers to learning how to use these tools, apply them in people's lives, start those new businesses, create the new jobs of the future. >> thing >> AI can teach people how to use AI. >> That's true. >> [laughter] >> Which is where where I I'm starting to see a lot of people learn how to use these tools on their own by asking the AI and engaging. And then there's this moment where it's almost like you lit a match on a on a bunch of tinder for the
[61:37] first time and you're like woah. And I I've seen this in person I'm watching people get knocked down like bowling pins in terms of woah. That woah moment that I've I've been like visibly seeing people just in the last couple months is making me very optimistic. >> That's good. It does though get back to this basic point that we need our public education system to teach people to think critically when half of our kids aren't on grade level for reading or math proficiency, it's going to be very hard for them to be lifelong learners. >> I mean, curiosity and asking questions
[62:09] and learning how to think, not teaching them knowledge, is a massive problem that we're dealing with in education in the United States in my opinion on its own. Kids are not being taught how to question, how to build. They're being taught facts. Those facts are irrelevant because they all exist in AI now. You don't need to know all those facts. You It's good to have basis, but what are you really trying to get? A curious mind, an engineering mind, a creative mind, a thoughtful mind, and teach individuals agency in a world where they have infinite capacity. That's what AI gives all of us. >> Yeah. >> But what do you think of Donald Trump?
[62:39] >> I'm not a fan. Um my concern with Donald Trump, even if he may get certain issues right. I think he's channeled the frustration of working Americans who feel that they've been left behind is that I don't believe he really understands what makes our country great. I think that he has created a lot of fear and division around immigration, doesn't recognize how many people we have had in this
[63:09] country in part because both Democrats and Republicans wanted access to cheap labor in places like Watsonville where I grew up, who have been here 20, 30 years working hard, paying their taxes, otherwise playing by the rules, raising children who are US citizens, who are now living in in terror because they're worried their family's going to get ripped apart. Um I I don't understand and don't support this war in Iran that I think is a huge uh huge blunder and it's going to drive up energy costs and it's it's not clear to me why we're losing American lives over there.
[63:39] Um I just, you know, I think tariffs, yes, I do believe China, this is something I think he's gotten right, has been competing unfairly with the US. I think a targeted approach to tariffs, focusing on that issue, would have made a lot more sense than the general inflation we've seen. So, I mean, I could go issue by issue, but I just I worry mostly about the health of our democracy. I think it requires a um a real, honest dialogue, a respect for rule of law, and the independent
[64:09] judiciary. Um I just, yeah, I have deep concerns that this not just populist, but um reactionary, quasi-authoritarian rhetoric and mindset is the outcome of declining trust in government when we don't hold ourselves accountable for delivering, for working people. I think it's predictable and I think you're seeing an equal and even um I'd say equally risky rise in populism
[64:39] on the left and reaction, and these two are playing off one of one another. And part of the reason I jumped into this race was to offer a third way, a pragmatic alternative. I'm a I'm a Democrat, but I also recognize that something's broken in California. The incentives are all wrong. The highly organized interests in Sacramento are being taken care of. Sacramento is working great for highly organized interests. It is not working great for regular people. And I think
[65:09] the best The to that is to get back to basics, be competent, be data-driven, deliver results for people because I'm worried that if we don't, we're going to see this epic populist battle on the right and the left where people are offering really easy answers, not the honest answers that we need. >> Rate Governor Newsom in the job he's done as governor of California. >> I think Governor Newsom has been a bullwark against some of the worst ideas coming out of the legislature. You mentioned that he's vetoed 10 to 15% of the bills coming out
[65:40] of the legislature. Uh many of those vetoes I agree with and I think have averted um real harm. I My my critique has been around not doing enough to take on the entrenched interests in Sacramento and uh and we've we've disagreed very publicly on certain policy issues. Prop 36, recovery housing, um some energy policy points. Uh but it's
[66:10] it's always I mean I try to attack problems, not people. I'm not really interested in you know, evaluating somebody's intentions or or or their ideology so much as the results of their actions. And I think he's done some really good things. Uh I also think he he could do even more and that's been my appeal to him is let's work together to drive even more change faster. But some of the things he's brought forward like CARE Court, right idea. Now we need to execute it. We need to actually make
[66:40] sure that CARE Court's actually getting people with addiction and mental illness into care. I think he's got the right right idea, right intention, but we've got to follow through and as governor I would make sure that Prop 36, Prop 1, CARE Court, uh number of things he's put in place are actually used to deliver the intended outcome. >> Governor Newsom's put out a lot of these memes kind of making fun of Donald Trump by doing tweets sort of like the way Trump does Truth Social posts and and so on. It's very antagonistic to the president, at least publicly antagonistic. At the same time,
[67:11] California relies on federal funding and requires a lot of federal cooperation, a lot of federal land in the state. How would you interact with President Trump and talk a little bit about how the governor has interacted with President Trump publicly. >> Look, I understand what the governor's doing. He's, you know, been holding a mirror up to Donald Trump and both fighting for California's values, which I appreciate. I think there's also just back to incentives. I mean, he's he's running for president and and that's
[67:41] where I think this approach is coming from. I would take a different approach in the sense that as governor focused on delivering for Californians, I will fight the Trump administration through through the courts, through the bully pulpit, whenever necessary to protect our values, to protect our people, to protect state funding. I also think though that we need to find places where we can achieve a win-win with the federal
[68:11] administration. I'll give you the example that's top of mind for me. I just spent time walking through Altadena, the Palisades, where people have lost everything. Over 10,000 homes lost between the two. People are desperate to rebuild. They're not getting the help that they need. And part of the reason they're not getting the help that they need is this hyper-partisanship in which uh California and Washington are fighting rhetorically and politically, and the people who are being hurt are
[68:41] the families who have lost their homes, who are waiting on the $40 billion of federal aid that's been promised, and that if it weren't for this political battle, would have already flowed to help those neighborhoods rebuild. And I just as governor, yeah, I I will absolutely fight for our values, but I'm committed to fixing our problems, which means finding a way to make it a win for this president and this administration to rebuild Los Angeles. That we have to put the people before our politics.
[69:13] >> And as it relates to ICE and immigration enforcement, do you consider undocumented immigrants in the state of California individuals that you would represent as governor? Is it part of your job to protect undocumented immigrants who came here illegally, but ICE would like to remove? >> Yes, unless they're committing serious and violent crime. Look, if you're here, you're not documented, you're committing violent felonies, I think you should be deported. But like many of the people I grew up with,
[69:43] if you were essentially, if tacit maybe tacitly welcomed here because we had an ag industry or a construction industry that needed low-cost labor, and you came, started a family, started working, paid taxes, raising kids here who were born here, who are US citizens, the only practical and ethical solution is for parties to put the hyper-partisanship aside, come together, and come to a grand bargain in which we secure the border, we deport those committing
[70:14] violent crime who are undocumented, and we create a pathway to a legal to some sort of legal status. If citizenship is a bridge too far for that older generation that came earlier, so be it, but their kids are US citizens, and they deserve to still live with their parents, and I think we've got to find the the the approach that respects people's humanity, and is practical and ethical, and I'm incredibly disappointed, frankly, with both parties for years of kicking the can down the road, and I will absolutely stand up to
[70:46] protect undocumented residents who are playing by the rules, who are doing the most American thing, and I get all the I get all the arguments around lawful immigration. Let's secure the border and set up a proper system of lawful immigration going forward and not create a bad incentive. So, let's do that and then create this pathway to legal status, but what we've seen play out in in Minneapolis is horrible for the country. We're seeing citizens arrested, even killed. This is This is not This is not working and I
[71:17] don't think it's ethical. Let me give you the pushback that the Republican Party leadership would would give, which is that many of these individuals will end up voting for Democrats, vast majority of them will vote for Democrats, and that the border was opened, they were allowed in here, and now this inevitable due to humanitarian conditions path forward to citizenship will ultimately increase the Democratic Party's voting base and lock them into power in DC, lock them into power in these states, turn more states blue, etc. How do you respond to that concern and pushback? Put the humanitarian piece
[71:47] aside. But that the The reason the border Every Democrat I ask about this cannot answer the question, why was the border opened? Was it to lower labor costs? Was there some other reason that we did it? Was it to increase the voting base? I mean, what was the motivation and how do we address the response that's going to come for the many years ahead from a Republican Party that's going to have issue with this? So, my sense growing up in an in an ag town that historically has probably been about a third undocumented is that the primary incentive for the
[72:17] parties to not solve this problem is that a lot of people became very wealthy, a lot of industries did very well by having access to low-cost, abundant labor, and plenty of the business interests that did really well in ag, construction, and other otherwise. I mean, historically this would have been, say, meat the meat packing industry, right? Um they're donors to the Republican Party. So, I think both sides have been complicit. I think the back to incentives, I think Democrats and Republicans have played to their base
[72:48] and actually been politically incentivized to not solve the problem. And as a pragmatic moderate, my approach is to say you're both wrong, but there's something true in what you're both saying. Republicans are right that we should be able we should know who and what comes in and out of the country. We should have a secure border, and we should take away any incentive for people to come here illegally, especially in a moment where uh we've got a fentanyl crisis, we've got the international terrorism, we've got nukes
[73:19] that are getting smaller and smaller. We should have border security, absolutely. If you're not here lawfully and you're committing serious and violent crime, deportation is the is the minimum expectation of what should happen. So, let's do that. But, I just I think both parties have been complicit. We can sit around and say who wins electorally or economically, we can play that game and continue to have this incredibly divisive and unproductive situation where millions of people are living in fear, living in the shadows, or we can
[73:49] fix it. And when I say legal status, maybe that legal status doesn't come with a with a right to vote. Maybe it's a green card. I mean, I'm I'm for compromise and problem-solving and moving the country forward. Both sides are going to have to give if we're going to solve this problem. >> I think that's the best idea possible for how to solve this, which is a path to residence without a path to voting. And that that could solve everyone's concerns. And And lastly, I just want you to compare and contrast your Democrat opponents, Swalwell, Steyer,
[74:20] Porter. Let's just do those three. Give me a sense on your view on each of the three of them. >> Look, I I've I've been in enough debates with them now to understand that those three other leading Democratic candidates are vying for the same lane. It is the more of the It's a platform that says that the answer to our our is more revenue. It's revenue, revenue, revenue as represents one of his top
[74:50] three goals. And uh look, we need to think differently. What I'm offering is an approach that's been working in Northern California's largest city. I call it getting back to basics. It's focusing on fewer things. The things that are most foundational to opportunity and quality of life for everyone. It's being humble about what government can actually do, not thinking that the answer to every problem is more revenue and another government program.
[75:20] It's being radically more transparent and accountable about how we spend dollars and rooting everything in results or or measurable outcomes. And just bringing a a new uh politics of pragmatism as an antidote to this incredibly destructive populism we're seeing on the right and the left that really risks the the democratic lower case D democratic project of this country. And I just I think that California has throughout its history been the the innovative state that has led the way
[75:51] and changed the world. And I am hopeful that Californians are ready for a different kind of politics that focuses on problem-solving. I jumped in this race because all of the other candidates across the spectrum had already been in for a year. And uh I didn't hear anyone talk speaking honestly about our problems and how to solve them. And I thought that I had a unique voice in this race, and we're seeing that. I It's a short runway, but as I travel around the state, go to you know, see the
[76:21] sewage crisis in the in the Tijuana River on the border that shut down all the beaches down there, walk Altadena, or go through the Tenderloin in San Francisco, people are are responding because all they really want is for their tax dollars to be used responsibly. They want their government to work. They want their life to get better when they send so much of their money to their government, and that's my that's my commitment. >> Mayor Matt Mahan, thank you for being here with me today on All-In. Really appreciate the time, and good luck in the in the governor's race.
[76:51] >> Thanks, David. I enjoyed it. >> I'm going all in. >> [music] >> all in.

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