California Update: It’s Not Just The Tacos That Are Fishy

While the Golden State struggles with the aftershock of its elevated fast-food minimum wage – California-based Rubio’s Coastal Grill, home of the fish taco, is filing for bankruptcy – and the legislature has to deal with the approaching deadline for a new state budget, which invites fiscal and policy skullduggery. Hoover senior fellow Lee Ohanian and distinguished policy fellow Bill Whalen, both weekly contributors to Hoover’s California on Your Mind web channel, discuss the latest news in the Golden State including a nascent 2026 governor’s race (will vice president Kamala Harris “pull a Nixon” and give it a go?), plus a fond remembrance of the late Bill Walton – native San Diegan, UCLA basketball legend, citizen activist – who passed away just days after his beloved Pac-12 Conference likewise bid farewell.

Transcript

Jonathan Movroydis: [00:00:00] It's Thursday, June 6th, 2024. And you are listening to Matters of Policy and Politics, a Hoover Institution podcast devoted to governance and balance of power here in America and around the free world. I'm Jonathan Movroydis, Senior Product Manager at the Hoover Institution, and I'm sitting in the chair with Bill Whalen, the Virginia Hobbs Carpenter Distinguished Policy Fellow in Journalism, so that he can answer questions and provide commentary about California policy and politics in which he is well versed.

Bill Whalen, in addition to being a Washington Post columnist, writes weekly for Hoover's California On Your Mind web channel. Whalen is joined today by Lee Ohanian, Hoover Institution Senior Fellow and Professor of Economics and Director of the Ettinger Family Program in Macroeconomic Research at the University of California, Los Angeles.

Ohanian also writes weekly about the policy environment of the Golden State for California on your mind. Good morning, gentlemen. Let's talk about the latest developments in policy and politics in the Golden State. Lee, let's start by talking about your article in California on your mind this week. I love the way you led with the article.

Quote, I remember my first fish taco from Rubio's Baja Grill. [00:01:00] Crispy fish combined with a creamy sauce, cabbage, cilantro, onion, and lime in a fresh corn tortilla. Lee, I too fondly remember enjoying Rubio's $1 fish taco as a hungry teenager two decades ago. And it's too bad that Rubio's is poised to close 48 out of its 115 restaurants in California.

You note that the average Rubio's employs about 26 workers, so you estimate that the closures have resulted. In about 1,250 jobs, you argue that this is a result of restorating operating costs rising, and this could be due to the new fast food wage law Assembly Bill 1288 that took effect on April 1st.

Governor Newsom had said otherwise, quote, can Californians expect the Prices of their McDonald's and Starbucks to go up. I've heard that before and it didn't happen. Unquote. Lee, is the governor right on this one? And also I've searched the California Restaurant Association's website for a position on AB 1288 and I didn't see anything.

Can we expect them to push for a repeal of the bill?

Lee Ohanian: Yeah, Jonathan they are pushing back quite hard at this point. So what we [00:02:00] saw with the signing of 1288, which which is a strange Taken, just removing ourselves from all this associated with California restaurants, etc.

California decided to charge a 25 percent higher minimum wage for fast food. Just that industry. All, every other industry pays 60 on our minimum wage. And you couldn't have done it You couldn't have picked a worse industry to impose a higher minimum wage because fast food disproportionately hires really young people, teens.

They hire about five times as many teens as a share of their workforce as every other business. And of course, teams are in the process of speaking as a former teenager, we all can think back to our first jobs, and I wasn't particularly good at mine. You're still accumulating skills and knowledge and training and going to school.

So teams just aren't all that valuable compared to, say, a prime age worker. They make about half. Of what workers 25 and over [00:03:00] make so now you're sticking it to the fast food restaurant saying Okay, you got to pay 20 an hour. It's 25 percent higher than everybody else for workers who you Disproportionately hire that just simply can't that you they just can't resolve that level of cost so what we saw since the signing of the bill is that almost 10, 000 jobs were eliminated in California fast food between the time Newsom signed the bill in September and April 1st, which is when which is when the the law took effect.

And so as you noted, Rubio's is announcing they're closing 48 of their California stores. They're not closing any in Arizona or Oregon Nevada, which where they also operate. So they're sticking with those And and Rubio cited high operating costs. And of course what changed is the is the law.

And interestingly, I received an email from a gentleman who owns a number of franchises in the fast food industry. They are taking out a full [00:04:00] page ad in USA Today, and that ad includes The 48 closures at Rubio's and it includes the Pizza Hut delivery drivers who have lost their jobs over a thousand of those delivery drivers.

It it has roughly 16 little panels on that full page ad about how California's minimum wage law is destroying jobs. And what's sad is that there are a lot of kids out there who would like those opportunities, and now they're just not available.

Bill Whalen: So what Lee is referencing, this is the California Business Industrial Alliance, which put out an ad in the the California version of the USA today.

When I, back to the day when I worked in California state government, if sometimes we had an issue with the Clinton administration, we would put out an ad in the California version of the New York Times, just to get attention that way. And what they did was, Lee mentioned, was they just did mock obituaries of popular fast foods.

Now, Lee, I think a couple of things going on here. One is Jonathan mentioned the 1 fish taco so we just had a nice nostalgic moment of the idea of something that's 1 in fast [00:05:00] food, and you talked about this this access to jobs for young people being cut off but I think there's something larger here, Lee, which is a shock to the economic status quo, if you will lending tree.

Does surveys of all kinds of topics. And recently they did a survey asking people about higher prices for fast food items. And here's what they found 78 percent of consumers now consider fast food to be a quote, unquote, luxury purchase due to the cost of the meals. That just completely upsets the apple cart, especially if you're Jonathan Mavrodis and raising a young family, a detour to McDonald's or some other fast food place to get the, Reverbial happy meal is supposed to be something that doesn't break the bank, but people are getting shocked out going to fast food But you know getting back to jonathan's question here lee the question is how do you put the gd back in the bottle if you will?

Special interest oftentimes use the initiative process to get favorable outcomes at sacramento We're going to talk more about that in a minute But the question would be what ammunition Lee, that you think the restaurant associations, a small business association [00:06:00] has to push back. Could they go to the ballot?

They're going to miss the deadline for November here very soon, but could they, if this gets worse, could they go to the ballot and push repeal effort? And how do they change this? Or are they just stuck because they let a very bad thing go to law?

Lee Ohanian: Yeah, good questions. This is a political payoff to the SCIU, the Service Employees International Union, which is incredibly powerful political lobby within the state.

And they had been trying for decades to unionize fast food workers across the country and spent over a hundred million dollars doing this. And they failed to do that. And one reason why is because you've got all these teams and extremely young workers who take these jobs for three or four months, five months, and then they move on to something else.

There was never any chance they were going to unionize these workers. So the SEIU is thinking, Okay, let's try to get permanent workers into those jobs with a high wage and then maybe we can sidestep our way into this [00:07:00] because If a fast food restaurant is unionized, then the law doesn't apply to them.

Collective bargaining agreements always exempt these types of laws ballot proposition. Those are really expensive. I don't know if they're willing to spend that kind of money what I suspect they may do is go to the legislation say hey, this is killing us Profit margins have passed through five to eight percent There's just not a lot of juice to squeeze out of that orange anymore So if I had to guess what might happen They try to get some they try to get some indirect support from the legislature some type of tax break some type of hiring credits Something like that will take a little bit of the sting out of this because you know The state legislator was saying we're going to hold billion dollar corporations accountable these restaurants for the most part aren't owned by mcdonald's or chipotle.

Or jack in the box, they're owned by most of them single franchisees, two thirds are owned by Or mom and pop operations. So they're getting killed [00:08:00] by this. So I hope the state ledger I wish the thing never existed in the first place. The the parent companies caved essentially because what was going to happen If 1228 wasn't passed is that the state was going to pursue joint liability and without getting into the weeds of that what that means is that Possible legal liability at the franchisee level Including labor, labor lawsuits, violations.

We're going to make the parent company jointly liable. And they wanted no part of that. So there's a huge push from the parent companies to the franchisees to accept this. And now they're paying the price. It's awful politics, it's awful economics.

Bill Whalen: It's funny, we haven't heard a peep from Donald Trump on this, who's in San Francisco, by the way, on Friday for a fundraiser.

Look out San Francisco. If anybody is the king of fast food among presidential candidates, it's Donald J. Trump. But I don't know, Lee, I'm just curious about this. I came out to California 30 years ago. So I've. 30 years ago, I first sampled my [00:09:00] fish taco, too. It was a rite of passage and I found that living here, you there are things that you see that are eye shocking that, at first, the price of gasoline, real estate are the first two that come to mind, but I think especially when it comes to gasoline, you get used to it at a certain point.

You just know you're going to go to the, pumps and pay four or five bucks a gallon. You just go along with it. But there's something about fast food. That's just different when you go in there and just the bill is 15. When you remember as a young man, it might've been four or 5. So I just don't know.

And the other thing not to ramble on here it's just the national media's fascination with the story. How I knew about the the advertisement USA today, because there's a story in the New York host today on AB 1288, it just, the story just doesn't, will not go away. Lee.

Lee Ohanian: No, and of course of course, there was Penarragate and that, that is not going away either.

There is of course, the bill was crafted using non disclosure agreements with the union in the bargaining room helping craft the legislation. When does a political interest group write legislation? Political interest groups voice their opinions and then [00:10:00] legislatures go off and write the legislation.

The S. C. I. U. Was in the room writing the legislation, including the Panera car about which Newsome still has not provided an accounting for. And Bill, yeah, you're absolutely right. You're in the van. You got four kids. You go to McDonald's or Jack the Box, whatever. And suddenly, instead of paying 35, you're paying 70.

And you're saying, what? What happened? And yeah, fast food prices are up enormously since the since the pandemic. And again, it's not, these are not greedy billion dollar corporations. Most of these are single mom and pop franchises and a profit margins of 5, 8%. I just, I can't imagine opening a small business in California today.

Unless you have some kind of transformational idea that was just going to, create dollars coming out of a pipe. I just can't imagine doing it is simply too expensive, too hard to exasperating. So I feel for these people there. California talks about the importance of Supporting the little [00:11:00] person.

And Bill, 30 percent of fast food franchises are owned by minorities compared to, I believe, under 20% entrepreneurship rates in the rest of the economy. So the Democratic Party talks about, diversity, equity, inclusion. This is completely the opposite of that. It's it's killing the people that they say they're trying to help.

Bill Whalen: Yeah, the situation calls for transparency, Lee and Jonathan. One reason why this topic is shrouded in mystery, it's because the parties involved during the crafting legislation, Lee, they signed NDAs. And so a lot of the backdoor negotiations, we're not privy to. I just think that Sacramento needs to get rid of NDAs.

We should not allow lawmakers to and, special interests to hide behind documents and secrecy when they're crafting legislation that affects Californians.

Lee Ohanian: No, not at all, Bill. And you, I know you followed the the bill that was created by Kevin Fong a few weeks ago that would have eliminated NDAs.

And it was killed in committee and for listeners to kill a bill in committee. All you need is [00:12:00] not to have the no votes exceed the yes votes. You just you just need the yes votes, not to get over 50 percent because there was only one no vote. in committee. Every other democrat simply chose not to vote.

So they are holding their nose. They understand that this is awful. This is an abrogation of the contract of transparency between them and their constituents. So I'm 100 percent with you. N. D. A. Should not be part of this, but that bill was killed. I believe there's a new bill. That was just advanced.

Ashley Zavala at the NBC affiliate up in Sacramento was tweeting about that. So we'll see what happens with that. But I think this is just the worst examples of the confluence of bad economics bad policies, and just Really illegitimate government that I've seen in an awfully long time.

Jonathan Movroydis: Gentlemen, let's turn to budget matters as CalMatters Dan Walters commented recently when Governor Newsom unveiled the 2022 23 [00:13:00] budget. He, quote, bragged about having a 97. 5 billion surplus to expand health care, social equity, and educational programs, unquote. But Lee, as you explain in your recent California On Your Mind column of May 21st, the state made, quote, enormously unrealistic revenue assumptions that falsely painted far too optimistic a fiscal portrait for the state, unquote.

You write that the state has failed to acknowledge stock market cycles and accounting for its future revenue. Lee, can you explain the economics that drive revenues? And also, toward the end of the article, you described how new constraints on the budget due to revenue shortfalls have revealed a silver lining.

What is that silver lining?

Lee Ohanian: Bill so California for decades and Bill Jonathan, I'm sorry. And Bill is is remarkably up close. I'm familiar with the issues, the fiscal issues fairly facing the state because we rely, we California rely inordinately on personal income tax revenues to fund the budget.

We rely very heavily on on the highest earners. A lot of those revenues come from capital gains. So [00:14:00] stock market goes way up people sell stocks They sell other assets businesses real estate and revenue gushes in and then you know As bill will tell you the next year you'll see capital gains revenues go way down because people sold them the previous year That's the story of California, California finances.

And because of that, California put in a rainy day fund a number of years ago to try to help smooth this out. Now, so what happens in 2021 is that capital gains revenues just come flooding into Sacramento. Revenue exceeds expects exceeds the forecast by over 70 billion. Huge. So Newsom says, Oh, this is just this is we are the model for the country.

We have a 100 billion surplus. And so then California went on a spending spree between during Newsom's governorship. The state budget rose from 200 billion to 328 [00:15:00] billion. Over a 60 percent increase. No state in the country comes close to that. We just wildly overspent.

And again, and during Newsom's governorship, we lost half a million people. So on a per capita basis it's just even more egregious. And then what makes this even worse, the obvious mistake you you refer to is that Newsome and his budget staff assumed that enormous waterfall of capital gains revenue that came in 2021 would not just continue, it would grow.

And so suddenly, CalSupri, as we go from this This apparent ephemeral 100 billion surplus to a 73 billion deficit in just two years. And and Jonathan, what makes this even worse is that when the 2022 budget was signed, and Newsom was bragging about the 100 billion surplus and we're the model of the, we're the model for the nation, the stock market had crashed.

In the first half of [00:16:00] 2022. So if you ever were going to expect a dearth of capital gains revenue It was going to be in that year because the stock market had gone down so much So now when you look at the budget suddenly, Newsom's budget staff is expecting much lower revenues than they were in the past.

They should have never ever expected that. But the silver lining Jonathan, you referred to is that Last year, the state passed a law that paves the way for California to implement single payer healthcare. And what that means is the private insurance would be eliminated. Medicare would be eliminated.

Everyone would fall under the same umbrella of single payer healthcare, which in my opinion has been just an abject failure in most countries. Just take a look at Britain and the National Health Service, which is the longest running single payer system. That's been in place since just after World War II.

It's just awful. It's absolutely awful. So the single payer health care system would require about a half of about [00:17:00] half a billion dollars. i'm sorry, 500 billion dollars. If only, if only it costs half a billion dollars so obviously this becomes pie in the sky and so that's been shut down for the time being.

But, at the same time Newsom in Newsom's May revision called for continuing to fund health care expenditures for illegal migrants which is obviously very politically controversial. It cuts funding for disabled kids. It cuts pre K funding for disabled kids. Which could just devastate them.

It includes over a billion dollars, I believe, over the next two fiscal years for buying electric buses, which are remarkably expensive. And of course, which is just Pure window dressing. It will do nothing in terms of, climate change, which is what one of Newsom's obvious objective.

Yeah, so there you have it. 73 billion deficit and was all because the governor and his staff made just an egregious forecasting error.

Bill Whalen: [00:18:00] So we're sitting here on the 6th of June. The first crunch day for lawmakers in Sacramento is June the 15th. That is the constitutional deadline for having a budget plan in place.

You then have to have a budget enacted by July 1st, which is the new fiscal year in California. And if you don't get a budget July 1st you just will do temporary spending to get you you know over the hump until you get a budget in place now There was a time when the budget was the republicans last stand in sacramento by that Budgets used to require two thirds majorities in both chambers to get past and so Before democrats had super majorities in the two chambers.

It was the republicans chance to You know, run interference and frankly, be difficult and try to exact a few items in the budget before it got passed. Those days are gone now. It's a simple majority vote. So a lot of the drama that you read in the papers now, but oh, my gosh, we're going to reach the deadline by July 1st and so forth.

Yeah, we'll probably hit it. They do have differences. The most notable one I'd point out besides some safety net issues that Lee mentioned Newsom wants to cut back transportation spending. And nothing gets a lawmaker more agitated than cutting back [00:19:00] transportation spending. Why? Because we're talking millions upon millions of quote unquote demonstration projects and easy chance to go back to your district and hold up a giant pair of scissors and cut the ribbon on the newly paved street or the roundabout that's replacing a turn light and so forth.

We'll see if they come together, but. Lee, the question though, is if Sacramento is ever going to get out of this cycle of a boomer bus budgeting, you mentioned single payer care, for example Jerry Brown, a decade ago was pooh, poohing the idea of single payer care. He simply said, show me the money and we'll talk about it.

And of course the money's never there. So the argument went away. So it seems like we keep having that kind of groundhog day aspect to some of these big ideas. But again, the question Lee is when you have these wild fluxes in revenue, you have these. big economic forecasts that don't pan out when we go boom to bust.

How do you change that if you're a state like California?

Lee Ohanian: So Bill, in an interview, Newsom admitted the state has a problem with this revenue model, with the structure of taxes which is extremely high tax rates on the highest earners. 13. 3 [00:20:00] percent last year. I think now we're up to, is it 14.

3? It's 14. 3 for some earners, yeah. Yeah, so 14, 14. 3%. So that just builds in that builds in this issue. And I think any sensible revenue system would be to tax more stable revenue sources rather than capital gains, which is just, it's a roller coaster. So what would be the more stable revenue sources probably would be taxing services.

Now taxing services would be political anathema to many in the state legislature because it would be, oh, you can't have, you can't have low income people paying higher prices than they're already paying. Can deal with that with earned income tax credit type supports and so forth.

But that's really the answer. I think it's a political nonstarter. News had been missing is a problem. He's certainly in that interview. He certainly didn't give any him whatsoever to what he thought the solution would be. He just simply danced around by saying, Yeah, there is a problem. But that's that's a conversation for [00:21:00] another day.

He's been in office now over five years. And he's shown no leadership whatsoever with that.

Bill Whalen: The governor doesn't talk about California having a spending problem. Let's suppose for the sake of argument that I had a very bad drug habit and I spent a lot of time in drug seeking behavior.

There are two ways to talk about this. Number one is the availability of drugs. But secondly, the amount of money I have to go purchase drugs in California, instead of looking at why it's hooked on drugs, i. e. spending, is complaining about not having enough money to buy the drugs. And so I just, I'd like to see somebody in Sacramento play dodge and just walk around with a candle and talk about state spending that you referenced, how we quickly went from 200 to 300 billion.

30 years ago, when I first came here, the state budget was a little under 50 billion. So I don't think, I don't think inflation over the course of 30 years takes you from 50 billion to 300 billion plus.

Lee Ohanian: No I I did a calculation. So I took I took the state budget from back in the day and I adjusted for inflation, adjusted it for population growth, and [00:22:00] then just for kicks, I said imagine we let it triple.

Not just account for population growth and inflation, but let it triple. What that comes to What that comes to is 116 billion dollar budget deficit I'm sorry. 116 billion budget rather than the 328 billion budget. And Bill you're 100 percent right. People should be talking about the spending problem.

And yet there's just an ending and an ending cry for for more spending, such as single payers, such as more investments in clean energy such as more support more support for health care in in low income communities. Just the list, there's a never ending list. And and Bill, it would have been one thing if that 320 that 328 billion budget guys like I can't even say it.

There's too many zeros. It would be one thing if that had done some good if that had been invested in water storage or water conveyance or [00:23:00] infrastructure. It wasn't those dollars were just simply burned up. You look around and say, Hey, you know what, where's that going? What aspect of public goods and services is better now than it was five years ago.

And I'd love to hear from somebody who can tell me who can tell me what that is. So one

Bill Whalen: thing the budget shows, Lee, is the education lobby really knows how to play the game, the California Teachers Association in particular. The governor comes out with a May revise and it proposes cuts to education.

CTA promptly dips into its war chest and starts running ads criticizing the spending cuts. That gets them an audience with the governor's people and they sit down and they work out a deal and the deal is as follows. The administration agrees to look at Proposition 98, which is the education guarantee in the budget.

In other words, it says that about 40 percent of new revenue that comes in gets devoted to education. And the new administration says we're going to look at Prop 98 and we'll play fast and loose with the guarantees and Prop 98, we'll find some more money under Prop 98 for you. And then secondly, they agree with CTA and the [00:24:00] deal is basically you lay off us if we agree to get you more money down the road.

So that buys the administration piece that gets them through this year's negotiations vis a vis that that angry ad campaign, but here's the problem, Lee and Jonathan. A year, two years, three years, five years, maybe for the next governor to deal with. CTA is going to have its hand out looking for more money.

And so this is part of what keeps you in the trap is spending more money. It's not just spending it when it comes in, it's the promise of spending it down the road.

Lee Ohanian: Yeah. Bill, so if you yeah, so the CTA got a great deal on this. If you put it in the perspective of say somebody borrowing money and someone lending money, It's like the cta is lending money to about a 20 percent interest rate.

So they're saying yeah, okay We'll take a year. We'll take a tough year and then we're just going to cash in and bill, you know that the k through 12 budget last year, 128 billion dollars And that's in a school system that's losing kids. We're down to about 5. 8 million kids in K 12 public school.

It was [00:25:00] over 6 million not so long ago. So that budget works out to about 23, 000 per kid. In the average, for a classroom of size 25 We're looking what close to six hundred thousand dollars of revenue per classroom So i'd love for somebody to tell me how we can't do a good job teaching kids except a hundred thousand dollars per classroom We're doing a terrible job one only three out of four of our kids lack proficiency in math science and english three out of four 600, 000 per classroom.

We should be getting a lot more out of that.

Jonathan Movroydis: Bill, in your column in California On Your Mind released today, you discuss reports that Vice President Kamala Harris is telling friends that she might run for Governor of California in 2026. This would make her kind of like Richard Nixon, who, like Harris, served as Senator of California before becoming Vice President of the United States.

Also, like Harris, Nixon had a tense relationship with the president's staff, in this case President Dwight D. Eisenhower's staff. And after losing the presidency to JFK in 1960, Nixon decided to run for governor of [00:26:00] California in 1962. You explained that 2026 could actually turn out to be like 1998 when your boss, Governor Pete Wilson, termed out.

Bill, how did that election unfold?

Bill Whalen: In 1998 a little different California in this regard, the primary system was different. It wasn't an open primary as it is now. Both parties had their respective primaries. The Republican side was locked up with Dan Lundgren, who's the Attorney General, but the Democratic side was pretty wide open.

You had the then Lieutenant Governor Gray Davis running and then you had a wealthy businessman, a former an airline executive by the name of Al Checkey who dumped about 40 million into the election. And the parallel between 2026 and 1998 is that Dianne Feinstein, the senator from California, was entertaining thoughts of running, and she hovered over this race as this very large force.

And if she had jumped in, that would have pretty much wiped out Davis and Checky. She did not run. She decided in January that year not to run. Jane Harmon, a wealthy congresswoman, she she married into the the Harman Electronics fortune. She jumped [00:27:00] in and spent a lot of money. Checkie started attacking her with ads.

She started attacking attacking Checkie with ads and the beneficiary of all this was one Gray Davis who just sat back and watched those two punch each other out. So that's the parallel. The idea of a very large figure jumping into the race. Now I would point out that as soon as the Kamala Harris rumors came up, her people did their best to shoot them down because you Yeah, you're running for reelection as vice president.

You don't want to be signaling that you're already thinking about another run two years from now in case you lose. You just don't act that way. But you look at 2026 right now and two features stand out. Number one, the race is already underway. Welcome to new California where you don't announce months ahead of time.

You announce years ahead of time. And it's already a pretty busy field. Alphabetically, you have Tony Atkins, who's a former legislative leader. Eleni Kounalakis, the current lieutenant governor, is running. Tony Thurman, the current state superintendent of public instruction, is in. So is Betty Yee. She's a former state controller.

Then you have a bunch of people thinking about it. That includes Javier Becerra, who's the current [00:28:00] federal HHS secretary, Rob Bonta, the state attorney general and Antonio Villaraigosa, who ran against Newsom in 2018 former governor former mayor of Los Angeles, he's thinking about as well.

And what stands out here, Lee and Jonathan is nobody in this field is really what we'd call a Titan along the lines of a Feinstein or even a Kamala Harris in terms of recognition and so forth. And this group is going to have to battle it out. Now the field will thin out at some point, cause there's not enough money to go around.

But I'll just be curious, Lee, to see if two things, number one, if anyone in this field really takes a dominant foothold, but secondly, Lee, the idea, if anybody in this field is going to really address the status quo in Sacramento, just point out touch into the public sentiment that things are just not going right in the state.

Lee Ohanian: Yeah, those to me and just being politically neutral it's disappointing that all the names you mentioned are are the status quo really the Sarah maybe maybe via Ragusa, although he got no traction last last time he ran against Newsom and Which was somewhat a little bit surprising to me [00:29:00] given the state's hispanic composition now essentially the median voter in california's now, is not a hispanic voter.

So it's a just yeah, it's a disappointing group. That I see. It's interesting. About harris running for running for um, governor should Should things go south, for her and biden. You I don't know. How do voters feel about a politician coming home for a consolation prize?

I would think that they would point to her and say, you know what, hey, you're a loser. This is, we want to, we want a winner here that's going to be leading us. I went back and looked at I looked at when she ran for, when she ran for president In 2020, and that campaign was, I don't know, did it even last three or four months?

Bill Whalen: She dropped, she did a smart thing. She dropped out in December of 2019, which spared her embarrassments in the likes of Iowa, New Hampshire, and South Carolina, especially. And so she, very smart. She got out before she really took defeats and also got out before she racked up a lot of debt.

Lee Ohanian: Yeah, and I remember the New York Times did a [00:30:00] story about her campaign.

It talked about how it unraveled and the adjectives and discussion within that article or what you've seen throughout her career as vice president. The article talked about a lack of organization within the campaign political infighting among her staff. Staff not knowing what she wanted her severe criticism of staff and then in turn, they would say, we just don't know what she's looking for.

She's changing message all the time. So I don't know, Bill. I would think that should things go south and she comes back and is looking to run the governor. I think she would have a bit of an anti Sally Field moment. Which she would learn. Hey, they really don't like me so much.

Let

Bill Whalen: Me let me let me pose a question to Jonathan since our are. Loyal listeners should know that Jonathan Mavroides is has Nixon ties here. He once worked in the Nixon library. Jonathan, are you familiar with why Nixon ran in 1962? My impression is that he was simply looking for, lack of a better word, redemption.

Having lost bitterly in 1960, he wanted to win. He wanted to [00:31:00] show that he could win.

Jonathan Movroydis: I think that's about, I think that's about right. I think that I'm not sure he actually had the confidence that he could win. In fact the future first lady, Pat Nixon, didn't want him to run. And I don't think, even thought that he could win the race either.

So I think he was looking for some kind of redemption, but that redemption didn't come obviously until 1968 when he was a little bit more prepared to run for the presidency.

Bill Whalen: Yeah. Now, one thing I'd point that would differ between Nixon's experience and Kamala's difference is for Nixon, you need to raise the question of why he should run for governor of California, because Richard Nixon was a national foreign policy guy at the end of the day, not really a nuts and bolts Sacramento politician, so fish out of water, I think, if he were governor of California.

Kamala Harris, though, the argument could be made that This would be good for her and that would show leadership chops that you can actually, demonstrate executive skills. But the timing here gets problematic. On the one hand being governor of california in 2027 should donald trump be in office Is an incredibly juicy job because that governor will do it You know, Gavin Newsom will do it then in [00:32:00] 2025 if Trump wins and he'll once again become the head of the resistance.

So you can see a California governor coming off in 2027 and having that national podium. If she wants to run for president, the future is going to be now for her. You're going to run, you're going to want to run in the 2028 cycle. So you can't, Come into office in January 2027 and promptly turn around and run for president.

Jerry Brown showed this doesn't work. So to me, if she ran for governor here in 2026, she'd be taking herself out of the presidential race. But if she's taking herself out of the presidential race, that's probably admitting that she's too toxic to win the democratic nomination. If she's too toxic to win the nomination, if she too toxic to win in California.

So I don't know. I find this story kind of funny. I just can't see her running for governor of California. There is the parallel with Richard Nixon. Pete Wilson came back from Sacramento. To Sacramento, ran for governor as well. So it's been done. I'm just not sure if it's the right person, but again, what stands out all these people running for office in 2026, and I have yet to see anyone run against Sacramento.

Now, maybe that changes and maybe Lee, what we need is a [00:33:00] proverbial wealthy guy from the outside to run. And if I'm looking for anybody, I'm probably going to hear the name talked a lot in the next year. Rick Caruso down in Los Angeles down in your hood, Lee.

Lee Ohanian: Rick Crusoe. Yeah, he's got the deep pockets.

He spent over 100 million to run for L. A. Mayor, which I can't imagine anybody who wanted to be L. A. Mayor. Large, because it's a weak mayorship because the City Council is is incredibly powerful there. The pockets are deep. The bad news for Crusoe is he spent over 100 he became a Democrat, although I don't think the Democratic Party has embraced him in any way he stands against a lot of the progressive and kind of pie in the sky political ideals that are within the progressive wing of the Democratic Party So I think that would be a breath of fresh air if a guy like Caruso was governor.

So fingers crossed on that. He's got the money. Maybe he would, I don't know, do you think he would do better at the state level than outside of LA? I mean he's certainly [00:34:00] very well known in LA. Very successful developer in in commercial real estate and very philanthropic as well. He's given a lot of money his way.

A lot of the money of his money away. So do you think he would be, you think be more successful at the state level?

Bill Whalen: I think so in this regard if he is, especially if he's running against three or four other Democrats, he, so Caruso, I think was once at one point, a Republican, he then switched to independent and then.

declared himself a Democrat shortly before filing to run for mayor, which probably didn't help things in the end. It looked, that, that, that baptism was looked a little fishy getting back to Rubio's tacos. But no, I think if he ran statewide though, against three or four Democrats, it would be interestingly in this regard, he could peel off some Democratic vote, But again, I think if he ran against the status quo and really Arnold did in 2003 in the recall position himself as somebody who wants to come in and clean up the stables, who knows, maybe there's an audience for that, but we'll see what his appetite is having spent a hundred billion dollars.

And I droned onto this before and probably in previous podcasts, but if I ever were a lawmaker, one of the first bills that introduced would be some form [00:35:00] of legal protection, allowing the children of wealthy people to file lawsuits against their parents, stopping them from running for office and wasting the family legacy.

Lee Ohanian: Yeah. Yeah, that 100 billion could have gone for other things. Exactly.

Jonathan Movroydis: Bill, in your California On Your Mind column last week you paid tribute to the late Bill Walton San Diego native, UCLA basketball great, Naismith Basketball Hall of Famer, and Pac 12 basketball broadcaster. The passing of Walton and the demise of his beloved Pac 12 came within one day of each other.

You write in the article. As Walton was arguably the face of the conference as a television commentator and its lead advocate, the conference of champions being one of his broadcasting catchphrases, the concurrence of twin departures was not, was hard to overlook. Bill, discuss what Bill Walton meant for not only athletics and West Coast sports, but also for the Golden State.

And America's finest city, San Diego, the city your boss once led as Walton was coming to the, was coming to age in the decade of the 1970s. And also a side note, while playing basketball at UCLA, Walton was arrested for [00:36:00] taking part in a protest against the Vietnam War blocking traffic on Wilshire and Veteran near the Westwood campus in your neighborhood, Lee.

Bill Whalen: Yeah, exactly. It's I got very sad and nostalgic when I saw that Bill Walton passed away many's a time I went to see a basketball game at Stanford at Maples Pavilion, and there was Walton broadcasting on the sidelines, and I thought if I had more guts, I'd approach him and explain that I work at the Hoover Institution, I do a podcast, would you please do it with me?

So I just loved to have a chance to talk to the guy because he was Just really fascinating a lot of levels. So what is it about him that made him quit to centrally California? You mentioned it, Jonathan. He grew up in San Diego in the in the sixties and early seventies a crunchy granola upbringing that sent him, but he was a basketball genius that sent him up north to UCLA, the promised land nothing in today's athletics compares to what UCLA was in basketball back in the sixties and seventies and Lee can attest to this Walton came in after Lew Alcindor and now Kareem Abdul Jabbar.

Jabbar came from New York to UCLA. Jackie Robinson told him is actually the place he wanted to be. And so that sold Jabbar. [00:37:00] Whereas Walton grew up dreaming about UCLA and being a Californian. So he stayed in California, but it was his love for California, his embracing of riding around on bicycles.

Bicycles back when his legs and feet were better, how he loved to hike. He loved the Grateful Dead. He really was the embodiment of a California free spirit in that regard. And boy, did he love the PAC 12 conference. And so when he died a couple of days after the last PAC 12 organized event, which was its baseball tournament, the irony was just hard to overlook.

If I'd had a chance to do a podcast with Walton, I would have asked him what's going on with college sports, especially the demise of the PAC 12 or the conference of champions as he always liked to call it himself. Because if you look at the list of universities with most team championships, they are Stanford, UCLA.

If you look at the universities with most Olympic athletes, it's Stanford, UCLA, and Cal Berkeley. Walton embraced that and now that Pac 12 is no more, I don't know. It's just to me, Lee, it's it's sadness, the man is gone, but it's a lot of California nostalgia too, because you do talk about him.

You do hearken back to the days of the anti [00:38:00] war protests. You do hearken back to the days of the wooden dynasty and you hearken back to many regards to days of kind of a simpler California.

Lee Ohanian: Yeah, much simpler. He grew up in San Diego in the in the fifties and sixties. I believe he was what, 71 or 72 when he passed away.

Yeah, so late fifties, early in the sixties. So those, the heydays of growth for California when the golden state, that was the right name for it. Yeah. Everything and anything seemed possible. And and, Bill, my understanding from those who know him is that he was an extremely fine man, a real gentleman Mike Breen, who's one of the broadcasters for the NBA a camera, if he's on ESPN or or TNT But he has, he had a story where he brought his his father was on the USS Midway.

His father was passed was soon to pass away. They wanted to see the Midway one more time. And it brought him San Diego and Breen called the Walton and said, Hey, do you have a hotel you can recommend? Here's the situation. My dad and Waltham hosted him at his home. And. Took them the midway and Breen was just so grateful that his dad was able to [00:39:00] have that experience so a fine gentleman and, he talked about the he talked about how San Diego is nirvana until the last few years when public safety and crime and homelessness has just gotten so out of control, and he talked about how he Would write to the mayor, Todd Gloria and say, Hey, what is a guy like me supposed to do?

I'm disabled. I believe I, I believe both of his ankles were fused due to basketball injuries and the horrible arthritis that came after that. So literally he had no mobility whatsoever in his ankles. You imagine walking like that. So he said, Hey, I'm disabled. What am I, people attack me when I'm riding my bike.

What am I supposed to do? And he never got a response. And Billy, it's interesting. Last year my family and I, we were we were visiting my wife's family down in San Diego. I took my youngest son to the to the holiday bowl, so we're going through downtown San Diego and it's just homeless everywhere.

It's just it's a scene of a human tragedy. And interestingly, the mayor who did not return Walton's calls Todd Gloria, I believe he comes up for another [00:40:00] election this fall. And Roughly 60 percent of the city within polls, of course, are looking for new leadership because the rest of California, San Diego's budget is skyrocketing.

Homelessness is out of control crime is way up, and people there are looking for some changes. And I wish Walton was around to see the nirvana that he enjoyed in San Diego, To get back to get back on track. But a fine gentleman, great basketball player, great ambassador for the sport.

And as you noted great ambassador for the PAC 12. He brought a lot of life to those PAC 12 those PAC 12 telecasts. And and Bill, not to belabor the point, but the, my opinion of the leadership in the state, the same thing happened with the PAC 12 conference. They The presidents and chancellors of the PAC 12 put the conference in the wrong hands of of those leading the PAC 12 and and it failed and died a miserable and very fast death.

I see the same kind of leadership attributes within our state. We, we [00:41:00] can't fail. We're too big to fail. But very sad. It's hard for me to fathom USC and UCLA now you In the Big Ten and flying five hours to go play the University of Maryland. But That's college sports. That's college sports.

Bill Whalen: It is now. Walton would not have run for mayor of San Diego We're not suggesting that but he would have been a very vocal voice in that election because he did not like the mayor And it was homelessness that really fueled him In fact, he had he came up with a plan to deal with it Which involved essentially moving the homeless population outside of san diego's boundaries just relocating them But he lived in balboa park he had this very kind of interesting Earthy home in Balboa Park, and he just saw San Diego falling apart at the seams because of this, as he mentioned, the homeless issue, and so that made him very mad.

Final note on Walton, by the way there is a series on Hulu right now called Clipped C L I P E D, Clipped, and it is the saga of David Sterling and his wife the former owners of the Los Angeles Clippers. And I mention this because the Los Angeles Clippers used to be the San [00:42:00] Diego Clippers, And at one point they signed Bill Walton to play for them and it was a huge deal, they gave him an enormous contract, the hometown kid coming home, but Walton's body kind of let him down.

But it was after his body let him down at with the Clippers that he actually came of all places to Stanford to go to the Stanford Law School. The journalist David Halberstam said you should go to law school, Walton did. And during his time, I think he was on campus for two years. He loved being here.

It's not just the kind of Grateful Dead hippie vibe he found in Northern California, but if you've been to Stanford, it's exceedingly flat earth. And so if you're a guy like Bill Walton with bad legs, it's a perfect place to be. He loved being here and he magically healed over that time.

Started playing pickup games on the Stanford campus. Can you imagine playing pickup hoops? And that guy walks in this seven footer, good luck. But he gets healthy enough to go back and play for the Boston Celtics. So he has one last hurrah, but yeah, just, farewell, PAC 12 and farewell, Bill Walton, God bless.

Jonathan Movroydis: As always, gentlemen, this has been an interesting hour of timely analysis. Gentlemen, thank you for your time.

Bill Whalen: Thank you, Jonathan. Thank you, Lee. Thanks, fellas. Bye.

Jonathan Movroydis: You've [00:43:00] been listening to Matters of Policy and Politics, the Hoover Institution podcast devoted to governance and balance of power here in America and around the free world.

Please don't forget to rate, review, and subscribe to this podcast wherever you might hear it, and if you don't mind, please spread the word, get your friends to have a listen. The Hoover Institution has Facebook, Instagram, and xFeeds. Our x handle is at hooverinst, that's at hooverinst. Bill Whalen is also on x, his handle is billWhalenca.

Leo Heian is also on X. His handle is at Lean Hanian. Please visit the Hoover website@hoover.org and sign up for the Hoover Daily report where you can access the latest scholarship and analysis from our fellows. Also, check out California on your mind where Bill Whalen and Leo Heian write every week.

Again, this is Jonathan Roy sitting in Bill Wayland's chair this week he'll be back for another episode of Matters of Paul and Politics. Thank you for listening.

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