Matters Of Policy & Politics: California High-Speed Rail: More “Loco” Than “Motion” | Bill Whalen And Lee Ohanian | Hoover Institution

>> Bill Whalen: It's Thursday, March 9, 2023, and you're listening to Matters of Policy and Politics, a Hoover Institution podcast devoted to governance and balance of power here in America and around the globe. I'm Bill Whalen, I'm the Hoover Institution's Virginia Hobbs Carpenter Distinguished Policy Fellow in Journalism. While I have the distinguished honor of that title here at Hoover, I'm not the only fellow doing podcasts these days.

If you don't believe me, go to our website, which is hoover.org dot click on the tab at the top of the homepage. It says commentary. Go over to where it says multimedia. You can see all of our podcasts there in front of you, you can sign up for any or all of them.

You can also sign up for our monthly pod blast, which delivers our best of our podcast to your inbox each and every month. My guest today is Lee Ohanian. Lee Ohanian is a Hoover Institution senior fellow and a professor of economics and director of the Ettinger Family Program in macroeconomic research at UCLA.

He's also my partner in crime, my writing partner, that is, in an endeavor that we call California on Your Mind. It's a Hoover Institution web channel devoted to all things Golden State. Lee, great to see you today.

>> Lee Ohanian: Hey, Bill, good to see you.

>> Bill Whalen: I would note, by the way, usually Jonathan Movroydis is doing the moderating for these California podcasts, but Jonathan could not make it today.

We will have him back the next time we do this. So, Lee, I was watching a tv show last night on the Science Channel, of all things. I have so many damn channels on my cable system, I don't know what I have. But I stumbled across this, and the title of the episode was great Trains.

And what it was chronicling was a high speed rail in Italy. And what a marvelous system they have and all the cool technology involved and how wonderful it is to go from Milan to Rome and so on and so forth. What it was, Lee, was a rather grim reminder, a grim reminder that if you want to see high speed rail working well, working efficiently, working effectively, go to Italy, go to Spain, go to France, go to Japan, but you don't go to California.

Now as coincidence would have it, you have written about California's latest in high-speed rail. Give us an update on what's going on here.

>> Lee Ohanian: Yeah, Bill, well, the California High-Speed Rail Authority came out with their latest version of their business plan, their 2023, actually it's a 2022 business plan.

It came out a week or two ago. And the cost of the system, Bill, is now up to well over $200 million per mile. And, Bill, as I was researching this column that came out yesterday in California on your mind, I found out something that I had never known about this.

Despite the fact we've talked about this a number of times. We both have written about this a number of times. And, Bill, here's what I didn't know. When you and I, voters, agreed to pass a bond for nearly $10 billion in 2008 as seed money, it was supposed to be an 800 miles network connecting LA, San Francisco, the Central Valley to the coast, a total tab of $33 billion.

What I did not know is that the business plan that was supposed to have been submitted to the state legislature two months before the election in which the bond was going to be passed or not passed by voters, the business plan was supposed to have been vetted. So voters had an idea of what they were ponying up for, whether they felt that the $10 billion seed money, $33 billion for the whole thing, was gonna be worth it.

Though here's what I didn't know. So the business plan was required by law to have been submitted to the state legislature in September. It was not submitted until after the election. And when the business plan was submitted after the election, here is what the California Legislative Analyst's office found out.

They found that the business plan was grossly deficient. And, Bill, imagine approving a business plan that did not have any analysis or discussion about future funding. It did not include any estimate for a breakeven point or what would be needed for the system to actually pencil out at a minimal level.

It did not include a discussion of the trains in any sort of detail. It did not include an allocation of costs across the different routes. It did not include a description of how they forecasted ridership or revenue. And it just goes on and on and on, including no discussion of expected completion dates for environmental reviews or how risks would be mitigated.

 

>> Bill Whalen: Right.

>> Lee Ohanian: So the business plan wasn't a business plan. The high-speed rail was never a serious project. And you go forward another year in time when the plug could have been pulled with minimal damage in 2009. And here's what the legislative analyst office wrote. Discussion of risk management is significantly inadequate, lacking any description of mitigation processes or detailed consideration of many types of key risks.

Few deliverables or milestones are even identified in the plan against which progress can be measured. There are inconsistencies in the proposed order of events that create uncertainty. And, Bill, what that last statement means is that the timeline within the business plan was out of order.

>> Bill Whalen: Right.

>> Lee Ohanian: It was a little bit like closing the barn door after the horse left.

What hit me was that the California high-speed rail was never, ever gonna get off the ground. And 15 years later, here we are without one train having left the station, without one route completed, and the state continues to forge ahead and just burn tax dollars. And I view this really as a gross betrayal of taxpayers within the state.

 

>> Bill Whalen: Right, so right now, what we're talking about, Lee, is so high-speed rail was sold in a couple ways to California voters. First of all, as you mentioned, it was sold with what sounded like a reasonable price tag. I think what you said, what, 32, $33 billion was quickly mushroomed to about $40 billion.

But the idea was, okay, we made about a one-fourth down payment with the bond, with the $9.9 billion bond. But what you have right now, Lee, is you don't have the promise, a very interesting promise when it first came up. The idea that you could take a high-speed train from San Francisco to Los Angeles and get there in three hours, which, if you figure how much times to fly and all that, it's kind of a trade off.

And you think riding in a train is just gonna be a lot more relaxing than fighting through an airport and so on and so forth. But that three hour model quickly vanished once we got into the weeds of how exactly you build it. And then the idea would have to go through some municipalities and the question of switching tracks and slowing down to go through areas such as here in Palo Alto, where I live.

So the three-hour concept quickly disappeared, Lee. What you have right now is, I think, what we'd call, in federal government parlance, a demonstration project, which I always like to say about transportation. It's a demonstration project. And the demonstration project in this regard is a high-speed train that goes from Bakersfield to Merced.

And no offense to those two towns and wonderful people who live there, but that's not the same as San Francisco and Los Angeles, so it doesn't match up. But at all times, Lee, I'm very curiously, cynically concerned about one thing, and that is show me the money. To mix our transportation metaphors here, I think the ship has already sailed for high-speed rail in this regard, to the extent that California could have received billions and, Billions of dollars of largesse and transportation money.

That window is closed right now, and it's closed after the last election in a Republican house. Right now, Kevin McCarthy is not gonna spend billions of federal dollars on high speed rail in California, mark my words. So California has missed that window to get more funding. You now look at the high speed rail authorities going to the legislature for $10 billion at a time when the state is running a large deficit.

I'm just curiously, how are they going to fund this thing? And actually, what is the latest price tag? Right now it's what, 110 hundred, 2130 billion dollars I think.

>> Lee Ohanian: Bill, nobody knows what the price take is. What's galling is that these annual business plans come out from the high speed rail.

The price tag keeps going up. But Bill, tell me, how could you ever estimate a price tag when you have absolutely no idea when the thing will be completed? They have no idea. They want to go forward with LA to San Francisco, which of course is never going to happen.

They come up with these price tags. So LA to San Francisco now is well over $100 billion. Just la to San Francisco, 520 miles. But what's galling is that how can you possibly estimate the cost of something when you have absolutely no idea when it will be completed or what impediments will stand in your way?

These are just, these are just pure guesses. And Bakersfield and Merced, the expected cost for Bakersfield and Merced now exceeds the estimated cost of the entire system back in 2008. And the $35 billion for Bakersfield and Merced of course, that's just gonna continue to go up. Bill, I did a little bit of penciling, and here's what I came up with.

Bakersfield and Merced, Merced is just 90,000 people. It's not a destination. But somehow the railway authority believes that 6.6 million people will be riding that route. Right. I have absolutely no idea how they came up with that number. For 15 years they've been making forecasts which, which they do not describe in detail, which are not reproducible by anyone else.

But Bill supposedly even got those 6.6 million people per year. What I calculated is that the value that these riders would have to place on going on the high speed train versus driving is somewhere around $1,000 per trip to make this whole thing pencil out. And who would possibly wanna spend an extra thousand dollars per trip when you're saving maybe 40 minutes?

Because the whole point of high speed rail is you don't make a lot of stops, and you have a long distance route where you can really exploit the fact that the train can go 200 plus miles per hour. This is 170 miles, and this is one with several stops.

So, Bill, I love your point about this is a destination project. There's no point, there's absolutely no economic point in doing this. And I wish that somebody would at least say, hey, we're sorry about this. But, Bill. Yeah, where's that $10 billion gonna come from? And realistically it's not 10 billion.

I suspect it'll probably closer to 20 billion. And how do you possibly justify the taxpayers? Yeah, we're gonna spend another $20 billion on something that we should be pulling the plug on right now.

>> Bill Whalen: And even if you spent that ten or $20 billion Lee, you still need to find another $100 billion out there if you wanna complete this thing.

And that's even if it's gonna cost 120, 130, 140,150 billion dollars wherever it goes. I would note Lee, that actually there is another high speed rail project underway in California talked about, and this would be a high speed line connecting Rancho Cucamonga to Las Vegas. And two things about this cut my eyelet.

Number one is the cost, if we want to call it reasonable, it's $10 billion. That's a lot of money, but it's certainly not in the level of what we're talking about for statewide high speed rail. But secondly, Lee, we're talking about Las Vegas as a destination. Again, not to offend our friends in the Central Valley.

Not Bakersfield, not Merced, but Las Vegas. Lee, I think there would be much more of an appetite for that line.

>> Lee Ohanian: Absolutely, Bill. So you're looking at a route that's substantially longer than Bakersfield and Merced. It's gonna cost roughly only 20% of the price tag of Bakersfield and Merced.

It's being done by a private company. And private companies only do things if they can make a required rate of return to their investors. Las Vegas is a destination, and it's a destination for people who are probably reasonably happy not to have a car. So this makes an awful lot of sense, Bill, and they're going to start construction relatively soon.

$10 billion is going to be a money making enterprise, and it just pales in comparison to what's being done with this government project. And Bill, I went onto the high speed rail website yesterday and California's director of transportation calls it a game changer. We've gotten to a point where politicians just will get in your face and just literally lie blatantly to you.

I wish taxpayers would wake up to this. I felt the media at some level for not calling this out. The San Jose Mercury did come out with an op ed, I believe it was last week, arguing that the project should be terminated. And I believe a couple of other newspapers are now doing this.

But this was never going to be something that took off. We're 15 years into it and we're just gonna continue to throw money down a black hole.

>> Bill Whalen: I think it ends either one of two ways. Either Governor Newsom decides enough is enough and pulls the plug on it.

Remember when he first came into office in his first state of the state address? He confused the heck out of everybody by indicating that he didn't think high speed rail worked. And people thought, my gosh, he wants to kill it. But then he quickly backtracked and said, no, no, no, no, I don't wanna kill it.

But he could in his second and final term, decide, okay, enough is enough, let's end it. But I'd be surprised if he did. Which leads you really with one option, Lee, and that's to go to the ballot and do an initiative. And here it points you to 2018 election in proposition six, which is supposed to kill high speed rail.

But this is a good example of how not to go about it. Instead of being a discussion about how to kill high speed rail, it was a conversation about the gasoline tax in California and what to do about transportation funding if you took away the gasoline tax. And that measure was defeated rather soundly.

So I think that some independent groups gonna have to go to the ballot lead and kill it once and for all and find a way to keep the focus on high speed rail and not get caught in the weeds of other California transportation issues.

>> Lee Ohanian: Yeah, Bill, great point.

Proposition six, I think it lost by a wide margin. I think it was something like 56 44, something along those lines got clobbered. That was the one where Xavier Becerra, who at that time was in DC, he was working for us supposedly, I think he had to rewrite the language of that.

I think twice it was politically scripted to try to at least some thought was politically scripted to try to make sure it was defeated. Yeah, that was a catch that was not well advocated by his proponents. I think high speed rail would be a winner in terms of shutting it down.

I just don't see how anyone. Really outside a small group of those in the central valley, or perhaps they would just be as happy to see that go away and not have to deal with another decade or another two decades of snail like progress on that bill. Just as a final note, the legislative analyst's office was remarkably accurate in forecasting what was going to happen.

They discussed the fact that risks were woefully and adequately discussed, that there was no solutions or mitigations to the risks that were discussed. They were worried about the fact that there weren't future funding sources. These are all the issues that we're talking about right now. We're talking about funding, we're talking about the fact that it's so woefully behind schedule and grossly over budgets because of all the risks that came up that derailed this thing, no pun intended.

I think it's probably the best example of what's happened to California governance, and it illustrates just how badly failing, our state government is doing its job right now.

>> Bill Whalen: Okay, let us now use a bad putt and let us turn to the governor of California, where he has trained his attention of lately.

And that is, of all things, Walgreens, this is Governor Newsom's latest foil. The governor on Monday tweeting the following, quote, California won't be doing business with Walgreens or any company that cowers to the extremist and puts women's lives at risk. That's what Gavin Newsom said, and he ended tweet by saying, quote, we're done.

Here's what Governor Newsom was referring to, Lee, Walgreens, earlier had announced that I was responding to legal pressure from Republican attorney generals in 21 states, including a handful where abortion remains legal. And deciding to partially halt its effort to sell the drug mifepristone, pardon my pronunciation, mifepristone. Newsom's office was caught flat footed by this lead, which is one of the interesting aspects of this story.

This is kind of shooting from the lip, the governor did, the office didn't really know what the details were, what it meant. You had to fast forward 48 hours to Wednesday when the governor's office announced that California would be pulling back a renewal of a $54 million contract with Walgreens.

It would have taken effect on May of 2023. This is mostly medication for prisoners, of all things, Lee. It raises a couple of questions, one is if the governor really wants to take this fight with Walgreens deeper? This could get very messy in this regard. California, in terms of its pharmaceutical needs, it has a couple hundred thousand state employees who obviously have medical benefits from the state.

They would, in theory, turn to Walgreens for their prescriptions. Another million and a half Californians are covered by CalPERS, Lee, then you have 13 million low income Californians who get drugs via Medi-Cal, Lee. Here's what I'm concerned about, let's say governor Newsom decides to make this a complete morality play against Walgreens, and tries in some way to get the state to take away all its business with Walgreens.

What if you're a poor person in a remote part of California, Lee, and Walgreens happens to be your only local pharmacist? What do you do if Walgreens is out of the business of dealing with California? Lee, what if you're living in an inner city part of California? And as we know, during the crime wave in the past couple of years, pharmacies have been hit particularly hard, hit CV's and Walgreens have been closing stores.

I just kind of wonder if the governor is bitten off more than he can choose here, Lee, but then it also gets to the question of these kind of blue state, redhead state morale plagues he's rather fond of. But your thoughts when you saw that Newsom is going after Walgreens dale?

 

>> Lee Ohanian: Yeah, absolutely silly. So, assuming this, if this were to go through, what Newsom would be doing is harming Californians, particularly poor Californians? Bill, if I were a betting man, I'm not, but if I were a betting man, all those people, all those women who would be affected by the loss of Walgreens, of service from Walgreens.

I guarantee you that whatever pharmacy would step in, that there would be a lot of hiccups, that there would be bumps in the road, and there would be people who would not get medications, birth control or otherwise, whose health will be negatively impacted by this. So, this is Newsom doing what Newsom does best, which is tilting it irrelevant political windmills and playing politics outside of California with states that he has no business with and engaging.

This is absolutely silly, in my opinion. Walgreens is trying to protect itself and its shareholders from lawsuits, that's what they're trying to do. They should be allowed to go about their business and they have to comply with laws in other states. They provide pharmacy services across the country.

I just don't get this whatsoever, even from a pure morality play, I just don't see what the issue is here. He has no criticism of what Walgreens is doing within the state. This is all about his so-called, his critique of Walgreens bending to Republican bullies. Well, that has nothing to do whatsoever with California.

This will raise the cost of pharmacy services in California and negatively affect the health of Californians, particularly poor people and ironically, particularly poor women.

>> Bill Whalen: Yeah, it's one thing, Lee, if the morality play is that, say, a technology state tech worker can't go to a conference in Texas or Tennessee or Florida because we disapprove of the red state policies, most Californians don't feel that.

But if you start messing with somebody's pharmacy and their ability to get drugs lead, now you have touched their lives personally. So, again, I just wonder if the governor really thought this through, and I don't think he did. And, again, you witnessed by the fact that he announces this on a Monday and it takes until Wednesday until his office actually has something to announce in terms of a concrete change in state policy.

Before that, all the aides could do is just say, hey, we're responding to a bully that is parrot of what the governor said. So, again, this is kind of the peril of being a little too tech savvy as a governor and having a little too much access to Twitter.

And, well, kind of like Donald Trump maybe just not thinking through something before you send it out for the world to see.

>> Lee Ohanian: Yeah, it was a knee jerk reaction, his aides have no idea what he's even talking about. And now they have to cobble together some type of proposed policy to deal with this.

And meanwhile, ironically speaking, there are 15 million Californians on Medi-Cal, which is the state's version of Medicaid. People who are living either under the poverty line or really close to the poverty line. And they're just hoping against hope that they don't lose their corner pharmacy. And Gavin Newsom is doing what Gavin does, and sadly, people's lives would be better off if he didn't do so much of this.

So, it would be wonderful if we had his aides started limiting his access to Twitter.

>> Bill Whalen: Ironically, Lee, Gavin Newsom might need to go to Walgreens because he was recently on a, quote, personal trip to Baja, and he came back and tested positive for COVID, the second time the governor has tested positive.

This was announced on Wednesday, he will be quarantining for five days. The timing of this is kind of tricky in that if I do my math right, if he's quarantined for five days, he'll be out of quarantine come Monday, the 13th, which just happens to be when President Biden is in California for a couple of days.

Lee, he's meeting with world leaders one day, then I think he's going to do gun violence the next day. So, in theory, Newsom might wanna tag along with him. Lee, it also ties around Newsom going to go on a statewide tour next week, and this is what, Caught my eye as a recovering speech writer having written speeches for a California governor in a past life.

There is no state of the state address this year in Sacramento. Let's process this for a minute. This is a speech that most Californians don't pay attention to. But like the State of the Union address in Washington Lee, it's an annual ritual in which the governor gets up for a joint session legislature and announces what he or she wants to do for the calendar year, sets priorities, kind of gently charge legislature, saying, I wanna work with you, but here's what I expect you to do.

It sets a tone for things. And yet Newsom is not doing it this year. Now, it may be in part because the man does suffer from dyslexia, and so giving big speeches is complicated for him. He has to put a lot of work into it in terms of being able to read off the teleprompter, and I would not, anyway, diminish the difficulty of doing that.

I can't imagine what that's like, but this shows one other thing, Lee. If you watch Newsom's progression as a governor, when it came into office, he gave a very early state of the state speech right after he got inaugurated. Ever since then, it's been sliding, and it slid into late January, then into February, and now it slid into March.

He did last year's in the first week of March, and this is what got me thinking about this. Before he announced he wasn't doing the speech, it was early March. I was thinking, where is his speech? I think this speaks to a couple of things, no pun intendedly, about Newsom and his California existence.

Number one, the strange calendar that he lives under. It's worth noting that Ron DeSantis, the governor of Florida, was in California last Sunday giving a talk at the Reagan library to promote his book. And then he was the star attraction at an Orange County GOP fundraiser. Then he promptly gone on a plane, went back to Florida and gave his State of the state address.

But Newsom didn't see the need to do one here in California. And I suspect, Lee, that might be a function of one thing. Whereas Ron DeSantis is on a timeline where he will probably announce for president come June, he wants to give that big speech, get some national attention, set the pace in Tallahassee.

Newsom as long as Joe Biden intends to run for reelection, doesn't operate under that same cycle. I would argue, Lee, that if Joe Biden announced last two weeks ago that he was not running for president, Gavin Newsom would have given a state of the state because why? It's free national attention.

 

>> Lee Ohanian: Yeah, with Biden apparently running, Gavin is looking at a path that seems somewhat amorphous. There's some level, there's nothing more for him to do in California, despite the fact that he's very early into a second term. And the reason I say that is that there's really no accomplishments he can point to.

I mean, he can talk about how he was magnificent leader during COVID Other governors could say the same thing about their states, but he, virtually all of his promises have really not turned out very well. He talked about a Marshall plan for housing. Housing starts are about 80%, maybe even 85% below what he had promised.

Homelessness is worse. Housing affordability still remains a huge problem within the state. You know, as we talked about, you know, a moment ago, there's still 15 million Californians on Medi Cal and bill to understand what, to understand just how difficult life is for that group of people. Medi Cal means a family of three earning under $41,000 per year.

It's hard to fathom how a family can do that here in the state, certainly anywhere close to the population centers. Wildfires, flooding, you just go down the list, I just don't know what he would point to in terms of his success. It seems like it's a funny political situation for him now.

Where is he going to go from here? No one really, I don't think anyone expects anything from him here in California. Those who are happy with him will be happy with him no matter what he does. Are we looking at him trying to think about a different type of office other than running for president, assuming that Biden does not decide not to run for second term?

 

>> Bill Whalen: Well, he has said he does not intend to run for the Senate in 2024, which would be the obvious lateral move. And I don't blame him because he'd be one of 100 senators with, with very low standing in Washington as opposed to being the chief executive of the world's, what, fourth or fifth-largest economy that's let down.

I think it's the White House or bust for him, Lee. But here's where the big speech is probably a necessary evil in this regard. And let me clarify, by the way, there's still a constitutional obligation by the governor to update the legislature on the state of the state just as the president does.

It's just, you don't have to give a televised address. You could literally write on a piece of paper, things are fine. Wrap it around a rock and throw it through the window of the state capitol. And there you're done. And you can argue that actually, given all the theatrics that go into these speeches, especially the State of the Union, maybe not such a bad thing to spare the public from this.

But three things I think are missing here. Number one would not be a bad opportunity for the governor to get for the legislature and give them a polite talk about spending, because the fact of the matter is they're going to have to sit down in the next few months and decide where to cut and where not to spend.

They don't have a surplus, now they have a deficit, so it's a very different animal. Secondly, I'm curious as to what his priorities are, as you mentioned, besides the obvious right now, which is that he wants to go after big oil in California in no uncertain way. So what else is on your mind, governor?

But then thirdly, and we'll get to this topic here in a minute, weather, and storms, and a heck of a lot of questions about governing. Newsom is lucky in this regard, Lee, and that media coverage of him is relatively light in California for a governor to slip off to Barha for a few days and forget about catching COVID, but just going off on a personal trip, as it was called, while people in the state are still digging out from the last storm, still looking for help, still wondering what's coming around.

I mean, much better for him to spend time in California talking about disaster preparation, flood preparation, and so forth and setting it off to Barha. He could have really gotten crucified for that. If he were in Washington, he would have been crucified for that. But it would be a chance to stand up and talk about storms Lee, and talk about things about water capacity and talk about various reforms.

Let's talk about ways in which California can be proactive rather than reactive when it comes to natural disasters.

>> Lee Ohanian: Yes, Bill, it's interesting. We have not had any investments in substantial water infrastructure for over 50 years. And there's no plans really that are gonna be making or they're gonna be moving the needle for us in that regard.

You know, Bill, when you mentioned that he was able to go off to Baja for a personal trip, that was really under the radar, wasn't it?

>> Bill Whalen: Yes.

>> Lee Ohanian: And so this reminds me of when you mentioned that this would have not passed had he been in Washington.

And it reminds me of Ted Cruz going off to Mexico. I guess it was last winter when Texas was having that cold snap and they had the electrical failures. Cruz was crucified when he made that decision to go off. So you have a governor who people used to call Reagan the Teflon president.

Can we call Gavin the Teflon governor?

>> Bill Whalen: Well, that's an apt phrase for it. And again, just if he harbors fantasies of being a President of the United States, this is not presidential behavior, you just cannot slip off for several days. Actually, a story that comes to mind is the Marion Barry, the late mayor of Washington, DC, famously got in this problem as well.

I think he was at a Super Bowl in California for the Redskins, and Washington had a terrible snowstorm and the whole city was shut down. The question was, where is the mayor? And the mayor is in Sunny, California at the time. So there you go. Yeah, so I mentioned, Lee, that Joe Biden is coming to California, and I'd be very curious to see what Joe Biden would do if he came to San Francisco.

And here's why. This is the season of Washington, Lee, to triangulate. Back in Washington, we saw President Biden break with. With his fellow Democrats by supporting a GOP Bill rescinding a DC criminal code reform that would have softened punishment. Basically, what it does, it would have lowered or eliminated mandatory minimum sentences for the likes of high profile crimes like carjacking.

Question for you, Lee. Are we seeing triangulation of foot in San Francisco? And I wonder if President Biden would think about this in this regard. You wrote a piece for California. Mind on your mind for this. This is San Francisco now taking a look at its sanctuary laws.

And the question what to do with fentanyl dealers. So, Lee, is San Francisco suddenly triangulating its politics, or am I just kind of imagining things?

>> Lee Ohanian: Yeah, I mean, we can hope. So San Francisco has very, very strong protections for those who have immigrated to the United States without going through the normal channels.

And my understanding is that nearly all fentanyl that's sold within San Francisco is being done so by Hondurans who are in the country illegally. And one of the city supervisors has proposed to modify the city sanctuary law. So that there can be more cooperation with immigration control enforcement.

And if this was done, the idea would be that these dealers would be deported immediately. And to the extent that they're all from the same place, this could really move the needle in San Francisco regarding fentanyl. Where, Bill, there's been twice as many deaths from fentanyl overdoses since 2020 as there happened from COVID.

Roughly 2000 fentanyl deaths, about 1100 COVID deaths. There's about 9000 overdoses that are reversed using the drug Narcan by paramedics per year. 9000 odds that are reversed per year. That comes out to about 25 per day. Think about that statistic for a second. 25 overdoses per day that are reversed.

It's just a horrendous problem. And so I hope that the supervisor's proposal goes through because it sounds like a no brainer, right? And I mean, these people are selling a product that is so toxic that as few as a volume, literally, of ten grains of salt. A volume of fentanyl equivalent to ten grains of salt can be fatal.

Is pairing up the city seems like a no brainer. One would wanna modify the policy this way. And yet the piece I wrote describes that there's an enormous amount of pushback in response to this proposal. There are advocacy groups talking about how the city shouldn't be in the position to be deporting people.

And you think, well, if you're not gonna deport someone for selling fentanyl, then what is going on in that city. So, Bill, I hope to see supervisors pursue this, but I'm worried they won't. And if Biden was gonna be walking around the streets of San Francisco, Bill, it is not a pretty sight.

It's an awful illustration of human misery and really inhumane treatment. San Francisco thinks, I guess, is doing people a favor by letting them be drug addicts on the streets. And people have completely lost control of their lives. And again, a sad illustration of what's happened to the quality of governance and the state at the local level.

 

>> Bill Whalen: Is there any signs leave this going to other aspects of the San Francisco existence? What I'm getting at is the city has for decades now been very fond of needle exchange programs, a very European approach, if you will. Rather than cracking down on Venus drug use, San Francisco will have people exchange needles and unfortunately walk around San Francisco.

This is one of the things you have to watch out for, needles on the street. Just as the local law enforcement's turned a rather blonde eye at times to open drug markets and just the selling of drugs on the street as well. But is this just fentanyl driven, or do you think there is a pendulum shifting in a larger regard in terms of drugs in San Francisco?

 

>> Lee Ohanian: Bill, every time I hope that the pendulum is gonna change, it doesn't. So I'm not gonna hold my breath. You bring up an interesting point about needle exchange. And how that is similar to European policies. What people don't realize is that in Europe, even though there are things such as needle exchange policies and prosecution of drug users, is different in Europe.

But they do not allow people using drugs outside. They do not allow people squatting on the streets. The whole idea is to move that away. And San Francisco, from that standpoint has not followed European policies. Bill, there's a period of time where I thought things in San Francisco were changing.

Chesa Boudin was recalled. Three members of the school board were recalled. And still there're some grassroots advocacy groups that I've been contact with over the last couple of months who in California mine and who say, hey, you know what? We are really trying to reclaim the city and we're trying to get better supervisors in place.

But Bill, at the end of the day, until we see the next election and hopefully more moderate supervisors elected, I don't necessarily see those changes coming along. I have my fingers crossed. But my hopes have been dashed too many times in the last several years when I thought, isn't it obvious what needs to be done here?

And sadly, what seems to be obvious does not get done.

>> Bill Whalen: The city, Lee, needs a very large conversation on several topics. All tying together public safety and crime and drug use, as we're talking about here with fentanyl, livability, affordability of housing. And Lee, what to do with the downtown.

And what was once a very vibrant financial and business sector, which is now something of a ghost town after COVID. And businesses not reopening downtown, office space going empty. So a lot of things for San Francisco officials to get involved, if they so choose.

>> Lee Ohanian: Absolutely, the downtown area is a huge issue for them.

Vacancy rates of commercial buildings are in the neighborhood of 25 to 30% now. Before the pandemic, the vacancy rate was about 3%. If you were a serious tech firm or wanted to be a serious tech firm, you almost had to have a presence in San Francisco. That's no longer the case.

And there's enormous amounts of revenue that have dried up because the downtown area vibrancy has declined so much. So it's a huge problem. 6.3% of San Francisco's population left between 2020 and between 2019 and 2021. The largest drop of any major city in the country. They lost billions of dollars in income, hundreds of million dollars in tax revenue, reflecting fewer businesses, more empty office space, fewer tourists coming to the city, fewer conventions and conferences coming to the city.

There's a day of reckoning to be had. And that day of reckoning is really very soon. There's a budget that they need to be thinking about. And the funding for that budget just really isn't there right now, at least to the point of the historical budgets they've. Had in the last couple of years.

They're not gonna be able to fund that. So they need to figure out how to restore business activity and tax revenue in San Francisco, and they need to do it really quickly.

>> Bill Whalen: Final topic, Lee, that would be the weather. You're in Santa Barbara, I'm in Palo Alto.

I'm looking at my window right now and it's fixing to rain. It's gonna rain here for the next couple of days. It's gonna rain for several days, actually. Very funny, Lee, I used to live on the East Coast, Washington, DC, where local weather people would just obsess over the idea of a snowstorm coming.

And if Washington was forecast with an inch of snow, people would go to the grocery stores and shop in just absolutely panic terms, selling out of milk and toilet paper in particular. I understand, by the way, getting a gallon of milk to get through the storm. Why need a 12 pack of toilet paper?

I never quite understood but people hoard as they decide to do question, Lee, are you sick of the rain? And are you, like me, maybe kind of sick of all the talk about the rain? Because just here in the Bay Area, it's all local news can do. Just talk about the weather constantly, non-stop.

 

>> Lee Ohanian: Yeah, I mean, here in Southern California, we have had more than 100% of normal of a year's precipitation. And yeah, but we're supposed to get the storm tomorrow. And then I think another storm or two next week. Santa Barbara continues to suffer from the lack of adequate storm drainage, despite the fact that we had just a horrendous debris flow on mudslide five years ago, where 23 people died and there was half a billion dollars worth of damage.

So we keep holding our breath and keeping our fingers crossed. And barely know, Newsom was here about a month or six weeks ago with the National Guard because one of our inadequate storm drainage debris basins had to be cleaned out after a January storm. And I guess we needed the National Guard to come down and do that.

There were plenty of local politicians here with Newsom for photo ops, and Gavin was standing at a point very close to where 23 people died. And he decided to talk about food insecurity rather than the people who had perished five years before. So, Bill, yeah, I'm ready for spring, man.

I'm ready for spring and no more having to look at the Weather Channel app on my phone every day to see what I need to do.

>> Bill Whalen: Well, I'm ready for spring, too because I do love baseball. But I guess here's what bothers me about all the attention to the weather, and I don't wanna sound blind and dismissive to people who generally struggle.

Terrible things do happen in storms and so forth. But I guess, first of all, Lee, it's just as tailor-made for local news because you have downed trees and flooded roads and it's tragedy. And local news just absolutely thrives on tragedy. But we just don't get these policy conversations we should have about how California should be prepared for the next storms, what we can and should be doing better.

You mentioned, for example, bad drainage systems. This gets in the question of water storage in California, runoff and so forth. We never seem to have these conversations. We just move on to the next weather condition before we know we'll be back having conversations about drought and storage and so forth.

I just wish there was somewhere in the state and adult conversation about what California should be doing better come the time is presented with a climate problem like this.

>> Lee Ohanian: Yeah, Bill, you mentioned Gavin not doing a State of the State address and I'm glad you brought the constitutional issue regarding, he needs to provide an update and assessment to the state legislature.

But I would have loved it, if he gave the State of the State and said here at the capital spending projects, we need to implement now. And water conveyance, reservoir capacity, storm drainage, those are all things we need to be investing in. Bill, every couple of years, the Society of Civil Engineers grades every state regarding their infrastructure.

And I think our water infrastructure, our levees, dams, our storm drainage, I think we get a grade of a D. I don't know why it's not enough. Maybe they're grading on a curve and there's enough other states that might even be a little bit worse than us. But yeah, those are the things that the Newsom and the legislature should be talking about rather than talking about what Walgreens is doing in other states.

But that conversation never takes place here. Schools would be another issue that we would need to be having a conversation about but again, that discussion never takes place.

>> Bill Whalen: I think so. Well, we're gonna have another conversation about three weeks. What we'll be talking about three weeks from now, Lee?

Maybe a very deep UCLA run of the NCAA basketball tournament.

>> Lee Ohanian: Bill, it looked pretty good for the Bruins. They lost sadly, one of their best players, he was the Pac-12 defensive player of the year. Probably a guy who's gonna play in the NBA. I think he tore his achilles' tendon.

So I think that that may have doomed the Bruins their chances to go deep in the tournament. But they have a couple of other guys that might be playing in the NBA, so, yeah, we'll see. So, I mean, I love watching March Madness. It's always an exciting time.

 

>> Bill Whalen: Well, Leah, enjoyed the conversation and keep up the great writing for California on your mind.

>> Lee Ohanian: Thanks Bill, good to chat.

>> Bill Whalen: You've been listening to Matters of Policy and Politics, a Hoover institution podcast devoted to governance and balance of power here in America and around the world.

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