How Matt Mahan Thinks He Can Save California

Matt Mahan, welcome to All-In.

Thanks, David.

I have no idea who you are. Who are you? You’re a guy who popped up running for governor of California at the last minute. How did that come about, and who is Matt Mahan?

Well, David, like everybody, I’m frustrated with the state that keeps spending more and seemingly getting less, which is why I jumped in. To back up, I grew up in a little farming town here in California called Watsonville, where your strawberries come from.

I do work in Watsonville.

Driscoll’s berries—you know it well.

Greenhouses, yeah.

Yeah, exactly. I came from a working-class family. My mom was a teacher, and my dad was a letter carrier. My lucky break in life was getting into a great college-prep high school on a work-study scholarship. I took buses about 2 hours each way and worked my way through high school and college.

I came back as a public school teacher through the Teach for America program. I was always very community-oriented and interested in politics. I wanted to know how to make our city and our world a better place. I ended up in the tech sector and spent about a decade building civic-tech tools to help people navigate their democracy.

What did you build?

I was involved with an early Facebook application called Causes and then went on to start a platform called Brigade that was sort of like LinkedIn for voters. The whole premise was to build grassroots, bottom-up power by connecting voters around issues they’re passionate about and outcomes they want to see, and helping them organize to hold their elected officials accountable.

After about a decade in the civic-tech space, our company was acquired, and I decided to run for city council. I went out and knocked on 10,000 doors, got yelled at for a lot of things that I wasn’t necessarily responsible for, but I got a real feel for the common sense of the residents of California. They would ask questions like, “If I’m paying $20,000 a year in property taxes, why haven’t my local roads been paved in the last 15 years?” I thought that made a lot of sense, so I went to City Hall to try to find out.

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

Pretty bad. I’m really worried, which is why I jumped in. I think the state is heading toward an inflection point, past which there may be no return. We have increased spending in state government by 75%. To put that in perspective, that’s $150 billion more this year than 6 years ago.

As far as I can tell, none of the outcomes have gotten better. Never mind 75% better—many of them are flat or down over the same time period. There is a real lack of accountability in government. We don’t have a money problem in Sacramento; we have an incentives problem.

We have a structure that allows us to keep shoveling more money into things that aren’t working. Just take high-speed rail. If a startup took 20 years, spent $14 billion, and didn’t deliver a product, people would have been fired a long time ago. We’re just not seeing that level of accountability in our state government.

Is this theft? Where does the money go? $14 billion. Who has that $14 billion, sir?

It’s contractors and lawyers. Some of it has gone into actually building the project, but belatedly. What happens in California, and the reason we can’t do big things anymore, is that we’ve got endless process, years of environmental review, and the most litigious environment imaginable. Anybody can sue under CEQA. You don’t even have to be a resident of California to sue under CEQA.

You get years of litigation and bureaucracy. When it comes to housing, just to slightly switch topics, the fees that cities can assess—one-time fees—can add 20% to the cost of a project. We’ve bureaucratized the state to the point where it’s total paralysis. We can keep spending more and more and not getting anything for it.

It’s like I’m trying to understand, as a citizen and a taxpayer: I pay a 53% tax rate living in California. I pay my federal tax and my temporary California tax, which I’ve been paying for 11 years. I’m paying 53 cents of every dollar I earn to the state and to the federal government. I’m asking myself, where did my money go? It’s such a mind-boggling number.

Take the high-speed rail project alone. $14 billion spent. Spent. We don’t have a rail. We don’t have anything. Is it lawyers who made $14 billion? You mentioned contractors. Is it just that there are a whole bunch of people making $20,000 or $30,000, and it all adds up to $14 billion? Help me understand where my money went.

On that project specifically—and I haven’t done the line-item-by-line-item analysis to be totally clear—you have years of consultants doing environmental reviews and all of these studies and reports on the impacts it might have. You have tons of consultants, the cost of litigation, and an entire cottage industry of people doing design and studies and reports, managing litigation, buying right-of-way, and managing community-engagement processes.

We take years to do anything, so it just gets vacuumed up into this sea of—

Little groups of things. So, there isn’t one big thief—the grandmaster thief of California who’s taken all the money—and it’s just that the dysfunction is that everyone’s getting a little piece of the pie.

That makes sense. Let’s be clear: There is fraud. There has been fraud, very well documented in California and other areas. During the last 5 years or so, roughly during the pandemic, unemployment claims in California that were fraudulent totaled over $30 billion. That is well documented.

There’s emerging research right now showing that there are hundreds, if not thousands, of hospice providers who may or may not exist. We’re just getting this information now. This is very real-time investigative journalism.

There’s fraud, but I think, by an order of magnitude, there’s something even bigger here: waste and inefficiency. It’s a system where you just keep incrementally growing head count, growing the size of programs, and growing the grants that we give out to nonprofits. We’re funding and managing around process, not outcomes.

I’ve tried to approach it very differently in San Jose, and I think that’s why, without raising taxes—in fact, our revenue has actually slowed a bit over the last couple of years, just because the economy is cyclical and real estate is struggling—we have dramatically changed the outcomes we’re getting. We’re very dependent on local property taxes.

We have led the state in reducing crime and become the safest big city in the country. We’ve reduced unsheltered homelessness, meaning people living outside in tents and vehicles, by about a third in the last few years. We’ve unblocked housing production, and we’re seeing thousands of new homes under construction.

In all of those cases, we had to change existing processes that were in the way, reduce fees, and cut funding for programs that weren’t delivering so that we could fund other solutions that were more efficient.

Let me also ask about legislation. If you look at Washington, D.C., we have our nation’s Congress, the House and the Senate, and there are Republicans and Democrats. They fight so much that they don’t get anything done, which, by the way, may be a good thing.

In California, the legislature passes hundreds and hundreds of bills a year, and they all come from one party, the Democratic Party. Gavin Newsom, on average, vetoes 15% to 20% of these bills every year, which says something.

Maybe you can explain a little bit of your view on how all these laws are getting passed in California. How does the legislature in Sacramento, where you’re vying for a seat that gives you the right to veto and the right to push back, make decisions? What’s motivating the California state legislature?

Yeah, and just to be clear, as governor, I would veto even more of these bills because there’s a total lack of accountability. I think too many of our legislators think that their measure of success is how many bills they can write, get to the governor, and ultimately get signed.

When you actually read what these bills do, they generally just add more cost and more process. What the legislature needs to be told by our next governor is that we’re not going to fund failure. We’re going to publicly set goals. We’re going to measure the performance of every dollar we spend. We’re going to audit the heck out of existing programs.

Right now, 75% of the audit recommendations from the state auditor never get implemented. There just isn’t a feedback loop with the public or accountability for the outcome.

There is a lot of performative politics, a lot of discussion about how much good we’re trying to do and how we’re trying to be responsive to everyone. We have a tendency, particularly in the Democratic Party, to want to be empathetic and tell everyone that we’re working on everything. We try to be everything to everyone all at once, rather than very strategically saying some things matter more than others.

The high cost of housing, the high cost of energy, the quality of our public schools, and the safety in our neighborhoods—these are the things people care about and think they should be getting when they pay taxes. But despite increasing spending in the state by 75%, none of those outcomes have actually gotten better. Some have gotten worse.

The irony is that sometimes it may be the case—and I think it’s very often the case—that less government solves the problem better than more government. Trying to do more to create housing may make housing more expensive. It sounds ironic. Trying to do more to make education accessible makes education more expensive.

The more government gets involved, the more prices seem to skyrocket. How do you get over that with all the interested groups that are getting themselves elected in the California state legislature by saying, “I’m going to do more. I’m going to do more. I’m going to do more”? Because that’s how you get elected. How are you possibly going to come in and say, “We should do less, and that’s how we’re going to fix some of your problems”?

Yeah, well, if you’re in a hole, don’t keep digging. Sadly, one of my opponents in this race, Eric Swalwell, just said it a couple of times now in debates. When asked what our top 3 priorities for the state were, he said, “Revenue, revenue, revenue.” To me, that is a mindset that doesn’t understand what has broken down in the state.

You’re absolutely right. As Democrats, we have to own the outcomes we’re getting in the state. For too long, our reflexive answer has been, “We need more revenue. If we just have more money, we’ll solve this problem.” I just don’t believe that. I say that as the only current executive in this race. I’m the mayor of the largest city in Northern California, San Jose.

Because of a quirk of history, we were built as a bedroom community for the job centers just north of us. We actually have significantly lower revenue per capita than many other cities. We’re not a job center, and so with Proposition 13, our tax revenue goes up more slowly, and it is smaller. Our revenue is about a third less than some of our neighboring cities, and we’re delivering huge increases in sheltering people, getting housing built, and reducing crime by thinking differently.

But it all starts with being willing to set a goal publicly and allow the public to hold you accountable for spending dollars in a way that actually achieves outcomes. That sounds so simple. I know most of your audience—I’ve been listening for years—is in the private sector, and it almost seems so obvious that you wouldn’t even need to say it. But the truth is, as elected officials, we almost never set public goals where we can actually be held accountable.

Heaven forbid, in your next election, you might get called out for not actually reducing homelessness, reducing crime, or getting housing built. Instead, to your point, we pass bill after bill showing that we’re doing something, and half the time, with the law of unintended consequences, we make it slower and more expensive to do the very thing that we want.

Right. Let’s talk about some of the competing interests that want to get capital, that want to pull capital through the government for their base. Those would be labor unions. They’re a very powerful, coordinated set of lobbying groups in California. They have significant influence over who gets elected in the legislature, who gets elected in city mayoral races, and who gets elected to the governor’s seat.

Tell me your view on the role that labor unions play in California politics today and in some of this dysfunction in government and unaccountability in spending. I know this might be a very controversial topic to talk about because you don’t want to piss off the labor unions, but I’d love to hear your candid views on their role.

Yeah. Let me start by saying I am not afraid to take on any organized interest. It’s not just labor, though. Let’s talk about the role of public-sector unions. It’s not just labor that is highly organized. You have trade associations, doctors and dentists, public-sector unions, and the oil and gas industry. Tech has actually been late to the party. Tech is starting to organize.

The way that I look at the landscape in Sacramento, and I think it’s largely true in Washington as well, is that you have well-resourced, highly organized, professional advocacy, lobbying, and political operations that essentially defend the status quo. You are absolutely right that the single biggest spender in Sacramento when it comes to advocacy, lobbying, and elections is organized labor, particularly public-sector unions.

I don’t think it’s a monolith. I have great relationships with our public-sector unions. Our building trades want to see the economy grow. Many unions are very pragmatic, and all of them are doing what they’re supposed to be doing. It’s spineless politicians who cave to their aggressive demands who are the root cause of the problem here.

When the teachers union organizes and says, “We don’t want more accountability. We don’t want to be told to use evidence-based curriculum. We don’t want more technology in the classroom”—whatever it is they may advocate for, presumably on behalf of, or at least what they perceive to be, the interests of their members—it’s our elected officials who need to step up and say, “For the good of the community, we’re going to push you on that. We’re not just going to give you a pass. We’re not just going to veto that legislation or stay quiet when we know that, for what we’re spending, we aren’t getting what we should be.”

We’ve gotten to the point where Mississippi and Louisiana are doing a better job of helping low-income kids get on grade level for reading than we are in the very well-resourced, very progressive state of California. That is a function of a system that is more responsive to the highly organized interests than to the people we’re elected to serve.

That’s the fundamental dysfunction. Some see this as corruption, and I don’t think that’s too strong of a word. I don’t mean it in the narrow sense of anyone breaking the law or stealing money, but the system has become—again, back to the core point here—the incentives are all wrong.

The incentive for an elected official is to cater to highly organized interests who disproportionately spend money in elections, follow what’s happening up in the legislature, draft the bill language, draft the friendly amendments, and get legislators to do their bidding. I’m running against the system because it doesn’t matter if you’re a Democrat, a Republican, or an independent. We need a high-functioning government that delivers lower housing costs, lower energy costs, better schools, safer neighborhoods, and an end to street homelessness.

We have the resources to do it. What we haven’t had is the political will and accountability to do it. I don’t think that’s a partisan point. Frankly, if the Democratic Party doesn’t start to wake up, become more responsive to the needs of our constituents, and deliver with the resources we’ve got, we’re going to see the pendulum swing all the way the other way, and you’re going to see a MAGA-like movement happen here in California.

If I look at California, I can understand that we’re not solving certain problems. But what I’m trying to grok is how some of these problems became the worst in the nation. There are statistics, and you can debate per-capita statistics versus the absolute number of people, but California is number 1 in poverty, number 1 in unemployment, and nearly half the nation’s homeless live in California.

Yeah.

How did California go from being bad and not solving these problems to making them worse?

Well, I think my grandmother used to always say that the road to hell is paved with good intentions. Generally speaking, I do think people have had good intentions but have been unwilling to look at data and react when the things they’re championing aren’t working.

On homelessness, first of all, we’ve broken the housing market, which we should talk about as its own issue. We’ve also been incredibly lax when it comes to dealing with cycles of addiction and mental illness. We’ve deluded ourselves into thinking that leaving someone to choose to live however they’d like—even if that means suffering in misery on the streets and ultimately dying of an overdose—is somehow more important than intervening and saving their life.

That’s how we’ve ended up in this horrific situation, which frankly has been underreported over the last decade. We’ve had 50,000 people die on our streets in California, about half from overdose and suicide. These are people with deep behavioral health issues, where we’re just watching them deteriorate and die because we’re so precious about protecting civil liberties. That may also be an excuse for not spending money in new ways.

In San Jose, we had to move away from spending $1 million a door to build a brand-new apartment to get someone off the streets and pivot to buying sleeping cabins that can be deployed in small communities on publicly owned land hooked up to utilities. The all-in cost is $85,000 a unit.

We’ve added over 2,000 shelter beds in my first 3 years as mayor and led the state in reducing unsheltered homelessness, but we had to overcome an incredible amount of opposition from advocates, affordable-housing developers, and others. Much of it was well-intentioned; maybe some of it was self-interested. But we either are going to be committed to solving the problem, or we’re going to cave to highly organized interests or a progressive ideology that needs to be willing to revise itself when its ideas in practice aren’t working.

Yeah. Some of the policies just feel crazy. I’ve always commented on the managed-alcohol program for homeless people in San Francisco. They give away free alcohol to alcohol-addicted unhoused people, and I can’t imagine that that disincentivizes people to—

No.

Right. It’s like you go to San Francisco, you get needles, you get free alcohol—you get these things. So it incentivizes people to go to San Francisco. The whole thing just seemed absolutely nuts to me.

Let’s get into the housing question. What is the core of the housing affordability problem in California? Is it that we don’t have enough houses? Because I see a lot of homes for lease, a lot of houses for sale, and a lot of houses for rent.

Or is it that we have regulations that make it hard to maintain a house and make it expensive? Or is there something else going on that's making housing unaffordable in California? What's the core here?

Look, I think it's fundamentally a supply problem. We've seen most recently in Austin, and we saw it in Seattle. We've seen in dozens of markets around the country that when we remove barriers to the market investing in housing to meet growing demand, you slow down cost increases. It's Economics 101.

Part of our challenge is that we've also made it impossible to build affordably. Part of the challenge is zoning, high fees, and all of the things government imposes that block housing from getting built. But we also have a building code that's incredibly cumbersome.

I mentioned litigation earlier when it came to high-speed rail. The same thing is true for housing. We're not building condos in California partly because construction defect liability allows a trial lawyer to come in in year 9 of a project, and if they see that the paint is starting to bubble, they'll file a suit. They care about the fees. Their incentive is to generate fees, and we've created a legal framework that allows them to do that. If you try to change it, another highly organized interest in Sacramento—the trial lawyers—will push back on that.

I think this is so important. People don't understand how expensive litigation is. Someone told me it was a sizable percentage of GDP in the United States, and that trial lawyers are the largest donors in certain state elections all over the country, trying to create a legal framework that allows them to pursue litigation and earn significant fees. It's a multi-multi-multi-billion-dollar industry.

That's right. California is very much at one end of the spectrum. I've talked to municipal leaders in cities that are settling at such a high amount for a trip-and-fall that now they can't afford to maintain the rest of the sidewalks in the city for the next few years. So they're going to have more trip-and-fall cases. We are at risk of allowing trial lawyers to sue the state into oblivion. That is a major issue.

On condos, it may seem like a peripheral issue, but traditionally, that has been how young people get some equity in society, become a homeowner for the first time, and build that nest egg to eventually perhaps trade up into a townhome or a single-family home. We've essentially taken that rung of the ladder away by making it cost-prohibitive to build. Good luck getting financing or insurance to build a new condo building in California right now.

Right. Is it fair to say we have a regulation crisis, not a housing crisis, in California? Is there a way to reframe this?

I think that's fair. I think regulation and bureaucracy are a set of codes and laws that don't work for people and work for the special interests in Sacramento.

I interviewed this guy Adam Carolla. You know him?

I know of him. I don't—

Yeah. Dr. Drew. He called it gynofascism. He said that all of the regulation is a safety thing, and it's a very feminine, safety-protective kind of origin in a lot of the regulations that have been passed that make it impossible. Everything's about safety: more regulation, more regulation, more regulation. As a result, you can't get anything done, the lawyers show up, and everything gets sued.

What's the right way to think about the origin? His argument is that there's a mindset of safety and protectionism that's driven this. Is it just the trial lawyers? Why do legislators keep passing laws over and over, layering more and more rules that make it impossible to build and make it super expensive to maintain because otherwise you'll get sued?

Yeah, look, I would take the gender content out of it, but I think the deeper point is that we suffer from safetyism. It's actually easier to add one more rule, one more process. I see this play out every day with our city council at the local level, and I think it's an even greater temptation at the state level, where you're not able to point to a concrete service that you're delivering. So much of the implementation happens at the local level.

Every time there is a negative story about something bad happening in the world, there is an impulse for a legislator—

Law.

—to say, "Let's create a new rule. It can always be a little bit safer. Let's add another check, another balance, another process, another rule, another fee, whatever it is."

The reason for that, in my view, is that we have not created an incentive structure in government to reward actual performance and outcomes. So we are, by default, rewarding the performativeness of showing that we're doing something. It's a lot of activity without a lot of impact.

I think that we have to help voters be smarter about analyzing what their elected officials are doing and whether or not it's working. That's why I want to be held accountable. I came into office running on dashboards. I put up public-facing dashboards and said, "Here's our baseline. Here's how we compare to others. Here's the goal we're setting. We're going to reduce homelessness by 10% year over year. We're going to reduce crime. We're going to remove barriers and get housing built. We're going to speed up permit reviews."

I want to be held publicly accountable because I would rather, frankly, have a feedback loop with the people whose doors I knocked on than with whichever group doesn't like that we're trying to change something.

What's your metric for being governor of California as it relates to housing? What's the dashboard you're going to put up, and what's your goal?

I think the ultimate outcome has to be that we're building more housing, but that we're building it more affordably. We have to pull the cost out of building because as long as the state of Colorado can build the exact same home at half the cost of what it is in the Bay Area, we're never going to be able to compete.

I want to see more housing in absolute terms get built. We need to start moving in a better direction. We've gone from about 100,000 units a year to about 80,000 a year. If you go farther back, it was 150,000 a year that we were doing.

What do you want to get to in your term?

We need to get well over 100,000. I think the right way to think about it, though, is that it's really a ratio with jobs. For every 2 jobs an economy creates, you need at least 1 home.

Part of the reason the Bay Area, and particularly Silicon Valley, is so unaffordable for working people, and why we're seeing displacement of working families, is that over the last 20 years, this incredible economy here—the engine of innovation for our country and really the world—has created about 8 jobs for every 1 new home we've built. That is a completely unsustainable ratio.

Yeah.

So I'm a little hesitant to come out and say we're going to build 10 million homes. I think it's a ratio thing. It's a rate of change. We need to be building more year over year, but importantly, we need to pull back the fees, the long timelines, and the overly complicated building codes.

All of those get a metric?

Yeah, each of those gets a metric because ultimately, the per-square-foot cost of building needs to go down.

Where does it need to get to? Where is it today, and where does it need to get to?

It varies dramatically by product type and market. I don't—I mean, it's a good question. I think we should lay that out, but I just visited a modular construction factory—factory-built housing. They can bring down the cost per unit by 20% and speed up overall project timelines by up to 50% by just industrializing the production of housing.

So we need to pull the cost down. We should be able to drop the cost on a per-square-foot basis by at least a third with actions that are within our control as regulators.

If you become governor, you're going to be fighting against a legislature that's got all of the various vested interests tied up in keeping this from happening. How do you take action without partnership with the legislature? What I think might be very hard is, again, to wind things back that all these incentive systems have been created to deliver.

Are there emergency powers or actions you can take as governor that can just say, "You know what? I'm going to fix this in a year"? Or do you have to work with the legislature to solve these problems?

A bit of both. The governor has certain levers that are very powerful: driving the budget process, the veto, the bully pulpit, just naming and shaming, which is really powerful, executive orders, and appointments. The governor appoints 3,000 people who run all of these commissions that have incredible discretion over how to implement regulations.

But there's no doubt that ultimately you need the legislative branch to change. I think that a lot of Democratic legislators, many of whom I know personally and privately, will admit that things are broken and that things aren't working. There just hasn't been that willingness publicly to name what is going on, say that the system's broken, and say that the incentives are completely backwards.

I think, as governor, I'd be in a position to change the conversation, help either persuade existing legislators to think differently, or elect different legislators.

Do you think it's also because if they're public about it, they'll lose their donors and they'll lose the donor class that's supporting them?

Well, it's hard to step out on a limb without knowing if you're going to have support for it.

It is difficult to go directly to voters in an environment where money talks. It’s a very large state. It’s expensive to deliver a message. Social media has lowered barriers.

That’s part of my bet: that we can go straight to the voters with this message and get traction around the truth, around what it takes to actually solve our problems. But I understand why people go with the sure thing. It’s not fun to be labeled. They will call you everything when you fight for change. You’re a corporate sellout, you’re racist, you’re whatever. There’s always some label that people will ascribe when you try to fight for change.

But I try to stay laser-focused on the real-world outcomes: housing costs, energy costs, quality of schools, public safety—the things that people care about in neighborhoods like the one I grew up in. That has to be the North Star.

Yeah. What causes homelessness?

It’s a big question. There are a few things. One, you can’t ignore our broken housing market because in places where housing is cheap and widely available, you can have high rates of addiction and mental illness, and most people can remain indoors even with those challenges.

Typically, if you actually look at it as a life-cycle issue, someone who’s already vulnerable for some reason—it could be of their own choosing, or it could be circumstances such as job loss, health issues, addiction, mental illness, or domestic violence—is at risk. There’s a range of really awful things that happen to people and that people sometimes do to themselves. In these circumstances, if the rent is $3,000 a month, you are just one medical bill or layoff away from ending up in your car very quickly. Working people in California, especially, don’t have a lot of savings. They don’t have something they can fall back on.

The macro cost structure of California includes the highest housing costs, second-highest energy costs, and the highest gas prices, which disproportionately hurts working people, as well as an educational system that is preparing far too few of our children for the jobs of the future. We can go through that list, but that is creating these conditions of vulnerability or fragility that mean people living on the edge are much more likely to end up in their car.

But I would add that we have a massive public policy failure. Not only did we break the housing production market, which is the macro challenge, but we haven’t built shelter and treatment beds. So, for folks for whom an addiction or mental health issue is the thing that has them on the edge, we have far fewer beds than other states.

And then, when people do become homeless, it ought to be brief and it should not be outdoors. Yet we lead the nation in unsheltered homelessness. Over 40% of the people living outside in tents in the entire country live in California, which is only about 12% of the country’s population.

We haven’t built shelter, we haven’t built treatment, we’re not doing what we need to do to rapidly re-house people, connect them to a case manager, give them tools to turn their lives around, and hold them accountable for turning their lives around.

If there’s mental illness, should they be committed to some facility to help them recover from their mental illness?

Yes, or support them through that. In short, I think you have to be able to involuntarily hold people for addiction treatment and mental health care if someone is repeatedly refusing help or harming the broader community, which is often the case, whether that’s vandalism or retail theft.

It’s been a battle here in our downtown, where windows are constantly being broken by people who clearly are suffering from serious addiction and mental health issues. I think we should give people opportunities to accept help. It needs to be dignified, and there need to be alternatives to the streets.

We’ve stood up over 2,000 indoor placements—interim housing placements—almost all individual rooms with doors that lock, giving people privacy. These are low-barrier alternatives to the streets. Bring your partner, your pets, your possessions. We’re really trying to meet people where they are.

The good news is that 2/3 of people say yes. The bad news is that the other third is so deep in the throes of addiction to substances like meth and fentanyl that they can’t make a rational decision about their own self-care.

I believe that it is not compassionate or progressive to leave them to endlessly cycle between streets, emergency rooms, jails, and ultimately die of an overdose. I think we have a moral duty to intervene, help them detox, get connected to a counselor, and give them a chance to turn their lives around.

Drugs are coming from somewhere, fueling this crisis. Can the governor address the drug crisis? Can the governor get drugs off the street and arrest drug dealers? Is that a federal issue? How do we resolve the fueling of fentanyl, methamphetamines, prescription painkillers, et cetera, that have made their way onto the street?

It has to be all levels of government—all hands on deck. So much law enforcement is done at the local level. We have a police department with about 1,000 officers out on the street enforcing local laws. They’re on the front lines of this crisis, as are our firefighters and social workers.

Surely, having federal tools is important, and at the state level we have the National Guard, CHP, and a variety of tools here. What I do know, though, is that we can reduce demand by intervening in public drug use, getting people into treatment, and holding them accountable for turning their lives around.

If we get people into recovery, that’s one more customer not available out on the streets to buy these dangerous products.

And how many times do they cycle through before they have to be held more permanently?

Well, I think it has to scale up over time. With Prop. 36, I was the first Democratic mayor in the state to come out in support of Prop. 36. The rule of thumb there is that on your third public drug offense, you can be given a choice between treatment and incarceration. That’s bringing a consequence to a decision that doesn’t just affect you.

We can talk about civil liberties, but when you are actively choosing not to engage in treatment, you are more often than not creating and imposing real costs and real harm on the broader community. We’ve seen businesses shutter in our downtowns and parks where families can’t play.

It’s direct and indirect.

That’s right. I think a lot of people don’t account for that, which is—

Critical. I want to shift topics to energy costs. There’s an Iran war going on, so there’s an acute spike in energy and gas prices in the state. But over the last number of years, California Governor Newsom and the state legislature have pursued an effort to drive green energy policy in the state.

California has a roughly 70-cents-per-gallon tax rate. The California price for gasoline this week is $5.50, compared to $3.50 in the rest of the country. Did we get it wrong? Should we have taken a different path in the state versus fighting for green, chasing Chevron out of the state? Chevron has now relocated to Houston. They’re shutting down the largest refinery on the West Coast because of the policies and the bureaucracy.

How do we balance this climate-change, green interest with the real hard cost for everyone in terms of the cost of living in the state?

Yeah, I do think we’ve gotten our regulatory approach here wrong. I would reject the notion that it’s either-or. I don’t think it has to be. I think innovation is the middle path, the way to do both.

Look, Texas is providing dramatically cheaper power that is cleaner than California. You see places like China leaning heavily into solar, wind, storage, and EVs. The path is investment, innovation, and infrastructure—a smarter grid.

What we’ve done in California is another classic case of well-intended regulations leading to massive unintended consequences. Let’s just take the example of our refineries. The state has lost most of its refineries over the last decade because we have intentionally regulated them out of existence.

What’s actually happened is that we still import oil and gas. We’ve just pushed refineries out of state. We had the cleanest, best-regulated refineries, with some of the highest-paying jobs in the sector. We pushed that out of state.

Now we’re importing the same amount of gas from thousands of miles away. It is dirtier. It has a bigger carbon footprint. We lost those good, high-paying jobs. We lost the tax base of those companies paying local taxes. It has been a hit on every level.

And actually, because climate change is a global phenomenon, we’ve actually made the problem worse while hurting ourselves economically. That’s the opposite of what we need. We need win-wins.

We should be paying EV owners today, in the middle of the day, strongly incentivizing them to charge their vehicles in the middle of the day, when power is so cheap and abundant in California that we sometimes pay Arizona to take our excess solar. Then have them plug in at night to power the grid and get through that roughly 5:00 p.m. to 9:00 p.m. evening peak, when we’ve got to start firing up gas power plants because there just isn’t enough power on the grid.

So we need to be smarter: invest in innovation and infrastructure, not regulate energy sources out of state that we still rely upon. But it’s hard. Now we’ve got the 70-cents-per-gallon tax in California. The legislature has passed a series of bills to make that tax go up and up and up. Now they’re talking about increasing it even further.

It’s the most regressive tax imaginable because it’s even worse than a sales tax, which is already fairly regressive.

But as you know, higher-income, wealthier people have already adopted EVs. They’re not paying this tax. It’s working folks, particularly in towns like Watsonville, where I grew up, who are paying it. When I was in high school, I had to go 50 miles one way for school, and my parents went 50 miles the other way for their jobs. So, it disproportionately hurts working people.

My proposal is that we temporarily suspend our gas tax, to start, to provide immediate relief to working families who are paying the price for a war that they didn’t ask for. They’re disproportionately paying the price. I would temporarily suspend it, but we have to be intellectually honest about this: it is our primary source of revenue for paving and maintaining roads and our transportation infrastructure.

We will need to shift how we do this. Rather than being a gas tax, first of all, the general fund is up 75% in the last 6 years. So, I’m pretty confident that a state that’s spending $350 billion can afford to pave our roads without punishing working families. But I also think that over time, as EV adoption increases, we’ll have to find a smarter way of charging a basic user fee so that people who use the roads pay to maintain them.

One of the other big costs in California, related to housing and to this climate change question, is the cost of insurance for your home. We had this massive wildfire that spread and destroyed large parts of Los Angeles last year, and as a result, many of the home insurance companies have left the state.

I just lost coverage on my home because I live near a bunch of trees, so my house is deemed too risky to have coverage. I’m fortunate in that I don’t have a mortgage to deal with the loss of insurance coverage, but this is becoming an increasing burden for the state of California because the state has had to step in and create a bigger and bigger insurance pool that, financially and accounting-wise, the state can’t really afford.

How do we solve this problem of the cost of homeowners insurance? What’s the right structural solution for either incentivizing the return of insurance companies or creating an insurance pool that’s well-capitalized and can actually afford to make the payouts, instead of needing to go to the federal government when there’s a crisis and ask for a bailout? How do we fix this problem in California?

I think there are a few components to the strategy going forward here. Number 1, we have to rebuild the private marketplace. 90% of homeowners, maybe more, can be covered by private insurance affordably, and we have to rebuild that part of the market by bringing insurers back, allowing them to appropriately price risk, and creating more granularity.

If you’re willing—and you may not be—but if you’re willing to remove those trees within 100 feet of your home, you should pay a lower premium. If you prefer to have the trees there, you should pay the higher premium. So, more granular pricing and allowing appropriate pricing of risk is really important.

For the 5% to 10% of homes that are up in the hills, in heavily wooded areas where there’s lots of vegetation, we’ll have to have higher insurance costs. First of all, when you build, there’s a question of how much more we should be able to build out there—probably not a lot. The materials you use need to be fire-resistant, and you’ll have to pay much higher insurance just to cover the true cost of the likelihood of a fire and the cost of replacement.

The other piece of this, though, is that the state has to take more ownership for vegetation management. We spend $8 on fire response and recovery for every $1 we spend on prevention, and there are plenty of urbanized areas that are at risk because they’re proximate to dense vegetation that the state has not taken ownership for clearing.

Yes, it should be a partnership with the federal government. If they’re federal lands, we should hold the federal government accountable for doing it. But I just toured Altadena and the Palisades and met with the homeowners there, who are incredibly frustrated about the lack of rebuilding. No one is quarterbacking this. If you walk the Palisades today, you will see, once again, vegetation that’s 5 feet tall and hasn’t been managed in an area where people are trying to rebuild their homes.

So, the state has to step up. As governor, I would create a task force that focuses specifically on fixing the insurance market. If the state will invest in vegetation management to reduce the risk of catastrophic loss, you’re going to see premiums go down over the long term.

I think it’s insane that the state sets rates, tells the insurance companies how much to charge, and assumes they’re going to stick around and keep charging it. If they can’t make money doing it, why not let the market decide? There are hundreds of insurance companies that, if they were able to set their own rates and not have the state dictate the rate, would compete, and prices would come down.

This idea that the state should be determining what companies should charge for anything is a problem, but fundamentally, in the insurance markets, it’s literally chased every insurer out of the state. I just don’t understand how this—

Yeah, these kinds of price controls don’t work in practice, as we’ve seen. That’s what I mean by saying we have to be able to appropriately price risk. Insurance companies need to be able to charge rates that reflect the true risk and cost.

I think they should be strongly incentivized, if not held accountable, for allowing homeowners to adopt best practices and thereby reduce their premiums. And I think there’s a subset of folks who may need to be on and pay into a public option of some kind because they just won’t be covered by the market. Perhaps they have to choose that based on where they live because they won’t have insurance.

I don’t know, but I don’t think you can force everybody else to pay exorbitant rates to ensure that we cover the riskiest home, which is going to be the most expensive to cover.

Yeah.

It’s just an illogical setup.

Well, look, let’s shift to one of the other big liability questions in the state. It’s the one I care about—I wouldn’t say the most—but it’s one that I’ve observed may end up being a big driver of what’s ahead for us.

California’s public employee retirement systems, CalPERS and CalSTRS, provide retirement benefits to roughly 3 million California public workers. There’s roughly $1 trillion of capital in those 2 investment funds that’s meant to support those retirees. They’ve been making about 7% a year, compared with the S&P making 11% a year.

Current accounting estimates are that they’re going to be short, by some estimates, $250 billion to $300 billion, and by other estimates as high as $1 trillion in the years ahead when paying out the benefits they’re legally obligated to provide to public employees as they retire.

You can’t just change those benefits. There’s a state Supreme Court case that has made it known that you can’t go in and rescind benefits that you’ve promised someone. So, you’re stuck with that liability. And because they’re public entities, California taxpayers are ultimately going to be stuck with a trillion-dollar liability if that’s what it comes to.

How do we fix this freaking problem?

Yeah, I’m worried about it as well, and I’m intimately familiar with it because we’ve had to tackle pension reform in San Jose. We were sort of the canary in the coal mine quite a few years ago, as our unfunded liability began eating up our general fund. Even today, after pension reform, 19% of our general fund in San Jose this year goes to paying an unfunded pension liability. That just comes off the top. One out of every $5 goes first to our obligation to retirees.

Again, I don’t blame the retirees or those who advocated for them. It’s politicians who didn’t do the math, didn’t recognize when the math wasn’t working out, and swept it under the rug because they knew they’d be long gone by the time the bill came due.

There are really only 2 options here. One is to move toward a defined-contribution model, as we have in the private sector. You see all over the world that the employer and the employee pay in. It’s put in the market, it needs to grow over time, and people need to calculate their savings and their—

You see your account. You track it.

You track it, and you can increase your contribution level. If we were to move to that, the public sector would need to be a strong match. I think the challenge is that politically, that’s not likely to happen.

What we’ve done in San Jose, which could be a roadmap for the state, is that we negotiated—well, we had to go to the ballot. There were lawsuits. It was a very messy process. I think it needs to be better handled. But effectively, we created a different pension system for new employees.

It said, “As you come in, this is what a right-sized pension system needs to look like. We’re going to have the employee and the employer paying more up front. We will be more realistic about the returns we’re expecting. We’ll adjust over time faster if the returns are underperforming.”

We’ve brought in better fund managers who are heavily incentivized to make smart investments and grow the investment. Most importantly, if our returns fall short, the delta—the gap—is covered 50/50 by the city, meaning the taxpayers, and the employee in terms of lost benefits. So, there’s shared pain on the backside if we miss our targets.

And what do we do for what we have now?

What that has allowed us to do, because of the legal limitations that you’ve mentioned, is—and I’m not saying it’s perfect, but this is just legally and politically what we were able to get to—the best outcome we were able to get is that we’re on a long glide path of paying off all of the unfunded liabilities for the Tier 1 employees, all of those older employees.

It's a 20-year process. By the early 2040s, San Jose will have cleared the debt, our general fund is going to be flush, and we're going to be increasing staffing and service levels. You'll start to feel that here much sooner. We are actually roughly at peak cost for unfunded liabilities today because we took the medicine, and now we'll start that slow glide path where each year there'll be a little more room in our general fund because we actually bit the bullet and took this on.

Well, I think that's the question: How do you fund that glide path? It may be the case that our budget has some margin for error, let's say, because of how much we're spending. Let's just do the statistics. California Governor Gavin Newsom has proposed a $349 billion budget this year for the state. That's up from $209 billion, so almost 2 times—60%, 70%, 80% more, 75% more—than the year before COVID. And that's up from $110 billion 10 years prior. So, we went from $110 billion to $350 billion, 3.5 times how much we're spending since it feels like yesterday, just a couple of years ago.

Yeah.

Despite having the nation's highest tax rates and the largest revenue base, we're still looking at a $35 billion deficit in the California state budget this year. What happened? How did this get so bad? And how much of this do you think is fraud, waste, and abuse? Where's this money going?

Well, part of what we've done is something we talked about earlier, which is that we have increased our pay for public-sector employees, our pension obligations, and post-retirement health benefits at a faster rate than we could actually afford, and we haven't been honest with ourselves about that. Part of where the money has gone, though, is really just a sprawling bureaucracy. When we have more money in good years, we create new programs and add headcount.

The state's population has stayed flat over the last 6 years. Spending is up 75%, as you point out, and headcount in state employees is up, I believe, over 20%. We're adding more state workers and pouring more money into public programs that aren't starting from the premise of, "What is the outcome we need, and how do we most efficiently get there?"

I mean, it's time for California to go through an exercise of zero-based budgeting and say, "What are the outcomes we need, and are we actually spending dollars to achieve those outcomes? Or are we just funding a sprawling, bloated bureaucracy where it's easier to add 2% or 3% headcount every year, give everybody a 4% raise, and call it a day?"

I think that's generally been the approach. Whenever revenue is up, we just give everybody a raise, hire more people, and initiate a few new programs. We never go back to basics and say, "If these are the resources we have and these are the outcomes we need, are we really optimizing our spending for those outcomes?" The answer is no, we're not.

Can you do that with restructuring and zero-based budgeting as governor, or do you need to do this in partnership with the legislature, where everyone has their special programs that they've fired up, with money flowing to their local counties, their friends, and their donors? How do you actually execute this?

Well, as I said before, I think electing a pragmatic, independent-minded governor who understands this problem and is willing to tackle it is step 1, and it's necessary but insufficient. Ultimately, we have to build a more moderate coalition of legislators who understand how broken the system is and who are willing to do hard things.

I don't think this just happens overnight, but the governor has a lot of tools that he or she can choose to use. You do drive the budget process. Ultimately, you need legislative support for it. You have the bully pulpit. You have the ability to manage state agencies in a very different way.

The governor appoints 3,000 people to run state bureaucracies. They can either come in with the mindset of business as usual—"I'm going to sit behind a desk; we're process-oriented"—or they can be held accountable. Maybe it shouldn't be 3,000 employees. Maybe we should reduce how many people that is. But they can be told, "Here are the outcomes we need. Go ground-truth these. Go down to the local level, spend time with the school boards, the cities, and the counties where all the money actually meets the constituent, where the rubber hits the road, and come back with answers on how to reform these systems to get more for what we're spending. And if you can't hit more aggressive goals, we'll bring in someone else who can."

We need a different mindset for how we operate our government agencies.

What you're saying is starkly different from what others are saying, and one of the biggest points that others are making right now is that they want to increase programs and spending, particularly in health care. What's your view on government-provided health care? Should all health care in California be free? There's a big movement and a big legislative effort to try to make this the case. Does this make economic sense? Can we afford it? How do we actually do it? Or do you think this should remain a private-market effort?

I don't think it's realistic for California to create a single, state-run, free-health-care-for-all system. I know many of my opponents in my party, the Democratic Party, are proposing this. I think we have a pretty good sense of how to reduce costs. We just have to be willing to do it.

Price transparency and competition could bring down costs in health care by 5% to 10%. Preventive care: We should be incentivizing insurers and health providers to help someone get healthier and reduce their overall demand on the system over the course of their lifetime. Things that may seem small, like getting 100,000-plus people off our streets and into shelter, dramatically reduce the burden on our health care system.

I'll take another one: Nurse practitioners can do so much more than we often allow them to do, which again is a function of this behind-the-scenes negotiation in Sacramento over what doctors are allowed to do and what nurses can do. Nurse practitioners providing preventive, upstream care in clinics in communities can be far more effective at preventing long-term chronic illness than what we do today, which is end up with everybody in the emergency room needing care after they're already really sick.

We need to restructure our health care system. California should be demanding and investing in innovation and better ways of doing things and bending the cost curve—not fall back on this lazy answer that we're just going to find a way to raise taxes more to fund free services that will ultimately break the bank.

You've been criticized by many for being against the billionaire tax. I think you're the only candidate running for governor right now who has spoken out against it. I've heard your comments on it, obviously. I think I was probably the first to identify it and bring it up on my show when it first came out, the day it was filed.

For me, it's fundamental to private-property rights. If you can take people's assets after they've paid taxes on them, there's no stopping that train. Why not take everyone's assets at some point? You pay your income tax, and that's your private property; you get to keep it. Shouldn't it be that a legislator can later say, "I'll take 10% of what you own"? That just seems wrong to me.

Do you think we need to have a continued increase? Do you think we need to maintain the temporary high income taxes in California? What's your general view on revenue? We've talked a lot about how you think we don't need to rely on growing revenue, but based on the current tax system in California, what else do you think needs to change? Or do you think it's just, "Let's leave it as is"? No billionaire tax, no new taxes, but let's just not go back.

Yeah, let me say a couple of things. One, I think where this push is coming from is a deep concern about economic inequality and declining social mobility. I think these are real issues. I am worried about economic inequality. I think in the long run it's a threat to democracy. I think there are a number of better solutions to this than the proposed wealth tax, which, as you point out—

Let me set aside even the philosophical arguments: It simply won't work, certainly not at the state level. We've already seen—

People I know have already left the state, right? We've seen over—

A trillion dollars of capital flight.

Our ongoing revenue going forward is now going to be lower. The dirty secret of this proposal is that it won't be the billionaires who pay higher taxes. It'll be middle-class and working families who are left holding the bag. That's why I immediately felt that I had to say something, because it's working people who are going to be hurt by this. It's not going to be billionaires. They're the most mobile people in society.

So, look, first of all, there are things we can do to make the tax code fairer. I think there's a legitimate debate about what the absolute rate of capital gains tax should be. There's the phenomenon of very wealthy individuals borrowing against appreciated assets, where you're effectively avoiding paying capital gains. I think that's a loophole we can close.

There's the step-up in basis upon death. I'm not sure that it's very fair. Well, let me just use an example. I don't think Elon Musk should be able to pass on $500 billion of appreciated but untaxed stock wealth to his children, and the moment that they inherit it, it's rebased at current market value and no one ever pays the capital gains on it.

There are a lot of things we can do to capture billions in revenue and close loopholes in the tax code. This is, of all the proposals, the worst: the least likely to work and the most likely to hurt working people.

But I also think we have to acknowledge that, in a state that keeps asking for more before we do better, social mobility is down because of public policy failures first and foremost: public schools that aren’t performing, housing that isn’t affordable, and energy that isn’t affordable. When most Californians are spending over a third of their income on housing, and many are spending over half of their income on housing, that hits social mobility a lot more than the fact that the tech sector has had a bunch of growth. These are fundamental public policy failures, and the sooner we own them and think differently about our regulatory environment and our policies so we start fixing them, the better for California, the better for the Democratic Party, and, most importantly, the better for the people we serve.

But what you’re saying makes a lot of sense, but I think people hate other people’s success. I think there’s a lot that’s been going on, this feeling around the lack of social mobility, but also seeing a small segment of the population accelerate. Technology has really driven that. I’ll be the first to admit there’s a small population in California that’s done extremely well, while most Californians have been left behind.

Do you think you’re electable in this sense? You’re not fueling the populist sentiment that I think every one of your candidates has found they can tap into, and that may put you at a big disadvantage in this race.

I do think we need to take economic inequality and social mobility much more seriously than we have. I think we need to ask, and ultimately demand, that our wealthiest individuals, our tech sector, and industries that do well be structured in a way that works for people.

I’m curious what you think. Maybe I’ll turn the tables for a moment. I think that we need a shared prosperity that includes people having some sort of equity or more direct benefit from the incredible gains that tech has produced. AI is scaring a lot of people because it could lead to the elimination of jobs and further concentration of wealth. What do you think is the appropriate role for the tech sector and those who have profited immensely from it in ensuring a level playing field, or at least some semblance of equality of opportunity?

That’s a longer conversation, but I do think giving more people more ownership is important. But I’m not sure people are going to want to or need to work at big companies anymore with AI. It’s a longer conversation, but in the same way that Instagram, Shopify, Etsy, and TikTok created new jobs—almost like new roles and new ways that people could earn—AI is going to create 1,000 times more new ways for people to earn than there are today.

Yeah.

AI is actually going to accelerate more people up the ladder faster than anyone’s really realizing. I can give you countless examples of this that I’ve seen recently. But I think we’re all going to wake up pretty happy with the next advance in economic mobility that’s going to be unleashed because of AI, not in spite of it.

I hope that’s true. It’s a very optimistic read. I do think my read of history is that technological change, while ultimately producing greater abundance, if you will—

Yeah.

—often is really hard on people.

Yeah.

And that’s why, in San Jose at least, we’ve created AI upskilling courses for our workers. We’ve gotten AI companies to come into our libraries and provide tools and training.

Totally.

We’re really trying to figure out how we lower barriers to learning how to use these tools, apply them in people’s lives, start those new businesses, and create the new jobs of the future.

AI can teach people how to use AI.

That’s true.

[Laughter] Which is where I’m starting to see a lot of people learn how to use these tools on their own by asking the AI and engaging. Then there’s this moment where it’s almost like you lit a match on a bunch of tinder for the first time, and you’re like, “Whoa.” I’ve seen this in person. I’m watching people get knocked down like bowling pins in terms of, “Whoa.” That “whoa” moment that I’ve been visibly seeing in people just in the last couple of months is making me very optimistic.

That’s good. It does, though, get back to this basic point that we need our public education system to teach people to think critically. When half of our kids aren’t on grade level in reading or math proficiency, it’s going to be very hard for them to be lifelong learners.

The lack of curiosity, asking questions, and learning how to think—not just teaching them knowledge—is a massive problem that we’re dealing with in education in the United States, in my opinion. Kids are not being taught how to question or how to build. They’re being taught facts. Those facts are irrelevant because they all exist in AI now. You don’t need to know all those facts.

It’s good to have a basis, but what are you really trying to get? A curious mind, an engineering mind, a creative mind, a thoughtful mind—and teach individuals agency in a world where they have infinite capacity. That’s what AI gives all of us.

Yeah.

But what do you think of Donald Trump?

I’m not a fan. My concern with Donald Trump, even if he may get certain issues right, is that I don’t believe he really understands what makes our country great. I think he’s channeled the frustration of working Americans who feel that they’ve been left behind, but I also think he’s created a lot of fear and division around immigration.

He doesn’t recognize how many people we’ve had in this country, in part because both Democrats and Republicans wanted access to cheap labor, in places like Watsonville, where I grew up. These people have been here 20 or 30 years, working hard, paying their taxes, otherwise playing by the rules, and raising children who are U.S. citizens. They’re now living in terror because they’re worried their families are going to be ripped apart.

I don’t understand and don’t support this war in Iran, which I think is a huge blunder. It’s going to drive up energy costs, and it’s not clear to me why we’re losing American lives over there.

On tariffs, I do believe China—this is something I think he’s gotten right—has been competing unfairly with the U.S. I think a targeted approach to tariffs, focusing on that issue, would have made a lot more sense than the general inflation we’ve seen.

I could go issue by issue, but I worry mostly about the health of our democracy. I think it requires real, honest dialogue, respect for the rule of law, and an independent judiciary. I have deep concerns about this not just populist, but reactionary, quasi-authoritarian rhetoric and mindset. It’s the outcome of declining trust in government when we don’t hold ourselves accountable for delivering for working people.

I think it’s predictable, and I think you’re seeing an equal and, I’d say, equally risky rise in populism on the left and reaction on the right. These two are playing off one another. Part of the reason I jumped into this race was to offer a third way, a pragmatic alternative.

I’m a Democrat, but I also recognize that something’s broken in California. The incentives are all wrong. The highly organized interests in Sacramento are being taken care of. Sacramento is working great for highly organized interests; it is not working great for regular people.

I think the best answer to that is to get back to basics, be competent, be data-driven, and deliver results for people. I’m worried that if we don’t, we’re going to see this epic populist battle on the right and the left, where people are offering really easy answers, not the honest answers that we need.

Rate Governor Newsom on the job he’s done as governor of California.

I think Governor Newsom has been a bulwark against some of the worst ideas coming out of the legislature. You mentioned that he’s vetoed 10% to 15% of the bills coming out of the legislature. Many of those vetoes I agree with, and I think they’ve averted real harm.

My critique has been around not doing enough to take on the entrenched interests in Sacramento, and we’ve disagreed very publicly on certain policy issues: Prop 36, recovery housing, and some energy policy points. But I always try to attack problems, not people. I’m not really interested in evaluating somebody’s intentions or ideology so much as the results of their actions.

I think he’s done some really good things. I also think he could do even more, and that’s been my appeal to him: Let’s work together to drive even more change faster.

Some of the things he’s brought forward, like CARE Court, are the right idea. Now we need to execute it. We need to actually make sure that CARE Court is getting people with addiction and mental illness into care. I think he’s got the right idea and the right intention, but we’ve got to follow through.

As governor, I would make sure that Prop 36, Prop 1, CARE Court, and a number of things he’s put in place are actually used to deliver the intended outcome.

Governor Newsom’s put out a lot of these memes kind of making fun of Donald Trump by doing tweets sort of like the way Trump does Truth Social posts, and so on. It’s very antagonistic to the president, at least publicly antagonistic.

At the same time, California relies on federal funding and requires a lot of federal cooperation, as well as a lot of federal land in the state. How would you interact with President Trump? Talk a little bit about how the governor has interacted with President Trump publicly.

Look, I understand what the governor's doing. He's been holding a mirror up to Donald Trump and fighting for California's values, which I appreciate. I think there's also, just back to incentives, a sense that he's running for president, and that's where I think this approach is coming from. I would take a different approach in the sense that, as governor, focused on delivering for Californians, I will fight the Trump administration through the courts and through the bully pulpit whenever necessary to protect our values, to protect our people, and to protect state funding.

I also think, though, that we need to find places where we can achieve a win-win with the federal administration. I'll give you the example that's top of mind for me. I just spent time walking through Altadena and the Palisades, where people have lost everything. Over 10,000 homes were lost between the 2 communities, and people are desperate to rebuild. They're not getting the help that they need.

Part of the reason they're not getting the help that they need is this hyper-partisanship in which California and Washington are fighting rhetorically and politically. The people who are being hurt are the families who have lost their homes, who are waiting on the $40 billion of federal aid that's been promised, and that, if it weren't for this political battle, would have already flowed to help those neighborhoods rebuild. As governor, I will absolutely fight for our values, but I'm committed to fixing our problems, which means finding a way to make it a win for this president and this administration to rebuild Los Angeles. We have to put the people before our politics.

As it relates to ICE and immigration enforcement, do you consider undocumented immigrants in the state of California individuals that you would represent as governor? Is it part of your job to protect undocumented immigrants who came here illegally but ICE would like to remove?

Yes, unless they're committing serious and violent crime. Look, if you're here, you're undocumented, and you're committing violent felonies, I think you should be deported. But like many of the people I grew up with, if you were essentially tacitly welcomed here because we had an agriculture industry or a construction industry that needed low-cost labor, and you came, started a family, started working, paid taxes, and raised kids here who were born here and are U.S. citizens, the only practical and ethical solution is for the parties to put the hyper-partisanship aside, come together, and arrive at a grand bargain in which we secure the border, deport those who are committing violent crimes and are undocumented, and create a pathway to some sort of legal status.

If citizenship is a bridge too far for that older generation that came earlier, so be it. But their kids are U.S. citizens, and they deserve to still live with their parents. I think we've got to find the approach that respects people's humanity and is practical and ethical. I'm incredibly disappointed, frankly, with both parties for years of kicking the can down the road.

I will absolutely stand up to protect undocumented residents who are playing by the rules, who are doing the most American thing. I get all the arguments around lawful immigration. Let's secure the border and set up a proper system of lawful immigration going forward and not create a bad incentive. Let's do that and then create this pathway to legal status.

What we've seen play out in Minneapolis is horrible for the country. We're seeing citizens arrested, even killed. This is not working, and I don't think it's ethical.

Let me give you the pushback that the Republican Party leadership would give, which is that many of these individuals will end up voting for Democrats. The vast majority of them will vote for Democrats, and the border was opened and they were allowed in here. Now this inevitable, due to humanitarian conditions, path forward to citizenship will ultimately increase the Democratic Party's voting base, lock them into power in D.C., lock them into power in these states, turn more states blue, and so on.

How do you respond to that concern and pushback? Put the humanitarian piece aside. Every Democrat I ask about this cannot answer the question: Why was the border opened? Was it to lower labor costs? Was there some other reason that we did it? Was it to increase the voting base?

What was the motivation, and how do we address the response that's going to come for the many years ahead from a Republican Party that's going to have an issue with this?

My sense, growing up in an ag town that historically has probably been about a third undocumented, is that the primary incentive for the parties not to solve this problem is that a lot of people became very wealthy, and a lot of industries did very well by having access to low-cost, abundant labor. Plenty of the business interests that did really well in agriculture, construction, and other industries—historically, this would have been, say, the meatpacking industry—are donors to the Republican Party.

I think both sides have been complicit. Back to incentives, I think Democrats and Republicans have played to their base and actually been politically incentivized not to solve the problem.

As a pragmatic moderate, my approach is to say, “You're both wrong, but there's something true in what you're both saying.” Republicans are right that we should know who and what comes in and out of the country. We should have a secure border, and we should take away any incentive for people to come here illegally, especially in a moment where we've got a fentanyl crisis, international terrorism, and nukes that are getting smaller and smaller. We should have border security, absolutely.

If you're not here lawfully and you're committing serious and violent crime, deportation is the minimum expectation of what should happen. So let's do that. But I think both parties have been complicit. We can sit around and say who wins electorally or economically, play that game, and continue to have this incredibly divisive and unproductive situation where millions of people are living in fear and living in the shadows, or we can fix it.

When I say legal status, maybe that legal status doesn't come with a right to vote. Maybe it's a green card. I'm for compromise and problem-solving and moving the country forward. Both sides are going to have to give if we're going to solve this problem.

I think that's the best idea possible for how to solve this: a path to residence without a path to voting. That could solve everyone's concerns.

Lastly, I want you to compare and contrast your Democratic opponents—Swalwell, Steyer, and Porter. Let's just do those 3. Give me a sense of your view on each of them.

Look, I've been in enough debates with them now to understand that those 3 other leading Democratic candidates are vying for the same lane. It is the more-of-the-same lane. It's a platform that says the answer to our problems is more revenue. It's revenue, revenue, revenue, as it represents one of his top 3 goals.

We need to think differently. What I'm offering is an approach that's been working in Northern California's largest city. I call it “getting back to basics.” It's focusing on fewer things—the things that are most foundational to opportunity and quality of life for everyone. It's being humble about what government can actually do, not thinking that the answer to every problem is more revenue and another government program.

It's being radically more transparent and accountable about how we spend dollars and rooting everything in results, or measurable outcomes. It's bringing a new politics of pragmatism as an antidote to this incredibly destructive populism we're seeing on the right and the left that really risks the democratic project of this country.

I think California has, throughout its history, been the innovative state that has led the way and changed the world. I am hopeful that Californians are ready for a different kind of politics that focuses on problem-solving.

I jumped into this race because all of the other candidates across the spectrum had already been in for a year. I didn't hear anyone speaking honestly about our problems and how to solve them. I thought that I had a unique voice in this race, and we're seeing that.

It's a short runway, but as I travel around the state, go to see the sewage crisis in the Tijuana River on the border that shut down all the beaches down there, walk through Altadena, or go through the Tenderloin in San Francisco, people are responding because all they really want is for their tax dollars to be used responsibly. They want their government to work. They want their lives to get better when they send so much of their money to their government, and that's my commitment.

Mayor Matt Mahan, thank you for being here with me today on All-In. I really appreciate the time, and good luck in the governor's race.

Thanks, David. I enjoyed it.