Gavin Newsom’s Misstatement of the State

The governor’s State of the State address — or rather, his pre-recorded speech spliced throughout with a campaign-style video montage — was filled with fact-spitting errors. Let’s consider just a few:

HOMELESSNESS: “No state has done as much as California in addressing the pernicious problem of homelessness that too many politicians have ignored for too long.”

During his five years in office, Newsom has spent “nearly $24 billion for homelessness and housing.” But homelessness has only worsened. That’s according to the state auditor’s April 2024 report, which notes that, despite the record spending, “More than 180,000 Californians experienced homelessness in 2023—a 53 percent increase from 2013.” Most of that increase has come recently, the auditor found: despite a slight decrease in homelessness “from 2013 through 2015 to fewer than 116,000 individuals, it had increased to more than 181,000 individuals as of 2023.” The report concludes that no one knows where the money went and whether it produced anything: “The State lacks current information on the ongoing costs and outcomes of its homelessness programs, because [it] has not consistently tracked and evaluated . . . efforts to prevent and end homelessness.” “No state has done so much,” indeed, and to so little effect.

GUNS: “Red states couldn’t be more divorced from reality. Their entire crime agenda narrative is about diversion and distraction. They create fear and division – meanwhile, people are gunned down at higher rates in Republican states than in Democratic states. Eight of the ten most violent murder states in America are red states. Cities like Jacksonville and Memphis have significantly higher homicide rates than San Francisco and Los Angeles.”

This is the familiar, flat-earth stats argument in which liberal analysts stack the deck by arguing at the state rather than local level. In fact, as conservative analysts will point out (with some deck-stacking of their own), the most dangerous places in America are in big cities and counties run by Democrats – including big cities and counties run by Democrats in red states. But even that doesn’t get at deeper truths revealed again and again by more granular data – like the role of race, ethnicity, age and poverty – and truths far deeper than that: “Regional differences in violence go back to the Founding Era,” the Manhattan Institute notes, and “it is very easy to change the conclusion by manipulating the data in very simple ways.” Newsom is a simple manipulator, a man who finds it more politically expedient to vilify conservatives – including conservative Californians – than to acknowledge statistical nuance and the importance of leadership.

Signs of hope: As crime has skyrocketed in the Bay Area, majorities of voters – including liberal voters – have recalled Chesa Boudin (the notoriously pro-criminal former San Francisco DA); Boudin’s Alameda County counterpart, District Attorney Pamela Price, faces a recall there on Nov. 5. Like Newsom himself, LA County DA George Gascon has faced two unsuccessful recalls. The lesson here, as Newsom almost certainly knows, is that when crime spikes in California, law-abiding citizens generally want more than angry tweets and dramatic recorded speeches about the dangers posed by Republican governors in distant states.

TAXES: “Catering to big business and the rich is also why red states tax their lowest earners far more than California does. They punish you when you’re struggling, but give you a free pass when you’re wealthy. Here’s the truth Republicans never tell you: California is not a high-tax state.”

Newsom is hung by his own words. Just three weeks ago, confronting the state’s historic budget deficit, Newsom told a very different story: “When considering [California’s] 8.84 percent corporate tax – which is the highest, arguably, depending on how you analyze it, in the country – no, I’m not prepared to increase taxes,” the governor told a May 10 press gaggle. “We have among the highest tax rates in the United States of America for high-wage earners, we have among the highest tax rates, as I noted, for corporate taxes. … I feel strongly that we have to live within our means.”

He said that while knowing that just days later the state Supreme Court, with justices appointed by Newsom and his predecessor, Jerry Brown, would agree with Newsom that a qualified taxpayer protection initiative should be kept off the November ballot. He also knew that California businesses are paying higher payroll taxes because of Newsom’s loss to fraudsters of $20 billion in federal unemployment loans.

FISCAL CONSERVATISM: “In California, you don’t have to be profligate to be progressive. We understand how to balance budgets while protecting working families, children, and the most vulnerable people in this state.”

Newsom is in fact still in the midst of resolving the state’s worst budget crisis ever – a crisis of his own making. Just two years ago, Newsom cock-a-doodled that California had a “historic” $100 billion budget surplus, the biggest state surplus in U.S. history. He didn’t mention the state’s obligations, including a $20 billion Covid-era federal loan to shore up the state’s failing unemployment insurance system. That loan remains unpaid, though California businesses will be repaying it for years through a federal payroll tax. That will be a drag on business productivity for years to come. And there’s another big deficit coming – surfers will tell you these come in sets – next year: Newsom’s budget “fix” actually predicts a 2024-25 deficit of $19 billion. And that’s after he declares a “fiscal emergency” he can only attribute to his profligate spending. None but Newsom and his allies dare call that an “understanding” of “balanced budgets.”

BORDER SECURITY: “When it comes to the southern border with Mexico, California has proven time and time again that it’s willing to tackle the hardest problems. But Republicans in Congress have chosen cynicism, partisan politics, and the dangerous path of chaos instead of doing their job.”

Where to begin with a governor who extended taxpayer-funded healthcare benefits, Covid benefits, and college scholarships to illegal immigrants; who has expanded sanctuary policies in California, limiting cooperation between local law enforcement agencies and federal immigration authorities; who has sued the federal government when it attempted efforts under Trump to limit illegal immigration?

A FRIEND OF BUSINESS, PART 1: “Here is a simple question for Republicans: If California is a failed state, why are four of the seven most valuable companies in the world based here? Why does the Bay Area remain the top-ranked region for venture capital?”

That’s a simple question, governor. Here’s the simple answer: Silicon Valley has been a global tech center since the 1960s, and you’re now living off that legacy – like a rich kid born on third base who thinks he hit a triple.

But dark trends are clear: “The share of all US tech industry jobs that are located in California has now fallen to some of the lowest levels in a decade, dropping a full percentage point over the last year alone,” data analyst Joey Politano posted on X this week, citing numbers from the Bureau of Labor Statistics. And many tech giants have in fact joined the migrant million – Californians seeking freedom from dysfunctional government and finding it in the places Gavin Newsom hates most. Most famously, Oracle and Tesla have departed for Texas. But the real pain will come next as startups decide to take their chances elsewhere, not in the Silicon Valley, but in “New York, Miami, Boston, Seattle, Philadelphia, or Chicago,” reports Cybernews. When New York, Seattle, Philadelphia and Chicago look better than the Silicon Valley, be afraid.

There’s also this: It’s very strange for a progressive governor, a man who regularly disparages the wealthy in order to signal his affinity for the working class, to be bragging about the good fortunes of a few wealthy Californians (among the world’s richest) while ignoring the high and rising cost of living attributable to his policies and which hurts all others.

A FRIEND OF BUSINESS, PART 2: “We’ve got more business starts in California than any other state in America and among the highest average wages in America for working people.”

Those “highest average wages” are necessary to live in either the first or second (behind Hawaii) for highest cost of living. Taxes, energy, housing, insurance, and more – every business sector that this government touches is compelled to raise its prices or to abandon the state altogether. Orlando is 42 percent cheaper than San Francisco; Dallas is 32 percent cheaper than LA; Nashville is 28 percent cheaper than Oakland. Higher costs require higher wages, and that’s why the states Newsom hates most are growing fastest.

ELECTRIC VEHICLES: “The global EV market would not exist without California’s leadership proving that our regulatory environment has been an accelerator for investment, creating certainty and unprecedented opportunities.”

This, at last, is absolutely true, though what Newsom means – what he has in fact said as often as he can – is that California’s “leadership” cost taxpayers billions in state subsidies to the EV industry.

“There would be no Tesla without California’s regulatory bodies, and regulation,” Newsom said during a September press conference with other West Coast governors. He said Tesla has “been a beneficiary of well over a billion dollars of subsidies” that enabled it to “grow and dominate the electric vehicle space.” A billion? If only. In fact, California taxpayers gave more than $3.2 billion in direct and indirect California subsidies and to support “market mechanisms” – that’s Newsom’s preferred phrase for regulations – since 2009.

Even that wasn’t enough to keep Tesla happy. The company moved to Austin, Texas in 2022. “California used to be the land of opportunity,” founder Elon Musk explained. “Now it has become and is becoming more so the land of overregulation, overlitigation, overtaxation and scorn.”

FAST FOOD WAGES: “Because of the leadership of California’s Legislature, these hard workers finally got the raise and job security they deserved. And the companies themselves got a more stable workforce.”

It’s remarkable that Newsom would raise this issue at all. The hike in fast food wages has led to predictable outcomes – thousands of layoffs, stores closures and menu price hikes. But even knowing it would produce these outcomes did not stop Newsom from signing into law the bill that made it happen: the goal was always to create disruption in an industry that unions could not successfully organize in order to force other industries to compete for low-level workers with the artificially high wages in fast-food.

INSURANCE: “But [raising people’s pay] doesn’t end at a paycheck because costs are still too high for too many people. An added stressor these days is the cost and availability of home insurance. We’re tackling that with more urgency than ever – moving reforms and new laws quickly to stabilize the insurance market.”

Spot the fabulously interesting Freudian slip here: “costs are still too high.” Yes, living in California is a luxury that few in the world can enjoy. The reason they’re so high is generally a function of government policy – in energy, housing, taxes, healthcare and insurance, for instance.

Insurance companies are fleeing California precisely because the state overregulates the insurance market. In February, American National departed. In March, State Farm said it wouldn’t renew some 72,000 residential policies in the state and would accept no new applications. Also in March, Allstate, Farmers and Hartford left. In April, Transpacific, Tokio Marine (that’s Misubishi) and Kemper Corp. said goodbye. In all, seven of the 12 top home-insurers in California have paused or restricted new business in California since 2022, saying they’re simply no longer trying to explain to Newsom’s insurance regulators the relationship between risk and policy costs.

EDUCATION: “California has also taken action to protect a student’s right to learn, and a teacher’s right to teach. In California, we don’t just dream of a future where everyone has a chance to get ahead. We’re creating a new grade to give Californians an early start: Pre-K for all by 2025.”

Among the greatest outrages to common sense is Newsom’s defense of the state’s failing education system. No state spends more or receives less in return for its schools than California. Notice that while Newsom talks about teachers and students, he says nothing about parents. That’s because he’s fighting in the courts to keep parents in the dark about what happens on campus – especially with regard to child sexuality.

This week came more of the news to which we’ve become accustomed in California. Just as the governor dined at French Laundry and vacationed internationally during Covid, this week we learned that he has moved his family out of Sacramento and into Marin – in order to send his oldest daughter to a better prep school. That form of school choice, available only to the wealthy, is precisely the problem with this administration. Newsom maintains the loyalty of his campaign financiers in teacher unions by defending their horrific performance – locking in working- and middle-class kids in some of the nation’s worst-performing schools. Unions that raise and spend more than $600 million each election cycle to buy the loyalty of your government officials. He escapes the worst effects of that betrayal by moving from Sacramento to Marin so that his daughter can attend a $60,000 per year private school.

We’re all glad the governor is looking after his own children. One only wishes he would allow other parents the same option.

Will Swaim is president of the California Policy Center and co-host with David Bahnsen of National Review’s “Radio Free California” podcast.