Incredibly, the Democratic establishment still looks to Gavin Newsom as their answer to Joe Biden. Yet frothy accounts of the California Governor’s record are about as accurate as a Google AI treatment of American history: totally fraudulent.
What is most remarkable is that, even with an huge AI boom enriching California tech firms like Nvidia, the state’s budget deficit has continued to expand, this time by $15 billion to a whopping $73 billion. That is in spite of the fact that tech booms tend to inflate California’s revenues enough to keep up with soaring costs.
But not this time: the state’s legislative analyst’s office predicts continued operating deficits through 2028 — a not surprising consequence of spending that has tripled on a per capita cost-adjusted basis over the last 50 years. In contrast, prime competitor states like Texas and Florida enjoy large budget surpluses.
One problem may be that it’s not clear that AI — the current rage in the tech world — will even create jobs, as did previous tech booms. AI seems as likely to swallow tech jobs as create them, essentially replacing software and engineering staff with bots. Last year alone, some 78,000 tech jobs disappeared while job growth, notes the Public Policy Institute of California, has been in generally low wage service jobs. Even firms with a big stake in AI such as Salesforce, Meta and Google have been laying off thousands of workers.
At the same time, Governor Newsom is pushing policies that are thinning out the tax base. High energy prices caused by the state’s draconian climate policies are impoverishing residents, and making the state a no-go zone for industrial expansions. A Hoover Institution report, released last year, observed that in 2020, California had only one-seventh the number of company-initiated capital projects than the leading state, Texas. Additionally, from 2018 to 2021, 352 companies headquartered in California moved their headquarters out.
Other measurements of economic activity are less than impressive. California has both the country second highest state unemployment rate, and job openings have cratered faster over the past year than all other states outside Wisconsin. In addition, few people from outside the state, a traditional source of innovation and growth, are entering California. Once one of the most popular destinations for new residents, the Golden State now ranks towards the bottom in attracting newcomers. That this erosion now includes both middle class educated professionals, whose exodus increased sharply since 2019 as well as the foreign-born, only adds to Newsom’s woes.
It’s no surprise, then, that our would-be President is increasingly unpopular with California voters. He rode high when the state had a huge surplus but now he has to choose between moderating the cascade of spending, or alienating the all powerful public employee lobbies, his base of support, who value their lavish public pensions. Greens too may find their pet projects eviscerated.
All this bodes ill for any Newsom-for-president boomlet. Can he run on the pledge, as Reagan did, to do nationally what he did for California? Democrats would be insane to back this notion, and may decide it’s better to run a clueless dotard than clued-in failure.
This piece first appeared at UnHerd.
Joel Kotkin is the author of The Coming of Neo-Feudalism: A Warning to the Global Middle Class. He is the Roger Hobbs Presidential Fellow in Urban Futures at Chapman University and and directs the Center for Demographics and Policy there. Learn more at joelkotkin.com and follow him on Twitter @joelkotkin.
Photo: Richard Schneider, via Flickr under CC 2.0 License.
Email this Story
