CA Governor Candidate Steve Hilton on Why California is Destroying Itself & How a Republican Can Win
Episode Details
In this episode of the All-In Podcast, hosts Jason Calacanis and Chamath Palihapitiya interview Steve Hilton, a prominent candidate in the upcoming California governor race. Hilton outlines his vision for reforming California, whose deteriorating Business Climate is driving innovation away from hubs like Silicon Valley, Los Angeles, and San Francisco. Hilton, who previously taught at Stanford and served as a fellow at the Hoover Institution, draws inspiration from former UK Prime Ministers Margaret Thatcher and David Cameron. His background is also tied to the tech industry through his wife, Rachel Whetstone, who held executive roles at Facebook, Google, and Uber. During the interview, Hilton proposes a radical Flat tax model to help the Working Class by eliminating state income taxes for those earning under $100K. This idea was surprisingly supported by Democratic rival Katie Porter, even though the establishment Democratic Party generally opposes his platform. To fund this, Hilton plans to eliminate Government Waste using a localized version of DOGE (Department of Government Efficiency). Hilton argues that the state's severe Housing Crisis is exacerbated by the California Environmental Quality Act (CEQA), which Unions weaponize for labor agreements, and by strict Climate Change mandates. He frequently contrasts this overregulation with Texas, noting insights from investor Michael Moritz on regulatory decay. Regarding Energy Policy, Hilton criticizes the California Air Resources Board for enforcing measures that force the state to import crude oil from Iraq. Tackling the state's failing public schools, Hilton strongly advocates for Education Reform, pushing back against Teachers Unions and pointing to Mississippi as a successful model for phonics-based learning. When discussing Crime, Hilton criticizes the lenient Prop 47 policies, noting that voters recently passed Prop 36 to increase penalties, a measure strongly opposed by current Governor Gavin Newsom. Addressing Homelessness, Hilton highlights the failure of state programs like Project Homekey. He emphasizes that the recent US Supreme Court ruling in Grants Pass versus Oregon finally gives cities the authority to clear encampments. He proposes building large-scale mental health facilities while bypassing restrictive Medicaid rules. Despite the challenges, Hilton remains optimistic that the Republican Party can win, citing the historical success of Arnold Schwarzenegger. Hilton believes that high turnout from the 2024 US Presidential Election, upcoming Voter ID Laws, and a key endorsement from Donald Trump will propel his campaign to victory.
The episode explores the structural decline of California's economy, focusing on the impact of excessive regulation, union influence, and government inefficiency. Candidate Steve Hilton proposes a platform centered on tax reform, deregulation of the housing market, and a shift in energy policy to restore the state's competitiveness.
Generated with gemini-3.1-flash-lite on 7/19/2026, 5:41:21 AM. For research only. Not financial advice.California Regulatory Reform and Fiscal Efficiency
A potential shift in California governance toward deregulation and fiscal austerity could unlock significant economic value and reverse the current business exodus.
The episode highlights that California's business climate is ranked 50th out of 50, driven by excessive regulation (CEQA), high taxation, and inefficient spending, which creates a massive opportunity for a pivot toward pro-growth policies.
- California's state budget has nearly doubled in the last 10 years.
- An estimated 20% of the state budget is lost to fraud, waste, and abuse.
- Housing construction costs are 2-3x higher in California than in neighboring states due to regulatory burdens.
- Implementation of a 'DOGE' (Department of Government Efficiency) model to audit and cut state spending.
- Potential ballot initiatives for voter ID and tax restructuring.
- Supreme Court rulings (e.g., Grants Pass v. Oregon) providing legal pathways to address homelessness and land-use issues.
- Strong institutional resistance from public sector unions and the existing Democratic legislative supermajority.
- Potential for political gridlock despite executive authority.
- The difficulty of reversing long-standing environmental and labor mandates.
- Analyze the California state budget for specific line-item waste identified by the 'Cal-DOGE' reports.
- Monitor the progress of Prop 36 implementation and its impact on crime statistics.
- Track legislative movement on state income tax reform for earners under $100k.
Energy Independence and Infrastructure Realignment
California's reliance on imported oil due to restrictive local production mandates creates an inefficient energy market that could be corrected by domestic production policy shifts.
The state currently imports nearly 80% of its oil, often from overseas, despite having significant domestic reserves, due to regulatory barriers that prevent local extraction and refining.
- California is currently dependent on oil imports from Iraq as a primary source.
- State agencies (CalGEM) are actively denying permits for existing well maintenance and expansion.
- The regulatory premium on gasoline in California is estimated at approximately $2.00 per gallon.
- Appointment of pro-energy leadership to state regulatory boards like CalGEM.
- Potential legal challenges to current permit-denial practices.
- Shift in public sentiment regarding the cost-of-living crisis and energy affordability.
- Intense opposition from environmental advocacy groups and climate-focused political factions.
- Potential for litigation regarding environmental impact assessments.
- Long-term shift toward electrification reducing the total addressable market for fossil fuels.
- Examine the regulatory process for well-sidetracking and new drilling permits in Kern County.
- Compare the cost-benefit analysis of local crude production versus current import logistics.
- Review the impact of current energy mandates on utility and fuel pricing for California consumers.
Watchlist
- California state budget deficit metrics
- California net migration and business relocation data
- California housing permit issuance rates
- California gasoline price premium relative to the US national average
Open Questions
- To what extent can a governor bypass a hostile legislature using executive orders and agency appointments?
- How would a flat tax on income over $100k affect the state's credit rating and bond market?
- What is the actual capacity for California to increase domestic oil production within current environmental constraints?
Key Topics & People
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Investor and podcast host analyzing AI infrastructure, politics, and markets.
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Investor and podcast host moderating discussions on startups and tech markets.
The podcast hosting the interview with GameStop CEO Ryan Cohen.
US President who announced the brokering of a comprehensive Middle Eastern peace deal.
Governor of California who signed laws regarding election audits.
City in California holding a disputed mayoral election.
Blue-collar workers and tradespeople who are forming a new political coalition benefiting from domestic infrastructure projects.
Strategies regulating and promoting energy production, which is a prerequisite for winning the global AI race.
The political party of Senator McCormick, which seeks to build working-class coalitions across rural and urban centers.
The political party of Senator Fetterman, which he critiques for shifting too far left and prioritizing outrage politics.
A US state used as an example of grid fragility, particularly concerning electric vehicle charging demands and historical fires.
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California politician considered the favored candidate of the Democratic establishment.
Expensive state initiative attempting to address homelessness.
Agency setting strict emissions and climate regulations.
State cited as a model for successful phonics-based education.
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Former UK Prime Minister who inspired Hilton.
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Former UK Prime Minister advised by Steve Hilton.
Steve Hilton's wife and former tech executive.
California's poor regulatory environment driving away companies.
Supreme Court case that empowered cities to clear homeless encampments.
Recent election showing strong Republican turnout in California.
Upcoming ballot measure expected to boost Republican turnout.
California city struggling with high crime and urban decay.
Venture capitalist who compared California's overregulation to the UK.
Think tank where Steve Hilton served as a fellow.
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Tech hub facing an exodus due to poor business climate.
Former Republican Governor of California.
Highest court that empowered cities to clear homeless encampments.
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Crisis tied to untreated drug addiction and mental illness.
Unions criticized for monopolizing the school system.
Efforts to improve California's failing public schools.
Environmental justification driving up housing and energy costs.
California's severe lack of affordable homes.
Environmental law used to block housing development.
Model adapted by Hilton to audit California's state spending.
Inefficient state spending, estimated at $80 billion annually.
The upcoming election for the governorship of California.
Republican candidate for California Governor.