Gov. Gavin Newsom (D-CA) may claim President Donald Trump’s tariffs are to blame for the state’s budget woes, but a quick look back shows spending has exploded under Newsom’s watch, and the state has very little to show for it.
“California is under assault,” Newsom claimed at a press conference Wednesday, “because we have a president that’s been reckless in terms of assaulting those growth engines and has created a climate of deep uncertainty. The impacts are being felt disproportionately in the fourth-largest economy in the world.”
Actual tax revenues collected so far this year are actually up $6.8 billion above what Newsom predicted last year, but he is now predicting a $16 billion decline in revenues thanks to what he calls the “Trump Slump” through 2026. California is uniquely dependent on the stock market for state revenues, and Newsom projects $10 billion less in capital gains taxes.
But the real reason California is $12 billion in the red is the massive spending increases Newsom has overseen. When Newsom was sworn into office in 2019, the state spent $199 billion. This year’s budget will spend $322 billion. That is a 60% increase in spending at a time when California’s population has actually ticked down from 39.44 million in 2019 to 39.43 million today.
California’s out-of-control spending is almost entirely due to its ever-expanding Medi-Cal system, which now covers 15 million people overall, including 1.6 million illegal immigrants. Newsom had estimated free healthcare for illegal immigrants would cost $6.4 billion a year, but instead it has cost $9.5 billion. Newsom also eliminated asset tests for seniors who wanted to enroll in Medi-Cal, causing a 40% growth in senior enrollment.
Newsom’s new budget addresses both of these problems by freezing illegal immigrant enrollment in Medicaid, instituting a $100 monthly premium, and bringing back the asset test for seniors.
Bringing back the Medi-Cal asset test may save California money, but it will also cut into what has been the state’s best job-creation sector. Since 2022, over 385,000 healthcare jobs have been added in the state, and half of those are home healthcare workers paid by the Medi-Cal program. The government has been the second-largest job growth sector in California, adding 163,000 jobs.
Even with the government and home healthcare jobs, California now has the nation’s third-highest unemployment rate. Since 2022, California has lost jobs in the tech, finance, manufacturing, and construction sectors. Without the job growth in government and healthcare, California would have fewer jobs today than it did two years ago, and Newsom can’t blame that on Trump.
The reality is that California’s high-tax, high-spending, high-regulation model is failing. It has the nation’s highest poverty rate, the nation’s largest homeless population, and its schools are worse than those in Mississippi.
JAMES LANKFORD HAS LEARNED NOTHING ON IMMIGRATION
The Democratic Party is in desperate need of a positive alternative vision to what Trump and the Republican Party are offering. States such as Florida, South Carolina, Texas, and Utah are growing rapidly by delivering affordable places to live for working families. California is not.
Until Democrats figure out how to make their liberal policies work in blue states, it is going to be difficult for them to win national elections.