No one said running for president was easy, although Donald Trump managed to make it look simple. But that same difficulty is now staring Gavin Newsom in the face and there isn\u2019t any easy answer for the dilemma he\u2019s facing.<\/p>\n
Politico published a story Friday detailing the growing clash between California Gov. Gavin Newsom and the progressive wing of his own party.<\/p>\n
The subtext is obvious. With his eye on a 2028 presidential run, Newsom is attempting a political balancing act that borders on the impossible. On one hand, he wants to present himself as a \u201cserious\u201d national candidate by finally confronting California\u2019s runaway spending and chronic budget problems. On the other, he remains tethered to a progressive base that helped create the fiscal mess in the first place and has little appetite for restraint:<\/p>\n
Newsom, people around him say, is determined to leave California with a balanced budget. He knows many voters outside the state would be wary of a San Francisco Democrat, and leaving California\u2019s budget in fragile shape could open him to attacks from 2028 rivals or from the next governor, who could pin a deficit on the mess Newsom left behind.<\/p>\n
\u201cThere\u2019s going to be two years between the end of (Newsom\u2019s) term as governor and potentially running for president,\u201d said Jeff Freitas, head of the California Federation of Teachers. \u201cCalifornia has to be successful in those two years.\u201d\u2026<\/p>\n
\u201cThe governor wants to leave the next governor a stable and balanced budget that protects essential services for the most vulnerable, and continues to spur innovation and economic growth in this state,\u201d [spokesperson Bob] Salladay said in a statement.<\/p>\n
But balancing the budget \u2014 and selling himself as a competent administrator to a national audience \u2014 will be far harder than Newsom\u2019s rhetoric suggests. Just weeks ago, the California Legislative Analyst\u2019s Office projected a looming $18 billion deficit, warning that even larger shortfalls are likely in the years ahead:<\/p>\n
The state is facing huge budget deficits despite an ebullient stock market and capital-gains rush.<\/p>\n
That was the warning last week from the state Legislative Analyst\u2019s Office (LAO). The nonpartisan policy adviser projects an $18 billion budget gap in the coming fiscal year and $35 billion shortfalls after that. This may be optimistic since it assumes no recession or severe market correction in the next several years. What are the odds of that?<\/p>\n
The fundamental problem, LAO says, is \u201cspending growth continuing to outstrip revenue growth.\u201d<\/p>\n
The real problem, of course, is runaway spending \u2014 a reality few Democrats are willing to acknowledge in a one-party blue state where fiscal accountability has become optional. Newsom could likely slash the deficit dramatically by admitting the obvious: extending taxpayer-funded Medicaid benefits to illegal immigrants is unaffordable. But that would require political honesty, and Newsom has shown little interest in that path.<\/p>\n
Instead, he is left with the only option Democrats ever seem to embrace \u2014 squeezing more money out of someone else. With another $18 billion needed each year, Newsom must decide by June 2026 where that revenue will come from.<\/p>\n
Progressives already have their answer. They are pushing a so-called \u201cone-time wealth tax,\u201d targeting fewer than 200 California residents. It\u2019s the familiar playbook: punish success, chase capital out of the state, and pretend the bill for years of overspending can be paid by a tiny group of politically convenient \u2018villains\u2019:<\/p>\n
Now, the state is seeking a billionaire tax and making it retroactive. Thus, even if you were waiting to decide to leave, it is too late. You are being taxed for the prior year\u2026<\/p>\n
The \u201c2026 Billionaires Tax Act\u201d would impose a one-time 5% tax on individual wealth exceeding $1 billion. While technically using 2026 wealth figures, it would apply to billionaires who resided in California in 2025. So you cannot hope to flee\u2026 at least with your wealth intact. It is a penalty for those who stayed too long hoping that rational minds would prevail in California.<\/p>\n
A so-called wealth tax isn\u2019t a modest skim off annual income \u2014 it\u2019s a direct grab at everything you own. A 5% wealth tax means the state claims 5% of your total assets, not your yearly earnings.<\/p>\n
If you\u2019re a major shareholder in a company you built, own valuable artwork, or hold real estate, the government wouldn\u2019t just ask politely for a check. You\u2019d be subjected to an intrusive audit to catalog every asset, after which you\u2019d be forced to liquidate roughly 5% of your holdings to satisfy the tax bill. In practice, that means selling pieces of your business, your property, or other long-term investments \u2014 whether it\u2019s a smart time to sell or not \u2014 simply to feed the state\u2019s appetite for more spending.<\/p>\n
Supporters of the proposal claim a so-called \u201cone-time\u201d wealth tax would raise $100 billion upfront, allowing the state to spread the money out at roughly $25 billion a year over four years \u2014 enough to paper over the budget deficit and even leave room for new spending. And after that? We\u2019re told California would magically be on its own again. Does anyone seriously believe that? More importantly, would the roughly 180 billionaires targeted by the tax believe it \u2014 or would they pack up and leave to avoid being hit again?<\/p>\n
To his credit, Newsom has rejected the idea. He may be a leftist, but he\u2019s not na\u00efve. Newsom understands that once you prove you\u2019re willing to confiscate wealth on that scale, many of the state\u2019s richest job creators will leave for good. And when they go, so does a massive share of California\u2019s tax base. You can\u2019t keep taxing billionaires if they relocate to Texas or Florida \u2014 and California\u2019s long-term finances would be even worse off once they do:<\/p>\n
Dan Newman, a political adviser opposing the campaign to tax billionaires, said Newsom is against a plan to slap a one-time, 5% tax on roughly 200 Californians worth more than $1 billion to \u201creplace lost federal dollars and protect essential services,\u201d as described by the campaign\u2019s website\u2026<\/p>\n
The governor\u2019s opposition is a blow to progressives and labor interests backing the tax\u2026<\/p>\n
So that\u2019s where we\u2019re at for now; Newsom wants to balance the state\u2019s budget but wants to do so without punishing the state\u2019s wealthiest job creators. However, the left-wing loonies are, ahem, urging him to change his mind:<\/p>\n
If he holds the line on taxes, he risks alienating unions and progressive allies who form the backbone of the Democratic electorate. If he doesn\u2019t, he risks reinforcing the Republican caricature of him as a California tax-and-spend liberal, and driving away moderate voters and the titans of California industry who have supported Newsom since he first entered politics\u2026<\/p>\n
\u201cThere is this idea he\u2019s trying to appeal as not a tax-and-spend guy,\u201d said Alex Lee, a state lawmaker who chairs a group of progressive Democrats pushing for more revenue. \u201cAmericans of all political stripes do not love billionaires right now, and if you\u2019re seen as a defender of billionaires that\u2019s going to hurt you down the line.\u201d\u2026<\/p>\n
\u201cIt\u2019s clear this administration is trying to attack the most vulnerable among us,\u201d said SEIU California Executive Director Tia Orr. \u201cI trust and am confident that this governor is going to do everything in his power to protect those folks from receiving the hits that this administration is aiming directly at them.\u201d<\/p>\n
That\u2019s the clean, carefully packaged version progressives are willing to float to friendly news outlets. Behind closed doors, it almost certainly sounds very different. It always does when unions and activist groups are involved. Their leverage isn\u2019t persuasion \u2014 it\u2019s threats. Do this or else.<\/p>\n
Tax the billionaires, or we\u2019ll brand you a stooge for the wealthy. A defender of billionaires. A friend of Elon Musk. That\u2019s almost certainly the pressure campaign Gavin Newsom is facing out of public view.<\/p>\n
How Newsom navigates this mess will be telling. He can continue to reject the wealth tax, but if he\u2019s serious about balancing the budget, he still has to come up with an enormous amount of money \u2014 and soon. The obvious, responsible move would be to cut spending and prove he\u2019s capable of making hard decisions. But for progressives, that would amount to an unforgivable double betrayal: no wealth tax and spending restraint.<\/p>\n
Newsom has roughly six months to sort it out. Whether he chooses fiscal reality or progressive appeasement will say a lot about whether his national ambitions outweigh California\u2019s financial future.<\/p>\n","protected":false},"excerpt":{"rendered":"
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