>> Jonathan Movroydis: It's Thursday, June 1, 2023, and you are listening to matters of policy and politics at Hoover Institution podcast devoted to governance and balance of power here in America and around the free world.
I'm Jonathan Mavroida, senior writer at the Hoover Institution, and I'm sitting in the chair of Bill Whelan, the Virginia Hobbes Carpenter distinguished Policy fellow in journalism, so that he can answer questions and provide commentary about California policy and politics in which he's well versed.
Bill Whelan, in addition to being a Washington Post columnist, writes weekly for Hoover's California on your mind web channel and edits and publishes Eureka Quarterly forum, featuring analysis and commentary from Hoover scholars and California's top thinkers. Whelan is joined today by Leo Hanian, Hoover Institution senior fellow and professor of economics and director of the Ettinger Family Program in macroeconomic research at the University of California, Los Angeles.
Ohanian also writes weekly about the policy environment in the Golden State for California on your mind. Good day, gentlemen. Let's talk about the latest developments in policy and politics in the Golden State. Lee, let's begin by talking about your California on your mind column from a few weeks ago. You explained that San Francisco office space values have plunged 75% and its vacancy rates have risen from 4% in 2019 to nearly 30% today.
In this podcast, we talk frequently about Weddell, San Francisco. But Lee, doesn't the plunge in office space values and occupancies present an opportunity to address the deficit of affordable housing in the city and revive the local economy? Here's a solution, this space could potentially be converted to residential units, condominiums and apartments. Does that logic add up? >> Lee Ohanian: Jonathan sadly, it doesn't. And it's very ironic because we have the spaces there.
There's four walls and roofs that are empty right now, and more will become empty over the next year or two. There are a lot of office buildings that are being sublet with those subleases coming up in one or two years. So yeah, so you'd like to think that okay, well, there's available office space. Housing in San Francisco is very expensive. Hey, let's convert some of these commercial buildings into residential buildings. But it just doesn't work that way in San Francisco.
So here's what happened, the Union bank building was put up for sale. It sold for a 75% discount relative to its valuation four years ago and relative to what similar office buildings sold for four years ago. So that's nothing short of great depression or worse than the Great Depression, the 1930s, that's just unheard of. Real estate declining 75%. And there were 30 bids that came in on the Union bank building. It was right in the heart of downtown.
And of those 30 bids, there wasn't one bid from a residential developer. And the big picture, long story short, is that it just doesn't pencil out economically to take that office space and convert it into residential space, even at a 75% price discount. And the main reason is because the cost and the delays that are of implemented by the city are just incredibly expensive. And then the city further requires nearly one out of four units in a large development.
And this would be a very large development, have to be set aside for low to moderate income tenants. And so what that means is the developer would take a very large loss on one out of four units, which means that they have to make it up on the other three units. And once you do the math, the cost involved just simply doesn't make it profitable for developers to consider that.
And to put in perspective, one developer noted that that 75% price drop, it would have to drop another further 50% or more to economically justified that type of conversion. So it just is, again, this is San Francisco where simple economics just seems to fly over the head or perhaps fly under the radar of the city supervisors.
>> Bill Whalen: Lee, if Jonathan told us right now that the stock of an Alphabet company, if he told us right now that Google stock was going down by 75%, or Apple or meta pick your stock, we would wait for that 75% drop. That would be on the phone with our stock brokers right away buying into it. Why? Because we'd be pretty sure that it's gonna come running back. Here's the question though, Lee, with this real estate so depressed, why aren't developers rushing in to buy?
Because it would seem to me to be a buying opportunity. If they're not rushing in leaders, I suggest that they just don't see a long term fix to San Francisco. Because again, if our investor I think that, okay, if the city is going to rebound in five to ten years, it's a good time to get on the ground floor. And these prices are incredibly depressed. >> Lee Ohanian: Yeah Bill, exactly, exactly. So that's the type of economic logic that's really missing within those who govern San Francisco.
So you're an investor, you have millions of dollars to invest, and, hey, we're talking about San Francisco, formerly one of the most desirable cities in the country, the tech capital. Really? Maybe next to Silicon Valley, one of the top two tech capitals the world, San Francisco up to 2019. If you are a tech company and you wanna make a splash, then you have to have a presence in San Francisco, no ifs, ands, or buts. Now, nobody wants to be there. So Bill, you're absolutely right.
People who are investing are looking at San Francisco and thinking, no, I don't see the city returning because investment is all about looking into the future. It's not just what you're going to get from the investment today, but in 2024, 2025 and so forth, people are looking for, investors are looking for economic reforms, social reforms regarding crime, regarding homelessness, regarding drug use, and they're not seeing those.
So instead of that 75% drop being a remarkable buying opportunity that we're all running as fast as we can to buy up, what investors are saying is they're not gonna risk their capital and making investments in a place where they have no confidence that San Francisco's political leaders are gonna make sensible decisions in the future. >> Bill Whalen: So I'd point out Lee, that Mayor London Breed is trying to do something here to her credit, she has a budget problem right now.
San Francisco does two year budgets. Each budget is about $14 billion. So you're looking at $28 billion in all. And I think there's a $780 million hole. So its about what, 3.5%. Its not crippling, but its a problem. So how to backfill? The historical way to backfill is to raise taxes in San Francisco. And if you cut social services, theres holy hell. Here's what London breed is up to.
Leah and Jonathan, on February she proposed two categories of tax incentives to try to prevent more companies from bailing from downtown. One incentive would delay scheduled tax increases for many businesses they're supposed to see this year. Another one of the incentives would give a tax break to companies that set up new offices in San Francisco. That sounds good.
Now here's the problem, Lee and Jonathan, the budget that Mayor Breed rolled out yesterday assumed that both of these tax incentives will be passed by the board of supervisors. It's going to cost the city about $15 million next year at about 22 in the following. But the presumption that she thinks this is gonna pass Lee, is a problem.
The board of Supervisors does not look favorably upon doing favors for businesses, especially because when you take away this tax incentive or actually give this tax incentive, what you're doing is you're dipping into money that was approved by voters in a. Tax in 2018, that goes to childcare and early childhood education. So this means that Lee and Jonathan, that San Francisco is going to have to make some very weighty decisions.
And in a very progressive town whose inclinations are always to go toward the social safety net and not go to the entrepreneurial side, it's got to look at the non entrepreneurial side and kinda raise the question of what to do for businesses. And here, I'm just not sure how she's going to get past the board of supervisors. >> Lee Ohanian: So breed is, mayor breed has a much better sense of economic realism than the board of supervisors.
I mean, I'm inclined to think the board of Supervisors of Scarlet O'Hara at the end of gone with the woman somehow living in another reality and thinking, well, everything will be okay. And the supervisors are gonna have to come to the conclusion of Scarlet O'Hara that maybe strangers will help us out. I mean, there's really no other understanding of the decision making they're considering right now. So breed understands that San Francisco has become uncompetitive for businesses.
It's becoming uncompetitive for people to live there. He's trying to make it competitive. She's trying to make it competitive for businesses. Absolutely the correct decision. Absolutely the correct decision to reduce the tax burden on businesses. My sense is that San Francisco is certainly one of the highest tax burden cities for commercial in the country, potentially the most. The highest tax burden New York probably would be in that conversation. Chicago might be in that conversation.
But what she's understanding now is that, hey, you know what? I used to have every suitor in the country who wanted to come to my city. Now they're abandoning my city, I've got to make it more attractive. I need to go to the prom, [LAUGH] I got to get a date. I have to be competitive in that arena. And the board of supervisors, they just simply aren't there. And so, Bill, you mentioned a $14 billion budget.
So when I said San Francisco must have some of the highest commercial tax burdens in the country, I said that because San Francisco has, on a per person basis, by far the highest city budget. Now, that's complicated a little bit, because San Francisco is its own city and county. But putting that aside, there's not any city that comes close to San Francisco on a per person spending measure. So what that tells me as economists is that something is extremely wrong.
They're spending an awful lot of money per person. They're spending more than any other comparable city. They've got to figure out how to live within a budget. They've got to figure out how to make the city attractive to businesses. They've got to figure out how to fill up those office buildings that once had just a 4% vacancy rate and now our 25% to 30% vacancy. So she's in a really difficult position. I mean, I feel for her. She understands what the economic reality is.
And she has a board of supervisors that still think illegal drug use on the city streets, people passed out, people costing the city budget millions and millions of dollars a year. Having paramedics run out and reviving them from fentanyl overdoses with Narcan, which reverses the effects of opioids. They still think that's just perfectly fine. And all the attendant problems that come with that, including crime, including homelessness. So [CROSSTALK] she's got a really difficult problem.
>> Bill Whalen: She's running for reelection, Lee and Jonathan, she'll face a challenge from the left. Some man or woman will be upset for reasons such as we mentioned about these tax incentives. They'll be upset with her because allegedly she wants to spend more money on homelessness, which all San Francisco's applaud. But she wants to do it by dipping into proposition C, which is another one of these. Tax Greece is put on the ballot by San Franciscans.
This is a big idea championed by Mark Benioff of Salesforce. The idea was this, raise the corporate tax in San Francisco with proceeds used mostly for housing. She wants to use it for other homeless related services. So once again, she'll have a fight on her hands. But, Lee and Jonathan, the clock is ticking on her, and not just for her reelection, but also the Super bowl is coming to San Francisco in February 2026.
And so, of course, that is ready for my close up, Mister DeMille, when America comes, the world comes to San Francisco to see that. So she has really about two and a half years to kinda turn around that city, if she can. Lee, we've talked about commercial space, can we talk a bit about the housing market for residents, homeowners in San Francisco?
I'm seeing some alarming numbers when it comes to how soft the condo market is, how much homeowners in San Francisco are losing in terms of equity right now. >> Lee Ohanian: Yeah, Bill, property values are declining everywhere in San Francisco, not just among commercial space. The decline among residential values is nearly 17% from the peak. That's much larger than the decline in the country as a whole, which is about 3.3% from the peak.
And, Bill, if you look at the decline in the rest of the country, that can probably be attributed perhaps completely to higher mortgage rates that have occurred since the housing price peak. So the country on hold has fallen by 3.3%. San Francisco fell nearly another 13 and a half percentage points. And, Bill, what that means is that San Francisco homeowners have collectively lost $260 billion in residential retail value relative to the loss that have declined in the rest of the country.
So you look at San Francisco and there's an additional $260 billion loss in residential value. And though, when you look at that, I mean, that's just, that's devastating from the standpoint of tax revenues that come in. If you're in government, it's devastating from the standpoint that, hey, prices are down because people are leaving. San Francisco's lost 7.5% of their population since I believe 2019. Now people will say, well, you know what? Other cities have lost their, have lost people.
And, hey, isn't this all the tech exodus? Well, San Francisco has lost a greater percentage than any city, I believe twice as much on a percentage basis as any city. And, Bill, from an economic point of view, when you think about people leaving and the knee jerk reaction being, well, you know what? They're tech workers and they can work from home. Well, they could have worked from home remaining in San Francisco.
I mean, nobody held a gun to their head and said, hey, move out of San Francisco, that was the choice. They could have continued living in San Francisco, working out of their San Francisco homes, but they've left. And, Bill, where are they going? Many moved to the area of Jackson Hole, Wyoming. So it's not just San Francisco is an expensive place to live. And, hey, we're leaving because we're trying to escape high housing costs. They're moving to areas that are expensive.
Jackson Hole has a median home value, it might even be higher than the San Francisco median home value. I haven't checked recently, but as of a few months ago, it was higher. They're moving to Miami beach, they're moving to Lake Tahoe. These are all areas that are not low cost places to live. So you've got enormous drops in residential values. And, Bill, when you think about crime, and my sense is that crime is a big part of this, Think about the Pacific Heights neighborhood in San Francisco.
Think about Nob Hill in San Francisco. These are two of the most expensive neighborhoods in San Francisco. Pacific Heights is where Nancy Pelosi lives. That's where Julia Roberts lives. And home values there have fallen $400,000 from the peak. Crime rates in Pacific Heights is about, I believe, 40% higher than the national average. And this is supposed to be perhaps the safest neighbor in San Francisco. Well, on a comparative basis, I think it is.
[LAUGH] It may not be the safest, but it's among the safest. The problem is that San Francisco has a crime rate that's over 100% higher than the national average. So when you think about that and you think about how much does it cost to live here, it has become unsafe. The schools don't perform well. Taxes are incredibly high. It's hard to get anything done, whether I want to build a home, even if I wanna make major renovations.
San Francisco just has a mare's nest of problems, and it's not going away. And, Bill, when you mentioned Super Bowl's coming, the NFL runs according to a clock of money, and that city better be cleaned up or, I don't know what's gonna happen if it's not. But, Bill, can you imagine having the Super Bowl there now? >> Bill Whalen: No, but it's very funny. So the Super bowl farms out its events.
So what you might see is the Super Bowl, NFL might try to send more events down towards San Jose if it felt safer down there than San Francisco. But there's one element to San Francisco, by the way, that we can move on to a new topic, and that is not just the issue of living in San Francisco, Lee and Jonathan, but getting to and from San Francisco.
In addition to the many other problems in terms of real estate, we've talked about, in terms of social services, crime, it also is facing a bona fide transportation crisis, a fiscal cliff that it's talking about the next couple of years. You look at the BART system, gentlemen, the subway system that goes through the Bay Area, very cutting edge in the 1970s.
The problem is in today's economy, with people not working and commuting to and from the city, BSRT is dying on the vine, and they're talking now about cutting back on lines and doing some lines once an hour, like an [LAUGH] Amtrak train running north and south on the east coast. It's not real public transportation. Lee, the showdown is gonna be, of all places, Sacramento, because San Francisco and other communities with transportation are looking for a bailout from Sacramento.
I think they want $1 billion a year for the next five years. And if you've looked at the fiscal situation in the state capital right now, they don't have money to give away. >> Lee Ohanian: Well, no, they don't have money to give away. They gave away a lot of money a year ago. What was the surplus last year? >> Bill Whalen: Was it $97 billion, I believe. >> Lee Ohanian: $97 billion. I don't know, $97 billion, a lot of money. So, poof, [LAUGH] that's gone.
And now we're looking at, what, is it 32.6 billion in terms of- It's an interesting thing to look at because, historically, you would know the exact deficit right now because all the revenue would have come in by April 15. >> Bill Whalen: But because of last year's disasters, a lot of communities like Santa Clara County, where I'm in, we're allowed to send in our taxes this fall. And so the state's still kinda groping around in the dark as to how much money it exactly has.
And so when the governor put out the $32 billion figure, the legislative analyst's office said, well, it's $32 billion for now, stay tuned. So it could be worse than 32 billion. >> Lee Ohanian: Right, my sense is it's probably gonna be worse than 32. >> Bill Whalen: Yeah. >> Lee Ohanian: Exactly.
And, Bill, when you talk about the transit stuff, and in particular BART, so Bay Area Rapid Transit, what strikes me as just incredible is that Governor Newsom, I believe, approved 11 or $12 million to build. Not to build, but just for planning purposes for a new BART tunnel connecting the Oakland Berkeley area with San Francisco. And it just strikes me as incredible because BART ridership is down 65%. Why are we thinking about expanding capacity when demand is down nearly two-thirds?
It's like, I don't know where that decision came from. But in terms of the bailout for BART and for other transit systems, Bill, as far as I can tell, BART has not been run particularly well. The BART inspector general resigned recently. She talked about fraud. She talked about conflict of interest. Writers have talked about crime. People have talked about BART doesn't do a very good job not just dealing with crime, but dealing with people who simply just hop the fence and don't pay fares.
And this is really a bigger part of a problem within California in that, I mean, I can't think of a major bureau within state government and local government that's run anything close to being efficient, anything close to being functional. And BART really become a poster child of saying, we need more money. And a person who just was directing it said, I can't recommend that. There's fraud, there's conflict of interest. The system is run horribly. It's not managed effectively.
So this is what we're coming with. And then Governor Newsom decides to spend 11 or $12 million on planning for more capacity on a system that is receiving two-thirds less ridership. It's just, I just don't know where that comes from. >> Bill Whalen: Yeah, essentially, it's the opposite of Washington, DC in the metro system, which likewise was built in the 1970s and is groaning under the weight of just a much larger Washington.
The system that was designed in the 70s was not built for this capacity it's facing right now. So it's trying to find ways to deal with too many riders, if you will. But, recently, BART actually commissioned a survey of riders to ask them, what are the key problems with BART as they see it? And they didn't say the cost of a ticket. They didn't say the frequency of trains. You know what they landed on, Lee? Landed on two things. Number one, cleanliness and number two, safety, plain and simple.
People don't wanna get on dirty cars. They don't wanna get on cars where they feel menaced. So this gets to the greater challenge of San Francisco. It's not just throwing money at the problem. It's really changing the culture of the way things are run. >> Lee Ohanian: Yeah, it's organizational dysfunction. And if you believe the BART inspector general, it goes deeper than that. I mean, she's suggesting corruption and fraud within the system.
And, Bill, I'll just give you one more data point, and this is not big money, but it gives you some insight into how badly BART is being run. BART spent $350,000 on a plan to reach out to the homeless. I believe they ended up being in contact with, I think, [LAUGH] one homeless person who perhaps thought there was a giveaway to be had with that. So again, you think about what are the basics? People wanna be safe. They wanna have clean cars. Those are the basics. But what is BART doing?
They spent $350,000 for a homeless outreach program that make contact with one person to get into some type of a treatment facility. So, again, emblematic of state government. What do people want? What are the priorities the government agencies should be delivering? $350 to spend. Spend on getting one homeless person into treatment just seems like it should be way, way down on the list. >> Bill Whalen: I agree.
>> Jonathan Movroydis: Gentlemen, the big National Culture War Story this week involved the Los Angeles Dodgers of all organizations and their decision to invite, disinvite, and invite again the Sisters of Perpetual Indulgence, an LGBTQ advocacy and street performance organization, in which its members don the habits of catholic nuns and wear white face paint. The sisters are supposed to receive a Community Hero Award on June 16 for promoting human rights, diversity, and spiritual enlightenment.
This, of course, sparked outrage from the Los Angeles Catholic Archdiocese and prompted Dodgers ace, Clayton Kershaw, to lobby for a faith and family day at Dodger Stadium at a later date. It seems surprising that a decisively progressive city like Los Angeles would be at the center of the culture wars. Among registered voters in Los Angeles, the share of Democrats outnumbers Republicans 52% to 17%.
Latinos represent nearly 40% of all registered voters in the county, a majority of whom, it can be presumed, support the Democratic Party. Could it be that the Dodgers' vacillation on this issue may have something to do with the Catholic Church's influence in Latino communities, Bill? >> Bill Whalen: It might. It's a tricky story in this regard. First of all, the Dodgers.
So the Dodgers on June 16th have what they call pride night to celebrate inclusiveness, and they invited the Los Angeles chapter of the Sisters of Perpetual Indulgence to take part. And then all hell broke loose, and some conservative groups protested their presence. And so the Dodgers disinvited them all. Hell broke loose again, and the Dodgers reversed course yet again and reinvited them.
So here we are now, which prompted Clayton Kershaw and some other players who are very Christian to say they object. And why do they object? Because the Sisters of Perpetual Indulgence, while they do a lot of good community work, they also outrage some people. The group describes itself as a, quote, leading edge order of queer and trans nuns. For people who take their religion seriously, especially Catholics, it rankles them to see men dressed up as nuns and essentially mocking the faith.
I think one thing it's a reminder of is that we look at these woke issues in California, I wanna say, because California is decidedly blue in its voting habits, progressive. It's not always that reliably progressive on these social issues. And not to get too far off track, but if we go back to the great debate we had over Proposition * in this state, that was the defense of marriage initiative.
And the assumption was it would go on the ballot, but cuz it was put on by a group of conservatives, it would get wiped out at the ballot by progressive voters. In fact, Proposition 8 passed. And why did it pass? And by its passage, it defined marriage as an act between a man and a woman, not same-sex couple. It passed in part because the organizers' strategy backfired. They assumed that black voters in California would vote for it en masse because they'd see it as a civil rights issue.
And what didn't count on was that for some black voters in California, this offended their religious beliefs. And so I think this kinda reminds me of the prop 8 debate in that regard, in that you can have pride night, and that's fine. But then you trot out the sisters, and your conservative fans, your Christian fans, your Catholic fans, they might find offense to it. I don't like political correctness in baseball. I think baseball is a great time out to go enjoy sport for two and a half hours.
And so teams that do this, I kinda cringe. Interesting, by the way, the Dodgers and the Giants got together last year and celebrated pride in San Francisco. They wore pride caps. But this is, I think, kind of a different animal than the Dodgers are after. I don't know, Lee, what do you think? >> Lee Ohanian: Well, I was remarkably surprised about this because, from an economic point of view, this just ends up looking a lot like what Anheuser-Busch did a couple of months ago.
So they reached out to, I guess, a social media influencer named Dylan Mulvaney, who is transgender male to female. And Budweiser made a big promotion about, I think they created a special can of Bud Light for Dylan Mulvaney. And of course, they were thinking that, hey, you know what, we'll connect with a demographic that is much younger than the average Bud Light drinker, much politically. But in thinking about connecting with that demographic, I mean, everybody knows what happened with that.
It was a complete disaster. Anheuser-Busch's stock values dropped about 20%, which is just an enormous fall. The marketing person who was responsible that, I think they're on leave. I suspect they won't ever be back. But, Bill, the person who did that at Anheuser-Busch, when she was interviewed for this, she just really created even more of a problem. She said, you know what, Bud Light is becoming irrelevant, and it's old-fashioned and it's very stale.
And it was fundamentally important that we get out to a different segment of the population. Okay, well, that's all fine. Bud Light, actually, I think, was still the number one leading [LAUGH] light beer, not that it was becoming irrelevant. But then the Dodgers sort of, in my view, they kind of did the same thing here. They wanna connect with as broad of a constituency and get as many people in the ballpark as they can.
If you want to reach out to the LGBT community, you can do that without inviting the Sisters of Perpetual Indulgence. Not casting any judgment on that group. To be honest, I'd never heard of them before this whole thing happened. So I'm kinda guessing a lot of people never heard of them. So you can do an awful lot to connect and try to market yourself to different groups, but you don't have to do without pissing a lot of other people off.
And to get to Jonathan's question, yeah, 40% of Los Angeles is Latino. That probably means 95% Catholic. So why go there? At the end of the day, it's like, why go there? >> Bill Whalen: Yeah, it's interesting. This might also be just as simple as difference between Los Angeles and San Francisco in Northern California and Southern California. To go to a Giants game in San Francisco, as it is in downtown San Francisco, it's really to embrace San Francisco.
And I dare say that they could have a pride night, and a bunch of men in drag dressed up as nuns could come out on the field, everybody would cheer and have a good time. I just don't think that place is easily in San Francisco. I just don't think that that community is quite as campy, for lack of a better word, as San Francisco is on this topic. By the way, note that San Francisco, Lee, getting back to our discussion about the economy, the city has put out a new tourism ad.
And very interesting, you look inside the ad, there are three drag queens dancing down the Castro, [LAUGH] advertising the city. So again, this is how San Francisco sees itself, but maybe Los Angeles just doesn't. Also, final note on this, Dodger Stadium is just kind of a unique little island to itself. I'll tell you a funny anecdote, then we can move on. I was in a ballgame there many, many years ago, and this is so long ago that actually you use cash to buy things.
And I took out some cash out of my wallet to buy a Dodger dog and a coke and dropped my wallet on the ground and went back to my seat. And about five minutes later, discovered to my horror, I didn't have my wallet and just had an immediate panic attack, and thinking, my God, my life is ruined. I went back to the hot dog stand, and guess what? They had my wallet. You know what? This is how Dodger Stadium operates. Just there are people who walk around the concourse.
They're constantly sweeping up and keeping everything clean. It's kinda like Disneyland for baseball in that regard. So again, just maybe the outside world intruding on baseball. And again, maybe it's just you can celebrate pride, and that's fine, we shall celebrate it. But to bring in a bunch of men dressed up as nuns, that just might be a step too far. And the Dodgers just didn't simply think this through. >> Lee Ohanian: They didn't think it through.
And then they did it, and then they walked it back. And then did it again, which just sounds like a complete fiasco. And Bill, I agree with you entirely, I think no matter where people are on the political spectrum, you pay money to go watch a baseball game or a ballet performance or the opera or a concert, and that's what you're going for. You'd like to get a little bit of break from the rest of the world that we live in and all the crazy political and cultural and social stuff.
No matter where you are on that spectrum, you wanna get away from that, that's what you go to the ballpark for. The Dodgers, no pun intended, they dropped the ball on this. >> Bill Whalen: That's why I watched the NBA playoffs, Lee, because none of this stuff permeates National Basketball Association action, I'm kidding. Heck no. >> Lee Ohanian: [LAUGH] Heck no, yeah, NBA in China, [LAUGH] so yeah, that's another podcast.
>> Bill Whalen: Yes. >> Jonathan Movroydis: Bill, in your column this week for California on Your Mind, you explained that for Governor Newsom the options to appoint an interim replacement for the visibly frail US Senator Dianne Feinstein are somewhat limited should she decide to leave her post before the November 2024 election. Why? Because more than two years ago, he declared that he would choose a black woman to fill her seat.
As you mentioned, Oprah Winfrey's spokesperson shot down the Senator Oprah trial balloon. Bill, who else could be in the running for Governor Newsom's pick that would fit this criteria should she step down? >> Bill Whalen: Well, it won't be me and it won't be Leo Ohanian. For obvious reasons, we don't quite qualify along the lines of gender and race. First of all, a shout-out to the good senator.
We're recording this on the 1st of June, three weeks from today she turns 90, so congratulations, Senator Feinstein. But here's the problem for Governor Newsom on this, because he did narrow this down to has to be a black woman and nothing else, it takes a lot of qualified people off the field right away. In my column, I suggested two people who would make a lot of sense.
One is Leon Panetta, who is a former congressman, a former director of OMB, a former White House chief of staff, a former secretary of defense. He'd be a pretty good freshman senator, I think we'd all agree, but he doesn't qualify, obviously. I also would be a fan of the scenario where if Senator Feinstein were to step down that Governor Newsom would point Nancy Pelosi to take her place, why? Nancy Pelosi's no spring chicken either, I think she turned 84 earlier this year.
Maybe she's gonna leave the House next year. This would be kind of a nice way for her to end her career at the flourish, if you will. But she qualifies only on one of the two counts. And so who does that leave him with? He could go to London, breed. But as we mentioned, she is up for reelection. For her to bail on San Francisco at this point would really be just, I think, a really terrible thing to do. He could turn to Karen Bass, who is the new mayor of Los Angeles, she's a black woman.
Problem here, though, is Governor Newsom did not endorse her last year when she was running against Rick Caruso. He just stayed out of it. I'm sure Karen Bass will remember this. Who else could he pick, he could pick Barbara Lee, the congresswoman from the Bay area. But she's announced that she's running for the primary next year, so I don't think Newsom will wanna give her a leg up, especially because he's close to Pelosi, and Pelosi supports Adam Schiff, who's also in the race.
Now you're looking at Malia Cohen, who's the state controller, Shirley Weber, the secretary of state as possibilities. So I decided, okay, just enough of this, and we're going to be really silly and just kind of go with the guinea pig. Because ultimately, that's what Oprah is, she's kind of the guinea pig. Why not somebody else, I think, in Montecito, Lee? She lives about two miles away from Oprah. Oprah has sat down and interviewed her. This particular woman is very active in social issues.
We think she might be politically oriented. Lee, do you know who I'm talking about? >> Lee Ohanian: Bill, are you referring to Ms. Meghan. >> Bill Whalen: The duchess herself, yes. >> Lee Ohanian: [LAUGH] The duchess, yes, the duchess. Well, yeah, I guess she's Oprah junior, they're great friends.
Yeah, you know what, [LAUGH] Bill, after that discussion, I'm almost speechless from the standpoint that- >> Bill Whalen: [LAUGH] >> Lee Ohanian: Politically, at some level, I understand what Newsom is doing by saying, okay, I'm gonna appoint a black woman- >> Bill Whalen: Right. >> Lee Ohanian: If you look at the national stage. >> Bill Whalen: Yes. >> Lee Ohanian: If you look at the California stage, blacks in California, they're down to about 5% of the population.
From California, you would have thought that if you wanted to play pure identity politics, he would've gone with an hispanic woman. >> Bill Whalen: But he picked a hispanic male, he picked Alex Padilla when Kamala Harris took over the vice presidency, so he's made a hispanic pick. So now he had to go back and reverse course. And there was a lot of. He got some grief when he picked Padilla, because remember, Barbara Boxer and Feinstein and Harris held that seat going back to 1992.
So he broke the streak of women holding it. And so I think he played the twofer game, he went both black and he went both female. It's interesting when you look at the stories coming down on Feinstein right now. And you might think this is just nasty partisan politics, Republicans just making your life miserable. This is all coming from left, folks. The New York Times ran a story over the weekend, it was just really kinda devastating.
It portrayed Senator Feinstein as just really not in charge of her faculties. It just cited an anecdote of about a year ago, where she's on the floor of the Senate. And Kamala Harris was presiding over the Senate in her capacity as the tie-breaking vote.
And Feinstein could not figure out what Harris was doing in the Senate so that the nation, the very left leaning nation, had an article out yesterday pointing out how in Texas, the attorney general, Ken Paxton, was run out of his job because his staffers basically ratted him out. And they're asking, why don't Feinstein staffers do the same to her, call her out for just being in no condition to be a senator. So this is about the left trying to force her out, plain and simple.
Not the right, but the left here, folks. And why would the left- >> Lee Ohanian: Yeah, totally, yeah. >> Bill Whalen: Right. >> Lee Ohanian: Yeah, it's all about the left trying to push her out. And Bill, you have a much deeper perspective on her political career than I do. But what I really respect about Feinstein is that she understood the value of bipartisan negotiations and bipartisan deals, and bipartisan accomplishments.
And I think she, to my knowledge, she worked in good faith with the republican party. She had a good understanding of what California needed from the standpoint of water issues. And the fact that she made a speech once where she said California hasn't had a major water investment since the California water project was prematurely finished in 1972. Yeah, she was absolutely spot on. >> Bill Whalen: Right. >> Lee Ohanian: Something that no other Democrat was saying, certainly not Jerry Brown.
[LAUGH] When he was up for reelection, he was talking about, hey, anybody who talks about that is silly, this is all about climate change. Well, Feinstein hit it right on the head.
So you have an old-school Democrat, and I don't mean old in terms of race, but it's just old school Democrat from the standpoint of the time of Bill Clinton and the time of other Democrats back in the day who understand we work with the other side, we find common ground, we make a deal where everybody gets something and we move the country forward, and that's just not where the left is anymore.
>> Bill Whalen: No, it's not, but this issue is not gonna go away anytime soon, as long as just these outlets keep writing these stories about her. And keep in mind, she's in that job until November of 2024. So that's what, another 15 months from now in terms of the Senate's work. So it's not like she'd be an absentee senator at the time, she has to be around. But it gets further complicated, and this is where the Republicans do play a role in this.
If she were to leave the Senate, the Republicans might very well refuse to put a replacement on the Senate Judiciary Committee. Why? That would deadlock the committee, make it very difficult for Democrats to pass any nominee at their own disposal. They'd have to pick compromised nominees that would really slow down the nomination process in the Senate. So here we have another fine mess now, Lee, don't we, where you're kinda damned if she does and damned if she doesn't.
Do you really want her staying in the Senate in her diminished capacity? On the other hand, do you want her to step down and create that problem with the Judiciary committee? >> Lee Ohanian: Yeah, absolutely, and Bill, I can't help but think, I mean, when you play identity politics If you play identity politics, you're always gonna say, this person is incredibly highly qualified, and they also happen to be a black woman or a male Hispanic or a transgender Asian or what have you.
But you look at the record of identity politics, appointments, and it's not one that, in my opinion, just from the standpoint of economics, is a particularly good one. I mean, I look at Padilla's record from the standpoint of economic policies, he's on the wrong side of that. So it would be wonderful if the governor said, I'm gonna find a remarkably well qualified person who's gonna really advance California's presence and advance the nation.
But instead, he went, okay, black woman, and, Bill, you've worked your way down the list of candidates, and where we're winding up is that just Meghan Markle? So that says something about, that says something about the whole process. >> Bill Whalen: Well, unless he chooses somebody from the centers of perpetual indulgence, but now we're into a whole another conversation about womanhood and so forth.
But you do raise a serious point here, Lee, and that is California's place in the United States Senate. Historically, states operate best when they have two senators who kind of approach their jobs differently. One is kind of the visionary senator, big picture, global thinker, and the other one's what we call a pothole senator, he or she tends to state business.
New York state was a great example of this in the 1980s when they had Daniel Patrick Moynihan, who, of course, at all times thinking great, huge thoughts. And Alphonse D'Amato, who was not shy about holding up things in the Senate to make sure that New York got its fair share. California doesn't have that right now, and this is part of what it misses in Feinstein's diminished capacity.
For years, she was the person you turned to, and I know this, having worked for a California governor, if you had a problem in Washington, that Edith sent it, action. You didn't go to Barbara Boxer, you went to die in Feinstein, issue generally delivered, but right now, I'm not sure she's capable of that. I don't know exactly what Alex Padilla does in the Senate on a daily basis.
So there's really a question of how California is looked for, and that's why I go back to the model of someone like a Pelosi or a Panetta, who, yes, they also are advanced in their age. But they know how Congress works, and so they could just very simply get legislation shepherd. Which is all you need, really for a placeholder candidate, because you do have an election coming out in November 2024. And then let the voters decide what they do want to do in terms of this identity politics.
>> Lee Ohanian: Yeah, it's interesting, Kevin Kiley and the House of Representatives been very critical of Newsom on this regard. He's saying, just put it up for an election right now, problem with that is, would be very expensive. >> Bill Whalen: Yeah, I think that's a terrible idea. It would be expensive, that person would get in the job for 12 months, they might get swept out. Keep in mind it would be that because we have a march primary in 2024, not a June primary.
So you do an election right now, they'd have to turn they'd have to turn around, they would never go to Washington, they'd stay in California and run. >> Lee Ohanian: It would be a quick U turn, and, Bill, your idea about Panetta. Yeah, yeah. And Bill, I think what would have, sadly, even if Leon Panetta was a black woman, but otherwise was entirely the same as Leon Panetta, the white male, old school Democrat.
I don't think there's really room for him anymore in that party, I hope I'm wrong about that. But it's a sad statement, the whole country loses one. >> Bill Whalen: And there's another old school Democrat he could turn to, that would be Jerry Brown. But he has a very strange relationship with Jerry Brown, and Jerry Brown is not a modern Democrat by any means, he is from a different generation.
So he's also an old school Democrat, so Newsom would get a backlash, we get a very woke backlash if he picked someone like Jerry, or even Nancy Pelosi, for that matter. >> Lee Ohanian: Yes, and Bill, you mentioned Daniel Packard Moynihan from back in the day, I pine away for the lack of supply of politicians at that level, I think we were fortunate to have people like that as public servants. If only we had one or two like that, one or two more like that.
>> Bill Whalen: Well, I would wager that Meghan Markle would take that job in a heartbeat if it were offered, why? She and her husband need to kind of figure out their next act, and I can think of few things better suited for a bunch of Netflix cameras to follow them around that Megan takes on Washington. >> Lee Ohanian: Megan takes on Washington, and by the time the election came around, I'm afraid she would still be asking, so what's an appropriations committee and which way is the restroom?
>> Jonathan Movroydis: Well, as always, gentlemen, this has been very interesting and timely analysis, thank you for your time. >> Bill Whalen: Thank you, Jonathan, thank you, Lee. >> Lee Ohanian: Good to see you fellas. >> Jonathan Movroydis: You've been listening to matters of policy and politics, the Hoover Institution podcast voted to governance and balance of power here in America and around the free world.
Please don't forget to rate, review, and subscribe to this podcast wherever you might hear it, and if you don't mind, please spread the word, get your friends to have a listen. The Hoover Institution has Facebook, Instagram, and Twitter feeds. Our Twitter handle is @HooverInst, that's @HooverInst. Bill Whalen is on Twitter, his handle is @William_Whalen, and Lee Ohanian is also on Twitter, his handle is @Lee_Ohanian.
Please visit the Hoover website @hoover.org and sign up for the Hoover Daily Report, where you can access the latest scholarship and analysis from our fellows. Also, check out California on your mind, where Bill Whalen and Leo Ohanian write every week. Again, this is Jonathan Movroydis sitting in Bill Whalen's chair this week, he'll be back for another episode of matters of policy and politics, thank you for listening. [MUSIC]
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