CA Governor Candidate Steve Hilton on Why California is Destroying Itself & How a Republican Can Win

The interview opens by introducing a Republican candidate for governor of California, born in Britain, who is described as leading a field of five or six candidates in the polls. One host frames the race cynically: the field will narrow, they predict, once Democrats push some candidates out and settle on an eventual nominee. The guest jokes in reply that this introduction had just tried to kill their chances.

Another host says they have known the candidate since 2012 or 2013, when the candidate and their wife, Rachel Whetstone, moved to Silicon Valley. The host describes California as "an incredible land of immigrants" and asks for the family story before the policy discussion.

The candidate's parents were Hungarian refugees from communism, and the candidate grew up in Brighton, on England's south coast, in what they call a working-class, aspirational immigrant family. Their stepfather, also Hungarian, fled at age 14 during the 1956 Soviet invasion. He and his brother and school friends ran for the border through barbed wire and minefields while guards shot at them. By the candidate's account, half of them were killed, and the stepfather reached a refugee camp in Austria and then England. The candidate says this history gave them a "real appreciation for actual freedom, for freedom and opportunity."

After Oxford, the candidate's first job was project manager at a construction company, chosen because they "just wanted to earn money." Their career then ran through the British Conservative Party, a large ad agency, their own business (including a couple of restaurants), and back into politics. They helped David Cameron win the Conservative leadership and then the 2010 general election, and served in 10 Downing Street as senior adviser to the prime minister, mostly on implementing the reform program. The family moved to the United States in 2012. By then Rachel was running communications and public policy worldwide for Google, and with a second son just born, the travel and time differences had become too much.

The hosts point out that the candidate is now a naturalized U.S. citizen. The candidate adds that they renounced their UK citizenship to make their commitment clear, borrowing the show's name: "All in, literally."

Asked how their politics developed, the candidate points to the late 1970s, when Margaret Thatcher came to power. They describe 1970s Britain as stagnant and "sclerotic," with unions running everything, ending in the 1979 "winter of discontent," when mass strikes left the dead unburied and trash piled in the streets. The candidate says they were inspired by Thatcher's stand against communism and by her focus on business, enterprise and hard work. They put her in the video that launched their campaign about a year earlier.

The candidate says the household was not political, but one line from their stepfather stuck with them as a lesson about work and hustle:

Mrs. Thatcher's for the workers and Labour are for the layabouts

When a host asks where California stands by comparison, the candidate draws a direct parallel to 1970s Britain. They cite union dominance in policymaking, a sclerotic economy and very high taxes. They note that British rates were higher then: a top rate of 60%, and by their recollection up to 98% once wealth taxes were included. They also mention a report on present-day Britain, sent to them by Mike Moritz, that describes over-regulation and the near impossibility of building anything. In their reading, it matches California.

A host calls the tax plan the candidate's most distinctive policy, and "pretty populist." It would eliminate state income tax for people earning under $100,000 and apply a 7.5% flat rate above that. The candidate says they announced it on the first day of the campaign and describes it as "pro worker and pro growth."

The candidate argues that California's status as the world's fourth-largest economy hides real hardship. They make these claims:

California has the highest unemployment rate in the country. It has the highest poverty rate, tied with Louisiana. A United Way report from about a year ago found that over a third of Californians cannot afford basic needs. The state has the highest gas prices in the country. It has the highest electric bills of any state except Hawaii. Its housing costs are the highest in the country, and insurance costs are also high.

The $100,000 threshold was designed around the working poor, whom the candidate describes as working hard but squeezed by costs and not much helped by the welfare system. The math was done about a year ago with economists at the Hoover Institution, where the candidate was a fellow; they also taught at Stanford. The candidate says many California counties officially define low income as about $100,000. They also say people earning just under that threshold pay 9.3% state income tax, a rate higher than the top rate in most states, on top of sales, property and gas taxes they describe as the highest in the country. (The transcript renders the zero-tax band as "First $100 tax free" and the earnings as "$70, $80, $90"; the context points to the $100,000 threshold.)

The candidate defends the 7.5% flat rate on growth and simplicity grounds. They say Chief Executive Magazine has ranked California 50th out of 50 for business climate for about ten years, with taxes a big reason. They also call the tax system's many rates a cost in themselves, because of the bureaucracy and hassle involved. They mention the proposed billionaires tax as one of the measures they say are driving wealth creation and investment out of the state.