Most important take away

California is in a 1970s-UK-style structural decline driven by union dominance, runaway litigation (especially CEQA), and climate dogma — producing the nation’s highest poverty, unemployment, gas, housing, and electricity costs despite the fourth-largest economy. Steve Hilton argues a Republican can win in 2026 by running a populist, pro-work, pro-growth platform centered on zero state income tax under $100K, a 7.5% flat tax above it, $3 gas, and aggressive enforcement on homelessness and crime. The race likely comes down to a “change vs. more of the same” framing against a Democrat (Steyer, Porter, or Becerra).

Summary

Key themes and actionable insights from the conversation:

Diagnosis: California as 1970s Britain

• Hilton draws explicit parallels between today’s California and pre-Thatcher UK: union dominance over policymaking, sclerotic economy, confiscatory taxation, and inability to build anything.
• Despite being the world’s fourth-largest economy, California has the highest unemployment rate, highest poverty rate (tied with Louisiana), highest gas prices, highest housing costs, and highest electric bills (except Hawaii). Over a third of Californians cannot meet basic needs.

Tax plan (pro-work, pro-growth)

• Zero state income tax on the first $100K of income (helps roughly 7M households / ~one-third of households).
• 7.5% flat tax above $100K, replacing the current bracket system (top rate 9.3% on incomes as low as $70–90K).
• 18.5% revenue reduction ($60B), achievable by rolling spending back to roughly pre-pandemic levels (state budget has nearly doubled in 10 years; up ~75% in five).
• Cross-aisle traction: Democrat opponent Katie Porter has publicly endorsed the under-$100K piece.

CalDOGE — fraud, waste, and abuse

• Hilton has set up “CalDOGE” with running-mate Herb Morgan (running for state controller, who has audit authority).
• Estimated $425B in fraud/waste over five years ($80B/year, ~20% of state spending).
• Specific examples: $928M of a $1B climate-mitigation fund (cap-and-trade) diverted from solar panels to Democrat-aligned nonprofits doing voter registration and “environmental justice”; $350M from cannabis tax meant for substance-abuse prevention diverted similarly; $3.8B Project Homekey largely flowing to developers.

Housing — the three structural villains

• Union power, litigation, and climate dogma intersect to make construction 2–3x more expensive than neighboring states.
• Building codes (EV charging mandates, solar requirements, insulation rules) inflate costs.
• CEQA’s private right of action: 70% of CEQA suits block housing; unions use them as leverage to force project labor agreements (skilled-and-trained / prevailing-wage) at 2–3x market wages.
• Impact fees of ~$30K/door in California vs. <$1K in Texas; Texas builds 3x more homes per capita.
• A Democrat legislator privately admitted to Hilton that reform would be “transformational” but said publicly impossible because “the unions run this place.” Newsom’s top three donor categories: government unions, trial lawyers, non-government unions.

Energy / gas prices

• California has abundant oil but imports ~80% of what it uses (Iraq is #1 source); refineries down from ~40 to 7.
• The state is effectively expanding Amazon-rainforest drilling to feed its heavy-crude refineries — counterproductive even on climate grounds.
• Most of the gas-price premium is regulatory, not taxes.
• Action without legislature: replace CalGEM leadership and start issuing permits — production could double every two years.

Education

• Spends ~$27K per student (near top in the nation) for some of the worst outcomes (47% meet basic English standards; 35% meet math).
• Long-term fix: school choice (hard given union grip).
• Short-term fixes modeled on Mississippi: phonics-based reading instruction, third-grade reading retention, and publicly graded teachers and schools.

Crime

• California is 30% more violent than the national average.
• Prison closures (5 of 35 closed by Newsom; population from 165K in 2006 to 93K) overflowed county jails, creating a “catch and release” environment.
• Prop 36 (2024) overturned Prop 47’s $950 theft threshold but isn’t being enforced.
• Plan: reverse prison closures, restore accountability, take rehabilitation seriously (recidivism is among the worst; Virginia’s is half).

Homelessness — three-part plan

• Enforce existing laws (Grants Pass v. Oregon 2024 removed the Boise-ruling excuse). Give localities a deadline, then deploy state law-enforcement resources.
• Mandate sobriety: rehab-or-jail; Newsom vetoed even a Democratic sober-housing bill.
• Mental health: redirect funds from “homeless industrial complex” ($900K/door units) into large-scale mental health facilities; pursue the IMD waiver to bypass Medicaid’s 16-bed rule.

Path to victory

• Top-two primary; Trump-endorsed; leading Republican in polls. Likely general against Steyer, Porter, or Becerra.
• Math: ~11.7M expected midterm votes, need ~5.9M to win. Trump got 6.1M in California in 2024 without campaigning — the Republican vote ceiling is higher than people think.
• Voter ID on the November ballot expected to boost Republican turnout.
• Coalition: multiracial working-class — squeezed hardest by current policies. Slogan: “Califordable” — $3 gas, electric bills cut in half, first $100K tax-free, affordable housing, no tax on tips.

Actionable insights

• Many of the biggest levers (energy permitting, CalGEM, CARB, prison capacity, homeless enforcement) are executive — they don’t need the legislature.
• Tax cut requires the legislature, but bipartisan support on the under-$100K piece appears achievable.
• Watch the billionaire wealth-tax proposal — Hilton frames it as the cliff edge for the tech ecosystem.

Chapter Summaries

Introduction & Hilton’s background Hilton introduces himself: Hungarian-refugee parents, working-class upbringing in Brighton, Oxford, ad agency career, senior advisor to PM David Cameron in 10 Downing Street. Moved to Silicon Valley in 2012 when his wife Rachel Whetstone was at Google/Facebook/Uber. Now a naturalized US citizen who has renounced UK citizenship.

Political evolution Inspired by Thatcher’s reversal of 1970s UK decline. Sees today’s California as that same 1970s UK: union dominance, sclerotic economy, confiscatory taxes, inability to build.

Tax plan First $100K tax-free (helps ~7M households); 7.5% flat tax above. Modeled with Hoover Institution economists. Costs ~$60B / 18.5% of revenue — recovered by rolling budget back near 2019 levels. Katie Porter has publicly adopted the under-$100K idea.

CalDOGE and fraud Estimates $425B in fraud/waste over five years. Concrete cases: $928M of $1B climate fund, $350M cannabis-tax fund, $3.8B Project Homekey — all largely diverted from stated purposes.

Working with the legislature Acknowledges Democratic supermajority obstacles. Cites coalition-government experience in UK. Believes a first Republican governor in 20 years would shake loose privately-sympathetic Democrats.

Housing crisis Three structural causes: union power, CEQA litigation, climate dogma. CEQA private right of action used by unions as leverage; project labor agreements inflate costs. Impact fees ~$30K/door vs. <$1K in Texas. A Democrat legislator told him reform was impossible because “the unions run this place.”

Energy and gas prices 80% of California oil now imported (Iraq #1, then South America). Refineries down from 40 to 7. Carbon accounting only counts emissions within 12 miles of coast. Most of the gas premium is regulatory. Production could double every two years through executive action at CalGEM.

Education Near-top spending, near-bottom outcomes. Long-term: school choice. Short-term: Mississippi-style phonics, third-grade reading retention, publicly graded teachers/schools.

Crime California 30% more violent than national average. Prison closures forced overcrowding into county jails, undermining local prosecution (“catch and release”). Plan: reverse closures, restore accountability and rehabilitation; Virginia has half California’s recidivism.

Homelessness Three pillars: enforce existing laws (post-Grants Pass), mandatory sobriety (Newsom vetoed sober-housing bill), redirect spending from $900K-per-door units to large mental health facilities (pursue IMD waiver).

Path to victory Top-two primary; Trump-endorsed front-runner on the Republican side. ~5.9M votes needed; Trump got 6.1M in 2024. Voter ID on November ballot. Working-class multiracial coalition. Pitch: “Califordable” — $3 gas, halved electric bills, first $100K tax-free, affordable homes, no tax on tips.