Gavin Newsom doesn’t run a ‘fraud empire’

from Dan WaltersCalMatters

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Gavin Newsom’s run of California government is certainly not that stellar.

During more than seven years as governor, he and a legislature controlled by fellow Democrats expanded programs, created new ones, made wrong revenue assumptions to support them, and overspent actual revenue, thereby creating a chronic budget deficit of billions of dollars which can go on indefinitely.

As Newsom begins a near-certain campaign for the presidency after he leaves office next year, his managerial failings are likely to be cited by Democratic rivals and, if he wins his party’s nomination, by whoever Republicans choose to run against him.

But does his record justify the epithet of “Gavin Newsom’s empire of fraud”?

A newly published article in City Journala journal published by the conservative Manhattan Institute for Policy Research refutes that claim.

He weaves together a series of fraud cases, cases of mismanagement, questionable assumptions and some arcane math to claim, “Best estimates suggest that under the governor’s watch, fraudsters, con artists and organized crime groups have stolen at least $180 billion from taxpayers.”

The centerpieces are two cases that have received heavy media coverage in California — a billion-dollar fraud in the payment of federal unemployment benefits by the Department of Employment during the COVID-19 pandemic, and the indictment of Newsom’s former chief of staff, Dana Williamson, for facilitating fraudulent campaign fund payments and falsifying documents to obtain pandemic relief funds for her own business.

The EDD scandal is – or should be – a sore eye for Newsom. But three aspects should not be overlooked: this is also happening in other countries; this reflected a push during the Joe Biden administration to speed up claims processing, and the EDD had hired hundreds of new workers who were not fully trained.

When citing the case of Dana WilliamsonThe City Journal declared, “California’s culture of fraud is so pervasive it has reportedly reached the governor’s office.”

This passage suggests that California has a “culture of cheating” and then suggests that Newsom is guilty.

There is cheating, of course. The specific cases cited by City Journal prove that when taxpayer money is spent on services, it entices some bad actors to cheat. This happens long before Newsom becomes governor; it will continue to happen after he leaves. And when it gets out, people go to jail.

One situation cited by the City Journal deserves special attention because it epitomizes his sloppy journalism – State Auditor’s Report 2024 that the Newsom administration spent $24 billion on homelessness relief but did not adequately track whether the money was being spent effectively.

City Journal suggests that $24 billion was lost to fraud, but it’s likely that it was spent on various programs rather than stolen. Newsom should be held accountable for mismanagement, but this is not fraud.

City Journal begins its “empire of fraud” claim with a dystopian description of California:

“Roads are crumbling. Mismanaged wildfires have reduced neighborhoods to ashes. Drug addiction and homelessness have metastasized, turning parts of Los Angeles and San Francisco into no-go zones. And the cost-of-living crisis is forcing middle-class taxpayers on basic necessities like groceries and gasoline, even as the state spends billions on social programs that never seem to lift anyone out of poverty.”

Accurate or not, this description has nothing to do with the alleged “hoax culture,” but it does reveal something about the article’s apparent intent, which is to smear Newsom in anticipation of his presidential campaign.

Newsom needs to be held accountable for what he did or didn’t do as governor, but this is just mudslinging to see if some of it sticks.

This article was originally published on CalMatters and is republished under Creative Commons Attribution-NonCommercial-No Derivatives license.