Steve Hilton | All In Summary

1. Key Themes

California's Structural Dysfunction Is Driven by Three Interlocking Forces

Hilton identifies union power, litigation, and climate dogma as the three root causes behind nearly every major policy failure in the state — housing, energy, education, homelessness. These aren't independent problems; they reinforce each other systemically.

"You've got these three structural forces that I think underpin the problem and show why a Democrat can't fix it. And the three things are union power, litigation, and climate dogma." 00:28:57

The Budget Has Nearly Doubled With Zero Improvement in Outcomes

California's state budget has roughly doubled in 10 years, with a 75% increase in just five years, yet poverty, homelessness, housing costs, and education outcomes have all gotten worse. The spending expansion from the pandemic was simply baked into the baseline permanently.

"If you look at the budget of the state of California, it's nearly doubled in the last 10 years. In the last five years, it's gone up something like 75%... this is just bringing the budget back to achieve that entire tax cut would bring the budget back just to where it was roughly before the pandemic." 00:13:24

California's Climate Policy Is Actively Counterproductive to Its Own Goals

The state's climate regulations have reduced in-state oil production to the point where California now imports nearly 80% of its oil — primarily from Iraq — shipped via the world's most polluting fuel source (bunker fuel). CARB only counts emissions from 12 miles offshore, masking the true carbon footprint.

"As a result of Democrat climate policy, we are now expanding oil drilling in the Amazon rainforest in order to provide the right kind of oil for California's refineries... the carbon emissions for the oil imports are only counted from when they're 12 miles off the coast of California." 00:40:58

2. Contrarian Perspectives

A Republican Can Actually Win California in 2026 — The Math Is Already There

Most people assume California is structurally impossible for Republicans. Hilton presents compelling math: Trump got 6.1 million votes in California in 2024 without campaigning there, and you only need ~5.9 million votes to win a midterm gubernatorial race. The votes exist; it's a turnout and coalition problem.

"In 2024, the presidential race, President Trump in California, without even campaigning here or spending money on ads or anything... got 6.1 million votes. In other words, there's more than enough." 00:06:11

CEQA Doesn't Actually Protect the Environment — It Protects Unions

The conventional wisdom is CEQA is an environmental protection law. Hilton reveals 70% of CEQA lawsuits are filed by unions to extract project labor agreements — closed shops and prevailing wages — not environmental protection. A Democrat legislator privately confirmed this to him.

"70% of CEQA lawsuits are used to block housing. Most of those lawsuits are filed by unions. They're used as leverage to negotiate what they call project labor agreements." 00:31:51 And: "They just waved their arm around like this and said, yeah, the unions run this place." 00:35:43

California's Air Quality Improvements Had Nothing to Do With EV Policy

The popular narrative credits California's aggressive EV push for improving Los Angeles air quality. Hilton argues the improvements were driven by technology broadly, not EVs — which still represent only 4-5% of vehicles — and that carbon emissions are separate from smog-causing particulates entirely.

"EV penetration, even with all the subsidies and so on, it's incredibly low in California... It's about four or five percent, something like that. Tiny. So actually, the improvements in air quality, dramatic improvements that you saw in LA were nothing to do with EVs." 00:44:46

Mississippi's Education Results Prove Spending More Is Not the Answer

California spends ~$27,000 per student per year — near the highest in the nation — and produces some of the worst academic results. Mississippi spends one-third of that and has dramatically better outcomes, specifically because of phonics-based reading instruction and a hard third-grade reading gate.

"For one third of their spend per student than California, their results are spectacularly better... Number one is how you teach kids to read. There's a technique called phonics... It's totally clearly established as the most effective. It's barely used in California schools at all." 00:48:10

California Is Driving Amazon Deforestation While Claiming to Be the Climate Leader

This is perhaps the most striking inversion in the episode: California's climate policies, by shutting down in-state production, have created demand for South American crude that matches its aging refineries — directly incentivizing expanded drilling in the Amazon rainforest.

"We are now expanding oil drilling in the Amazon rainforest in order to provide the right kind of oil for California's refineries. I mean, it's just so utterly insane and incoherent." 00:40:58

3. Companies Identified

Fantastic Sheet Metal (HVAC manufacturer, Pomona, CA)

Description: Union-shop HVAC duct manufacturer making systems for semiconductor fabs and high-end manufacturing
Why mentioned: Exemplifies the business exodus risk — they are considering relocating out of California because all the semiconductor and AI manufacturing facilities they supply (TSMC, etc.) are being built in other states
"They are making the HVAC systems, the air conditioning, incredibly important, as you know, for TSMC and these semiconductor factories and all these high-end manufacturing that's happening in other states... they said to me, since the facilities are all now being built in other states, we're on the brink of moving our facility to be closer." 00:27:00

4. People Identified

Michelle Steeb

Description: Homeless services practitioner who has run homeless shelters at the street level for many years in California
Why mentioned: Hilton's primary policy partner in developing his homelessness plan; cited as having deep operational credibility
"My real partner in developing that was someone called Michelle Steeb, who's done a lot of work on this. She actually run homeless shelters and really at the kind of street level of this for many, many years." 00:56:49

Tom Wolfe (San Francisco)

Description: Recovered addict and vocal advocate on homelessness, active on social media
Why mentioned: Praised for common sense approach to homelessness, cited as an advisor to Hilton's policy work
"There's also someone called Tom Wolfe, who's given me a lot of great advice. He's in San Francisco, a recovering addict, a recovered addict who's just fantastic." 00:57:10

Herb Morgan

Description: Candidate for California State Controller, running alongside Hilton
Why mentioned: Leading Hilton's "Cal Doge" fraud investigation work; the State Controller has legal power to audit any organization receiving state money and stop fund flows
"There's a guy running with me called Herb Morgan, and we've been doing this work together. And we've published four reports now, three of them on individual examples of fraud." 00:17:10

Mike Moritz

Description: Legendary venture capitalist (Sequoia Capital)
Why mentioned: Proactively sent Hilton a comparative report drawing parallels between the UK's current dysfunction and California's trajectory
"Mike Moritz actually sent me a report that someone had done about the UK today. And again, there's just these eerie parallels with just how impossible it is to do anything in the UK, to build anything, the over-regulation." 00:08:10

5. Operating Insights

Build Your Cabinet Before You Win, Not After

Hilton is running coordinated slates for multiple statewide offices simultaneously — including the State Controller — before the election. This is an unusual pre-election team-building strategy that ensures day-one execution capability rather than scrambling for appointees post-victory.

"One of the ways I think I'm running this campaign differently is that I'm actually putting together a team before the election of the, of, in terms of others who will run with me for statewide office, because you've got some very important positions alongside the governor that are going to be crucial in putting us back on track." 00:16:41

Use AI to Audit Public Financial Data at Scale

Hilton's Cal Doge team used an AI partner to systematically track government grant spending through published state reports — finding that of $1 billion allocated for solar panels in low-income housing, only $72 million actually went to solar installation. This is a replicable model for any operator doing due diligence on government contractors or nonprofit fund flows.

"We actually tracked that money with an AI partner that can get all the reports. And of that $1 billion total in 10 years, the actual amount spent on the purported benefit here, solar panel installation, was $72 million." 00:18:09

Use Existing Legal Authority Before Seeking New Laws

Hilton notes that California's oil production shutdown was executed entirely through permit denial at a regulatory agency (CalGEM) — not through legislation. A new governor could reverse this overnight by appointing different leadership, no legislature required. Operators should identify which problems are actually regulatory/administrative versus truly requiring new law.

"You can pretty much turn that around overnight by appointing people who are pro-energy who will issue permits." 00:43:07

6. Overlooked Insights

The IMD 16-Bed Rule Is a Massive Hidden Lever for Mental Health Reform Nationwide

Buried in the homelessness discussion is a federal Medicaid rule that almost no one talks about publicly: facilities with more than 16 beds receive zero Medicaid reimbursement for mental health care. This single rule has effectively prevented the existence of economically viable large-scale mental health facilities across the country. California has not taken the Trump-era IMD waiver that would allow them to bypass it — but any state or private operator that pursues this waiver could unlock a massive, currently underfunded market.

"There is no Medicaid reimbursement to the states for any mental health care provided in a facility with more than 16 beds... The first Trump administration created a waiver, the IMD waiver, that states could apply for. So you could get around the rule. California, a lot of other states have taken that up. California hasn't." [00:01:00:33]

California's Refinery Infrastructure Is a Structural Moat That Locks In Bad Policy

California is down to seven refineries from forty, and those refineries were specifically engineered for California's heavy crude. This physical infrastructure constraint means only Iraqi crude and South American crude are compatible substitutes — creating a permanent structural dependency that is expensive and carbon-intensive to maintain. Any investor in California energy infrastructure, or in domestic heavy crude production matching California specs, should recognize this as both a policy risk and a surprisingly durable economic moat for whoever can supply the right crude.

"The refineries were built to refine California crude, which is known as heavy crude... Iraq provides — Iraqi oil is a good match. The other place whose oil is a good match for our refineries is South America." 00:40:36