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[Music]

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what was your initial reaction when you

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heard about this bullet train project

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well back in in basically 2008 so I was

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a know from the get-go onto the train

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just simply from the fact that it

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doesn't solve any of the congestion

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problems and basically it was strapped

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full of lies I mean if you just look at

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bullet trains inherently they are a

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money loss they don't make money they're

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not self-sustaining from what I remember

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there's only two lines in the entire

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world that that are profitable four

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lines and that's in France but then they

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added a bunch of other things

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another lines because all politicians

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wanted to add their lines and you know

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basically a lot of bureaucracy got in

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the way and it's a money loss so to me I

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don't understand why you would be using

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basically into the sense 1960s 1970s

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technology to build something that cost

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billions of dollars that doesn't

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alleviate traffic so the promises that

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were made were garbage yeah well I mean

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I agree I think it's old technology

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they're not as safe as planes by far

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they're not as safe as planes and I

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don't think there is cost-effective as

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no there isn't because you don't have if

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it was cost-effective then you would

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have really private companies building

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high-speed rails without government

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subsidies and being dependent upon them

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to survive airlines don't need

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government subsidies people take them

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and then especially with newer

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technology is going to be coming out

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with faster planes quieter like near

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supersonic like planes it doesn't make

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sense to build this now if you're going

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to build transportation I'm all for it

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transportation solutions but you gotta

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actually address issues that help with

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traffic congestion and high-speed rail

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does not do that one I mean it's just

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basically a project for you know unions

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and construction company

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and you know government consultants to

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make money no one's gonna take this

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thing it's it's garbage from day one I

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was recently reading about China and

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everything that they've done with their

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high-speed rail and it's just been

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incredibly inexpensive but then again

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it's it's being run by the federal

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government very low labor costs very low

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land costs like zero probably so every

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circumstance is different in California

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you've got the most expensive real

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estate in the world well yes and you

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know part of this stuff is you know they

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were supposed to start basically into

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the Central Valley where it was going to

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be cheaper and it's going to have less

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requirements from you know seismic

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activities cos this is California so we

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have to worry about earthquakes and

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everything else but you've seen the land

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explosion they came up with I against

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typical government kind of in to the

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census where they they wanted to do a

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project they didn't count the cost

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basically of what was going to take to

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you know build a high-speed rail didn't

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do land proper land acquisition and the

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problem is oh it's instead of looking at

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this project and saying how can we build

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even if you were going to build a

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high-speed rail this is how it should

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work just like it does in the private

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sector what would work what is the best

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route to do and let's go ahead and do

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that one but it doesn't matter because

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government severely wants to waste money

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right you have a politician and Fresno

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or somewhere else who wants a high-speed

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rail they want the roof line coming into

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their area those serves no purpose but

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it's going to go ahead and give jobs

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locally so they go ahead and build it

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out right it's a it's a coalition of

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garbage that gets put into it and that's

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why you get something that balloons I

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mean originally we're looking at this

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project being 33 billion dollars and

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then when the new s event from the

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high-speed rail from there said you know

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it would be about 77 billion but it

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could cost up to almost 100 billion it

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was about 98.1 billion it's going to

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exceed that - if it continues to

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basically go on there is no way they

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have no ways to get through the

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grapevine they're gonna have to war I

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mean this thing is gonna be way north of

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a hundred billion dollars yeah and I

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think that at this point

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this interviews we've done so far I you

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know I would imagine our listeners

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probably aren't gonna need to be

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convinced that this thing is kind of a

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way off the rails in a disaster I think

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the two things I'm kind of interested in

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is how did we get here you know where

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where did this thing make a big left

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turn and then how do we stop this thing

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so going back to the beginning as far as

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the initial referendum on this who who

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was putting money in this thing to

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support this initiative do you know how

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the money was from what I know back in

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2009 widows prop 1a was a coalition of

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obviously unions and contractors and

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what eventually became like the

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president of the high-speed rail

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authority which is interesting and the

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fact I can't remember his name Quintin

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Hogg yeah he's suing you know even if

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we've interviewed Quentin Kopp and yeah

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he he's still a huge advocate of a train

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he's just upset with how this is being

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managed and the fact that it's no longer

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gonna be high-speed rail that's yeah I

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mean and that was a requirement so if

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you're not familiar I ended up running

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for California State Controller back in

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2018 and one of the functions of the

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controller is being able to hold funding

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from the Train if it doesn't comply with

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state law so you know the current

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controller and was reelected Betty Yee

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you know she was like oh well yeah you

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can but you know I'm not allowed to do a

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performance on it and that's like you

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don't need to do a performance audit on

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this thing the documentation is saying

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exactly what you already need to know

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from the high speed rail the third of

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this is not being funded by the private

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sector a third is not being funded by

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the federal government we're paying for

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it 100% violation of prop 1a I suppose

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have time restrictions and actually be

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high speed well it is at high-speed rail

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and then also the other requirement was

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there would go no ongoing subsidies and

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we're already looking at 100 billion

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dollars from that one you know I would

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still encourage the controller Betty Yee

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to go ahead and stop funding on this

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immediately you don't need to do a

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performer

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taught it all you need to do is stick

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their own documentation and go ahead and

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cancel the project unfortunately she's

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not going to do it and that's why us

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have reformed California we're gonna be

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putting a ballot initiative in 2020 to

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repeal the high-speed rail and to fund

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this once and for all we're gonna bring

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it back to the few buzzers so she's not

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defunding it because she says I don't

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have the authority to not defund it well

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she never said she didn't have because

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she never stated when we would be

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debating or we had radio interviews

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radio debates and everything else said I

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wanted to be funded she said she never

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said that I couldn't because that is the

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job of the controller is to hold funding

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if something doesn't comply with state

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law you know it's been a basic audit now

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her thing was I'm not allowed to do a

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performance on it on the high-speed rail

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which I will agree she couldn't do a a

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performance audit on the high-speed rail

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it but it doesn't need to because their

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own documentation coming from the high

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speed rail authority is proving that

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there are not compliance with the law so

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you just have to take their statements

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put out a nation and say until this

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project complies with prop 1a what the

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law says and what the voters approved

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are going to be holding funding until

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and then allow the high-speed rail

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authority then to come back issue

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payments and we lose connection no I

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still got you oh now you paused it was

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going fine and all the sudden it froze

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oh okay hold on sorry yeah I think

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you're back okay yes so in your view is

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she simply just toeing the party line

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bottom line you know everything these

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days comes down to politics you're there

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for dirt against it based on your party

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Democrats are in favor of this so is

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that why she's not doing anything to try

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to stop this project well I I truthfully

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think the Democrats actually want this

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project dead I think even Gavin Newsom

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wants this project dead they know it's a

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boondoggle but they can't I don't think

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they can so I think it is basically

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toeing the party line no no what no

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one's gonna use this train we already

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know it's gonna cost billions of dollars

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and they would like to obviously focus

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on spending

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billions of dollars and other projects

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that we don't agree with which would be

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you know some of the social programs in

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welfare state that they want to create

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in California and they'd rather spend

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the money there than on a high-speed

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rail that will never really be built in

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not be high-speed and no one will take

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it and drain the state of billions of

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dollars so hold on if you're saying that

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you believe that even Democrats oppose

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this project why aren't they taking the

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steps then to stop it because it is 100

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percent within their control to do so

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because it's politics right because

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there's enough funders and donors I

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think from on the Democratic side or on

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the unions that are making you know

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there's a lot of people working on this

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thing and it's a project so they're not

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happy with it but I don't think there's

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political will for them to get rid of it

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well no some at some point I mean am I

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correct he has not really made a

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statement about the Train since he was

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inaugurated earlier this month yeah from

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what from what I know and then he just

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talked about maybe having it from Fresno

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to San Francisco or blah blah blah and

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canceling the portion basically coming

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to Southern California because obviously

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that would be even a more disaster and

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very expensive to you actually do so I I

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think for the most part even from our

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polling data that we did with reform

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California you know two thirds about of

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Californians depends I've seen also

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about 57 percent but I've seen enough up

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to higher that want to get rid of this

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train I think it's you know it's a

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bipartisan thing it was well intentioned

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we kind of you know wished that what we

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promised was gonna actually work but you

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know it's not so by the way that was a

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question I was gonna ask but you and you

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say it was well intentioned I mean do

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you feel that the original initiative

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was in good faith there was they truly

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felt this thing could be built for those

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dollars and there was proper due

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diligence done well no no I don't think

273
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there was proper due diligence I mean I

274
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just think it's you know you know they

275
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blindsided with you know how sexy a

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high-speed rail sounds and everything

277
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else and they wanted to build it so they

278
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negate the fact that basically do due

279
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diligence in it and a lot of times you

280
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know there's no you know political you

281
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know there

282
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two stewards of the taxpayers money it's

283
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not like a corporation where you're you

284
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know you own stock into it you're

285
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getting paid money if you waste money

286
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and you do something stupid it's not

287
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your money anyways wouldn't you say the

288
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biggest mistake then that was made was

289
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actually commencing construction of this

290
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thing and commencing the spending of

291
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billions of dollars which started you

292
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know what a couple years ago yeah I mean

293
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it to me is look if you went ahead and

294
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put it under the prop I'm trying to look

295
00:11:43,300 --> 00:11:41,790
at a lot of different stuff I know

296
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they've talked about you know doing a

297
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you know state-run bank which I don't

298
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disagree with obviously with the

299
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cannabis and so forth but if you wanted

300
00:11:52,850 --> 00:11:51,000
to conduct a study and properly take a

301
00:11:55,190 --> 00:11:52,860
look and say what's a you know

302
00:11:57,980 --> 00:11:55,200
constitutional arguments you know parole

303
00:11:59,690 --> 00:11:57,990
against it you know what kind of issues

304
00:12:01,940 --> 00:11:59,700
we'll get with federal regulation and do

305
00:12:03,620 --> 00:12:01,950
a study on something I'm fine with that

306
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and if the voters want to but before you

307
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break ground you know buy the land know

308
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exactly where the line is going to be

309
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going have true estimates and you know

310
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costs overruns you have to have

311
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legitimate liens ones you know all

312
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government basically big projects have

313
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always gone over budget by huge amounts

314
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typically somebody's trying to account

315
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for that and then say this is what it's

316
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going to be really looking at here's the

317
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problems that we have this is what kind

318
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of land we're gonna have to acquire or

319
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you know do we move forward on to it

320
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where basically they just really wanted

321
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to break ground and build so much we're

322
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at the end government would basically go

323
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to those what we've gone this far let's

324
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just complete it anyways I mean how far

325
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have they gone so far as far as dollars

326
00:12:50,900 --> 00:12:47,280
spent you know any penny billions have

327
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been spent not the exact amount I think

328
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it's around ten some are within there I

329
00:12:57,800 --> 00:12:55,560
believe but I can't remember the exact

330
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number yeah I've had trouble getting

331
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that number which is kind of sad in and

332
00:13:04,940 --> 00:13:02,010
of itself but yeah I'm hearing estimates

333
00:13:07,580 --> 00:13:04,950
as high as ten billion dollars already

334
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spent does that already make it the

335
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biggest white elephant in the history of

336
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the United States of America yeah I mean

337
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pretty much because you haven't built

338
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anything I mean Donald Trump is the

339
00:13:20,090 --> 00:13:18,030
federal government the federal

340
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government is shut down over a debate

341
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over five

342
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and the state of California has already

343
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spent almost ten billion building tracks

344
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in the middle of nowhere yeah and it

345
00:13:33,189 --> 00:13:31,160
makes no sense and a lot of the things

346
00:13:35,019 --> 00:13:33,199
that they built does it meet code for

347
00:13:39,759 --> 00:13:35,029
the seismic so they have to be torn down

348
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and rebuilt again and so and then the

349
00:13:43,569 --> 00:13:41,779
problem is that they say well the delay

350
00:13:46,030 --> 00:13:43,579
you know those are going to be paid from

351
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the contractors you know it won't be

352
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paid by the taxpayers and this is what

353
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happens the longer project goes the

354
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inflation they're gonna charge the state

355
00:13:55,480 --> 00:13:53,839
more money anyways so that's where you

356
00:13:57,249 --> 00:13:55,490
get the inflation from their own study

357
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that it could cost up to a hundred

358
00:14:02,919 --> 00:13:59,569
billion dollars so Gavin do some I think

359
00:14:06,100 --> 00:14:02,929
wants to run for president one day this

360
00:14:08,970 --> 00:14:06,110
project is going to be a major blemish

361
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on his record if he doesn't do something

362
00:14:13,359 --> 00:14:11,779
relatively soon it seems to me oh I

363
00:14:15,669 --> 00:14:13,369
don't think this is gonna be his biggest

364
00:14:17,259 --> 00:14:15,679
problem on election night on you know

365
00:14:19,179 --> 00:14:17,269
speaking you know casually with county

366
00:14:20,590 --> 00:14:19,189
matters I told them if I was Gavin

367
00:14:23,259 --> 00:14:20,600
Newsom was consulted I would probably

368
00:14:27,460 --> 00:14:23,269
recommend he run for president this time

369
00:14:29,559 --> 00:14:27,470
in 2020 not wait until 2024 because the

370
00:14:30,549 --> 00:14:29,569
pension crisis that's looming which you

371
00:14:32,319 --> 00:14:30,559
know we're probably looking at a

372
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recession somewhere around the summer of

373
00:14:39,610 --> 00:14:36,829
2020 s most people expect a recession

374
00:14:41,499 --> 00:14:39,620
because well I mean it's just an in a

375
00:14:44,379 --> 00:14:41,509
natural course of economics I mean

376
00:14:46,480 --> 00:14:44,389
you're the the tax breaks and so forth

377
00:14:47,710 --> 00:14:46,490
you know they always will have a boost

378
00:14:50,139 --> 00:14:47,720
into the economy but they eventually

379
00:14:51,759 --> 00:14:50,149
will kind of run their course they're

380
00:14:54,369 --> 00:14:51,769
not permanent and other things there's

381
00:14:56,769 --> 00:14:54,379
going to be changes you know you expect

382
00:14:59,019 --> 00:14:56,779
to have you know a downturn could it be

383
00:15:00,819 --> 00:14:59,029
a recession or simply downturn after the

384
00:15:03,249 --> 00:15:00,829
market will not consume so your point is

385
00:15:05,710 --> 00:15:03,259
whenever we do have that downturn which

386
00:15:07,600 --> 00:15:05,720
is inevitable whether it's 2020 or later

387
00:15:08,710 --> 00:15:07,610
when we do have that downturn what's

388
00:15:11,860 --> 00:15:08,720
going to happen to California

389
00:15:13,299 --> 00:15:11,870
Oh massive pension crisis right now with

390
00:15:15,009 --> 00:15:13,309
the discount rate of return that we

391
00:15:21,069 --> 00:15:15,019
basically are saying we're migrating it

392
00:15:23,109 --> 00:15:21,079
from 7.5 the 7% CalPERS for instance our

393
00:15:24,999 --> 00:15:23,119
outside consultants say the rate of

394
00:15:26,739 --> 00:15:25,009
return on our investments on long term

395
00:15:28,059 --> 00:15:26,749
at least over the next ten years should

396
00:15:31,660 --> 00:15:28,069
be 6.2 percent

397
00:15:33,819 --> 00:15:31,670
Stanford did an analysis and said it

398
00:15:34,570 --> 00:15:33,829
should be five point five percent so if

399
00:15:37,990 --> 00:15:34,580
we took Stanford

400
00:15:40,120 --> 00:15:38,000
and so people know CalPERS is is the

401
00:15:43,269 --> 00:15:40,130
California pension system basically

402
00:15:47,560 --> 00:15:43,279
which rick has most government employees

403
00:15:51,130 --> 00:15:47,570
into it plus the Cal State University

404
00:15:53,530 --> 00:15:51,140
employees then there is CalSTRS which is

405
00:15:56,650 --> 00:15:53,540
administrators in schools primarily and

406
00:15:58,540 --> 00:15:56,660
then there's a UC regents those are the

407
00:16:00,519 --> 00:15:58,550
three big ones that have now there's

408
00:16:03,730 --> 00:16:00,529
also independent ones like LA and like

409
00:16:05,710 --> 00:16:03,740
LAUSD are part and depending on their

410
00:16:07,710 --> 00:16:05,720
own and don't have their own but within

411
00:16:10,840 --> 00:16:07,720
California those are the three major

412
00:16:13,690 --> 00:16:10,850
pensions so California really is a boom

413
00:16:15,160 --> 00:16:13,700
and bust state when it comes to the the

414
00:16:18,550 --> 00:16:15,170
funding of the state government because

415
00:16:20,860 --> 00:16:18,560
our taxes are so high that when the

416
00:16:23,319 --> 00:16:20,870
economy is doing well the state

417
00:16:25,420 --> 00:16:23,329
government rakes in the money then when

418
00:16:28,690 --> 00:16:25,430
things turn suddenly there's a

419
00:16:30,639 --> 00:16:28,700
significant drop in those dollars well

420
00:16:32,980 --> 00:16:30,649
yeah because California primarily has

421
00:16:35,410 --> 00:16:32,990
their capital gains tax is where they

422
00:16:37,870 --> 00:16:35,420
get because we have high income tax and

423
00:16:39,790 --> 00:16:37,880
it's based on income tax and really 1%

424
00:16:43,060 --> 00:16:39,800
of the population the one-percenters is

425
00:16:45,790 --> 00:16:43,070
basically who fund California from what

426
00:16:48,519 --> 00:16:45,800
I remember the statistics about 15,000

427
00:16:51,490 --> 00:16:48,529
families like individuals families

428
00:16:55,410 --> 00:16:51,500
taxpayers fund about 25% of the general

429
00:16:58,060 --> 00:16:55,420
fund about seventy thousand fund about

430
00:17:02,740 --> 00:16:58,070
forty eight percent so that's why you'll

431
00:17:05,260 --> 00:17:02,750
see a huge increase in you know the

432
00:17:06,880 --> 00:17:05,270
surplus as we say we'll get that one and

433
00:17:09,900 --> 00:17:06,890
then it will dramatically cut down and

434
00:17:12,340 --> 00:17:09,910
drop simply from the fact that you know

435
00:17:14,409 --> 00:17:12,350
we're based so much on the stock market

436
00:17:15,669 --> 00:17:14,419
and those capital gains and so that's

437
00:17:17,230 --> 00:17:15,679
why they want to add the service and

438
00:17:18,699 --> 00:17:17,240
labor tax that's what Gavin Newsom is

439
00:17:21,189 --> 00:17:18,709
gonna be looking at doing yeah I mean

440
00:17:22,780 --> 00:17:21,199
it's just one of the just general

441
00:17:23,829 --> 00:17:22,790
observations I have about Californians

442
00:17:24,699 --> 00:17:23,839
just incredible that you know you got

443
00:17:26,860 --> 00:17:24,709
Silicon Valley

444
00:17:28,990 --> 00:17:26,870
you've got Los Angeles you got San

445
00:17:32,320 --> 00:17:29,000
Francisco you've got billionaires galore

446
00:17:34,510 --> 00:17:32,330
in California you have probably the most

447
00:17:36,700 --> 00:17:34,520
expensive real estate in the world that

448
00:17:39,850 --> 00:17:36,710
has property taxes associated with it

449
00:17:43,060 --> 00:17:39,860
you have sales tax that's almost 10% I

450
00:17:45,790 --> 00:17:43,070
mean the money that California must

451
00:17:48,140 --> 00:17:45,800
bring in in taxes and yet we have such

452
00:17:50,830 --> 00:17:48,150
basic problems like

453
00:17:54,890 --> 00:17:50,840
homelessness which is a frickin mess

454
00:17:57,140 --> 00:17:54,900
roads that are an embarrassment I mean

455
00:17:59,290 --> 00:17:57,150
you just go over to Arizona and you

456
00:18:03,320 --> 00:17:59,300
drive around Phoenix and Scottsdale

457
00:18:05,360 --> 00:18:03,330
gorgeous roads mm-hmm California with

458
00:18:07,340 --> 00:18:05,370
all the money that we have we can't even

459
00:18:09,740 --> 00:18:07,350
have basic roads and instead we're gonna

460
00:18:11,900 --> 00:18:09,750
spend it on a bullet train well I mean

461
00:18:13,340 --> 00:18:11,910
it's just like a you know it's a trust

462
00:18:14,900 --> 00:18:13,350
fund kid right California is a trust

463
00:18:17,630 --> 00:18:14,910
fund kid doesn't matter how much money

464
00:18:19,510 --> 00:18:17,640
you have they never learned fiscal

465
00:18:21,770 --> 00:18:19,520
discipline and how to be good stewards

466
00:18:23,930 --> 00:18:21,780
money and you can have somebody who

467
00:18:25,940 --> 00:18:23,940
doesn't make as much money but you know

468
00:18:27,230 --> 00:18:25,950
we'll have a home paid off have a cards

469
00:18:30,549 --> 00:18:27,240
because it'd been good stewards of their

470
00:18:33,200 --> 00:18:30,559
money California they just waste money