Politics Desk

MILWAUKEE — A Wisconsin judge pleaded not guilty Thursday to charges of helping a man who is in the country illegally evade U.S. immigration authorities seeking to arrest him in her courthouse.

Milwaukee County Circuit Judge Hannah Dugan entered the plea during a brief arraignment in federal court. Magistrate Judge Stephen Dries scheduled a trial to begin July 21. Dugan’s lead attorney, Steven Biskupic, told the judge that he expects the trial to last a week.

Dugan, her lawyers and prosecutors left the hearing without speaking to reporters.

The accusations against Dugan

Dugan is charged with concealing an individual to prevent arrest and obstruction. Prosecutors say she escorted Eduardo Flores-Ruiz and his lawyer out of her courtroom through a back door on April 18 after learning that U.S. Immigration and Customs Enforcement agents were in the courthouse seeking to arrest him on suspicion of being in the country illegally. She could face up to six years in prison if convicted on both counts.

Her attorneys say she’s innocent. They filed a motion Wednesday to dismiss the case, saying she was acting in her official capacity as a judge and therefore is immune to prosecution. They also maintain that the federal government violated Wisconsin’s sovereignty by disrupting a state courtroom and prosecuting a state judge.

A public backlash

Dugan’s arrest has inflamed tensions between the Trump administration and Democrats over the president’s sweeping immigration crackdown.

Dozens of demonstrators gathered outside the courthouse ahead of Thursday’s hearing, with some holding signs that read, “Only Fascists Arrest Judges — Drop the Charges,” “Department of Justice Over-Reach” and “Keep Your Hands Off Our Judges!!” The crowd chanted “Due process rights,” “Hands off our freedom,” and “Sí se puede” — Spanish for “Yes, we can” — which is a rallying cry for immigrant rights advocates.

One man stood alone across the street holding a Trump flag.

Nancy Camden, from suburban Mequon north of Milwaukee, was among the protesters calling for the case to be dismissed. She said she believes ICE shouldn’t have tried to arrest Flores-Ruiz inside the courthouse and the Department of Justice “overreached” in charging Dugan.

“How they handled this and made a big show of arresting her and putting her in handcuffs, all of that was intimidation,” Camden said. “And I’m not going to be intimidated. I’m fighting back.”

Esther Cabrera, an organizer with the Milwaukee Alliance Against Racist and Political Repression, said the charges against Dugan amount to “state-funded repression.”

“If we are going to go after judges, if we’re going to go after mayors, we have to understand that they can come after anybody,” she said. “And that’s kind of why we wanted to make a presence out here today, is to say that you can’t come after everyone and it stops here.”

The case background

According to court documents, Flores-Ruiz illegally reentered the U.S. after being deported in 2013. Online court records show he was charged with three counts of misdemeanor domestic abuse in Milwaukee County in March, and he was in Dugan’s courtroom on April 18 for a hearing in that case.

According to an FBI affidavit, Dugan was alerted to the agents’ presence by her clerk, who was informed by an attorney that the agents appeared to be in the hallway. Dugan was visibly angry and called the situation “absurd” before leaving the bench and retreating to her chambers, the affidavit contends. She and another judge later approached members of the arrest team in the courthouse with what witnesses described as a “confrontational, angry demeanor.”

After a back-and-forth with the agents over the warrant for Flores-Ruiz, Dugan demanded they speak with the chief judge and led them from the courtroom, according to the affidavit.

After she returned to the courtroom, witnesses heard her say something to the effect of “wait, come with me” before ushering Flores-Ruiz and his attorney out through a door typically used only by deputies, jurors, court staff and in-custody defendants, the affidavit alleges. Flores-Ruiz was free on a signature bond in the abuse case, according to online state court records. Federal agents ultimately detained him outside the courthouse after a foot chase.

The state Supreme Court suspended Dugan last week, saying the move was necessary to preserve public confidence in the judiciary. She was freed after her arrest.

How the case might play out

John Vaudreuil, a former federal prosecutor in Wisconsin who isn’t involved in Dugan’s or Flores-Ruiz’s cases, said the Trump administration seems to want to make an example out of Dugan. U.S. Atty. Gen. Pam Bondi or Deputy Atty. Gen. Todd Blanche, rather than the U.S. attorney in Milwaukee, are likely making the decisions on how to proceed, making it less likely prosecutors will reduce the charges against Dugan in a deal, he said.

Her attorneys will likely try to push for a jury trial, Vaudreuil predicted, because they know that “people feel very strongly about the way the president and administration is conducting immigration policy.”

Dugan is represented by some of Wisconsin’s most accomplished lawyers. Biskupic was a federal prosecutor for 20 years and served seven years as U.S. attorney in Milwaukee. Paul Clement, meanwhile, is a former U.S. solicitor general who has argued more than 100 cases in front of the U.S. Supreme Court. Both were appointed to jobs by former Republican President George W. Bush.

Richmond writes for the Associated Press. AP reporters Scott Bauer in Madison, Wis., and Laura Bargfeld contributed to this report.

If you voted for Donald Trump last November because you believed he’d increase economic freedom, it’s safe to say you were fooled. Following a reckless tariff barrage, the White House and its allies are preparing a new wave of tax-code gimmickry that has more in common with progressive social engineering than pro-growth reform. And don’t forget a fiscal recklessness that mirrors the mistakes of the left.

Defend these policies if you like, but let’s be clear: The administration shows no coherent commitment to free-market principles and is in fact actively undermining them. Its approach is better described as central planning disguised as economic nationalism.

This week’s example is an executive-order attempt at prescription-drug price control, similar to Democrats’ past proposals. If implemented it would inevitably reduce pharmaceutical R&D and innovation.

Tariffs remain the administration’s most visible economic sin after Trump launched the most extreme escalation of protectionism since the infamous Smoot-Hawley Act of 1930. Unlike the 1930s, however, today’s economy is deeply integrated with global supply chains, making the damage extensive and far more immediate. Tariffs are only nominally imposed on imports. Ultimately, they’re taxes on American consumers, workers and businesses.

The president has made it clear that he’s fine with limiting consumer choice, blithely telling parents they might have to “settle” for two dolls instead of 30 for their children. Smug pronouncements about how much we should shop (not much) or which sectors we should work in (manufacturing) are economic authoritarianism.

They’re also indicative of a deeper government rot. Policymaking is now done by executive orders as comatose congressional Republicans, like some Biden-era Democrats, allow the president to rule as if he’s a monarch.

A full-throated, assertive Congress would remind any president that manufacturing jobs were mostly lost to technologies that also create jobs and opportunity in members’ districts. Prosperity increases only through innovation and competition and isn’t restored by dragging people backward into lower-productivity jobs.

Now, even Trump’s tax agenda — once considered a bright spot by many free-market advocates — is being corrupted. Instead of championing the broad-based, pro-growth reforms we’d hoped for, the administration is doubling down on gimmickry: exempting tips and overtime pay, expanding child tax credits and entertaining the idea of raising top marginal tax rates.

These moves might poll well, but they’re unprincipled and unproductive. They undermine the 2017 Tax Cuts and Jobs Act, which aimed (however imperfectly) to simplify the code and incentivize growth, and not to micromanage worker and household behavior through the Internal Revenue Service.

And then there are the administration’s misleading, populist talking points about raising taxes on the rich to reduce taxes on lower- and middle-income workers. The U.S. income-tax system is already one of the most progressive in the developed world. According to the latest IRS data, the top 1% of earners pay more in federal income taxes than the bottom 90% combined. These high earners provide 40% of federal income-tax revenue; the bottom half of earners make up only 3% of that revenue. Thankfully, the House of Representatives steered away from that mistake in its bill.

Meanwhile, some Republican legislators are pushing to extend the 2017 tax cuts without meaningful offsets, setting the stage for a debt-fueled disaster. As noted by Scott Hodge, formerly the longtime president of the Tax Foundation, the GOP’s proposed cuts could add more than $5.8 trillion to the debt over a decade. That’s nearly three times the cost of the 2021 American Rescue Plan, which many Republicans rightly criticized for fueling inflation and fiscal instability.

To be clear: Pro-growth tax reform is essential. But not every tax cut is pro-growth, and no tax cut justifies further fiscal deterioration. Extending the 2017 cuts, which I generally support, shouldn’t be confused with true tax reform.

Some of the provisions being floated — expanded credits, exclusions for tips and overtime, rolling back the state and local tax (SALT) deduction cap — are not growth policies. They are wealth redistribution run through the tax code, indistinguishable in substance from the kind of demand-side, Keynesian stimulus Republicans once decried.

Hodge notes that these measures would do more to mimic the American Rescue Plan than to reverse its pricey mistakes. And with the Federal Reserve still fighting inflation, adding trillions in unfunded liabilities to the national ledger is profoundly irresponsible.

None of this should surprise anyone paying attention. This administration is packed with advisors and surrogates who glorify union power, rail against globalization and scoff at the very idea of limited government. Some sound more like Bernie Sanders than Milton Friedman. Whether it’s directing industrial policy or distorting the tax code to reward their favorite behaviors, they are hostile to the competition and liberty of the free market.

Sadly, that hostility has real consequences: higher prices, greater economic uncertainty, sluggish investment and fewer opportunities for middle- and lower-class families.

Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University. This article was produced in collaboration with Creators Syndicate.

BEIJING — The new U.S. ambassador to China, former senator and business executive David Perdue, arrived in Beijing on Thursday, just days after China and the U.S. agreed to a temporary break in their damaging tariff war.

Perdue said on X that it is an honor to represent President Trump as ambassador.

“I am ready to get to work here and make America safer, stronger, and more prosperous,” he wrote.

Perdue, 75, had a long career as an executive in firms from clothing to retail. He was based in Hong Kong as head of the Asia operations for Sara Lee Corp. and later was president of the Reebok athletic brand and chairman and CEO of Dollar General stores.

A Republican, he was a senator from Georgia from 2015 to 2021 and ran for governor of the state as a Trump-backed candidate in 2022 but lost in the Republican primary.

Chinese Foreign Ministry spokesperson Lin Jian said China was ready to “provide convenience” for Perdue to perform his duties.

“We have always viewed and handled China-U.S. relations based on the principles of mutual respect, peaceful coexistence, and win-win cooperation. We hope the U.S. side will work with China in the same direction,” Lin said at a daily news briefing.

The U.S. reached a weekend deal with China to reduce sky-high tariffs on each other’s goods, an agreement Trump has referred to as a victory.

The U.S. agreed to cut the 145% tax Trump imposed last month to 30%. China agreed to lower its tariff on U.S. goods to 10% from 125%. The lower tariff rates came into effect on Wednesday.

Worldwide, markets have responded to the agreement with gusto, rebounding to the levels before Trump’s tariffs, but many business owners remain wary.

Along with tariffs and China’s massive trade surplus with the U.S., the two have tangled over security in the South China Sea, which China claims virtually in its entirety.

The U.S. has also been a harsh critic of China’s crackdown on human rights in ethnic areas such as Tibet and Xinjiang and in Hong Kong, and is a strong supporter of Taiwan, the self-governing island democracy that China says is its own territory and threatens to invade.

With the 90-day tariff suspension being a notable exception, relations have hit lows not seen in decades. A reminder of that was Perdue’s predecessor Nicholas Burns’ order this year banning American government personnel in China, as well as family members and contractors with security clearances, from any romantic or sexual relationships with Chinese citizens, a throwback to the Cold War.

Perdue was confirmed by the Senate on April 29. While in the Senate, he served on the Armed Services, Foreign Relations, Banking, Budget, and Agriculture committees. He also chaired the Subcommittees on Sea Power and State Department Oversight and “traveled extensively to strengthen U.S. partnerships across Asia, the Middle East, and Europe,” according to his official biography.

He was born in Warner Robins, Ga., and grew up on his family’s farm. He and his wife have two sons and three grandsons.

WASHINGTON — Democrats and Republicans alike raised concerns on Wednesday about deep staffing cuts, funding freezes and far-reaching policy changes overseen by U.S. Health and Human Services Secretary Robert F. Kennedy Jr.

A bipartisan group of lawmakers questioned Kennedy’s approach to the job, some saying that he has jeopardized vaccine uptake, cancer research and dental health in just a few short months.

In combative and at times highly personal rejoinders, Kennedy defended the Trump administration’s dramatic effort to reshape the sprawling, $1.7-trillion-a-year agency, saying it would deliver a more efficient department focused on promoting healthier lifestyles among Americans.

“There’s so much chaos and disorganization in this department,” Kennedy said on Wednesday during the Senate hearing. “What we’re saying is let’s organize in a way that we can quickly adopt and deploy all these opportunities we have to really deliver high-quality healthcare to the American people.”

During tense exchanges, lawmakers — in back-to-back House and Senate hearings — sometimes questioned whether Kennedy was aware of his actions and the structure of his own department after he struggled to provide more details about staffing cuts.

“I have noted you’ve been unable, in most instances, to answer any specific questions related to your agency,” said Sen. Angela Alsobrooks, a Maryland Democrat.

The secretary, in turn, pushed back — saying he had not had time to answer specific questions — and at points questioning lawmakers’ own grasp of health policy.

Kennedy testified to explain his downsizing of the department — from 82,000 to 62,000 staffers — and argue on behalf of the White House’s requested budget, which includes a $500-million boost for Kennedy’s “Make America Healthy Again” initiative to promote nutrition and healthier lifestyles while making deep cuts to infectious disease prevention, medical research and maternal health programs.

He revealed that he persuaded the White House to back down from one major cut: Head Start, a federally funded preschool program for low-income families across the country.

But lawmakers described how thousands of job losses at the health department and funding freezes have impacted their districts.

One Washington state mother, Natalie, has faced delays in treatment for Stage 4 cancer at the National Institutes of Health’s Clinical Center, said Democratic Sen. Patty Murray. The clinical center is the research-only hospital commonly known as the “House of Hope,” but when Murray asked Kennedy to explain how many jobs have been lost there, he could not answer. The president’s budget proposes a nearly $20-billion slash from the NIH.

“You are here to defend cutting the NIH by half,” Murray said. “Do you genuinely believe that won’t result in more stories like Natalie’s?” Kennedy disputed Murray’s account.

Democrat Rep. Bonnie Watson-Coleman of New Jersey asked “why, why, why?” Kennedy would lay off nearly all the staff who oversee the Low Income Home Energy Assistance Program, which provides $4.1 billion in heating assistance to needy families. The program is slated to be eliminated from the agency’s budget.

Kennedy said that advocates warned him those cuts “will end up killing people,” but that President Trump believes his energy policy will lower costs. If that doesn’t work, Kennedy said, he would restore funding for the program.

Sen. Lisa Murkowski, a Republican of Alaska, said those savings would be realized too late for people in her state.

“Right now, folks in Alaska still need those ugly generators to keep warm,” she said.

Murkowski was one of several Republicans who expressed concerns about Kennedy’s approach to the job throughout the hearings.

Like several Republicans, Rep. Chuck Fleischmann of Tennessee praised Kennedy for his work promoting healthy foods. But he raised concerns about whether the secretary has provided adequate evidence that artificial food dyes are bad for diets. Removing those food dyes would hurt the “many snack manufacturers” in his district, including the makers of M&M’s candy, he said.

Rep. Mike Simpson, a dentist from Idaho, said Kennedy’s plan to remove fluoride recommendations for drinking water alarms him. The department’s news release on Tuesday, which announced the Food and Drug Administration plans to remove fluoride supplements for children from the market, wrongly claimed that fluoride “kills bacteria from the teeth,” Simpson noted. He explained to Kennedy that fluoride doesn’t kill bacteria in the mouth but instead makes tooth enamel more resistant to decay.

“I will tell you that if you are successful in banning fluoride … we better put a lot more money into dental education because we’re going to need a lot more dentists,” Simpson added.

Kennedy was pressed repeatedly on the mixed message he’s delivered on vaccines, which public health experts have said are hampering efforts to contain a growing measles outbreak now in at least 11 states.

Responding to Sen. Chris Murphy, a Democrat of Connecticut, Kennedy refused to recommend that parents follow the nation’s childhood vaccination schedule, which includes shots for measles, polio and whooping cough. He, instead, wrongly claimed that the vaccines have not been safety tested against a placebo.

Sen. Bill Cassidy, a Republican of Louisiana and chairman of the health committee, had extracted a number of guarantees from Kennedy that he would not alter existing vaccine guidance and work at the nation’s health department. Cassidy, correcting Kennedy, pointed out that rotavirus, measles and HPV vaccines recommended for children have all been tested in a placebo study.

As health secretary, Kennedy has called the measles, mumps and rubella vaccine — a shot given to children to provide immunity from all three diseases — “leaky,” although it offers lifetime protection from the measles for most people. He’s also said they cause deaths, although none has been documented among healthy people.

“You have undermined the vital role vaccines play in preventing disease during the single, largest measles outbreak in 25 years,” independent Sen. Bernie Sanders said.

Seitz writes for the Associated Press.

The radiation containment domes at Arizona’s Palo Verde Generating Station were, truth be told, pretty boring to look at: giant mounds of concrete, snap a picture, move on. The enormous cooling towers and evaporation ponds were marginally more interesting — all that recycled water, baking in the Sonoran Desert.

You know what really struck my fancy, though? The paintings on conference room walls.

There were five of them, each representing one of the far-flung Southwestern cityscapes powered by Palo Verde. Two showcased Arizona: one for the Phoenix metro area — saguaro cacti and ocotillo in the foreground, freeway and skyscrapers in the background — and one for the red-rock country to the north. Another showed downtown Albuquerque. A fourth portrayed farm fields in El Paso, likely irrigated with water from the Rio Grande.

Then there was an image that may have looked familiar to Southern Californians: Pacific Coast Highway, twisting through a seaside neighborhood that looks very much like Malibu before the Palisades fire.

A painting of Pacific Coast Highway winding through Southern California, on display at Arizona’s Palo Verde nuclear plant.

(Sammy Roth / Los Angeles Times)

That’s right: If you live in Los Angeles County, there’s a good chance your computer, your phone, your refrigerator and your bedside lamp are powered, at least some of the time, by nuclear reactors.

The city of L.A., Southern California Edison and a government authority composed of cities including Burbank, Glendale and Pasadena all own stakes in Palo Verde, the nation’s second-largest power plant. In 2023, the most recent year for which data are available, the plant was L.A.’s single largest energy source, supplying nearly 14% of the city’s electricity. The reactors supplied just over 9% of Edison’s power.

During a tour last month, I walked past the switchyard, a tangle of poles and wires where energy is transferred to power lines marching west and east. When all three reactors are running, the yard can transfer “the equivalent of half of the peak [electric demand] of the state of California on its hottest day,” according to John Hernandez, vice president of site services for utility company Arizona Public Service, which runs the plant.

“So it is a massive, massive switchyard,” Hernandez said.

For all the heated debate over the merits of nuclear energy as a climate change solution, the reality is it’s already a climate change solution. Nuclear plants including Palo Verde generate nearly one-fifth of the nation’s electricity, churning out 24/7, emissions-free power. Shutting down the nuclear fleet tomorrow would cause a giant uptick in coal and gas combustion, worsening the heat waves, wildfires and storms of the climate crisis.

Phasing out the nation’s 94 nuclear reactors over a period of decades, on the other hand, might be manageable — and there’s a case to be made for it. Extracting uranium for use as nuclear fuel has left extensive groundwater contamination and air pollution across the Southwest, especially on tribal lands, including the Navajo Nation.

“When we talk about nuclear, thoughts often go toward spent fuel storage, or the safety of reactors themselves,” said Amber Reimondo, energy director at the Grand Canyon Trust, a nonprofit conservation group. “But I think an often overlooked piece…has been the impacts to those who are at the beginning of the supply chain.”

Reimondo participated in a panel that I moderated at Palo Verde, part of the annual conference of the Society of Environmental Journalists. She noted that the nation’s only active conventional uranium mill — where uranium is leached from crushed rock — is located in Utah, just a few miles from the Ute Mountain Ute Reservation.

Waste ponds at Energy Fuels’ White Mesa uranium mill in southeastern Utah.

(Jim West / UCG / Universal Images Group via Getty Images)

Even during the Biden years, Reimondo said, it was tough to overcome bipartisan enthusiasm for nuclear energy and “get folks to take seriously the impacts that [tribal] communities are feeling” from mining and milling.

“We just haven’t reached a place in this country where we are listening to these folks,” she said.

That dynamic has remained true during the second Trump administration. Just this week, Interior Secretary Doug Burgum said his agency would fast-track permitting for a uranium mine proposed by Anfield Energy in Utah’s San Juan County, completing the environmental review — which would normally take a year — in just 14 days.

Burgum and President Trump, like Biden-era officials before them, say it’s unwise for the U.S. to rely on overseas suppliers for nearly all its uranium. But many environmental activists, even some who are fans of nuclear, believe running roughshod over Indigenous nations and public lands is disgraceful. And counterproductive.

Victor Ibarra Jr., senior manager for nuclear energy at the nonprofit Clean Air Task Force, said rebuilding the U.S. nuclear power supply chain will require local buy-in — on the front end, where uranium is mined, and on the back end, where spent fuel is stored. Thus far, political opposition has derailed every attempt to build a permanent fuel storage site, meaning nuclear waste is piling up at power plants across the country.

If there’s any hope for more uranium mining and power plants, Ibarra said, it will involve a lot of conversations — conversations that lead to less pollution, and fewer mistakes like those made during the 20th century.

“I think it’s really unfortunate that the nuclear industry has behaved the way it has in the past,” he said.

The benefits of nuclear reactors are straightforward: They generate climate-friendly electricity around the clock, while taking up far less land than solar or wind farms. If building new nuclear plants were cheap and easy — and we could solve the lingering pollution and safety concerns — then doing so would be a climate no-brainer.

If only.

The only two nuclear reactors built in the U.S. in decades came online at Georgia Power’s Vogtle plant in 2023 and 2024, respectively, and cost $31 billion, according to the Associated Press. That was $17 billion over budget.

Units 1 and 2 at the Vogtle nuclear plant near Waynesboro, Ga., seen in 2024.

(Mike Stewart / Associated Press)

Meanwhile, efforts to build small modular reactors have proved more expensive than large nuclear plants.

“It would really be quite unprecedented in the history of engineering, and in the history of energy, for something that is much smaller to have a lower price per megawatt,” said Joe Romm, a senior researcher at the University of Pennsylvania’s Center for Science, Sustainability and the Media. “We try to make use of the economies of scale.”

Those setbacks haven’t stopped wealthy investors including billionaires Bill Gates and Jeff Bezos from bankrolling efforts to bring down the cost of small modular reactors, in hopes that mini-nuclear plants will someday join solar panels and wind turbines as crucial tools in replacing planet-warming fossil fuels.

I hope they succeed. But I’m not going to spend much time worrying about it.

Like I said earlier: Love it or hate it, nuclear is already a huge part of the nation’s power mix, including here in L.A. We’ve lived with it, almost always safely, for decades — at Palo Verde, at Washington state’s Centralia Generating Station, at the Diablo Canyon plant on California’s Central Coast. Nuclear, for all its flaws, is hardly the apocalyptic threat to humanity that its most righteous detractors make it out to be.

It’s also not the One True Solution to humanity’s energy woes, as many of its techno-optimist devotees claim it to be. There’s a reason that solar, wind and batteries made up nearly 94% of new power capacity built in the U.S. last year: They’re cheap. And although other technologies will be needed to help solar and wind phase out fossil fuels, some researchers have found that transitioning to 100% clean energy is possible even without nuclear.

So what’s the answer? Is nuclear power good or bad?

I wish it were that simple. To the extent existing nuclear plants limit the amount of new infrastructure we need to build to replace fossil fuels: good. To the extent we’re unable to eliminate pollution from uranium mining: bad. To the extent small reactors might give us another tool to complement solar and wind, alongside stuff like advanced geothermal — good, although we probably shouldn’t spend too much more taxpayer money on it yet.

Sorry not to offer up more enthusiasm, or more outrage. The climate crisis is a big, thorny problem that demands nuance and thoughtful reflection. Not every question can be answered with a snappy soundbite.

Before leaving Palo Verde, I stopped by the conference room for a last look at the paintings: Arizona. New Mexico. Texas. California. It was strange to think this plant was responsible for powering so many different places.

It was strange to think the uranium concealed beneath those domes could power so many different places.

A painting of metro Phoenix, on display at Arizona’s Palo Verde nuclear plant.

(Sammy Roth / Los Angeles Times)

This is the latest edition of Boiling Point, a newsletter about climate change and the environment in the American West. Sign up here to get it in your inbox. And listen to our “Boiling Point” podcast here.

For more climate and environment news, follow @Sammy_Roth on X and @sammyroth.bsky.social on Bluesky.

One problem that promoters of cryptocurrencies have faced since the asset class first emerged is that its reputation stinks.

Crypto trading has become identified by regulators and in the public mind as a haven for scams, theft and other forms of sharp practice. The FBI, in its most recent annual report on cryptocurrency, found that crypto-related fraud has exploded. Criminality is “pervasive” in the field, the agency warned.

The elusive use case for crypto assets seemed to have been narrowed down to facilitating criminal fraud, ransomware attacks, drug and human trafficking.

Then came Donald Trump. During the presidential campaign and after his election, crypto promoters thought they were entering the nirvana of officially recognized legitimacy.

Trump signaled that he would end government regulatory initiatives on crypto, “in order to promote United States leadership in digital assets and financial technology while protecting economic liberty,” to quote the executive order he issued Jan. 23, effectively wiping out federal regulations on the class.

Things aren’t working out as they hoped. Since Trump returned to the presidency, his and his family’s involvement in crypto-related deals has critics charging that crypto has become an entirely new path for official corruption and conflicts of interest in the White House.

“Trump’s cryptocurrency ventures are nothing more than a fig leaf for payoffs from foreign nationals & foreign gov’ts,” Sen. Richard Blumenthal (D-Conn.) tweeted on May 7. Blumenthal’s target was the offer of a sit-down private dinner with Trump scheduled for May 22 at his Virginia golf club, and personal tours of the White House for the biggest buyers of $TRUMP, a “memecoin” assiduously promoted by Trump and his family.

The price of the coin soared to about $74 on Jan. 19, the day before Trump’s inauguration. It immediately fell in value, though its price has been propped up by the offer of the dinner and tours; the most recent quotes place it at about $13. The top 220 holders of the Trump coin, who are entitled to the dinner, spent nearly $148 million for the privilege, according to an estimate by Reuters.

More than half of the biggest holders appear to be foreign entities, according to an analysis by Bloomberg. That implies that the purchases might be designed to circumvent federal laws barring foreigners from making political contributions in the U.S.

Democratic Sens. Adam Schiff of California and Elizabeth Warren of Massachusetts demanded that the federal Office of Government Ethics, an independent executive branch agency, open an inquiry into the “severe risk that President Trump and other officials may be engaging in ‘pay to play’ corruption by selling presidential access to individuals or entities, to include foreign nationals and corporate actors with vested interests in federal action, while personally enriching the President and his family.”

DWF, a crypto firm based in the United Arab Emirates, announced last month that it had bought $25 million in coins issued by the Trump-affiliated firm World Liberty Financial, in part to “enhance regulatory engagement with U.S. policymakers.” Freight Technologies, a Houston logistics company, announced April 30 that it had borrowed $20 million to buy Trump coins, calling the transaction “an effective way to advocate for fair, balanced, and free trade between Mexico and the US.”

The unease has spread to Republicans on Capitol Hill, who fear that the Trumps’ crypto deals will undermine their efforts to enact crypto-friendly regulations.

“This gives me pause,” Sen. Cynthia Lummis (R-Wyo.), a leader in the legislative movement to pass a pro-crypto law, told NBC News. “Even what may appear to be ‘cringey’ with regard to meme coins, it’s legal, and what we need to do is have a regulatory framework that makes this more clear, so we don’t have this Wild West scenario.”

Trump’s activities already have derailed, if temporarily, the so-called GENIUS Act, which would regulate a form of cryptocurrency known as “stablecoins,” which are supposedly pegged to the value of underlying currencies such as dollars. Schiff and eight other Senate Democrats who had supported the measure have bailed on it, making passage in its current form virtually impossible.

Democrats in both chambers have introduced the “End Crypto Corruption Act,” which would bar the president, vice president, members of Congress and high-level executive branch appointees from issuing, sponsoring or endorsing any “cryptocurrency, meme coin, token, non-fungible token, stablecoin, or other digital asset that is sold for remuneration.”

Even some crypto promoters are no happier than the politicians. “They’re plumbing new depths of idiocy with the memecoin launch,” Nic Carter, a crypto investor and Trump supporter, told Politico.

As a crypto category, memecoins are disdained even by many participants in the field. They generally have even less utiilty or authenticity than mainstream cryptocurrencies, often originate as joke investments, and ride waves of pure hype. The Trump coin has no discernible value apart from its identification with Trump himself.

I asked the White House for comment on the accusations of corruption and received this reply from spokeswoman Karoline Leavitt: “President Trump is compliant with all conflict-of-interest rules, and only acts in the best interests of the American public.”

The memecoin isn’t Trump’s only venture into crypto, though some of his arrangements seem designed to give him plausible deniability if legal or ethics questions are raised. World Liberty Financial, which markets a crypto token designated $WLFI and a stablecoin designated USD1, is 60% owned by Trump and members of his family, who are entitled to up to 75% of the proceeds of sales of $WLFI.

The firm’s website features an image of Trump striking a heroic pose and says the WLFI token is “inspired by Donald J. Trump.” In the small print it asserts, however, that “any references to or quotes or imagery attributed to or associated with Donald J. Trump or his family members should not be construed as an endorsement or representation or warranty.”

Crypto investors really stepped up to the plate with political donations during the 2024 election cycle. Fairshake, the super PAC representing the class, spent nearly $41 million in contributions. That included $13 million to defeat two congressional candidates in Democratic primaries, Rep. Katie Porter (D-Irvine) and Rep. Jamaal Bowman (D-New York). Both were known to favor stricter regulation of the asset class, and both lost their races.

The biggest crypto firms spent lavishly in 2023 and 2024 to fatten Fairshake’s war chest, which collected more than $162 million in that time frame; Coinbase contributed $46.5 million, Ripple Labs, $45 million and Andreessen Horowitz, a major crypto investor, $44 million. Much of the total was funneled to two other crypto-related political action committees, according to federal election records.

After the election, many of the firms, like more traditional businesses, made contributions of $1 million or more to Trump’s inauguration fund.

One can hardly deny that the crypto camp has gotten its money’s worth from the Trump administration so far. The Securities and Exchange Commission has dropped or deferred more than a dozen enforcement cases against Ripple, Coinbase, Gemini, Kraken and other crypto promoters.

The largest victory arguably belongs to Coinbase, the biggest crypto trading platform in the U.S. The SEC in 2023 charged the firm with running an unlawful trading exchange and marketing unregistered securities. The case reflected the SEC’s position that what crypto firms are marketing are securities by a different name, and thus need to be registered as securities so buyers and sellers get the same legal protections as stock and bond investors.

A federal judge in New York cleared the enforcement action to move ahead in 2024, after finding that the SEC had made a plausible case that Coinbase was operating illegally. The SEC dropped the case in February. Coinbase had asserted that the SEC was wrong “on the facts and the law,” and that “the case should never have been filed in the first place.”

Earlier this month, the agency settled its case against Ripple, which it had charged in 2020 with having raised $1.3 billion through unregistered securities. As part of the settlement, the SEC agreed to return to Ripple $75 million of a $125-million penalty it held in escrow. The settlement elicited a crisp rebuke from Commissioner Caroline A. Crenshaw, a member of the commission’s Democratic minority.

Crenshaw noted that the deal was part and parcel of the SEC’s effective abandonment of crypto regulation. “This settlement, alongside the programmatic disassembly of the SEC’s crypto enforcement program, does a tremendous disservice to the investing public,” she wrote.

That won’t be the end of the deregulation drive. On April 7, Deputy Atty. Gen. Todd Blanche — who was Trump’s defense attorney in the New York criminal case that resulted in guilty verdicts on 34 felony counts of falsifying business records — ordered an end to Justice Department regulatory cases based on interpreting crypto assets as securities or commodities. That closed down the government’s principal regulatory initiative against crypto promoters.

Blanche directed the DOJ’s Market Integrity and Major Frauds Unit to “cease cryptocurrency enforcement,” and disbanded the National Cryptocurrency Enforcement Team, “effective immediately.”

There doesn’t seem to be any sign that Trump’s involvement with crypto will slow down even as he disembowels the government’s regulatory capacity over crypto ventures.

World Liberty Financial recently announced that Abu Dhabi would use its stablecoin to invest $2 billion in Binance, a multinational crypto firm that pleaded guilty and paid a $4.3-billion penalty in 2023 on charges of financial crimes including money laundering. Binance’s chief executive, Changpeng Zhao, also pleaded guilty and spent four months in U.S. prison.

Last month, the SEC put its civil case against Binance on hold for at least 60 days.

On its investor advice webpage, the SEC used to post a warning on its website about crypto. “Trendy investments are especially ripe for fraudsters so be aware there is a real risk of fraud,” it said. “Cryptocurrencies may be today’s shiny, new opportunity but there are serious risks involved.”

That page has been taken down.

WASHINGTON — Markets rejoiced this week over news that the Trump administration, after six weeks of maximalist rhetoric, had struck a preliminary deal with China to lower tariff rates between the two countries. Tech stocks led the rally, with investors hopeful that President Trump had finally retreated from plans for a protracted trade war with a vital trading partner.

But the celebration may be premature, industry insiders, foreign diplomats and market experts said, telling The Times that Silicon Valley will face strong headwinds in the months ahead — the makings of a perfect storm of uncertainty that could still tip the U.S. economy into recession.

Investigation at Commerce

Wall Street reacted with similar exuberance last month on word that tech products, such as smartphones and computers, would be exempt from Trump’s 145% tariffs on China — a figure that was reduced in the deal struck on Monday to 30%, marking a significant reduction, but still far higher than tariffs have ever been on Chinese imports.

And yet the April 12 White House announcement outlining exemptions was widely misunderstood as a walk-back. In fact, those tech products, including the iPhone, are exempted from existing tariff rates only temporarily, because the Commerce Department is conducting an ongoing review of whether to impose separate import duties on the sector over specific national security concerns.

The investigation, under Section 232 of the Trade Expansion Act of 1962, is progressing, with the Commerce Department recently ending its acceptance of public comments. The department, led by Secretary Howard Lutnick, could issue findings anytime in the coming months, alongside a tariff rate of unknown size that may severely affect Silicon Valley companies.

The review is causing uncertainty in its own right. But Lutnick has indicated that action is forthcoming. He has repeatedly advocated for the iPhone to be manufactured in the United States — a process that would require a large, skilled workforce in high-tech manufacturing produced by the very universities being targeted by the Trump administration, and would substantially increase the price of computing products for American households.

Scott Bessent, the Treasury secretary who has earned greater confidence than Lutnick from the business community, is the one leading trade negotiations with China, where many of those products are made. That has Silicon Valley executives questioning which one of them is in charge, and whom they should be speaking with, according to one tech executive, speaking on condition of anonymity because they are not authorized to speak publicly.

“The core issue for Silicon Valley lies in the uncertainty and potential cost disruption these bring to critical technology components, especially semiconductors,” said Subhajyoti Bandyopadhyay, a professor of information systems and operations management at the University of Florida.

“While ostensibly about national security, the application of these investigations can introduce significant volatility into supply chain planning and investment decisions. Companies might hesitate to commit to certain sourcing strategies if there’s a persistent threat,” he added. “All of which is to say that there will be quite a bit of turbulence ahead for strategic planners of Silicon Valley firms.”

Looming battle with Europe

Announcing the reduction in trade tensions with China on Monday, Trump turned his attention to the European Union, another major trading partner, and levied a threat.

“The European Union is in many ways nastier than China,” the president said. “They’ll come down a lot. You watch. We have all the cards. They treat us very unfairly.”

But the Europeans believe they have some cards, as well.

Trump’s focus on trade with Europe has been on tangible goods, such as agricultural products, manufactured items, pharmaceuticals and cars — a grouping of products that on their own would show a significant U.S. trade deficit with the continent. But European officials use different math. They want to account for European use of U.S. digital services to level the playing field.

One European official, granted anonymity to speak candidly, said that the taxation of digital services — such as online advertising, social media platforms and streaming services — is expected to be a “significant” component of the upcoming negotiations.

“Silicon Valley should be very concerned,” said Michael Strain, director of economic policy studies at the American Enterprise Institute. “The U.S. really stands to lose if there are certain tariffs that are brought to services, and I think people in the U.S. understand that, and would try to prevent it from happening.”

Targeting the U.S. digital sector offers Europe potent leverage in negotiations with the Trump administration, not only because it represents such a large portion of the American economy, but also because it applies acute pressure on Trump’s political allies in Silicon Valley — a tactic that could ultimately persuade him to cave.

“Trump blinked on the China tariffs at least in part because China aggressively retaliated,” Strain said. “That will be interesting to watch if other trading partners modify their strategy: learning that punching the bully in the nose is the right thing to do.”

Rates remain high on China

One of Trump’s first calls on Monday morning after announcing his temporary truce with China was to Apple’s chief executive, Tim Cook. “He’s going to be building a lot of plants in the United States for Apple,” Trump said. “We look forward to that.”

Apple can’t build them fast enough. Although it committed $500 billion in investments over the next four years in U.S. production, including new plants and a manufacturing academy, uncertainty in the interim will force the company to make hard decisions on its product lines.

Despite some protection from the exemptions in place as the Commerce investigation proceeds, the California tech giant still faces hurdles from the tariffs that remain high across supply chains — not just in China, where rates remain at 30%, but also elsewhere in Asia, including India and Vietnam, which face 10% import duties. In the most recent earnings call, before the China deal was announced, Cook estimated that Apple could incur a $900-million hit from tariffs.

“For companies like Apple, and indeed much of Silicon Valley, this overall environment isn’t just about weathering a storm; it’s about fundamentally rethinking global operations,” Bandyopadhyay said. “We’re already witnessing the strategic pivots.”

To offset the costs of tariffs, Apple could increase the prices of iPhones in the fall. But the company also has to walk a fine line both politically and financially. The Trump administration has been critical of companies such as Amazon that have considered showing consumers the impact of tariffs.

“This is all sort of a game of poker, and also remember, Tim Cook is 10% politician, 90% CEO,” said Dan Ives, a Wedbush Securities analyst who covers the technology sector.

Ives said the upcoming iPhone 17 could cost $100 more than the current model, but his firm estimates that could reduce demand by 5%, delaying consumers’ purchases of new devices. Other analysts said it is tough to say if prices will increase, with the smartphone maker keeping prices relatively stable in recent years.

The debate over Apple’s fate has proved to be a sensitive point in U.S. negotiations with Beijing. Last month, the Chinese Foreign Ministry recirculated a video from a visit Cook made to China in 2017, in which he explained why Silicon Valley companies find themselves so reliant on the Chinese supply chain.

“The popular conception is that companies come to China because of low labor costs. I am not sure what part of China they go to, but the truth is China stopped being a low-labor-cost country many years ago,” Cook said at the time. “The reason is because of the skill, the quantity of skill in one location, and the type of skill it is.”

“The products we do require really advanced tooling and the precision that you have to have in tooling and working with materials that we do are state-of-the-art,” he added. “If you look at the U.S., you could have a meeting of tooling engineers and I’m not sure we could fill a room. In China, you could fill multiple football fields.”

Times staff writer Queenie Wong in San Francisco contributed to this report.

What else you should be reading

The must-read: California to ask federal judge for sweeping pause to Trump’s tariffs
The deep dive: Trade truce with China is hailed, but it may not be enough to stop shortages
The L.A. Times Special: Newsom claims Trump’s tariffs will reduce California revenues by $16 billion

More to come,
Michael Wilner
—
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For the last 18 months, the city of Rancho Palos Verdes has been struggling to address a worsening local emergency — the dramatic expansion of an ancient landslide zone that has torn homes apart, buckled roadways and halted utility services.

Triggered by a succession of heavy winter rains in 2023 and 2024, the ongoing land movement has upended the lives of residents and cast the city into financial uncertainty. Without significant outside aid, officials say they expect to spend about $37 million this fiscal year on emergency landslide mitigation — a sum nearly equal to the city’s annual operating budget.

Now, to make matters worse, the Trump administration has announced that it will cease funding the Federal Emergency Management Agency’s Building Resilient Infrastructure and Communities grants — a major pot of money the city hoped to use to finance a long-term prevention and stabilization plan.

“The BRIC program was yet another example of a wasteful and ineffective FEMA program,” read the administration announcement. “It was more concerned with political agendas than helping Americans affected by natural disasters.”

For the city of Rancho Palos Verdes, the action amounts to the likely loss of $16 million for stabilization work. It also marks a striking reversal in federal support for local slide mitigation efforts.

In September 2024, a campaigning Trump visited his nearby Trump National Golf Club to say that government needed to do more to help residents in the slide area. “The mountain is moving and it could be stopped, but they need some help from the government. So, I hope they get the help,” Trump said.

Last week, city officials again extended a local emergency declaration as the crisis continues to pose unprecedented strain on city finances.

“We are running out of money quickly,” Rancho Palos Verdes Mayor Dave Bradley said at a recent City Council meeting. “We are dramatically coming to the end of our rope to be able to [continue landslide mitigation efforts]. … We are spending major percentages on our total budget on this one issue.”

The majority of those allocated funds have gone toward a collection of new underground “de-watering” wells, which pump out the groundwater that lubricates landslide slip planes — a strategy that geologists have credited with helping to ease the movement in recent months.

Millions of dollars have also gone toward repeated repairs to Palos Verdes Drive South — which continues to crack and shift — as well as efforts to fill fissures, improve drainage and maintain important infrastructure, such as sewer and power lines.

While the city isn’t yet facing a major budget shortfall, its reserve funds have quickly dwindled over the last two years. By next fiscal year — which begins in July — the city expects to have only $3.5 million in unallocated capital improvement reserves, down from $35 million three years ago, according to city data. And while landslides have been the most pressing concern of late, city officials say they now face an estimated $80 million in other capital projects.

“Without a doubt, we need outside help for this landslide,” said Ramzi Awwad, the city’s public works director. He said the city is working to find and apply for other federal and state funding sources, but has run into roadblocks because landslides are not typically included within most disaster or emergency response frameworks.

“This is a disaster … very much exacerbated by severe weather and severe climate change,” Bradley recently testified before the California Assembly Committee on Emergency Management. He called the growing price tag for necessary response “unsustainable.”

Many areas of the Rancho Palos Verdes landslide complex — which covers more than 700 acres and includes about 400 homes — are still moving as much as 1.5 feet a month, damaging property and infrastructure, according to the city. Other sections that shifted several inches a week at the peak of movement in August 2024 have slowed or completely halted. City officials attribute those improvements to the ongoing mitigation projects as well as a much drier winter — but they say more work is needed to keep the area safe and accessible.

Officials argue the loss of FEMA funding could stymie long-term slide prevention efforts that were in the works for years before land movement drastically accelerated last year.

The Portuguese Bend Landslide Remediation Project, which calls for the installation of a series of water pumps called hydraugers, as well as other measures to keep water from entering the ground, was initially awarded a $23-million FEMA BRIC grant in 2023, Awwad said. The grant was later reduced to $16 million.

The project is separate from the city’s ongoing emergency response, but key to long-term stability in the area, Awwad said.

Rancho Palos Verdes officials dispute the administration’s assertion that the BRIC grant program is “wasteful and ineffective.” Instead, they say it represented a lifeline for a small city that has long dealt with landslides.

For decades, the city’s most dramatic landslide — the Portuguese Bend slide — has moved as much as 8.5 feet a year, or approximately an inch or two per week. Last summer, it was moving about a foot a week. Other nearby landslides, including Abalone Cove and Klondike Canyon, also saw dramatic acceleration last year, but those areas are not a part of the long-term stabilization plan.

Shown is a view of a large fissure in Rancho Palos Verdes’ Portuguese Bend neighborhood. Landslides have accelerated in the city following back-to-back wet winters in 2023 and 2024.

(Allen J. Schaben / Los Angeles Times)

“Losing the BRIC funding will jeopardize the city’s ability to implement long-term efforts to slow the Portuguese Bend landslide and prevent the kind of emergency we are experiencing now from happening again,” Megan Barnes, a city spokesperson, said.

Because BRIC grants were earmarked for preventive measures, the city was unable to use the money for its emergency response. But in recent weeks, the city completed the first phase of the long-term project — planning, engineering and final designs — after FEMA approved $2.3 million for that initial work.

Officials say the city has yet to receive that portion of the funding, and it is now unclear whether it ever will.

“We are still seeking clarification on the next steps for what, if any, portion of the BRIC grant may be available,” Barnes said. “We continue to strongly urge our federal, state and county partners to recognize the urgency of this situation and continue to support the city in protecting our residents and vital infrastructure.”

Awwad said it’s not just the local residents who benefit from such stabilization efforts; it also helps the thousands of motorists who use Palos Verdes Drive South and thousands more residents who rely on the county-run sewer line that runs alongside the road.

“This is a regional issue,” Awwad said.

Barnes said the city is considering applying to FEMA’s Hazard Mitigation Grant Program for the project, but securing state or federal funding for stabilization projects has been a challenge.

After the Biden administration declared the 2023-2024 winter storms a federal disaster, the city applied to FEMA for over $60 million in disaster reimbursements, linking its landslide mitigation work to the heavy rainfall. But FEMA officials rejected almost all of the city’s request.

The city has appealed that decision, but it seems unlikely federal officials will reverse course. In a recent letter to FEMA about the appeal, the California Governor’s Office of Emergency Services recommended the appeal not be granted because the landslides “were unstable prior to disaster” and therefore not a “direct result of the declared disaster.”

“Cal OES agrees with [the city] that the winter storms… may have greatly accelerated the sliding,” the letter said. “However … the pre-existing instability dating back to 2018 makes that work ineligible per FEMA policy. “

The most significant outside funding the city has received has come from Los Angeles County. Supervisor Janice Hahn secured $5 million for the landslide response — more than $2 million of which has been distributed to homeowners for direct assistance through $10,000 payments. The county’s flood control district also allocated the city $2 million to help cover costs preparing for the rainy season.

In 2023, the city also received $2 million from Congress after U.S. Sen. Dianne Feinstein (D-Calif.) helped secure the funds for landslide remediation.

The city’s most dramatic financial support — if it comes through — would be a $42-million buyout program that was awarded last year by FEMA. With that money, city officials expect a buyout of 23 homes in the landslide zone, 15 of which have been red-tagged, or deemed unlivable. FEMA has yet to allocate those funds, Barnes said, but even if it does, none of the money would go toward slide mitigation or prevention.

In the face of such difficulties, city officials have thrown their support behind a bill that could change how the state classifies emergencies.

Assemblymember Al Muratsuchi (D-Rolling Hills Estates) introduced AB 986, which would add landslides as a condition that could constitute a state of emergency — a change that could free up a pool of state funds for Rancho Palos Verdes.

He called the bill “a common sense proposal” after seeing what the Rancho Palos Verdes landslide zone has been dealing with, but similar bills in the past have failed.

“The Palos Verdes peninsula … has been witnessing what I call a slow-moving train wreck,” Muratsuchi testified at an Emergency Management Committee hearing last month. “Homes are being torn apart. … The road is being torn apart, utilities are being cut off. By any common sense definition: a natural disaster.”

SACRAMENTO — After nearly seven years of hibernation, a ballot initiative overwhelmingly approved by the voters is emerging from its slumber to challenge the way California governments spend the taxpayers’ money.

Designed by tax crusader Paul Gann to limit public spending, Proposition 4 was largely forgotten after it won passage in 1979. But now the measure’s spending curbs are on the verge of taking hold–offering the prospect of a tax rebate and the threat of deep program cuts.

When the new fiscal year begins July 1, the state will be within sneezing distance of the measure’s spending limit–just $95 million below the lid in a budget of nearly $37 billion. State analysts expect the limit to take effect by 1987, preventing the state from spending an estimated $900 million it will collect.

Possible Tax Refund

The awakening of the initiative has prompted Gov. George Deukmejian to suggest the possibility of a tax refund.

But others fear that the measure will ultimately put the brakes on economic growth in California by handicapping government’s ability to provide highways, schools and other necessary services.

Major business organizations, the education establishment and lobbyists for local governments have already begun searching for ways to divert money that would otherwise be returned to the taxpayers.

Three business groups that originally helped draft the initiative–the state Chamber of Commerce, the California Assn. of Realtors and the California Taxpayers Assn.–are leading a drive to alter Proposition 4 and free highway construction from the spending restriction.

And many of the state’s leading politicians, including state Supt. of Public Instruction Bill Honig, Los Angeles Mayor Tom Bradley and Assembly Speaker Willie Brown (D-San Francisco) have quietly come to the conclusion that the limit must be modified or repealed.

“Eventually, I think you’re going to have to repeal it because it’s a death sentence for the schools,” Honig said. “It will put the state in such a straitjacket that you’ll end up with a second-rate state–and I don’t think the people will stand for it.”

Proposition 4 began with a simple idea: Put a specific limit on the rate of growth in government spending.

Gann’s measure followed on the heels of Proposition 13, the 1978 property tax-cutting initiative and was dubbed “the spirit of 13” by its backers. The constitutional amendment drew a broad range of supporters that included then-Gov. Edmund G. Brown Jr.

Overwhelming Approval

Voters, outraged by high taxes, double-digit inflation and dollar-a-gallon gasoline, approved the initiative with an amazing 74% of the vote.

Now, all levels of government–the state, counties, cities, school districts and special districts–can increase spending at a pace governed by a formula based on population growth and either the national inflation rate or the increase in per-capita income–whichever is lower.

The rate of inflation is calculated by using the U.S. Consumer Price Index.

Revenues collected above the limit must be returned to the taxpayers within two years, unless voters agree to raise the lid for a four-year period.

The measure is aimed primarily at government’s ongoing operations, including such programs as education, health, transportation, welfare, prisons, parks and road and school construction.

A variety of exceptions were built into the initiative that provide some protection for long-term capital improvements and programs that directly pay for themselves. Some sources of income are not subject to the restraint, including bonds, tidelands oil revenues, user fees collected to pay for a particular service and proceeds from the sale of land. Certain state expenditures also are exempt, including unrestricted payments to local governments, interest payments on loans and spending required by the federal government or a court.

In 1979, state analysts believed it would be many years before the state ever reached its spending restriction. But during the last several years, California has enjoyed both low inflation and economic growth, a combination that has pushed state revenues to the limit.

Lack of Flexibility Cited

“Over a period of four to five years, the limit will rise at a rate well below the growth of the state’s economy,” said former Legislative Analyst William G. Hamm. “The state would be put in the position of having to reduce services. Ultimately, the limit is just not flexible enough to stand up over a long period of time.”

Since Proposition 4 was approved, public resentment toward state taxes appears to have cooled off somewhat. A Los Angeles Times Poll in 1983 found that 71% of those surveyed said they were either satisfied or neutral about the level of California taxes they were paying.

During the last several years, 10 cities and counties have reached their own spending constraints and asked the voters to raise their limits. In all but one case, the voters agreed, local government officials report.

In a 1984 election in Santa Monica, for example, a measure to hike the spending lid by $4 million to pay for more police won 74% of the vote while a second measure to raise the cap by $3.5 million for public works won 69%.

Paradoxically, the initiative spawned during former Gov. Brown’s “era of limits” may make his successor, George Deukmejian, its biggest beneficiary.

Should the Republican governor win election to a second term in November, Proposition 4 offers him a golden opportunity to preside over a politically popular tax refund.

The governor hinted at that prospect earlier this year.

Speaks of Refund

“That might be a good possibility of happening,” he told reporters. “If we got more revenue in than we could legally spend, it would have to be returned. . . . You’re not going to be able to expand and have a mushrooming bureaucracy.”

Deukmejian, who has enlarged the state budget each year of his first term, could accomplish his longtime goal of cutting back the size of government. Armed with the Gann limit, he would have a powerful tool at his disposal to block legislative spending proposals and reduce social programs popular among Democrats.

At the same time, the limit would create a sizable surplus that could not be spent. This would allow the governor to propose a rebate without incurring criticism from the Legislature that he was hoarding funds needed for programs and services.

“We would enjoy the people’s will being carried out,” said Steven A. Merskamer, Deukmejian’s chief of staff.

Lt. Gov. Leo McCarthy, who was a leading advocate of Proposition 4, worries now that the state could cut services and give money back to the taxpayers at the same time that it is unable to make up for large reductions in federal aid resulting from the Gramm-Rudman deficit-cutting measure.

A tax rebate could take many forms–especially since there is no requirement that the people who paid the taxes are the same ones who would receive a refund.

Selected Tax Breaks

The governor and lawmakers could use the opportunity to give tax breaks to selected groups, such as the multinational corporations that have long been seeking elimination of the unitary tax, one legislative staff member suggested.

Legislators have also begun looking at the possibility of developing creative methods of financing to make up for cuts in some state programs. For example, the state could offer tax credits to developers who carry out projects deemed desirable, such as construction of schools or low-income housing.

Already, business leaders, educators and local officials are angling for ways to divert money from a possible refund by taking advantage of loopholes in Proposition 4.

The proposal that has advanced the furthest is a constitutional amendment authored by Sen. John Foran (D-San Francisco) that would remove road and highway construction expenditures from the limit by declaring that the gasoline tax is a user fee, not a tax. The measure, which would be placed before the voters in November, cleared the Senate and is pending in the Assembly.

Deukmejian, in a rare break with the business community, opposes the measure.

“I strongly supported Proposition 4,” Deukmejian said in a speech last week. “I believe its limit on government growth is very reasonable, and I don’t agree with those who say we should do away with it so taxes can be raised.”

Gann said he also is against the Foran bill “simply because it kicks a hole in 4.”

Key Supporters

Among the bill’s backers are three people who helped Gann draft Proposition 4 in 1979: Dugald Gillies, lobbyist for the California Assn. of Realtors; James P. Kennedy, vice president of the California Chamber of Commerce, and Kirk West, then executive vice president of the California Taxpayers Assn. and now president of the Chamber of Commerce.

“Everything is made to be altered,” Gillies explained. “Even the 10 commandments are altered by interpretation. The Constitution is altered by interpretation. Gann was meant to be dealt with in the same context. The flexibility was built right into it.”

Gillies argued that the Gann limit will not restrict growth in California because voters have the option of raising the spending lid. But he said the spending restraint should be altered to exclude highways because of a tremendous need for new roads around the state.

Education has become another rallying point for opposition to the spending restrictions.

Honig predicts that unless the Proposition 4 limit is altered, California’s drive to improve education will eventually come to a standstill. Although school districts may not reach their limits for at least a year, Honig said, the spending lid would eventually halt efforts to reduce class size and institute other reforms.

“It is very shortsighted to limit the growth of schools by an arbitrary limit of inflation plus growth,” Honig said. “If Gann cuts in, we’ll never catch up with other industrial states. That’s going to put us at a competitive disadvantage.”

Bradley, Deukmejian’s Democratic rival in the gubernatorial race, also cites the need for more spending on education as the primary reason to alter Proposition 4.

Popular Vote

“The problem we face particularly in the field of education indicates to me there is a need for either repeal or modification that must be put before the people,” the Democratic candidate said in an interview.

One suggestion that is gaining popularity among opponents of the limit is to leave the concept of the spending restriction intact while changing the formula for calculating the spending cap.

Instead of a formula that would use either the Consumer Price Index or per-capita income in calculating the spending limit, the idea is to use only California’s per-capita income. Advocates of this change say personal income is a better indicator of the state’s economic growth.

Among those calling for modification of Proposition 4 are the Capitol lobbyists for city and county government.

“This has the potential of being a hell of a lot more destructive for public services than Proposition 13,” said Larry Naake, executive director of the County Supervisors Assn. of California. “At the same time that we’re talking about not letting the state appropriate money, we’ve got counties that are going under.”

Naake and other local government officials have begun lobbying to get a share of the money that the state would be prohibited from spending on its own programs. Such transfers–allowed under Proposition 4 as long as lawmakers do not place restrictions on the way the money can be used–would then count against the limits of the jurisdictions that spent the money.

Limits Will Be Reached

But even with that money, most cities and counties will reach their own limits sooner or later. When that happens, some officials predict, they will be unable to provide basic services as well as those needed for economic development at the local level.

“It certainly does inhibit our ability to finance growth in certain situations,” said Kenneth J. Emanuels, lobbyist for the League of California Cities. “It’s anti-growth in terms of business development. It certainly is not the situation that was envisioned.”

Despite the widespread perception of problems with Proposition 4, most advocates of altering the measure expect that the spending limits will have to take hold before the public will be willing to make major modifications.

Many politicians are reluctant to predict the worst–recalling how wrong they were in making dire predictions of financial disaster if Proposition 13 passed.

“I think it’s hard to change something like Proposition 4 before the problem is at our doorstep,” Emanuels said. “In the past, we haven’t been persuasive when we predicted problems. We’re going to have to experience some of this before there’s a consensus.”

NEW YORK — Former New York City Mayor Bill de Blasio has agreed to pay a $329,794 fine to settle an ethics board’s complaint that he misspent public funds on his security detail during his brief, failed run for U.S. president.

The deal, announced Wednesday by the city’s Conflicts of Interest Board, is the costliest repayment order in the ethics board’s history. But it allows de Blasio to avoid an even steeper penalty of $475,000 that was previously imposed, a reduction the board said came in light of the former mayor’s “financial situation.”

In exchange, de Blasio agreed to drop his appeal of the board’s finding. And for the first time, he admitted that he received written warning that his out-of-state security expenses could not legally be covered by city taxpayers.

“In contradiction of the written guidance I received from the Board, I did not reimburse the City for these expenses,” de Blasio wrote in the settlement, adding: “I made a mistake and I deeply regret it.”

The payments concern the $319,794.20 in travel-related expenses — including airfare, lodging, meals — that de Blasio’s security detail incurred while accompanying him on trips across the country during his presidential campaign in 2019. He will also pay a $10,000 fine.

The campaign elicited a mix of mockery and grousing by city residents, who accused the Democrat of abandoning his duties as second-term mayor for the national spotlight. It was suspended within four months.

Under the agreement, de Blasio must pay $100,000 immediately, followed by quarterly installments of nearly $15,000 for the next four years. If he misses a payment, he will be deemed in default and ordered to pay the full $475,000.

The funds will eventually make their way back into the city treasury, according to a spokesperson for the Conflicts of Interest Board.

An attorney for de Blasio, Andrew G. Celli Jr., declined to comment on the settlement.

De Blasio had previously argued that forcing him to cover the cost of his security detail’s travel violated his 1st Amendment rights by creating an “unequal burden” between wealthy candidates and career public servants.

Since leaving office in 2021, de Blasio has worked as a lecturer at multiple universities, most recently the University of Michigan, and delivered paid speeches in Italy.

Offenhartz writes for the Associated Press.

Gov. Gavin Newsom proposed slashing funding by 67% for a pioneering deal with Google to support struggling California newsrooms, citing financial pressures that have promoted wider budget cuts.

California newsrooms had expected to receive $30 million from the state as part of a deal brokered last year in which Google and the state would jointly contribute money over five years to support local newsrooms through a News Transformation Fund. The state Department of Finance confirmed Wednesday that California instead will pay out $10 million for the 2025-26 fiscal year.

“The sole reason for the reduction is more limited/fewer resources than projected in the January budget,” Department of Finance spokesperson H.D. Palmer said.

Newsom announced Wednesday that the state is facing an additional $12-billion budget shortfall next year. The revised $321.9-billion plan will also include a reduction in healthcare for low-income undocumented immigrants and a decrease in overtime hours for select government employees.

The deal was born of negotiations that began with a proposed funding bill written by Assemblymember Buffy Wicks (D-Oakland), which is known as the California Journalism Preservation Act. It would have required Google to pay into a fund annually that would have distributed millions to California news outlets based on the number of journalists they employ. The California News Publishers Assn., of which the Los Angeles Times is a member, backed the larger effort.

It was designed to aid newspapers that have seen their finances collapse in recent years, leaving fewer journalists to cover institutions and communities.

The proposal was modeled after a Canadian bill that has Google paying about $74 million per year. Google fought the bill, arguing its passage would force the company to remove California news from its platform, thus restricting access for Californians.

Instead, the state and Google agreed in August to provide nearly $250 million to newsrooms over five years, starting in 2025, with funding slated for two projects.

The second initiative was a $68-million pledge for Google to fund artificial intelligence in the form of a National AI Accelerator. The AI funding element of the deal drew sharp rebukes from Democratic lawmakers and journalists.

California had pledged $30 million in 2025 and $10 million for each of the next four years. Google agreed to an initial payment of $15 million in 2025 and $55 million in total into the journalism fund. Google also agreed to boost its own journalism programs with a separate $50-million grant.

SACRAMENTO — Gov. Gavin Newsom on Wednesday threw his support behind two bills that would streamline housing development in urban areas, saying it was “time to get serious” about cutting red tape to address the housing crisis.

Newsom said his revised state budget proposal, which he announced at a news conference Wednesday, also will include provisions that clear the way for more new housing by reforming the state’s landmark California Environmental Quality Act and clearing other impediments.

The governor praised Assemblymember Buffy Wicks (D-Oakland) and state Sen. Scott Wiener (D-San Francisco) for sponsoring bills designed to ease the permitting process for infill projects, or building in urban areas that already have development.

Newsom’s housing proposal looks to force permit deadlines on the Coastal Commission, allow housing development projects over $100 million to use CEQA streamlining usually available to smaller projects, and create a fund, paid for by developers, to finance affordable housing near public transit.

CEQA has long been used by opponents to impede or delay construction, often locking developers into years-long court battles. The law is so vague that it allows “essentially anyone who can hire a lawyer” to challenge developments, Wiener said in a statement.

“It’s time to accelerate urban infill. It’s time to exempt them from CEQA, it’s time to focus on judicial streamlining. It’s time to get serious about this issue. Period, full stop,” Newsom said during the morning budget news conference. “… This is the biggest opportunity to do something big and bold, and the only impediment is us. So we own this, and we have to own the response.”

Assembly Bill 609, proposed by Wicks, who serves as the Assembly Appropriations Committee chair, would create a sweeping exemption for housing projects that meet local building standards, especially in areas that have already been approved for additional development and reviewed for potential environmental impacts.

“It’s time to refine CEQA for the modern age, and I’m proud to work with the Governor to make these long-overdue changes a reality,” Wicks said in a statement.

Senate Bill 607, authored by Wiener, who serves as chair of the Senate Housing Committee, focuses the environmental review process and clarifies CEQA exemptions for urban infill housing projects.

“By clearing away outdated procedural hurdles, we can address California’s outrageous cost of living, grow California’s economy, and help the government solve the most pressing problems facing our state. We look forward to working with Governor Newsom and our legislative colleagues to advance these two important bills and to secure an affordable and abundant future for California,” Wiener said in a statement.

Both bills are pending before the appropriations committees in the Assembly and Senate, respectively.

As President Trump parades through the Middle East this week, he will encounter a very different region than the one he experienced during his first term. True, the Israeli-Palestinian problem remains unresolved, as do the challenges emanating from Iran’s much-advanced nuclear program and the instability and dysfunction in Iraq, Lebanon, Libya, Syria and Yemen.

But this old wine is now packaged in new bottles. Beyond the garish headlines of Trump’s plan to accept a Boeing 747 as a gift from Qatar, new trends are emerging that will redefine the region, posing additional challenges for U.S. policy.

Of all the changes in the Middle East since Hamas’ Oct. 7, 2023, attack on Israel, perhaps the most striking is Israel’s emergence as a regional powerhouse. Aided by the administrations of Presidents Biden and Trump, and enabled by Arab regimes that do little to support Palestinians, Israel devastated Hamas and Hezbollah as military organizations, killing much of their senior leadership. With the support of the United States, Europe and friendly Arab states, it effectively countered two direct Iranian missile attacks on its territory.

Israel then delivered its own strike, reportedly destroying much of Iran’s ballistic missile production and air defenses. In short, Israel has achieved escalation dominance: the capacity to escalate (or not) as it sees fit, and to deter its adversaries from doing so. Israel has also redefined its concept of border security in Gaza, Lebanon, the West Bank and Syria by acting unilaterally to preempt and prevent threats to its territory.

Converting Israel’s military power into political arrangements, even peace accords, would seem like a reasonable next step. But the right-wing government of Prime Minister Benjamin Netanyahu seems uninterested in such options and is unlikely to be induced to change its outlook. Moreover, securing new, lasting agreements also depends on whether there are leaders among the Palestinians and key Arab states ready to take up the challenge, with all the political risks it entails.

But the Arab world remains in serious disarray. At least five Arab states are dealing with profound internal challenges, leaving them in various degrees of dysfunction and state failure. Amid this power vacuum, two alternative power centers have emerged. The first are the states of the Persian Gulf, especially Saudi Arabia, the United Arab Emirates and Qatar. Relatively unscathed by the Arab Spring and blessed with sovereign wealth funds, oil and natural gas, these stable authoritarian powers, particularly Saudi Arabia, have begun to play an outsize role in the region.

The second category comprises non-Arab states. Israel, Turkey and Iran are the only states in the region with the capacity to project significant military power beyond their borders. While each has suffered periods of internal unrest, they currently enjoy domestic stability. Each also boasts tremendous economic potential and significant security, military and intelligence capabilities, including the capability to manufacture weapons domestically.

One (Israel) is America’s closest regional ally, another (Turkey) is a member of NATO and a newfound power broker in Syria, and the third (Iran) retains considerable influence despite Israel’s mauling of its proxies Hamas and Hezbollah. Iran’s nuclear program keeps it relevant, even central, to both Israeli and American policymaking.

All three non-Arab states engender a good deal of suspicion and mistrust among Arab regimes but are nonetheless seen as key players whom no one wants to offend. All three are at odds — with each frustrating the others’ regional objectives — and all three are here to stay. Their influence will most likely only grow in the years to come, given the fractiousness of the Arab world.

In the immediate aftermath of the Oct. 7 Hamas attack, it seemed that the Palestinian issue was once again front and center, not just in the Arab world, but internationally. Those who claimed it had lost its resonance could point to the outpouring of sympathy and support for Gazan civilians as Israel’s war against Hamas led to a humanitarian catastrophe.

Moreover, the United Nations passed resolutions calling for an end to the war, many around the world condemned the war and Israel, the International Court of Justice took up the question of whether Israel is committing genocide, and the International Criminal Court issued an arrest warrant for Netanyahu (as well as for Hamas’ military commander, later found to have been killed).

Nonetheless, it has become stunningly clear that, far from pushing the Palestinian issue to the top of the international agenda, the Oct. 7 attack has actually diminished its salience and left Palestinians isolated and without good options. Continued U.S. support for Israel’s war against Hamas, despite the exponential rise of Palestinian deaths, has protected Israel from negative consequences; key Arab regimes have done next to nothing to impose costs and consequences on Israel and the U.S. as Palestinian civilian deaths mount. The international community appears too fragmented, distracted and self-interested to act in any concerted way in defense of Palestine.

Meanwhile, the Palestinian national movement remains divided and dysfunctional, giving Palestinians an unpalatable choice between Hamas and the aging president of the Palestinian National Authority, Mahmoud Abbas. The prospects for anything resembling a two-state solution have never looked bleaker.

How the Trump administration will process these developments remains to be seen. Clearly, it has adopted a pro-Israel view, with Trump musing about turning Gaza into a Riviera-style resort. He has deployed his special envoy to the Middle East to secure the return of hostages taken by Hamas but has yet to invest in any postwar plan for the beleaguered enclave. Indeed, he has left the strategy for Gaza to Israel, which in turn has resumed its military campaign there. Trump has also acquiesced to Israel’s pursuit of aggressive border defenses against both Lebanon and Syria, while enabling Israel’s annexationist policies in the West Bank.

Yet Trump is nothing if not unpredictable. In April, he announced new U.S. negotiations with Iran in the presence of Netanyahu, who himself has tried to persuade the president that the only solution to Iran’s nuclear program is military action. But if U.S.-Iranian negotiations do advance, or if Trump’s interest in Israeli-Saudi normalization intensifies, he may find himself drawn into the Middle East negotiating bazaar, dealing with the intricacies of day-after planning in Gaza and a political horizon for Palestinians.

These paths are already fomenting tension between Trump, who will not be visiting Israel on his Middle East trip, and a recalcitrant Netanyahu. But given Trump’s absolute control over his party, Netanyahu will have few options to appeal to Republicans if the White House proposes policies that he opposes. As most U.S. allies have already learned, if Trump wants something, he’s not averse to using pressure to get it.

Aaron David Miller, a senior fellow at the Carnegie Endowment for International Peace, is a former State Department Middle East analyst and negotiator in Republican and Democratic administrations and the author of “The End of Greatness: Why America Can’t Have (and Doesn’t Want) Another Great President.” Lauren Morganbesser is a junior fellow at the Carnegie Endowment for International Peace.

The Los Angeles City Council voted Wednesday to approve a sweeping package of minimum wage increases for workers in the tourism industry, despite objections from business leaders who warned that the region is already facing a slowdown in international travel.

The proposal, billed by labor leaders as the highest minimum wage in the country, would require hotels with more than 60 rooms, as well as companies doing business at Los Angeles International Airport, to pay their workers $30 per hour by 2028.

That translates to a 48% hike in the minimum wage for hotel employees over three years. Airport workers would see a 56% increase.

On top of that, hotels and airport businesses would be required to provide $8.35 per hour for their workers’ health care by July 2026.

The package of increases was approved on a 12-3 vote, with Councilmembers John Lee, Traci Park and Monica Rodriguez opposed. Because the tally was not unanimous, a second vote will be required next week.

Rodriguez, who represents the northeast San Fernando Valley, told her colleagues that the proposal would cause hotels and airport businesses to cut back on staffing, resulting in job losses. The same thing is happening at City Hall, with elected officials considering staff cuts to cover the cost of employee raises, she said.

“We are right now facing 1,600 imminent layoffs because the revenue is just not matching our expenditures,” Rodriguez said. “The same will happen in the private sector.”

Councilmember Hugo Soto-Martínez, standing before a crowded of unionized workers after the vote, celebrated their victory.

“It’s been way too long, but finally, today, this building is working for the people, not the corporations,” said Soto-Martínez, a former organizer with the hotel and restaurant union Unite Here Local 11.

Hotel owners, business groups and airport concession companies predicted the wage increases will deal a fresh blow to an industry that never fully recovered from the COVID pandemic. They pointed to the recent drop-off in tourism from Canada and elsewhere that followed President Trump’s trade war and tightening of the U.S. border.

Adam Burke, president and chief executive of the Los Angeles Tourism and Convention Board, said Canada, France, Germany, Ireland, the Netherlands and the United Kingdom — nations that send a large number of visitors to Los Angeles — have issued formal advisories about visiting the U.S.

“The 2025 outlook is not encouraging,” Burke said.

Several hotel owners have warned that the higher wage will spur them to scale back their restaurant operations. A few flatly stated that hotel companies would steer clear of future investments in the city, which has long served as a global tourism destination.

Jackie Filla, president and chief executive of the Hotel Association of Los Angeles, said she believes that hotels will close restaurants or other small businesses on their premises — and in some cases, shut down entirely.

In the short term, she said, some will tear up their “room block” agreements, which set aside rooms for the 2028 Olympic and Paralympic Games.

“I don’t think anybody wants to do this,” Filla said. “Hotels are excited to host guests. They’re excited to be participating in the Olympics. But they can’t go into it losing money.”

Jessica Durrum, a policy director with the Los Angeles Alliance for a New Economy, a pro-union advocacy group, said business leaders also issued dire warnings about the economy when previous wage increases were approved — only to be proven wrong. Durrum, who is in charge of her group’s Tourism Workers Rising campaign, told the council that a higher wage would only benefit the region.

“People with more money in their pockets — they spend it,” she said.

Wednesday’s vote delivered a huge victory to Unite Here Local 11, a potent political force at City Hall. The union is known for knocking on doors for favored candidates, spending six figures in some cases to get them elected.

Unite Here Local 11 had billed the proposal as an “Olympic wage,” one that would ensure that its members have enough money to keep up with inflation. The union, working with airport workers represented by Service Employees International Union-United Service Workers West, also said that corporations should not be the only ones to benefit from the Olympic Games in 2028.

Workers from both of those unions testified about their struggles to pay for rising household costs, including rent, food and fuel. Some pleaded for better health care, while others spoke about having to work multiple jobs to support their families.

“We need these wages. Please do what’s right,” said Jovan Houston, a customer service agent at LAX. “Do this for workers. Do this for single families. Do this for parents like myself.”

Sonia Ceron, 38, a dishwasher at airline catering company Flying Food Group, said she has a second job cleaning houses in Beverly Hills for about 32 hours a week. Ceron lives in a small studio apartment in Inglewood, which has been difficult for her 12-year-old daughter.

“My daughter, like every kid, wants to have her own room, to be able to call her friends and have her privacy. Right now, that’s impossible,” Ceron said.

L.A.’s political leaders have enacted a number of wage laws over the last few decades. The hotel minimum wage, approved by the council in 2014, currently stands at $20.32 per hour. The minimum wage for private-sector employees at LAX is $25.23 per hour, once the required $5.95 hourly healthcare payment is included.

For nearly everyone else in L.A., the hourly minimum wage is $17.28, 78 cents higher than the state’s.

SACRAMENTO — One of the many traits that set California apart from other states is the way undocumented immigrants are woven into our communities.

Their economic impact is obvious, and the Golden State would be hard-pressed to keep our status as a world-competing financial power without their labor.

But most Californians know, and are OK with the reality, that at least some of our neighbors, our kids’ classmates, our co-workers, are without legal documents, or in blended-status families.

Gov. Gavin Newsom took a stand Wednesday for those undocumented Californians that seems to have gone largely unnoticed, but which probably will be a big fight in Congress and courts. In his bad news-filled budget presentation, Newsom committed to keeping state-funded health insurance for undocumented residents (with cuts, deep ones, which I’ll get to). Although some are disappointed by his rollbacks, many of which will hit citizens and noncitizens alike, standing by California’s expansion to cover all low income people is a statement of values.

“We’ve provided more support than any state in American history, and we’ll continue to provide more support than any state in American history,” he said.

Sticking with that promise is going to be tough, and likely costly.

This decision comes as Congress considers a Trump-led budget bill that would severely penalize states (there are 14 of them) that continue to provide health insurance to undocumented immigrants. California, of course, has the largest number of such folks on its Medi-Cal plan and would be the hardest hit if that penalty does indeed become the new law — to the tune of $27 billion over six years, according to the Center on Budget and Policy Priorities.

To put that in perspective, the governor is now estimating a nearly $12-billion budget shortfall this year. That federal cut would add at least $3 billion a year to our costs once it hits.

That federal cut, Newsom said, was “not anticipated in this budget,” which means we are ignoring it for the time being.

Federal programs aren’t open to noncitizens, and no federal dollars are used to support California’s expansion of healthcare to undocumented people.

But Congress is threatening an approximately 10% cut in reimbursements to states that insure undocumented people via the Medicaid expansion that was part of the Affordable Care Act. That expansion allows millions of Americans to have access to healthcare.

Those expansion funds are working in ways that many don’t know about. For example, as Newsom pointed out, behavioral health teams doing outreach to homeless people are funded by Medicaid dollars.

In all, about one-third of Californians rely on Medi-Cal, including millions of children, so this threat to cut federal funds is not an empty one, especially in a lean year.

Katherine Hempstead, a senior policy advisor for the Robert Wood Johnson Foundation, which advocates for universal healthcare, said that the bill being debated by Congress is so full of cuts to healthcare that arguing against the provision penalizing coverage for undocumented people may not be a priority for most Democrats — making it more likely that the cut will get through.

“I don’t know if this is going to be a do-or-die issue,” she said.

Gov. Gavin Newsom presents his revised 2025-26 state budget during a news conference Wednesday in Sacramento.

(Rich Pedroncelli / Associated Press)

And indeed, the pressure by Republicans to kill off coverage entirely for undocumented folks was quick.

“Gov. Newsom has only partially repealed his disastrous policy,” Rep. Kevin Kiley (R-Rocklin) said in a statement. “ It needs to be reversed entirely, or Californians will continue to spend billions on coverage for illegal immigrants and our state will lose an even larger amount in federal Medicaid funding.”

Newsom has given economic reasons for sticking with the state’s coverage for all low-income residents, regardless of status. When people don’t have access to routine care, they end up in emergency rooms and that is extremely expensive. And also, Medicaid has to cover that emergency care, so taxpayers often end up spending more in the long run by skimping on upfront care.

“It’s definitely important to the people that get the coverage because they don’t really have an alternative,” Hempstead said.

But that care has been vastly more expensive than California expected, also to the tune of billions of dollars in unexpected costs, in part because so many people have signed up.

To the dismay of many, Newsom’s budget reflects both recent economic woes — a $16-billion revenue hit caused by what he’s dubbing the “Trump slump” — as well as the state vastly understimating the cost of covering those undocumented folks.

That shortfall may force cuts in the coverage that undocumented people qualify for if the Legislature goes along with Newsom’s plan, or even parts of it.

Most notably, it would cap enrollment for undocumented adults age 19 and over in 2026, effectively closing the program to new participants. That’s a huge hurt. His plan also calls for adding a $100 per month premium, and other cuts such as ending coverage for the extremely popular and expensive GLP-1 weight loss drugs for all participants.

“I don’t want to be in this position, but we are in this position,” Newsom said.

Amanda McAllister-Wallner, executive director of Health Access California, called those cuts “reckless and unconscionable” in a statement.

“This is a betrayal of the governor’s commitment to California immigrants, and an abandonment of his legacy, which brought California so close to universal healthcare,” she said.

I strongly believe in universal single-payer healthcare (basically opening up Medicare to everyone), so I don’t disagree with McAllister-Wallner’s point. In better days, I would hope to see enrollment reopen and benefits restored.

But also, we’re broke. This is going to be a year of painful choices for all involved.

Which makes Newsom’s, and California’s, commitment to keep insurance for undocumented people notable. The state could back down under this real federal pressure, could try to find a way to claw back the benefits we have already given.

But there’s a moral component to providing healthcare to our undocumented residents, who are such a valuable and vital part of our state.

Although the fiscal realities are ugly, it’s worth remembering that in providing the coverage, California is sticking with some of its most vulnerable residents, at a time when it would be easier to cut and run.

When a Los Angeles County judge resentenced Erik and Lyle Menendez on Tuesday, he offered the brothers a path to freedom for the first time since they were given life in prison for killing their parents with shotguns in 1989.

The latest development makes Lyle, 57, and Erik, 54, eligible for parole — but that is just one of three avenues that could enable them to walk free after 35 years behind bars.

In the coming months, several different judges, parole commissioners and even Gov. Gavin Newsom could still have a hand in the brothers’ fate.

When could they get parole?

Tuesday’s decision by L.A. County Superior Court Judge Michael Jesic modifies the brothers’ original sentence to 50 years to life. Under the state’s youthful offender law, both are immediately eligible for parole because the shootings happened before they turned 26.

A parole hearing probably will be scheduled before the end of the year, according to lawyers working with the Menendez defense team. At the hearing, a panel of commissioners could deem the brothers suitable for parole, but that decision is not final on its own. A 90-day review period would follow, and Newsom could block their release.

Nothing had been scheduled as of Wednesday. At a parole hearing, the brothers will have to take accountability for their crimes and argue to commissioners that they are unlikely to re-offend. In statements delivered in court on Tuesday, they appeared contrite and emotional when revisiting the murders.

“My actions were criminal, selfish, cruel and cowardly,” Erik Menendez said Tuesday. “I have no excuse, no justification for what I did. … I take full responsibility for my crimes.”

Lyle also said he made “no excuses” for felling his mother and father with shotgun blasts, and apologized to the nearly two dozen relatives who have spent years fighting for his release.

“I’m so sorry to each and every one of you,” Lyle told the court Tuesday. “I lied to you and forced you into a spotlight of public humiliation you never asked for.”

How else could they be released?

Before the resentencing process began, Erik and Lyle’s attorneys also filed an application for clemency with Newsom. If the governor grants clemency, their sentence would be commuted immediately and they could walk right out of the Richard J. Donovan Correctional Facility in San Diego, where they’ve been housed for years.

A remote clemency hearing is scheduled for June 13, with the brothers set to appear virtually before the parole board. On that day, the board can make a recommendation to Newsom on their suitability for release — which could also forecast their fortunes at an eventual parole hearing.

There is no timeline for Newsom to act on the clemency application, and he is not required to respond to it. The governor has already announced a potential change to statewide parole processes in connection with the case.

The brothers also have a pending petition for a new trial. In the motion, defense attorney Mark Geragos pointed to additional evidence of sexual abuse committed by Jose Menendez, including a fresh allegation from a member of the boy band Menudo.

The brothers have long argued they carried out their crime for fear their parents would kill them to cover up years of sexual abuse committed by Jose.

What’s next for the district attorney?

Los Angeles County Dist. Atty. Nathan Hochman thrust himself into the center of the Menendez case even before he was elected, attacking his predecessor’s decision to seek to have the brothers resentenced last year despite having no access to files on the case.

Hochman asserted that former Dist. Atty. George Gascón filed the petition only to save his failing reelection bid and promised to review the case after he was inaugurated.

In March, Hochman formally announced his opposition to their resentencing, saying the brothers still had not shown proper “insight” into their crimes by atoning for lies they told about their motives in the case and attempts to get witnesses to give fabricated testimony at their original trials.

Despite Jesic repeatedly warning prosecutors that those arguments weren’t legally appropriate for a resentencing hearing, Hochman’s team barreled ahead, ultimately ending in the most high-profile loss of Hochman’s early tenure as district attorney.

Hochman said Wednesday he still considered his opposition to their resentencing a success because it presented to the judge, parole board and governor — all of whom would have a say in the brothers’ fate — a “full record of the facts.”

Hochman maintained that he did not believe the brothers should be released and said prosecutors will “participate” in any future parole hearings.

Hochman could also potentially appeal Jesic’s ruling. The district attorney’s office did not immediately respond to an inquiry about that approach.

Times staff writers Richard Winton and Matthew Ormseth contributed to this report.

Gov. Gavin Newsom is proposing to accelerate his administration’s plan to build a $20-billion water tunnel beneath the Sacramento-San Joaquin River Delta by short-cutting permitting for the project and limiting avenues for legal challenges.

Newsom urged the Legislature on Wednesday to adopt his plan to “fast-track” the tunnel, called the Delta Conveyance Project, as part of his revised May budget proposal.

“For too long, attempts to modernize our critical water infrastructure have stalled in endless red tape, burdened with unnecessary delay. We’re done with barriers,” Newsom said. “Our state needs to complete this project as soon as possible, so that we can better store and manage water to prepare for a hotter, drier future. Let’s get this built.”

The tunnel would create a second route to transport water to the state’s pumping facilities on the south side of the Delta, where supplies enter the aqueducts of the State Water Project and are delivered to 27 million people and 750,000 acres of farmland.

Supporters of the plan, including water agencies in Southern California and Silicon Valley, say the state needs to build new infrastructure in the Delta to protect the water supply in the face of climate change and earthquake risks.

Opponents, including agencies in the Delta and environmental advocates, say the project is an expensive boondoggle that would harm the environment and communities, and that the state should pursue other alternatives.

“It’s a top-down push for an unaffordable, unnecessary tunnel that fails to solve the state’s real water challenges,” said Barbara Barrigan-Parrilla, executive director of the group Restore the Delta.

She said the governor “wants to bypass the legal and public processes because the project doesn’t pass the economic or environmental standards Californians expect.”

Newsom, who is set to serve through 2026 and then leave office, is pushing to lay the groundwork for the project.

Newsom said his proposal would: simplify permitting by eliminating certain deadlines from water rights permits; narrow legal review to avoid delays from legal challenges; confirm that the state has authority to issue bonds to pay for the project, which would be repaid by water agencies; and accelerate state efforts to acquire land for construction.

Announcing the proposal, the governor’s office said that “while the project has received some necessary permits, its path forward is burdened by complicated regulatory frameworks and bureaucratic delays.”

The State Water Resources Control Board is currently considering a petition by the Newsom administration to amend water rights permits so that flows could be diverted from new points on the Sacramento River where the intakes of the 45-mile tunnel would be built.

The governor’s latest proposal was praised by water agencies including the Metropolitan Water District of Southern California, which is currently spending about $142 million on the preliminary planning.

MWD General Manager Deven Upadhyay called Newsom’s proposal a “bold step” toward protecting water supplies, saying the approach would support completion of the planning work, reduce “regulatory and legal uncertainties,” and allow the MWD board to make an informed decision about whether to make a long-term investment to help foot the bill for construction.

Jennifer Pierre, general manager of the State Water Contractors, said the governor’s approach makes sense to address costly delays and upgrade essential infrastructure that is “in dire need of modernization.”

Environmental and fishing groups, however, called Newsom’s proposal a reckless attempt to bypass the existing legal process and make it harder for opponents to challenge the project over what they contend would be harmful effects on the Delta region and the environment.

Scott Artis, executive director of the Golden State Salmon Assn., a group that represents fishing communities, called Newsom’s proposal “an attack on the salmon fishing industry and the state’s biggest rivers.”

Commercial salmon fishing has been canceled for three consecutive years because of a decline in the Chinook salmon population. Artis said building the tunnel would represent a “nail in the coffin of California’s once mighty salmon runs.”

California is facing an additional $12-billion state budget shortfall next year, a deficit largely caused by overspending and that Gov. Gavin Newsom said was made worse by President Trump’s federal tariff policy.

“California is under assault,” Newsom said. “The United States of America, in many respects, is under assault because we have a president that’s been reckless.”

Newsom unveiled the forecast during a presentation Wednesday of his $321.9-billion revised spending plan that proposes walking back free healthcare for low-income undocumented immigrants, eliminating Medi-Cal benefits for expensive weight loss treatments and cutting back overtime hours for in-home supportive service workers, among dozens of other trims.

The new deficit comes in addition to $27.3 billion in fiscal remedies, including $16.1 billion in cuts and a $7.1-billion withdrawal from the state’s rainy day fund, that lawmakers and the governor already agreed to make in 2025-26.

The overall $39-billion shortfall marks the third year in a row that Newsom and lawmakers have been forced to reduce funding for state programs after dedicating more money than California has available to spend.

Newsom’s proposed cuts

Among the new cuts Newsom put on the table Wednesday is a call to cut back on his signature policy to provide free healthcare coverage to income-eligible undocumented immigrants.

Newsom is proposing freezing new Medi-Cal enrollment for undocumented adult immigrants as of Jan. 1 and requiring those over 18 to pay $100 monthly premiums to receive healthcare coverage through Medi-Cal.

The cost share will reduce the financial burden on the state and could lower the total number of people enrolled in the healthcare program if some immigrants cannot afford the new premiums. Freezing enrollment may prevent the price tag of the program from continuing to balloon after more people signed up for coverage than the state anticipated.

The changes offer minor savings of $116.5 million next year, with savings growing to $5.4 billion in 2028-29.

The governor is also following the federal government’s lead and cutting $85 million in benefits for Ozempic and other popular weight loss medications from all Medi-Cal coverage plans, while saving $333.3 million by eliminating long-term care benefits for some enrollees.

Newsom wants to cap overtime hours for in-home support service workers, according to his budget, to save $707.5 million next year.

The governor’s budget includes a controversial proposal to grab $1.3 billion in funding in 2025-26 from Proposition 35, a measure voters approved in November that dedicated the revenue from a tax on managed care organizations to primarily pay for increases to Medi-Cal provider rates. The decision is expected to draw pushback from a coalition of doctors, clinics, hospitals and other healthcare groups that supported the proposition, which nearly 68% of voters backed.

Under another cost-saving measure, the governor wants to shift $1.5 billion in funding for Cal Fire from the general fund. Instead, Newsom wants to provide that $1.5 billion from the greenhouse gas reduction fund paid for by proceeds of the state cap-and-trade program next year.

The governor’s budget proposes extending the cap-and-trade program — a first-of-its-kind initiative that sets limits on companies’ greenhouse gas emissions and allows them to buy additional credits at auction from the state, and he wants to dedicate at least $1 billion each year to high speed rail.

A spending deficit

The budget marks a continuation of years of overspending in California under the Newsom administration.

After predicting a lofty $100-billion surplus from federal COVID-19 stimulus funding and the resulting economic gains three years ago, Democrats have not reduced spending to match up with a return to normal after the pandemic.

Poor projections, the ballooning cost of Democratic policy promises and a reluctance to make long-term sweeping cuts have added to the deficit at a time when the governor regularly touts California’s place as the fourth largest economy in the world.

State revenues have exceeded expectations since April, but so has state spending.

Despite the shortfall, California has more money to spend than in the prior budget approved in June, and the governor and lawmakers still plan to take $7.1 billion from the state’s rainy day fund to cover the total 2025-26 deficit.

A “Trump Slump”

Though personal income tax and corporate tax receipts in the state came in $6.8 billion above projections through April, Newsom is predicting that overall revenues will be $16 billion lower than they could have been from January 2025 through June 2026 because of the economic impact of Trump’s tariffs.

The governor originally released the new information, which his team dubbed the “Trump Slump,” on the eve of the presentation of his revised 2025-26 state budget plan, seeking to blame the president for California’s expected revenue shortfall.

Trump in April implemented a series of tariffs on all imported goods, higher taxes on products from Mexico, Canada and China, and specific levies on products and materials such as autos and aluminum. The president has backed down from some of his tariffs, but Newsom alleges that the policies and economic uncertainty will lead to higher unemployment, inflation, lower GDP projections and less capital gains revenue for California.

California filed a lawsuit last month arguing that Trump lacks the authority to impose tariffs on his own. On Tuesday, the state said it will seek a preliminary injunction to freeze the tariffs in federal court.

WASHINGTON — A Democratic lawmaker is launching a renegade effort to impeach President Trump, pushing past party leaders on Wednesday with an attempt to force a procedural vote in the U.S. House that is expected to fail.

Rep. Shri Thanedar of Michigan announced his intention to charge ahead, saying that as an immigrant to America he wants to do all he can to protect its Constitution and institutions from Trump’s lawlessness. His resolution contains seven articles of impeachment against the Republican president.

“Donald J. Trump has been committing crimes since day one — bribery, corruption, taking power from Congress, creating an unlawful office in DOGE, violating 1st Amendment rights, ignoring due process,” the congressman said earlier from the House floor.

It would be the historic third time Trump has faced impeachment efforts after being twice impeached during his first term as president — first in 2019 on charges related to withholding military aid to Ukraine as it confronted Russia and later on a charge of inciting insurrection over the Jan. 6, 2021, attack on the Capitol by a mob of his supporters. Trump was acquitted both times by the Senate.

Thanedar is not the only Democrat who has signaled impeachment efforts against Trump. But his decision to go it almost alone, without backing from party leadership, comes as he faces his own political challenges at home, with several primary opponents looking to unseat him in his Detroit-area congressional district.

Timing is also key. His resolution claiming Trump committed “high crimes and misdemeanors” comes as Trump is traveling in the Middle East in his first major trip abroad of his second term, violating a norm in American politics of not criticizing the president once he leaves the U.S.

But Thanedar said he was pressing ahead in part because of Trump’s trip abroad and the potential conflicts of interest as the president appears to be mixing his personal business dealings with his presidential duties and is considering accepting a lavish gift of an airplane from the Qatari government.

“My constituents want me to act,” Thanedar told the Associated Press late Tuesday.

“It’s time for us to stand up and speak. We can’t worry about, ‘Is this the right time?’ We can’t worry about, ‘Are we going to win this battle?’ It’s more about doing the right thing,” he said. “I took an oath to protect and defend the Constitution. So did Mr. Trump. He has violated his oath, and he’s doing unconstitutional activities. It’s time for someone to stand up and say that, and if that’s just me, then so be it.”

Thanedar is using a procedural tool to force a vote Wednesday on whether to proceed to the issue or shelve the matter.

One top Trump ally, Republican Rep. Marjorie Taylor Greene of Georgia, criticized Thanedar and dismissed the impeachment effort.

“It’s DOA,” she posted on social media.

Impeachment of a president or other U.S. officials, once rare, has become an increasingly common in Congress.

Republicans in the House opened an impeachment inquiry into then-President Biden, a Democrat, but stopped short of action. The Republicans in Congress did, however, impeach Biden’s Homeland Security Secretary Alejandro Mayorkas. The Senate dismissed two articles of impeachment against Mayorkas, ending his trial.

Thanedar, who’s from India, has said he came to the United States without many resources. He said he loves the U.S. and wants to defend its Constitution and institutions.

When he took over the Detroit congressional district, it was the first time in decades the city was left without a Black lawmaker in Congress.

Mascaro, Brown and Askarinam write for the Associated Press.

RIYADH, Saudi Arabia — President Trump met Wednesday with Syria’s new leader, praising him as a “young, attractive guy” and urging him to rid his country of “Palestinian terrorists.”

Trump also urged Syrian interim President Ahmad al-Sharaa to sign onto the historic Abraham Accords brokered during Trump’s first term.

The meeting in Riyadh came as Trump concluded the Saudi Arabian leg of his Middle Eastern trip and headed to Qatar, the second destination of what has so far been an opulence-heavy tour of the region.

The meeting with Al-Sharaa, which lasted roughly half an hour and was the first time in a quarter of a century that the leaders of the two nations have met, marks a significant victory for Al-Sharaa’s fledgling government, coming one day after Trump’s decision to lift long-standing sanctions from the war-ravaged country.

It also lends legitimacy to a leader whose past as an Al Qaeda-affiliated jihadi leader — Al-Sharaa severed ties with the group in 2016 — had made Western nations keep him at arm’s length.

The sanctions were imposed on Syria in 2011, when the now-deposed President Bashar Assad began a brutal crackdown to quell anti-government uprisings.

Al-Sharaa headed an Islamist rebel coalition that toppled Assad in December, but the Trump administration and other Western governments conditioned the lifting of sanctions on his government fulfilling certain conditions.

Yet as is his custom, Trump cut through protocol and relied on personal relations, lifting the sanctions at the urging of Saudi Crown Prince Mohammed bin Salman and Turkish President Recep Tayyip Erdogan, a long-time supporter of Syria’s rebellion, who joined the meeting via phone.

Speaking on Air Force One en route to Qatar, Trump described Al-Sharaa as a “young, attractive guy. Tough guy. Strong past. Very strong past. Fighter.”

“He’s got a real shot at holding it together,” Trump added. “I spoke with President Erdogan, who is very friendly with him. He feels he’s got a shot of doing a good job. It’s a torn-up country.”

According to a readout shared by White House Press Secretary Karoline Leavitt on X, Trump urged Al-Sharaa to sign onto the Abraham Accords, tell “foreign terrorists” to leave Syria and deport “Palestinian terrorists,” help the U.S. in preventing Islamic State’s resurgence and assume responsibility for detention centers in northeast Syria housing thousands of people affiliated with Islamic State.

The Abraham Accords were the centerpiece of Trump’s foreign policy achievements in his first term. Brokered in 2020, they established diplomatic relations between Israel and the United Arab Emirates, Bahrain, Morocco and Sudan — without conditioning them on Palestinian statehood or Israeli concessions to the Palestinians.

Under Assad, Syria maintained a decades-old truce with Israel, despite hosting several Palestinian factions and allowing Iran and affiliated groups to operate in the country.