Bleak budgets shadow Newsom's 2028 ambitions

Politico

17-05-2025

SACRAMENTO, California — Gavin Newsom's final years of overseeing a massive state budget will be lonely ones.
The California governor, who has less than two years left in his last term and is widely considered a potential 2028 presidential contender, is facing intense backlash from close political allies over his plan to close a $12 billion shortfall — which included deep cuts to Planned Parenthood and health care for undocumented immigrants. Next year could be even worse as forecasters project deficits for years to come.
In a bitter twist, his nemesis in the White House is forcing many of these painful choices, ensuring months of brutal headlines for the ambitious Democrat. Economic upheaval from President Donald Trump's trade policies, on top of yet-undetermined federal funding cuts, will likely drag state spending talks into the fall — a connection Newsom made clear as he released his plan with a reference to the 'Trump slump.'
The governor will now spend his final stretch in Sacramento paring back some of those accomplishments, muddling his record and straining his relationships with supporters who cheered him during the flush years — many of whom he'd turn to for a presidential run.
'Through no fault of his own, the governor's going to have to navigate through a very difficult time,' said Democratic political consultant Darry Sragow. 'He's going to have to make very hard decisions and be prepared to take a lot of heat. He may lose friends, he may lose political standing.'
The gloomy finale — which will shadow his next political move — is a stark reversal from years of booming surpluses that allowed Newsom to enshrine legacy projects like universal health care and early childhood education, send voters rebate checks, and deliver for influential players like organized labor.
Longstanding allies in the California Medical Association and Planned Parenthood lambasted the governor for cutting reproductive health dollars and Medicaid services. Immigration advocates and Democratic lawmakers excoriated him for seeking to cap health insurance enrollment for undocumented immigrants. Unions blasted his proposals to cut money for long-term caregivers and childcare workers.
The broadsides came with a biting message: Newsom is shirking the kind of leadership he champions to counter Trump, cutting Medi-Cal in the midst of federal efforts to shrink Medicaid.
'The proposed budget is catastrophically misguided given where we are as a country,' said Assemblymember Alex Lee, head of the Legislature's progressive caucus.
SEIU California Executive Director Tia Orr — who's typically reserved in criticizing a governor who has helped her union group secure major wins — warned the budget fundamentally misreads a political moment in which Democrats are struggling to connect with many voters.
'In this past election, we saw so many questions about what electeds are going to bring to working-class individuals,' Orr said. His budget, she added, 'is one that I'd call more centered on the wealthy, protecting CEOs and those with vast wealth.'
Newsom has pinned much of the blame on Trump, estimating tariffs would bleed some $16 billion from state coffers by undercutting core industries and convulsing the stock market.
But the governor oversaw a costly and politically combustible state spending initiative — the expansion of a program offering free health insurance to undocumented immigrants — even as Republican foes warned about the price tag. Newsom called the program both fiscally prudent and morally laudable.
Now he is retrenching. His proposal would cap the enrollment of undocumented adults and charge them a monthly premium. The governor has insisted he is stabilizing the program, not walking away from it. But in doing so, he has managed to both infuriate the program's liberal supporters and reinvigorate Republican attacks about excessive government spending — fodder for rivals to his left and right in a national campaign.
'He's trying to blame Trump and tariffs for his budget deficit when it's been very clear this deficit was coming, it was just a matter of how big it was going to be,' said Assembly Minority Leader James Gallagher. 'We're continuing to fund healthcare for illegal immigrants, and it's not sustainable.'
The budget proposal preserves some of Newsom's biggest legacy projects, like universal pre-kindergarten for 4-year-olds, that he built across multiple budget cycles. During his budget presentation, he touted the state's booming GDP as a sign of its continued economic dynamism — a goal that former and current aides describe as a central part of Newsom's fiscal vision.
'What the governor believes is that California is the example of progressive pluralism that is also economically dominant,' said former administration official Jason Elliott. 'In order for the right-wing ideology to be correct, California can't succeed.'
But despite the pace of new patents and initial public offerings, voters living in the world's fourth-largest economy are still feeling profoundly pessimistic about the economy — and the polling shows it.
Newsom's approval ratings have dipped underwater, and voters have overwhelmingly concluded he's more focused on his national prospects than on fixing his state's problems. A drumbeat of headlines about deficits and cuts is unlikely to turn that around, noted Berkeley Institute of Governmental Studies poll director Mark DiCamillo.
'The last two years could be consequential,' DiCamillo said. 'If things turn negative for California, which looks likely to happen, I don't think he'll end up with positive job approval ratings.'