It’s a difficult time to be an honest Californian.
The state faces the highest cost of living in America and some of the highest taxes, levied to fund a massive welfare state. For that investment, taxpayers do not get less poverty or a better quality of life, but rather an epidemic of fraud — with an estimated $180 billion or more stolen under Gov. Gavin Newsom alone.
Consider this a warning for America as Democrats look to export the state’s model nationwide. Fraud is not merely an enforcement problem, as the Left wishes to believe. It is the inevitable result of policies that ignore human nature and expand government beyond its constitutional and moral bounds.
America’s Founders understood an essential truth: People are not angels. They are shaped by human nature and by incentives. Government can only influence the latter, and California’s handout economy is incentivizing joblessness, fraud and the breakdown of social order.
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Take the state’s unemployment insurance program, among the most expansive in the country. With no time limit on benefits, no work requirements and minimal oversight, it has turned joblessness into a vocation and the program into a magnet for opportunistic criminals. At one point, there were more applications for jobless benefits than Californians over the age of 18. One rapper bragged in verse, “You gotta sell cocaine, I can just file a claim.”
The pattern repeats across programs. In the state’s hospice system, hundreds of sham facilities — some with addresses at burrito stands and auto body shops — have received millions for nonexistent dying patients. Medi-Cal’s budget has ballooned following Newsom’s push for “guaranteed health care” for all, only to lose around a quarter of its spending to fraud each year.
This is a moral collapse, and not just on the part of the fraudsters. California’s government is betraying the fundamental duty of any government, which is to protect law-abiding citizens and the fruits of their labor. By transferring those fruits to the unscrupulous, it forces middle-class taxpayers to pay twice — first through punishing taxes, and again through degraded services and a worsening quality of life.
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Our Founders also understood another truth on display in California: The bigger a government grows, the more self-serving it becomes.
Consider how San Francisco spends more than $100,000 per homeless person per year on “eradicating homelessness,” with few improvements to show for it. It’s because the funds go to a shady network of nonprofits with a clear and perverse incentive. Why would these groups solve homelessness when it would mean the money stops flowing?
It is equally unsurprising that dozens of California public employees have been charged with fraud or embezzlement since 2024. Even the governor’s own chief of staff faced corruption and fraud charges, only to receive a $50,000 payout for unused vacation time after she resigned.
Most revealing of all is the state’s response. Instead of combating the fraud, Democrats in the state Assembly want to make it harder to expose and prosecute.
One proposal, the “Stop Nick Shirley Act,” named after the journalist who exposed the Somali day care fraud in Minnesota, would allow fraudsters to conceal their identities while criminalizing efforts to expose them online. Another would lower penalties by raising the threshold for felony welfare fraud from $950 to $25,000.
Whose side are these lawmakers on? Certainly not the taxpayer, but not the needy either. Even in a world with zero fraud, their welfare schemes would only subsidize poverty and homelessness, not lift people out of them.
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Wisconsin faced a similar problem in 1996. The state was spending enormously on anti-poverty programs with few results. So it began requiring recipients to search for work and created new incentives for the welfare bureaucracy: Counties would be allocated funds not based on the number of recipients, but on the number of recipients placed in jobs and taken off benefits.
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This led to a swift reduction in poverty and a cascade of welfare reforms across dozens of states. These policies succeed today because they acknowledge human nature and incentivize the values of hard work, honesty and self-reliance. They understand that government is not a parent — that its capacity to help is limited but its capacity to harm is not.
Thomas Jefferson once warned about a government intent on “wasting the labors of the people under the pretense of taking care of them.”
That’s the California system — but it’s never too late to improve it, nor is it particularly difficult. The state can do more by doing less: shrinking its welfare programs, allowing taxpayers to keep more of their money, and fostering the virtues that sustain a republic.
We won’t hold our breath. But for the rest of America, California’s predicament is our choice. We will either learn from its example or repeat it nationwide.
Rob Noel is a speechwriter who serves as president of Washington Writers Network.
