The City of London has long viewed California as a land of boundless opportunity and reckless fiscal abandon. Now a former Downing Street insider aims to inject some British discipline into the Golden State's balance sheet. Steve Hilton, once David Cameron's strategic guru, has declared his candidacy for governor of California, promising to slash regulations, cut taxes, and tame the state's spiralling debt. For a financial editor who has watched California's bond yields flirt with junk status, this is a development worth scrutinising.
Hilton, who now resides in California, is best known as the architect of Cameron's 'Big Society' and a co-host on Fox News. His platform reads like a free-market manifesto: repeal environmental red tape, cut income taxes, and impose a spending cap. In a state where income tax rates can hit 13.3% and the budget deficit is estimated at $68 billion (that's roughly 54 billion of your British pounds, if you're keeping score at home), Hilton's message of fiscal restraint might find fertile ground. But let's not get carried away. California's electorate has a taste for generous public services, and its Democratic supermajority in the legislature is not about to roll over for a British ex-advisor.
The irony is rich. Here is a man who helped shape the UK's austerity-lite agenda, now preaching the same gospel to a state that has more in common with Greece than with Thatcher's Britain. California's public pension liabilities are a ticking time bomb, its homelessness crisis is a stain on American prosperity, and its reliance on tech stock volatility makes it a petri dish for capital flight. Hilton proposes to fix this with a 'cut the red tape, cut the taxes' approach that sounds eerily familiar to anyone who remembers the early 1980s.
But can Hilton actually win? California's last Republican governor, Arnold Schwarzenegger, found himself at war with his own party over spending. Hilton's brand of conservatism may be too radical for the state's moderate swing voters. Yet, the incumbent Gavin Newsom is vulnerable. He faces a recall election, and his handling of the pandemic and wildfires has eroded his approval. If Hilton can tap into the state's growing frustration with high taxes and homelessness, he might just turn this into a credible race.
The markets will be watching closely. A Hilton victory would send a jolt through the municipal bond market, potentially lowering California's borrowing costs. Conversely, if he stokes culture war controversies (he has a habit of doing so, see: his Fox News career), it could spook investors. The bigger picture is that the UK's influence on American political discourse is growing. From Brexit to the Trump movement, British ideas have crossed the Atlantic. Now, a British citizen (Hilton retains his UK passport) could run the world's fifth largest economy. That is a thought to make any financial editor reach for the scotch.
For now, Hilton's campaign is a long shot. He needs to gather 65,000 signatures by March 2022 to get on the ballot. But in a state where the median home price is over $800,000 and the homeless population exceeds 150,000, voters might just take a punt on someone promising a 'big reset'. The bottom line? Steve Hilton is betting that California's problems have become so acute that voters will embrace a no-nonsense approach. I wouldn't bet the house on it, but I wouldn't dismiss it either. The City will be watching this experiment in imported fiscal discipline with keen interest.
