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CA Controller candidate Lanhee Chen on fiscal audits, Taiwan & Kobe Bryant

Lanhee Chen is a GOP fiscal policy expert long associated with the conservative Hoover Institute and familiar to voters from his regular cable news appearances. In July 2021, he launched his campaign for California Controller. If elected Nov. 8, Chen will be the first Californian Republican in statewide office since 2004.

His campaign got a big boost in the primary when the editorial boards of The Los Angeles Times and San Diego Union-Tribune endorsed him over Democrat Malia Cohen. (The papers had endorsed Joe Biden in 2020 and Hilary Clinton in 2016.) Chen recently spoke with by phone for our 30th Q&A since launching almost two years ago. See other Q&As here.

SACTO POLITICO: You are a first-time candidate but previously advised the presidential campaigns of Mitt Romney and George W. Bush. Having run yourself the past 13 months, is there anything about being “the candidate” for which you now have a deeper appreciation or insight into?

LANHEE CHEN: There were a lot of times when I advised candidates in the past that I had sort of wondered, “Why don’t they do this? Why don’t they do that? Why don’t they follow my advice on this?” Now as a candidate, what you realize is it is almost like being in a constant state of sensory overload. There are a lot of different demands on your time, a lot of different people with recommendations and opinions, and a lot of people to get to know.

You layer on that the fact California is a massive state, but I don’t think you can get a real appreciation of the scale and size of the state until you have to travel all over and meet with people with different concerns on a day-to-day basis. You think about folks in San Diego County and the issues they have down there and how they differ from some of the issues in the North State. Of course, there are similarities because we are tied together as Californians. But at the end of the day, the thing that has struck me is how massive a challenge it is to run and compete statewide. Now that I have to take in the information and the counsel and make the decisions about the direction of the campaign, I recognize how much of a challenge it is to be candidate, and I applaud those who jump into the arena and do this.

S/P: The California Controller serves as the state’s accountant, bookkeeper and payroll officer, and oversees state and local government audits. Central to your campaign is a pledge to launch “an audit a day.” Do you know how many audits are currently handled by the Controller’s office, and if elected, how many more auditors or audit contractors might you need to achieve your goal?

LC: The Controllers’ office has publicly released about 40 audits over the last two years. These are the ones I would like to significantly expand. In addition, there are probably another 50 to 100 what I call desk audits or smaller scale audits that aren’t publicly released for every large-scale audit that has been. So they are conducting a fairly high volume of audits as we speak.

But when we talk about audits more broadly, I think the question is really what’s the goal of a program where we are trying to get accountability for spending? And are we really auditing the sort of big-ticket items that occupy a tremendous amount of state spending?

One of the things I have identified as a challenge is take programs like MediCal for instance. If you look on the Controller’s website, it has been several years since there has been a systemic examination of MediCal. Now surely there are parts of the program that are being looked at, and there are elements of the flow of funds from the federal government that are regularly reviewed because the program is a joint state-federal program. But the reality is we haven’t seen a large-scale examination of the functioning of the program and whether, in fact, the participants in the program are receiving the benefits they have been promised and whether that is happening in an efficient and effective way. The goal of my sort of audit program would be, in addition to the financial audits that have to happen by law, can we focus our attention on areas of greater spending or potentially higher risk of mismanagement in the process.

[Editor’s note: One feature of MediCal was highlighted as problematic in this recent Q&A with Placer County State Assembly candidate Rebecca Chenoweth.]

You asked how many auditors are in the Controller’s office and whether more hires will be needed. I don’t have an answer to that without digging more into the actual personnel allocations, which is something I will do if elected. I know there are about 1,400 full-time employees in the Controller’s office, and most of them are auditors. So I think there is a tremendous capacity there and people who want to do the good work of the people of the state. Part of the challenge is to make sure we are putting people to their best and highest use when it comes to the challenges we face and the audits we need to get done.

S/P: In the past, you were often interviewed about federal budgetary policy. With a near $100 billion annual budget, California is just a sliver of the $4 trillion federal budget, but what do you consider the key similarities and differences between budget management at the state and federal level?

LC: That’s a great question. There are a couple things. A key difference between state and federal budgeting is the degree to which the state balanced budget requirement drives budgetary policy at the state level. Obviously, the federal government does not have a similar requirement.

I think [the state requirement] is an advantage if the balanced budget requirement is actually taken seriously. Unfortunately, there have been examples – including relatively recently – where the legislature tried to engage in some shenanigans rather than produce a truly balanced budget. You may be familiar with the episode when John Chiang [in 2011] withheld paychecks of legislators for a short period of time when he was Controller because legislators were unable to produce a truly balanced budget.

In terms of similarities, both the state and federal budgets have a considerable amount of what we might consider mandatory spending. At the federal level, these are programs like Medicare and Social Security for which there are simply very few or no discretionary levers that policy makers can pull. In California, we have a similar structure in the sense with propositions like Prop 98 [that established minimum levels of spending on education] that lock in how much discretion policy makers do or don’t have. When you don’t have a lot of discretionary money to allocate, it creates a competition for scarce resources. It also raises the possibility for a less efficient allocation of what is left. You would think it would be more efficient because there is less available, but what I have observed at both the state and federal level is there really isn’t a ton of time and attention paid to what is the return on our discretionary spending. In other words, are we really getting results for the money we are spending?

At the federal level, there has recently come into effect requirements for more stringent evaluation of the impact of spending. These essentially function as performance audits required by the Office of Management and Budget, but are not currently required at the state level. I would love to see some of these results-based tools brought into the state level to better understand what it is that we are spending money on and whether that spending has been efficient.

S/P: This brings to mind how the state legislature will generate 5,000 separate bills in every two-year session. Only a handful get singed into law. Would you prefer far fewer longshot bills drafted and more legislator time spent on oversight of existing policy and programs?

LC: There is certainly not enough oversight being conducted by the California State Legislature at this time. That is something noted to me by both Democratic and Republican policy makers. I think the volume of legislating is problematic and contributes to the oversight issue. But it is within [legislators’] control how much oversight they do or don’t conduct. But the Controller’s office can be helpful as an oversight mechanism through the audit function and provide some of that oversight that I think taxpayers deserve.

S/P: Our college system certainly produces an awful lot of political science majors, but poli-sci degrees generally focus more on the political process than governmental management. Do you wish our schools produced more well-educated managers of government to more effectively combat government waste?

LC: You know, I’m not sure it is the job of college to necessarily do that. The reality is a lot of the management skills and the skills needed for looking at the efficiency of government usually come from direct experience. When I look back at my career in government, teaching and business, the experiences I have had helped me better understand and answer some of these questions. I think the on-the-job experiences one gets inside and outside of government are probably more valuable than the experiences in the classroom. At the end of the day, it is very hard to teach some of this in a classroom setting. You really have to get out and experience it in the real world.

S/P: As the son of Taiwanese immigrants, what are your thoughts about Nancy Pelosi’s recent visit to Taiwan and the international “friction” this led to, including China’s show of military force around the island?

LC: First, I think Taiwan is a beacon of democracy and freedom in a part of the world where that is still developing and in some places not even present. That includes just 80 miles across the Taiwan Strait in the People’s Republic of China [PRC]. I think there is a stark contrast between Taiwan and the PRC. Our relationship with Taiwan and highlighting the role that Taiwan plays in the global community is hugely important.

So I strongly believe Pelosi was right to visit Taiwan. I am glad she went and deserves credit for going and demonstrating the importance of the Taiwan-U.S. relationship. And those who supported it deserve credit for keeping her and the delegation safe during their time there.

In terms of the result of the trip and the war gaming by China, a lot of this in my view is just [Chinese President] Xi Jinping positioning himself for the upcoming National People’s Congress in October when he will likely be re-elected. He is demonstrating that he still has a firm grasp of control over the PRC and still has some ability to influence things in [China’s] sphere. I am not too concerned about that in the short-run. In the longer term, the bigger question is how will we continue to engage with Taiwan and what will our relationship with China look like. I hope that China’s bravado does not prevent us from continuing to interact with Taiwan in a way that we should and ought to.

S/P: Let’s finish on a lighter topic. I lived in Chicago during the Bulls’ great double three-peat era in the 1990s. You’re a lifelong Lakers fan but highly analytical. So who was greater: Michael Jordan or Kobe Bryant?

LC: Well, as a lifelong Lakers fan I have to say Kobe, but I am not exactly a dispassionate observer. [Laughs] It is interesting when we try to compare players across slightly different eras. Obviously, the Jordon-Kobe comparison is a lot easier than comparing Bill Russell and Kobe Bryant, which is an almost impossible thing to do in my mind. But the interesting thing about Kobe was how in the first part of his career he had the benefit of playing with Shaq, and then the second part of his career, he didn’t. His ability to experience success in both those contexts was impressive. Both because he had to get along with Shaq, but also when he was able to set out on his own and do things separately.

The similarity I see in both [Jordan and Bryant] is their ability to take over a game when it counted and to just be able perform at the highest level when the stress and spotlight were greatest. There is no doubt they are both great players, but after he retired, Kobe’s ability to still be an ambassador for the game and trying to encourage girls and women’s participation in basketball was very, very laudatory. For that reason, I have to give the edge to Kobe, but I enjoyed watching both throughout my life as a basketball fan.

S/P: Any final words?

LC: I think the Controller’s office is not an office that Californians spend a ton of time thinking about, but it is my hope through this campaign that they can understand the impact that an effective controller can have in terms of improving the fiscal management of our state and creating greater trust for taxpayers that their money is being spent wisely and efficiently.

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