Newsom’s Populist Turn On Tech

When Gavin Newsom recently proposed giving Americans equity shares in artificial intelligence companies, he was doing more than floating an economic policy. He was staking out what advisers and allies believe could be a defining populist cause of the 2028 campaign.

The idea of giving the American public shares in the largest AI companies has drawn interest from across the political spectrum. Now, as he prepares for a likely presidential bid, Newsom, who spent years as California governor championing the state's AI boom, is working to temper his pro-tech instincts with an alloy of economic populism, making the case that Americans deserve a share of the profits. And while he has opposed a billionaire tax in his home state, he raised the issue nationally with proposed taxes on the wealthy — and with his new proposal on AI.

“He started worrying about the economic schism from AI long before it was the in-vogue thing to talk about,” said Jason Elliott, a longtime adviser who worked on the equity proposal.

Newsom has proposed converting some of AI hegemons’ titanic valuations into a public equity fund that could fund programs like retraining displaced workers. Advisers say the concept — which Newsom unveiled last month, along with proposed taxes on the ultrawealthy, as he worked to counter a separate wealth tax initiative — would be part of a broader attempt to rewrite the social contract between government and industry.

“If he’s running for president,” said Nathan Gardels, the co-founder of the the Berggruen Institute, a think tank based in Los Angeles, who has discussed the public shares idea with Newsom, “the next presidential election will be the first AI election, and I think the governor is pretty well positioned on that.”

For Newsom, the stakes are enormous. In California, he is taking criticism from progressives for his opposition to a one-time wealth tax despised by tech titans, and his longstanding enthusiasm for Silicon Valley could be a red flag for a primary electorate that is increasingly distrustful of Big Tech.

The former San Francisco mayor maintains deep ties to the technology industry, reflecting both an abiding interest in innovation and California’s reliance on the tax dollars it generates. He casually references “Sam” and “Dario” — as in Altman and Amodei, the leaders of OpenAI and Anthropic — and he has sided with Silicon Valley by vetoing labor-backed bills to constrain technology like self-driving cars and AI models.

Newsom has been contemplating the effects of transformative technological change for years, sharing papers and studies with his brain trust and speaking regularly with tech leaders like Altman. He used his first State of the State speech, in 2019, to propose “digital dividends” compensating Californians for their data — an idea that never materialized — and funded state trust accounts for millions of young Californians, years before Republicans embraced a similar idea in Trump Accounts.

Newsom also spent years trying to square his business-friendliness with a progressive agenda, arguing California can pair capitalistic dynamism with steep taxes on its wealthiest residents. Similarly, he has defended AI as a tentpole of California’s economy while warning it could “detonate” a precarious financial system and further imperil democracy unless policymakers take dramatic steps to share the wealth it creates.

The tension between those ideas of AI as a generational boon and a civilizational threat — and the differences between Democrats offering ways to resolve it — is “going to become very pronounced as the debate comes forward in the presidential election,” Gardels predicted.

“Bernie Sanders and Elizabeth Warren are anti-tech,” Gardels said. “The governor's not anti-tech. He’s pro-tech, but he understands the downsides.”

Many ambitious Democrats like Newsom are increasingly approaching economic fairness as a threshold issue, with Newsom making the case that democracy’s viability depends on it. From Washington to California, they argue appealing to both progressives and the voters who restored Donald Trump to the White House requires addressing their widespread perception that the system is skewed to favor the wealthy — and any plan to do so must grapple with the destructive potential of artificial intelligence.

“The old bargain is dead," Newsom said during a NALEO event on Tuesday, "and AI is going to finish it off."

Poll after poll shows that while the rapid rise of trillion-dollar AI companies has enthralled investors, many voters fear it will spur mass job losses and expand the gulf between the rich and everyone else — fusing fears of technological displacement with a sense that the economy is fundamentally broken.

In response, politicians across ideological lines have found common cause in spreading the wealth. Trump has also floated giving the public a stake in AI companies. So has Sen. Bernie Sanders, who proposed a 50 percent share. The fact that a leading Democratic presidential contender, the head of the party’s progressive wing, and a president they both abhor are pitching a similar idea points to how widely shared concerns about AI’s political consequences have become.

“Universal Basic Capital makes sense to people because the AI models are built off our data so it’s only natural that citizens have a stake in AI-driven innovation, particularly as AI is going to impact millions of workers,” Andrew Yang, whose presidential run popularized the idea of universal basic income, said in a text message. “Politicians from every lane are hearing about it from constituents and there’s an eagerness to demonstrate that ordinary people will be in position to benefit.”

AI companies have signaled they’re open to the idea, too. Both OpenAI and Anthropic have broached it in policy papers, although Anthropic framed it as one that would apply in the most extreme hypothetical case and has not engaged with federal policymakers on the idea, whereas OpenAI has discussed it with the White House. It would likely require an act of Congress.

Even some of AI's biggest winners, who are poised to reap unfathomable wealth and power from the technology, have argued for such an approach. Many have come to believe that a universal basic income, in which the government sends out monthly checks — once the buzzy proposal for Silicon Valley elites — is now insufficient to the scale of disruption.

That includes Altman. The OpenAI founder in 2019 spent millions of dollars on a universal basic income pilot project but recently said that idea “does not get at what we’re really going to need for this next phase.” In 2021, he floated an “American Equity Fund” worth 2.5 percent of AI companies; last month, his company and the White House discussed a 5 percent stake. With valuations for the biggest companies approaching $1 trillion, that could mean tens of billions of dollars flowing back to society.

Similarly, Newsom has begun describing a universal basic income as passé after California allocated $35 million for pilot projects — an outlay that was seen at the time as groundbreaking.

Former Stockton Mayor Michael Tubbs, who served as an economic adviser to Newsom after championing universal basic income in his Central Valley city, said the spread of guaranteed income pilot projects to dozens of cities shows how policies once dismissed as fringe can eventually enter the mainstream. Just as policymakers once dismissed universal income only to see it become real, Tubbs argued, they are running behind on public AI shares.

“I was shocked at the difference in the conversations I was hearing in Silicon Valley about AI and what I was hearing from government leaders — the only people who had a vision were the folks developing this technology,” Tubbs said. “I’m happy some political leaders are starting to wake up and see this is something we need to get our hands around.”

Newsom himself has expressed skepticism that the tech leaders saved in his phone would go along. During a recent podcast conversation with another tech ally, founder-turned-Democratic megadonor Reid Hoffman, the governor issued a direct call to action.

“How the hell do you do it? Who’s going to do it?” Newsom said. “This is the moment, with all these IPOs coming. Dario: Here's the moment.”

And even if the companies do engage, many progressive critics worry such a policy risks doing more harm than good. Center for Economic and Policy Research co-founder Dean Baker warned that public stakes could help inflate a dubious AI bubble, putting a government imprimatur on an unproven technology.

“The idea is: Here’s this giant windfall, and by taking a stake in it we’re going to make sure we’re getting a chunk for the American people,” Baker said. “I don’t think there will be that giant windfall, so I think they’re actually making the inequality worse by hyping this.”

But the hype has been inescapable. For now, Newsom’s proposal has been thin on specifics and largely confined to two paragraphs in a blog post; his team declined to provide more detail. Even so, two years before the primary, he has made the idea central to his shadow campaign.

“A year or two ago this was a top-20 issue. Now it’s a top-five issue,” said Nathan Calvin, general counsel for Encode, an organization that advocates for AI regulation. “If this is as transformative as some of the companies and investors think, it could become number one.”