Trump Targets California For Fraud Probe As Newsom Claims He Welcomes Investigation

Democratic California Gov. Gavin Newsom said President Donald Trump and his administration should proceed with their investigations into fraud and wasteful spending in his state.

Concerns over fraud and mismanagement of taxpayer dollars have been in the spotlight since late December after independent journalist Nick Shirley posted a YouTube video examining alleged child day care center fraud in Minnesota. During an exclusive interview with MS Now’s Jacob Soboroff, Newsom was asked about the administration’s decision to freeze federal child care funding, noting that Press Secretary Karoline Leavitt said the administration could potentially investigate fraud in California.

“Well, I think it was, let’s — bring it on. Fraud in terms of child care? Hey, [if] you think for a second anyone countenances fraud. So if he has some unique insight and information, I look forward to partnering with them,” Newsom said.

“Can’t stand fraud. Can’t stand waste and abuse,” Newsom added. “Can’t stand the kind of thing he has been doing in terms of our National Guard and hundreds of millions of dollars of taxpayers subsidies and funds that have been wasted on all of this illegal activity by this president. So I’m with you in terms of that. I’m with Karoline Leavitt as well.”

The U.S. Department of Health and Human Services (HHS) announced on Dec. 30 that all federal child care payments to Minnesota would be frozen, a move that could expand to include other Democrat-led states like California, New York, Illinois and Colorado. The frozen funding is expected to halt $7 billion for the Temporary Assistance for Needy Families program, an estimated $2.4 billion for the Child Care Development Fund and roughly $870 million for social services grants, according to CBS News. 

With eyes on California over potential wasteful spending, Trump announced Tuesday on Truth Social that the fraud investigation into the Democrat-led state “has begun.”

“California, under Governor Gavin Newscum, is more corrupt than Minnesota, if that’s possible??? The Fraud Investigation of California has begun. Thank you for your attention to this matter!” Trump wrote.

In response to the investigation from Trump, Newsom’s office provided a statement to the Daily Caller News Foundation.

“HAHAHAHA. Donald Trump is a deranged, habitual liar whose relationship with reality ended years ago,” Newsom’s office stated. “This is not complicated. He spends his days posting whatever garbage his shriveled little brain can cough up — and Fox News dutifully treats it like the Lord’s scripture.”

“Meanwhile — in the actual world where adults govern — Gavin Newsom has been cleaning house. Since taking office, he’s blocked over $125 BILLION in fraud, arrested criminal parasites leaching off of taxpayers, and protected taxpayers from the exact kind of scam artists Trump celebrates, excuses, and pardons,” Newsom’s office continued. “Gavin Newsom runs a state. Donald Trump runs his mouth and little fingers.”

Newsom’s office also pointed back to previous posts on X pushing back against accusations tied to the state’s policies.

Questions about California’s spending have circulated for years, as issues such as homelessness, crime and unfinished projects have continued to burden taxpayers.

The state has repeatedly faced accusations of wasteful spending and fraud, including $32.6 billion in Pandemic Unemployment Assistance payouts, an estimated $24 billion spent on homelessness since 2019 and roughly $16 billion tied up in the unfinished high-speed rail project.

Beyond those concerns, California has remained in a budget deficit for years. In November, the state’s nonpartisan Legislative Analyst’s Office admitted it botched the 2026-27 deficit estimate by roughly $5 billion.

At the time of last year’s fiscal cycle, the administration anticipated the state would face an almost $13 billion budget problem for 2026-2027. However, with the new update, the figures were drastically off. For the last three fiscal cycles, California has had to deal with massive deficits, hitting a $27 billion deficit in 2023-2024, $55 billion in 2024-2025 and $15 billion in 2025-2026.

With Trump’s announcement into investigating the state, it remains unclear what the process will look like for the administration.