In a segment devoted to attacking wasteful state spending by California's state government, FOX News host Bill O'Reilly falsely claimed that the state finances unnecessary and outlandish medical procedures for the state's prisoners, including “breast reduction surgery for men,” “transgendered surgeries,” and cosmetic surgeries like facelifts and nose jobs. O'Reilly's guest, Hoover Institution senior fellow Bill Whalen, blamed “a very liberal legislature in Sacramento” for the waste. O'Reilly criticized Governor Arnold Schwarzenegger for traveling to Washington, D.C., to lobby for more federal dollars for California, declaring that “to have plastic surgery paid for by me sitting there in New York state ... is insane.” In fact, Schwarzenegger and other state lawmakers traveled to Washington chiefly to complain that California receives only 79 cents in federal money for every dollar its citizens pay in federal taxes and that the state receives less federal homeland security money per capita than Wyoming.

O'Reilly began the segment on the February 21 edition of FOX News' The O'Reilly Factor, which aired live from Los Angeles, by reporting that Schwarzenegger “went to Washington last week to ask for more federal dollars,” reminding viewers that “that's money you and I have to pony up.” Then, he asked, "[W]hy should we give him [Schwarzenegger] our money when the Golden State has lost control of spending?"

In fact, given that California is one of 18 states that paid more in federal taxes in fiscal year 2003 than it received in funding, Schwarzengger would first have to receive his state's own money back before he could begin to target “our money.” Beyond the overall funding inequity mentioned above, one of Schwarzenegger's biggest complaints about federal funding for California is that that the state ranks 26th in per capita federal funding for homeland security, below such unlikely terrorist targets as Wyoming, North Dakota, and South Dakota.

O'Reilly and Whalen made false statements about various wasteful expenditures in California. O'Reilly noted accurately that “California spends $1 billion a year on medical treatment for incarcerated convicts,” then claimed that “this includes breast reduction surgery for men” as well as “transgendered surgeries.” In fact, the San Jose Mercury News reported on June 22, 2004: “A state prison inmate who was reported to have had breast-reduction surgery at taxpayer expense was instead operated on to remove a tumor, corrections department officials said Wednesday.” The article explained how the apocryphal story had first surfaced:

The issue of possible cosmetic surgery for inmates was raised Tuesday during a hearing on the soaring costs of prison health care -- which account for about $1 billion of the California Department of Corrections' nearly $6 billion in spending. Sen. Jackie Speier, D-San Mateo, said she had received a tip about an inmate allegedly receiving breast-reduction surgery last Thursday at Doctors Hospital of Manteca. Apparently caught off guard, corrections officials said initially that they did not know about the allegation and stressed that they do not pay for cosmetic surgery.

Similarly, Media Matters for America found no evidence that California has ever financed “transgendered surgery,” though the source of this apparently false claim could not be identified. In an article about a transgendered inmate in Wisconsin who is suing state prison officials for refusing to allow surgery to complete the sex-change process begun by hormone therapy, The Milwaukee Journal Sentinel reported on January 22: “No states provide sex change surgery to inmates, and the federal prison system doesn't either, according to Alex Lee, director of the TGI [Transgender, Gender Variant, & Intersex] Justice Project, which aims to defend the rights of transgender prisoners.”

O'Reilly and Whalen also made several baseless claims about benefits under Medi-Cal, California's state Medicaid program:

O'REILLY: Plastic surgery is now included in California's Medi-Cal benefits. Can I get a facelift? Is that what you're telling me?

WHALEN: Now that you need one, you can get acupuncture if you're on Medicaid in California.

O'REILLY: I can get acupuncture. What else can I get as far as plastic surgery? What can I get? Nose job?

WHALEN: You can probably get a nose job. You can get, you know, cosmetic surgery. It's about self-esteem in California.

In fact, while Medi-Cal does cover acupuncture in some cases, as the Los Angeles Times noted in a November 2, 2002, article, a search by Media Matters turned up no evidence that the program covers cosmetic surgery.