Republicans blame labor secretary nominee for massive California COVID unemployment insurance fraud

Tribune Content Agency

WASHINGTON — With her confirmation as U.S. Labor secretary stalled in the Senate by angry Republicans and undecided Democrats, Julie Su was grilled aggressively Wednesday by GOP lawmakers about her California record and support for worker rights.

Su, the Biden administration’s acting secretary since Marty Walsh resigned in March, began her testimony by focusing on winning support for the department’s fiscal 2024 budget. But the hearing quickly became another vehicle for Republicans to weaken her chances for Senate approval.

Rep. Kevin Kiley, R-Rocklin, repeatedly asked Su, secretary of the California Labor and Workforce Development Agency from 2019 until mid-2021, when she became deputy U.S. labor secretary, whether she took responsibility for the more than $30 billion in fraudulent claims that jolted California’s unemployment insurance system.

Most of those claims were managed by the Employment Development Department, which Su’s state agency supervised. They involved a new COVID-triggered, federally-funded program that operated under more lax rules than the state unemployment program.

Kiley struggled to get a straight answer.

“Do you accept any responsibility for the unemployment fraud that occurred in California, yes or no?” he asked at one point.

“I think an unemployment insurance system that truly delivers in times of crisis should be the goal of everybody,” Su replied. California, like many other states, had trouble at first managing the new federal program.

Kiley said he understood there were circumstances beyond her control, and asked Su again if she accepted responsibility.

Su cited a state audit that identified two key reasons for the fraud, an unprecedented volume of claims as the COVID pandemic ravaged the economy, and a federal program without the usual safeguards.

But Kiley pushed back by citing other conclusions from the auditor.

In January 2021 the auditor wrote that “Despite repeated warnings, EDD did not bolster its fraud detection efforts until months into the pandemic.” It also said EDD’s response to the fraud was “massive missteps and inaction.”

Su finally did concede some responsibility for the problems.

“To be clear, congressman, I did not run the EDD. I was labor secretary of California. But several agencies fell under my purview. And I did take responsibility for our needs,” she said. “There were desperate Californians who were very hard hit by closures, by the loss of their jobs, and relied on unemployment insurance.”

Su gets support

Democrats argued Su did the best she could with EDD and had a stellar record of fighting for worker rights..

Rep. Bobby Scott, D-Virginia, lauded Su’s record as a California and national labor official.

The COVID-era turmoil was “not Ms. Su’s doing,” said Scott, noting that under Su, the state adopted several reforms to make the unemployment system more efficient.

“She has been a committed public servant who has dedicated her career to serving workers and families,” he said, and cited the low unemployment rate as evidence Biden administration labor policies are working.

Republicans and many business interests are trying hard to portray her as not only hostile to their interests, but someone incapable of running a large agency.

Kiley has been helping to lead the congressional effort against Su. Tuesday, he wrote on his blog, ‘We’ve managed to stall the nomination for three months now, and we are close to killing it.” The House has no say in whether Su is confirmed.

Su needs 51 Senate votes for confirmation. Democrats control 51 seats, but at least three have not said how they’ll vote. All three —Sens. Joe Manchin of West Virginia, Jon Tester of Montana, and independent Kyrsten Sinema of Arizona. — face difficult re-election races next year.

Republicans fire away

Republicans made it clear throughout the House Education and the Workforce hearing, whose official subject was a broad look at the Labor Department, that they had serious questions about Su.

“President Biden’s anti-worker agenda is hurting our economy,” said Chairwoman Virginia Foxx, R-North Carolina. “At best it pushes a misguided union agenda. At worst it subverts our economic do so,” Foxx said of the Labor Department.

Su stressed the Biden administration’s commitment to worker rights. She said that “all workers should have good jobs and have the free and fair choice to join a union.”

Kiley and others brought up Su’s support of California’s Assembly Bill 5, a three year old state law that expands employee rights.

While there is currently no independent data showing that AB5 was unduly harmful to large segments of workers, critics have said it’s had a devastating effect on independent contractors.

“You celebrated its passage,” Kiley said, adding that people have “lost their careers, lost their livelihoods, their ability to work because of AB5?”

Su said she was sensitive to the criticism and had met with many people affected by the law. “I don’t every want our policies to result in people losing their livelihoods,” she said.