Julie Su Gets Grilled in Congress with CPC Report

Acting Labor Secretary Julie Su testified in front of the House Education and Workforce Committee last week and it’s worth your time to watch the grilling she received from California Congresswoman Michelle Steel. Rep. Steel began her questioning by introducing California Policy Center president Will Swaim’s recent reporting on Su, which she entered into the Congressional Record.

“I want to submit for the record this article from the San Bernardino Sun published on April 6th, titled ‘Julie Su Prepares to Forgive Herself for Julie Sue’s Mistakes,’” Steel said.

Readers will remember Swaim’s article shared in this newsletter last month, exposing that Su is “prepared to force U.S. taxpayers to pay off California’s loss of some $30 billion in federal COVID-relief funds” stolen via bogus unemployment claims by fraudsters — including international crime gangs — while Su oversaw California’s Employment Development Department.

Swaim explained that the “news is buried in California’s 2022 annual comprehensive financial report, an otherwise obscure document filed on March 15.” Turns out Su’s Department of Labor plan allows the federal government to forgive and forget the billions lost to fraud on her watch so long as California made “such action as reasonably necessary to recover” those stolen billions.

And how will federal officials know whether California took such reasonable action? Because California officials have told them so, of course!

At last week’s hearing, Rep. Steel asked Su point blank: “Does DOL intend to forgive the nearly $30 billion in fraudulent payments that the California EDD paid out to fraudsters, scammers and known international organized crime rings that occurred under you in California?”

Not surprisingly, Su responded with the usual bureaucratic word salad. However, her testimony drew immediate attention from the U.S. Senate.

Senator Bill Cassidy, M.D. (R-LA), ranking member of the Senate Health, Education, Labor, and Pensions (HELP) Committee, and Senator Mike Crapo (R-ID), ranking member of the Senate Finance Committee, sent a letter to Su Wednesday about her testimony.

“We write to express our concern that the U.S. Department of Labor (DOL) may be preventing the recovery of federal unemployment insurance funds lost to fraud by California’s Employment Development Department (EDD),” the letter begins.

The letter continues:

“While serving as Secretary for the California Labor & Workforce Development Agency (LWDA), you waived basic fact-checking and fraud prevention requirements for federal pandemic-related unemployment insurance (UI) payments … Even California’s own state auditor found that ‘[d]espite repeated warnings, EDD did not bolster its fraud detection efforts until months into the pandemic, and it suspended a critical safeguard.’ As a result of EDD’s failures, including to verify claimants’ identities, it is estimated to have mistakenly paid approximately $32.6 billion in fraudulent UI payments during the pandemic. This is more than double the annual budget of DOL.

Under your leadership as Acting Secretary, DOL issued Unemployment Insurance Program Letter No. 05-24 stating that, to allow states to ‘be forward looking,’ the agency will ‘defer to states to apply their finality laws to the CARES Act UC programs.’ … DOL’s guidance therefore appears to allow California to shift the consequences of a still unknown amount of federal funds that was lost under your leadership as Secretary of LWDA to the American taxpayer.”

The Senators’ letter asks Su to answer a series of hard-hitting questions and “provide all responsive documents requested by May 22, 2024,” including correspondence with any California state government officials about the debacle.

The story was covered by the New York Post and Fox Business Network, which spotlighted Swaim’s article. (Watch the Fox Business highlight here.) CPC board member David Bahnsen appeared on the Fox segment and called the loss of billions to fraudsters “totally inexcusable.” Bahnsen said that taxpayers will be “paying for it for years and years to come.”

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