Highlights California’s $31 billion in Unemployment Insurance fraud that happened under her watch, raises questions about her lack of experience and competency
WASHINGTON—At a Health, Education, Labor, and Pensions (HELP) Committee hearing today on the nomination of Julie Su to serve as Secretary of Labor, U.S. Senator Mitt Romney (R-UT) pressed Su on the nearly $31 billion in fraudulent Unemployment Insurance (UI) benefits that were authorized during her tenure overseeing California’s UI program. Specifically, Romney questioned her decision to waive program safeguards to get the money sent out.
Romney also raised questions on Su’s competence and ability to be an unbiased, neutral arbiter in leading high-stakes negotiations between unions and business leaders. During her time as Deputy Secretary of Labor, Su’s public calendar shows standing meetings with unions, while she had not met with business associations until six weeks ago. At least 150 large union contracts will be expiring in 2023.
Full text of his exchange with Su can be found below. Video can be found here.
Senator Romney: Thank you, Mr. Chairman and Deputy Secretary Su. We now know that unaccompanied minor children are being trafficked in illegal labor markets across the country. Your department wrote last year that violations have increased by some 70% since 2018. Was that communicated to the White House prior to this year? Is that something you’ve communicated them, that this is a major, major problem?
Julie Su: So thank you very much, Senator, for the question. As we discussed a little bit earlier today, we are seeing…
Romney: No, no, I have a very specific question, a very limited time. Did you communicate that as a Department to the White House prior to this year?
Su: Um, I don’t know the answer to that question.
Romney: Ok. Thank you. My second question, which is, during your last two years at the Department, the public calendar shows that you had a standing meeting with unions on a regular basis. But until six weeks ago, you’d not met with any business associations. Unions on a regular basis, but that was with business associations. I guess it’s really hard to understand how when we think about putting two groups together, getting to the compromise and negotiating, how we could have any confidence that you’d be seen as an unbiased, neutral arbiter, but instead would be biased in such a way that business associations are not going to be able to trust the Department of Labor to play a meaningful role.
But of greater concern to me is your record in California, and this is something I’ve raised with you before, but the fact that under your lead, unemployment insurance payments in California of some $31 billion went to people who were basically receiving money on a criminal basis, illegally receiving money from the federal government, 31 billion! That’s about as much as we provided in military aid to Ukraine.
That’s almost twice the total budget of the Department of Labor. Under your leadership in California, $31 billion was fraudulently paid out. Now, there’s a principle in all sorts of enterprises known as the “Peter Principle,” which is people get promoted to a point where their competence is no longer been established. In this case, your record there is so severely lacking. I don’t know how in the world it makes sense for the President to nominate you to take over this Department. To work behind Marty Walsh is one thing, and to learn from him. But you haven’t had experience negotiating a major deal between unions and management, and your leadership of an enterprise resulted in $31 billion of fraudulent payments. What am I missing?
Su: So, Senator, thank you on both those points. In terms of business leaders, I think that business leaders and industry associations who’ve worked with me would paint a different story about both my openness and my desire…
Romney: But you’ve got to meet with them, for them to do so. If you haven’t met with them for the first two years until six weeks ago and you’ve met with unions regularly, that sends a pretty clear message to those business leaders.
Su: So 100% that relationships are very important. I believe that I have them and I’d be happy to talk to you more about them at any time. But as I said in my opening statement, I think anybody who knows my record would say that I am someone who is communicative, transparent, and really sees that there is tremendous areas of common ground between employers who are job creators and employees who do the work.
Romney: That’s as accurate as it is irrelevant to your competence to be able to lead a negotiation fraught between unions and management. Help me with the $31 billion.
Su: Thank you for that, Senator. So the vast majority, over 95% of the fraud in the unemployment system, not just in California but across the nation, was in the Pandemic Unemployment Assistance Program, a program that was passed by Congress to meet a very, very urgent need, an unprecedented crisis that was viewed to require an unprecedented solution. That Pandemic Unemployment Assistance Program did not have the safeguards that regular unemployment insurance does.
Romney: It set those safeguards. There are guidelines in California. You chose to waive to get that money out! $31 billion.
Su: So, Senator…
Romney: You realize what $31 billion would have meant that the people in Ukraine had we been able to double our military support there?
Su: There? Yes. Yes. And that is why I fraud, waste and abuse of any kind is completely unacceptable. That is why in California, as soon as we knew that there was fraud happening, I shut the front door to that fraud. I made changes to the program that would ensure that people couldn’t get in the front door. But to be very clear, the state auditor, who did many audits, never said, never found, that my eliminating eligibility requirements resulted in any of the pandemic unemployment situation that we’re talking about.
Romney: My time is up. The buck stops at the top. You’re the person running UI! You’re the one that decided to waive the guardrails. $31 billion! The idea of promoting a person who’s had that experience to a position of leadership of the entire Department of Labor makes no sense at all! Thank you.
Su: Respectfully, Senator, if I may. Just on the unemployment insurance fraud issue, California’s Unemployment Insurance fraud rate, which was different from the Pandemic Unemployment Assistance was really about comparable to what it’s been before. The high rates that you’re talking about were in a program that did not have the safeguards in its design.