A ruling by the Government Accountability Office allows Joe Biden to keep Julie Su in charge of the Labor Department without confirmation by the Senate. Before Biden tapped her for the post, Su headed California’s Labor and Workforce Development Agency (LWDA), which oversees the Employment Development Department (EDD), responsible for unemployment claims.
On Su’s watch, the EDD sent more than $31 billion in fraudulent unemployment claims to California, out of state, and out of the country. Scammers and convicts, file hundreds of fake claims, with no accountability in evidence. That problem did not disappear.
As the California Globe reports, “Bank of America quickly decided to get out of providing unemployment benefits, because of their part in the $32 billion in fraud and giving out outdated cards with no fraud prevention chips.” EDD has now turned to the Money Network for unemployment, disability, and Paid Family Leave debit card payments. As it happens, the Money Network also handled California’s middle class tax refund (MCTR), a program also rife with fraud.
“Scammer may have snagged your California Middle Class Tax Refund,” NBC Los Angeles reported last July. The Money Network, the contractor hired to run the program, will receive $25 million, but California isn’t tracking how much fraud occurred. Californians waited for their refund to arrive, then learned that the card had been stolen and used at a convenience store ATM. Other problems were soon to follow.
“Hackers took their Middle Class Tax Refunds and now victims are getting a tax bill,” ABC news reported. Many Californians found out they might have to pay income taxes on money they never received. California Attorney General Rob Bonta warned of “scammers targeting California’s middle-class tax refund,” but did not indicate how much fraud his office had prevented, or how much money had been recovered.
Despite this record, the EDD turned to the Money Network, paying around $32.3 million over the next five years to cover the costs of direct deposit transactions alone. According to the EDD, “Money Network customers get the benefits of embedded microchips and state-of-the-art encryption for making contactless payments.”
Based on their experience with the Money Network and state government, the “customers” can have more than a reasonable doubt. As they understand, the original $32 billion EDD fraud would not have happened if Julie Su had implemented proper safeguards. She didn’t, and unemployment fraud was not her only problem.
Su was a prime mover of Assembly Bill 5, a frontal assault on independent workers.
In the style of Marxist scholar Saule Omarova, Biden’s pick for comptroller of the currency, Julie Su, was the worst possible choice for Labor Secretary. A federal “accountability” office allowed Biden to keep Su in the post, but her absence from California did not end the state woes.
According to California’s independent Legislative Analyst Office, the state budget deficit for the 2024-2025 year has increased from previous estimates of $58 billion and $68 billion to a whopping $73 billion. That massive deficit is due in part to workers and businesses moving out of state.
In 2021, for the first time in 171 years, California lost a congressional seat while Texas gained two. According to U-Haul, 2023 marked the fourth consecutive year that more Californians rented one-way trucks to leave California than residents of any other state. When Attorney General Bonta was a member of the state Assembly, he backed a measure that would continue to tax people for ten yearsafter they left the state.
“We believe we can do that,” Bonta told reporters. “We think it’s a sound approach and has a strong legal foundation.” As the Yale law alum should know, it doesn’t. The Bay Area Democrat was undeterred. “I don’t think the image of folks fleeing has panned out, I don’t think it’s historically true.”
It certainly is now, as the numbers confirm. Even with Julie Su in Washington, California’s waste, fraud, and abuse is likely to get worse.
This article was also published in The American Spectator
