Julie Su ‘presided over a disaster’ in California, GOP’s Mitch McConnell says

Republicans Thursday tried to paint California’s Julie Su as unqualified to become Secretary of Labor, saying she presided over a fraud-riddled, chaotic California unemployment system.

“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,” said Sen. Mitt Romney, R-Utah.

“She presided over a disaster as head of the state labor department out in California,” Senate Republican Leader Mitch McConnell of Kentucky said on the Senate floor.

Romney is a member of the Senate Health, Education, Labor & Pensions Committee, which held an often tense 2-hour hearing Thursday on whether to confirm the former California Secretary of Labor and the Workforce Agency.

Su’s fate is uncertain. Democrats control 51 Senate seats, but Sen. Dianne Feinstein, D-Calif., has been absent as she battles health issues. That means one defection could sink the nomination, since all 49 Republicans are likely to vote no.

The committee, which has 11 Democrats and 10 Republicans, is expected to vote on the Su nomination next Wednesday. If approved, it would be considered by the full Senate.

Su, a workers’ rights attorney who is currently acting Secretary of Labor, came under fire for her stewardship of the California unemployment system at a time when it went from considering about 43,000 claims in March, 2020, before the COVID-19 pandemic to 1 million within weeks as the pandemic sent the economy reeling.

The state’s Employment Development Department wound up paying out an estimated $30 billion in fraudulent claims, almost all in the federally-funded Pandemic Unemployment Assistance program.

The California State Auditor was highly critical of the state agency’s management. In January, 2021, Auditor Elaine Howle wrote “EDD did not take substantive action to bolster its fraud detection efforts for its unemployment insurance program until months into the pandemic…”

Democrats praise Su

Sen. Tim Kaine, D-Virginia, defended Su Thursday. He said Su’s agency, like those throughout the country, was suddenly hit not only with the deluge in claims, but a new unemployment benefit program created quickly by Congress as well as a mandate to pay higher amounts.

The PUA benefits, created by Congress in March 2020, allowed independent contractors and others who traditionally do not qualify for benefits to receive them.

The program was part of a package that received strong support from both Republicans and Democrats at the time.

“I’m upset with the fraud,” Kaine said Thursday, “but I’m not upset that Congress did what it did, because it helped this nation get through the worst health emergencies and one of the most serious economic challenges in the past hundred years.”

He told Su, “You did a fine job under challenging circumstances trying to negotiate through this extraordinary set of programs.”

Romney had a very different view.

“The buck stops at the top. You’re the person running unemployment insurance. You’re the one who decided to waive the guardrails,” he told Su. “The idea of promoting a person that’s had that experience to a position of leadership in the entire department of labor makes no sense at all.”

Romney, who had an extensive career as a business executive before entering politics, cited the Peter Principle.

“There’s a principle in all sorts of enterprises known as the Peter Principle,” he said, “which is people get promoted to a point where their competence has no longer been established.”

Su calmly responded.

She pointed out that the federal PUA program did not have the same safeguards that regular unemployment insurance has. The state’s program requires a series of steps before people can qualify for benefits.

When she realized there were problems, Su said she acted quickly.

“Waste, fraud and abuse of any kind is completely unacceptable,” she said. “That is why as soon as we knew it was happening I shut the door to that fraud.”

Su and California

But 10 months after the March 2020 surge in claims, Auditor Howle remained critical. “EDD has put its unemployment insurance program at higher risk for such fraudulent payments by relying on uninformed and disjointed techniques to prevent and detect impostor fraud,” she wrote.

Su also was grilled on her support of California’s Assembly Bill 5, which gives many independent contractors certain employee rights, such as workers compensation and minimum wages. Sen. Bill Cassidy, R-La., “would you commit to not trying to force an AB5 type regulation on the rest of the country (like) that which was done in California?”

“The short answer to your question is yes,” Su said.

Republicans were concerned she would fight to impose similar requirements nationwide; Su noted that would not only be difficult, but isn’t something the Biden administration is proposing.

“Bonafide independent contractors will always have a place in our economy,” Su said. “They have and always will and they’re very, very important.”

Su did receive a warm welcome from Democrats. She was introduced by Sen. Alex Padilla, D-Calif., who said “After years of exemplary public service to California and the nation, she is more than qualified to lead the Department of Labor.”