Biden’s Troubling Nomination: Julie Su for Secretary of Labor

President Joe Biden nominated Julie Su as the next Secretary of the Department of Labor on February 28, 2023. Su has served as a Deputy Secretary in the U.S. Labor Department since July 17, 2021. It is a highly troubling nomination, given Su’s poor track record as a top administrator.

Su earned her negative reputation while serving as California’s Labor Secretary, serving in that role from January 11, 2019, until July 14, 2021. Su allowed $11 billion in COVID unemployment benefits to be paid out to fraudsters in 2020, including $1 billion to inmates of California’s state prisons.

That, by itself, is not what makes Su’s nomination so troubling. What is worrisome is her lack of response to the criminal looting of pandemic jobless benefits occurring under her watch. Despite claiming responsibility, she failed to take effective action to recover any fraudulently claimed funds.

What Su Didn’t Do

Instead, those actions were left to her successors in California, who took the crimes much more seriously than Su. By June 21, 2022, a year after Su left Sacramento for Washington D.C., California’s Economic Development Department announced it had recovered $1.1 billion of the funds lost to unemployment insurance fraud while Su was in charge.

What is more impressive is how easily the Economic Development Department recovered most of those funds:

The recovered funds were located on approximately 780,000 inactivated benefit cards. Most of the recovered funds will return to the federal government because the fraudulent claims are from the emergency federal Pandemic Unemployment Assistance program, which was the primary target of fraud nationwide.

As fraud recoveries go, California’s recovery of these funds taken through fraud represents the lowest of low-hanging fruit. They simply deactivated the unemployment benefit debit cards they identified as fraudulent and claimed back the money that hadn’t been spent. They could have recovered more if the department had acted soon after Su acknowledged her agency’s problems—potentially billions more. Su was derelict in her duty as a top administrator in failing even to take this easy step.

The Biden Administration’s Growing Tolerance of Fraud

In nominating Su to be the next Secretary of Labor, President Joe Biden is sending an unfortunate message. The message is his administration will not take fraud against taxpayers seriously.

Su’s nomination comes as news is breaking about how the Biden administration fails to address another aspect of what is being called “the biggest fraud in a generation.” The Small Business Administration appears to be taking a page out of Julie Su’s managerial playbook:

The federal government will not even attempt to recover some coronavirus-related loans that did not meet the conditions for forgiveness, in what could amount to the greenlighting of theft from an $800 billion program.

The Small Business Administration (SBA), which administered the pandemic aid Paycheck Protection Program (PPP), said it will not seek to collect on loans that should have been paid back, but were not, as long as the amount is $100,000 or less. The vast majority of the 12 million loans given out in 2020 and 2021 were under $100,000.

The agency’s inspector general, which is tasked with policing waste, fraud, and abuse, sounded the alarm at SBA’s decision, saying its logic does not add up and it should suspend the decision.

“SBA ending collections on PPP loans valued at $100,000 or less is not in compliance with applicable criteria,” the IG wrote. “SBA is potentially increasing the taxpayer burden by missing the opportunity to collect on these delinquent PPP loans,” it wrote.

It said that by openly allowing Americans to keep huge sums of money they are not entitled to, the federal government is encouraging future fraud against the government.

U.S. taxpayers had to wait until Julie Su vacated her leadership role as California’s Labor Secretary before any traction was made in getting any restitution for the fraud committed against them through the agency she led. In Washington D.C., there’s a saying that “personnel is policy.” Do Americans really want another green light given to fraudsters?

Craig Eyermann is a Research Fellow at the Independent Institute.
Beacon Posts by Craig Eyermann | Full Biography and Publications
  • Catalyst
  • Beyond Homeless