California Businesses Are Still Paying for Biden Nominee Julie Su’s $31 Billion Mistake

Julie Su: The Controversial Labor Secretary Candidate

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California Businesses and Agriculture Groups Protest Escalating Payroll Taxes

Last month, nearly 60 California businesses and agriculture groups representing over four million members voiced their concerns about escalating payroll taxes to bail out the state’s insolvent unemployment insurance fund. The groups warned state legislative leaders that the taxes could exceed $400 per worker each year, posing a significant threat to employee-heavy small businesses and restaurants that were already devastated by California Democrats’ strict COVID-19 lockdowns.

The business groups did not mention Su by name, but they noted how California’s unemployment insurance fund spent up to $31 billion on payouts for fraudulent claims, which only exacerbates the financial burden on businesses and taxpayers.

The Impact on Small Businesses and Restaurants

• Escalating payroll taxes could exceed $400 per worker each year
• Employee-heavy small businesses and restaurants are at risk
• California Democrats’ strict COVID-19 lockdowns have already devastated these businesses

It’s clear that California businesses and agriculture groups are fed up with the financial burden placed on them by the state’s unemployment insurance fund. With small businesses and restaurants already struggling to stay afloat due to the pandemic, these escalating payroll taxes could be the final straw. It’s time for California lawmakers to take action and find a solution that doesn’t put the livelihoods of hardworking Americans at risk.

California Businesses Struggle with “Su Tax” as Labor Secretary Confirmation Remains in Doubt

Julie Su, former California labor secretary, left her post to become the Biden administration’s deputy labor secretary after presiding over the state’s unemployment insurance fund’s fall into insolvency. Now, with Su seeking confirmation as Biden’s labor secretary, California businesses are struggling with the “Su tax” as they face double taxation to make up for the government’s negligence.

Concerns about Su’s Competence

The California Chamber of Commerce and other business groups wrote in a letter that California’s businesses had no control over the mistaken distribution of the employer-funded UI funds. The plight of California businesses underscores swing-vote senators’ concerns about Su’s competence as she seeks confirmation as labor secretary.

The Senate Health, Education, Labor, and Pensions (HELP) Committee voted along party lines to advance Su’s nomination to a vote by the full chamber, but her confirmation remains very much in doubt.

An Incompetence Tax

Some Republicans in California have taken to referring to the new costs of doing business as the “Su tax.” Rep. Kevin Kiley (R., Calif.) called it an “incompetence tax” and said it was a price private citizens are being forced to pay for their government’s failures.

Objections to Su’s Confirmation

Ranking committee member Bill Cassidy (R., La.) voiced objections to Su’s confirmation that Republican lawmakers and national business groups had raised. Cassidy said that a qualified Secretary of Labor needs to successfully handle negotiations, manage a department properly, and refrain from partisan activism. He hasn’t seen evidence of Julie Su’s ability to do any of those three things.

Su insisted that she had moved swiftly to stop California from being defrauded during the pandemic, but her testimony was directly contradicted by federal and California state audits. According to the audits and Su’s own directives, she tossed safeguards out the window to pump unemployment dollars to the millions of people who were rendered jobless during the state’s long COVID-19 lockdown.

• Su suspended a requirement that unemployment insurance recipients check in every two weeks to prove they still qualify for benefits.
• The unemployment insurance fund also paid claims to parties its own analysis deemed ineligible.

The predicament that small businesses in California now find themselves in is another example of why Julie Su’s nomination to be our nation’s next labor secretary is so ill-considered.

California’s Unemployment Fund Still in the Red After $31 Billion in Fraudulent Payments

California’s unemployment insurance fund is still nearly $20 billion in debt, more than two years after the state’s Employment Development Department (EDD) wasted as much as $31 billion in pandemic unemployment insurance payments. The EDD’s “lax approach” to fraud prevention was flagged as suspicious by California’s watchdog, and a federal audit found that one fraudster received $1.6 million in benefits over 164 days.

As a result, California businesses are now facing a $21-per-employee increase in payroll taxes, with the tax bump rising every year that the fund remains insolvent. The burden of replenishing the fund falls on private employers alone, despite the fact that the cost of COVID-19 on California’s UI Fund should not be their responsibility alone.

No Plan in Place to Make the Fund Whole

Despite Governor Gavin Newsom’s latest budget, which does not address the fund’s insolvency, there is no plan in place to make it whole. This means that private employers will continue to bear the brunt of the state’s errors, with no exemption for small businesses.

Published under:

• Biden Administration
• California
• COVID-19
• Fraud
• Labor Secretary
• Unemployment

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