[Congressional Record Volume 169, Number 37 (Monday, February 27, 2023)]
[House]
[Pages H907-H909]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




              PRESIDENT BIDEN SHOULD NOT APPOINT JULIE SU

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 9, 2023, the Chair recognizes the gentleman from California 
(Mr. Kiley) for 30 minutes.
  Mr. KILEY. Mr. Speaker, Secretary of Labor Marty Walsh has announced 
his intention to leave the Biden administration, and reports suggest 
Deputy Secretary Julie Su is the leading candidate to replace him. As 
chair of the House Subcommittee on Workforce Protections, I am urging 
President Biden, in the strongest terms, not to appoint Julie Su to 
this important cabinet post.
  Prior to joining the Biden Labor Department, Su was California's 
Secretary of Labor under Governor Gavin Newsom. To say she failed the 
people of California in that role would be an extreme understatement. I 
was serving in the State assembly during her tenure. I witnessed 
firsthand failures on a scale that no State in this country has ever 
experienced.
  I have already sent a coalition letter from Members of the California 
Congressional delegation to President Biden urging him to nominate 
someone, anyone, other than Su. Today, I will expand on the points we 
raised in that letter.
  The amount of suffering Su's labor department inflicted on my 
constituents and millions of Californians needs to be understood by the 
President and by every Senator who would be voting on her nomination.

                              {time}  2030

  Specifically, I will be discussing three main failures in her tenure 
in California, each of which is independently disqualifying.
  First, under her supervision, California's unemployment office, known 
as the EDD, failed to deliver benefits to millions of Californians.
  Second, at the same time, thanks to Su's gross negligence, the EDD 
allowed the largest fraud of taxpayer dollars in history.
  Third, Su helped destroy the careers of thousands of California 
freelancers as an architect of a labor law that effectively bans 
independent work.
  Let's start first by looking at the EDD's staggering failures under 
Su's watch to perform its basic function of delivering benefits to the 
unemployed.
  California had the highest or second-highest unemployment rate in the 
entire country through most of the COVID-19 era. This in itself could 
be seen as a significant failing of the State's secretary of labor. 
What was even worse is that those people who lost their paychecks on 
the government's orders, millions of Californians, had to wait weeks, 
months, or in some cases indefinitely for the unemployment benefits 
they were entitled to by law.
  Now, in fairness, the COVID shutdown presented unemployment 
departments with unprecedented demands, and a number of States 
struggled to keep up. What happened in California under Su's management 
is simply without comparison.
  An estimated 5 million claims were delayed, many for months on end. 
An estimated 1 million people were wrongfully denied benefits. As a 
result, many of my constituents were left helpless with no income, no 
ability to provide for their families. Many became dependent on food 
banks and had to cut back on basic necessities. They had to dip into 
their lifesavings or take on debt.
  For example, in late April 2020, my office received a call from a 
woman named Emily, who was inconsolable, saying she was on the brink of 
giving up hope. She was out of work and her EDD claim had been pending 
for a month. She had no money, no way to pay her bills or put food on 
the table. I just can't do this anymore, she said, adding that she 
couldn't hang on the Governor's promises anymore. We later learned the 
agency had made a basic processing error, denying her claim and not 
even telling her.
  I could provide hundreds of other stories just like this. At times, 
during 2020, my office would open dozens of new cases every day from 
constituents who could not get their benefits. We heard from folks who 
would call the EDD hundreds of times with no answer, who received 
notices with someone else's Social Security number, someone else's 
employer, someone else's earnings, who would wait weeks, months, or 
forever for their benefits.
  The level of service was worse than anything I had ever seen in 
government, eclipsing the very worst horror stories of bureaucratic 
ineptitude. By one estimate, only one in a thousand people would reach 
a live person when they tried to call the EDD.
  Sometimes, after finally getting through, the caller would be 
abruptly hung up on. The callback option routinely failed with people 
requesting a call back and then not getting one.
  Often, no reason was given for benefit denials, and when one was 
given, it often didn't make sense. One claimant had an electronic 
application denied as illegible--an electronic application.
  San Francisco Assemblyman David Chiu, a Democrat, started a hashtag 
featuring the worst of these incidents. He called it #EDDfailoftheday.
  Months went by with no progress made. You don't need to take my word 
for it. In July 2020, 61 of the 80 members of the California Assembly, 
mostly Democrats, wrote as follows:
  ``In our fifth month of the pandemic, with so many constituents yet 
to receive a single unemployment payment, it is clear that EDD is 
failing California. Millions of our constituents have had no income for 
months. As Californians wait for answers from EDD, they have depleted 
their lifesavings, have gone into extreme debt, and are in deep panic 
as they figure out how to put food on the table and a roof over their 
heads.''
  The lawmakers went on to explain how the EDD, time and again, failed 
to take responsibility and failed to correct its mistakes. They wrote 
that they had been met with longwinded excuses, fumbling non-answers, 
or unclear and inconsistent data, along with a ``lack of transparency 
and accountability,'' even ``obfuscation and dishonesty'' in their 
dealings with the agency.
  We have exhausted all avenues at our disposal, they said, as the 
agency had addressed only a few of the many issues we have highlighted 
for months and was only scratching the surface of the disaster that is 
the EDD.
  Those are the words of the Democrat supermajority in the legislature: 
the disaster that is the EDD. The legislators lamented ``how little has 
improved at EDD over the course of the pandemic.''
  Independent reports would soon confirm the extent of the agency's 
mismanagement and deception. While the EDD had said in July 2020 that 
its claims backlog would be cleared by September, a report found 1.5 
million claims remained unresolved and the backlog was increasing by 
10,000 each week.
  The independent Legislative Analyst's Office found the EDD 
mischaracterized the crisis repeatedly to the legislature. For 
instance, the EDD claimed that 705,000 claims were denied when the real 
number was 3.4 million.
  Under Julie Su, California's unemployment office became the national 
poster child for government failure. Su failed to prevent avoidable 
problems, failed to address the crisis as it spiraled out of control, 
and failed to honestly acknowledge problems after the fact.
  Millions of Californians paid the price. It bears emphasizing that 
these were people who had lost their jobs on the government's orders 
and had been paying into the very system that was now failing them.
  Even allies of the Governor and Secretary Su concluded that she was 
responsible. Democrat Assemblymember Cottie Petrie-Norris, who is 
chairwoman of the Assembly Accountability and Administrative Review 
Committee, said that Su has not done a

[[Page H908]]

good job at running the Employment Development Department, saying that 
Su's mismanagement caused heartache for millions of Californians.

  That is the first reason, that heartbreak for millions, why President 
Biden should not even consider elevating Deputy Secretary Su. The 
second independent basis for disqualification is the historic fraud of 
taxpayer dollars that occurred on her watch.
  As so many hardworking citizens waited in vain for the checks that 
they were owed by the EDD, there was one group of claimants for whom 
the delivery of benefits was swift and seamless: prisoners and 
fraudsters who were not entitled to them.
  In the largest fraud of taxpayer dollars in history, an estimated $32 
billion was wrongfully paid out from the EDD to State prison inmates 
and international crime syndicates. Payments were made to murderers, 
rapists, and child molesters, and 133 death row inmates collected over 
$400,000. These hardened criminals didn't have to try hard. They used 
names like Dianne Feinstein and John Doe without raising an eyebrow. 
The district attorney of Sacramento County called the scheme 
``relatively easy.''
  The scale of this fraud boggles the mind. It equates to over $800 per 
person in California. The amount of money wasted was enough to pay the 
annual salary of 330,000 teachers in California. You could end world 
hunger with this kind of money.
  Where did the money go? It went to the worst of the worst, funding 
organized crime both domestically and internationally. This $32 billion 
was used not to help citizens who had lost their jobs or to pay 
teachers or to end hunger but to fund further criminal activities.
  It was easily preventable. Nothing even close to this happened in any 
other State. The reason it happened in California was Secretary Julie 
Su. She made the inexplicable decision to forgo a basic fraud 
prevention system. She ignored the Federal Government's guidance that 
claims be crosschecked against the prison rolls, which was standard 
practice in other States. The agency sent hundreds of benefit cards to 
the same address, sent cards directly to correctional facilities, and 
issued benefits to infants and centenarians.
  The district attorney of Sacramento County called the EDD's response 
to the fraud ``slow and nonexistent'' and advised to look to other 
States for solutions.
  Fresno County's district attorney said the administration did nothing 
until the elected district attorneys brought it to the media, adding 
that she did not think the State ``has a handle on it.'' Riverside 
County's district attorney said: ``I don't know who was at the wheel.''
  The chairwoman of the State Assembly committee responsible for 
overseeing the EDD, a Democrat, decried the failure to follow ``simple 
and obvious steps that are implemented across the country.'' She added: 
``It is absurd. This is outrageous.''
  Perhaps most outrageous of all, as the district attorneys who 
uncovered the fraud put it: ``Fraudulent unemployment claims deny those 
who have lost their employment, many due to COVID-19, who are legally 
eligible for benefits and are truly in need from getting the financial 
assistance they need.''
  Assemblyman David Chiu, a Democrat from San Francisco, summed it up 
this way: ``It is egregious that my constituents make a single typo 
that holds up their EDD benefits for months while an inmate on death 
row can use a fake name and still get benefits paid out.''
  As if these first two reasons were not enough--the heartbreak for 
millions and the waste of billions--Deputy Secretary Su should not be 
elevated to the Biden cabinet for a third independent reason. As 
California's secretary of labor, she championed and ruthlessly enforced 
a labor law that has been called one of the most destructive pieces of 
legislation in the past 20 years.
  It wasn't me that called it that. This quote came from Gavin Newsom's 
own former deputy chief of staff, Yashar Ali, who added: ``It is truly 
horrific how many people have been negatively impacted by the law.''
  That law, AB5, effectively bans independent work of any kind. While 
it was promoted as a way to convert rideshare drivers to the status of 
W-2 employees, the law has ensnared hundreds of professions: 
videographers and caricaturists, transcriptionists and interpreters, 
technicians and engineers, analysts and consultants, musicians and 
conductors, artists and dancers, writers and editors, coaches and 
trainers, teachers and tutors, nurses and doulas. Hardly an industry or 
trade is unscathed.
  It is a law so bad that affected industries have had to lobby the 
legislature for exceptions, over 100 of which have been granted, but 
only to those with enough influence. Countless other Californians, 
spanning hundreds of professions, remain subject to the law and have 
lost their ability to earn a living in our State or had their 
professional options severely restricted.
  In fact, many national companies now explicitly disclaim on their 
applications that they can no longer work with California freelancers. 
In many professions, independent contracting is the only viable 
business model. In others, it is much preferred, thanks to the 
flexibility and freedom it affords. Regardless, the blunt instrument of 
AB5 forbids it.
  Most devastated by this law are the most vulnerable: seniors, 
caregivers, students, reformed convicts, single mothers, people with 
disabilities or health issues or mental health needs, all of whom rely 
on independent contracting to balance work with their personal life 
circumstances.
  Consider just a few testimonials of Californians whose lives have 
been upended by the law.
  A woman named Jodie said: ``I worked years to gain my skill as an 
American Sign Language interpreter. It was my goal since I was 9 years 
old. After AB5, I lost all three of my agencies. The dream I worked for 
is lost. I can't provide for my family and thousands of California's 
deaf won't be serviced.''
  Andy said: ``I work with underserved artists of color. None of my 
career as an artist, technician, designer, and producer would have been 
possible under AB5. Artists of color will be less able to create their 
own work.''

  Megan said: ``I am a nurse practitioner. AB5 is widening the gap in 
healthcare as small rural practices that can only be staffed with 
contractors shut their doors. Setting my own schedule has allowed me to 
spend time with my children that I will no longer be able to.''
  Daniel said: ``I am a chiropractor in California. I was just 
terminated from my wonderful independent contract, 10 hours per week 
job. The company cited AB5. I have had this job for 10 years. The job 
allowed me flexibility to take care of my three special needs kids. Now 
it is gone.''
  Jared said: ``AB5 forced me to shut down my business. I went from 
making $80,000 per year in home services to a minimum wage employee. My 
family trade is gone. I have gone from working 4 days a week to spend 
time with my kids to not knowing if I can make ends meet working 7 
days.''
  Kathi said: ``I am a 71-year-old transcriber. I raised six kids and 
went to work in my forties, but I had to retire at 62 due to health 
issues. I depend on my at-home transcription pay to survive and pay my 
bills. For 8 years I did okay, until AB5.''

                              {time}  2045

  Barbara said: ``I am a proofreader. Competition is fierce, and it is 
hard to get clients, but I did it. I was thrilled to choose jobs I was 
best suited for and to work when I wanted. After AB 5, Californians 
need not apply.''
  Julie Su has been called an ``architect'' of this law. After its 
enactment, she used her position as California Secretary of Labor to 
ruthlessly enforce it.
  Here is what Su said in her own words: ``The way to enforce AB 5 is 
just doing investigations and audits. That will be on both wages and 
tax. So we will be doing investigations and audits so that those who 
want to comply with the need to reclassify can do so, and those who 
don't will understand that is not the kind of economy we want in 
California.''
  Think about how callous those words are, Mr. Speaker.
  Just wiping out hundreds of professions of countless people, ``that 
is not the kind of economy we want in California,'' she said.

[[Page H909]]

  She went on to say: ``So we can issue citations and demand both wages 
and taxes and other kinds of penalties.''
  Su shamelessly kicked this harassment strategy into high gear after 
the COVID shutdowns began. She even defied the will of Congress in the 
process. It was one of the most disgraceful episodes of the COVID era 
in California. Congress had provided benefits to independent 
contractors through the CARES Act and put States in charge of 
distributing those benefits. Yet under Julie Su, the EDD wrongfully 
withheld those benefits as she aimed to exploit this sudden need that 
independent contractors had to interface with her department.
  A website called The People v. AB 5, run by four self-described 
``Democrats who support unions'' but were opponents of the law, 
explained Su's scheme. They wrote that EDD ``attempted to weaponize the 
COVID-19 crisis by leading out-of-work Californians into a trap.''
  Instead of giving them access to the benefits Congress had included 
for independent contractors in the CARES Act, the EDD tried to shoehorn 
them into the regular unemployment system where they would then have to 
name the names of their business partners. Then, once it had that list, 
EDD would pounce, launching audits of the named businesses for 
allegedly violating AB 5 and hitting them with fines ranging from 
$5,000 to $25,000 per ``misclassification.'' This would be applied 
retroactively to before the law even existed.
  The website gave an example of a small ``princess for your little 
girl's birthday party,'' business whose owner was audited and fined 
$60,000 dating back several years.
  Incredibly, as small businesses were on their last legs, the EDD 
plowed ahead with these harassing audits using personnel that could 
have been processing unemployment claims or detecting fraud. The worst 
consequence of all this was that countless freelancers who were forced 
out of work by AB 5, COVID, or some combination of the two, had to wait 
weeks or months for benefits as Su's department played its political 
games.
  You don't need to take my word for this, Mr. Speaker. California 
Congressman Adam Schiff wrote a letter to Secretary Su in April of 2020 
rebuking her for failing to release the benefits independent 
contractors were owed under the CARES Act.
  Schiff wrote as follows:

       I represent thousands of independent, freelance contract, 
     and gig workers, including many in the entertainment 
     industry, who often do not qualify for standard unemployment 
     benefits. The CARES Act, which was signed into law 2 weeks 
     ago, dramatically expands unemployment coverage, and I led an 
     effort in the House to extend this coverage to nontraditional 
     and independent workers.
       As States are now working to implement these expanded 
     benefits, I am hearing from many of my newly eligible 
     constituents who are concerned because they are not yet able 
     to apply and are increasingly worried as their financial 
     responsibilities continue to mount without anticipated 
     income.

  It is little wonder that the coalition behind AB 5 has issued a 
letter endorsing Su to be President Biden's new Secretary of Labor. The 
letter signed by the California Labor Federation, SEIU California, and 
the California Teachers Association, among others, begins: ``There is 
no one more qualified to help lead.''
  They know exactly where she would lead the country: down the same 
disastrous path as California--something her former boss, Gavin Newsom, 
has explicitly called for, saying that California is a model for the 
Nation and promising to highlight California's ``policy innovations'' 
so they can be scaled up nationally.
  Given Julie Su's role as an architect and enforcer of AB 5, there is 
no doubt that as U.S. Secretary of Labor she would do everything in her 
power--and likely things not properly in her power--to nationalize the 
law and its destructive consequences.
  In fact, there are already two vehicles for doing so. The PRO Act, 
which passed the House last year would cost at least 350,000 freelance 
workers their ability to earn a living, and at this moment, the 
Department of Labor has a proposed rule that would similarly threaten 
the livelihoods of independent contractors nationwide.
  This is not a trivial matter. Fifty-seven million Americans engage in 
freelance work. They deserve a Secretary of Labor who defends their 
freedom to work and respects them as professionals. Julie Su's track 
record suggests she would be a Secretary who does just the opposite.
  President Biden faces a very clear choice: Does he want a Secretary 
of Labor who will fight for workers, taxpayers, and citizens, or does 
he want the hand-selected rubberstamp of special interest groups?
  This is a moment of vital importance for the American workforce. We 
are coming out of an era of unprecedented upheaval and heading toward 
an era of unpredictable transformation.
  The position of Secretary of Labor cannot be treated as a gift to 
special interests. It cannot be occupied by someone who has harmed so 
many workers in so many ways. It cannot be consumed by the incompetence 
and corruption that Californians are all too familiar with.
  Mr. Speaker, I urge President Biden to cease consideration of Julie 
Su for Labor Secretary and to appoint a new Secretary who is competent 
and qualified, who is pro-worker and pro-small businesses, who will 
work with Democrats and Republicans alike, who will unleash our 
economic potential rather than suppress it, and who understands that it 
is ingenuity and hard work--not the heavy hand of government--that has 
made the American workforce the greatest engine for progress the world 
has ever known.
  Mr. Speaker, I yield back the balance of my time.

                          ____________________