Taxpayers May Be Forced to Pay for $32B Unemployment Fraud Caused by Biden Administration

By: Ben Campbell | Published: May 15, 2024

American taxpayers may soon be burdened with a staggering $32 billion bill for employment fraud, a crisis that has been attributed to the Biden administration. 

The enormous bill is partially blamed on Biden’s labor head, Julie Su, who served as California’s top labor official during the COVID-19 pandemic when most of the fraud payments were issued. 

Employment Fraud During Covid

The U.S. government initiated numerous relief programs to ease economic hardship during the COVID-19 pandemic, which cost the nation around $5 trillion. 

Two people pictured following guidelines during the COVID-19 pandemic

Source: Wikimedia

Millions of Americans and businesses were helped through programs such as the Paycheck Protection Program, which issued forgivable loans for payroll. Other programs included the Federal Pandemic Unemployment Compensation, which aimed to provide assistance to employees who lost their jobs during the period. 

Fraudulent Employment Payments

According to reports released over the past few years, it became apparent that many Americans chose to steal from the programs by submitting fraudulent applications. 

A picture of a person using a calculator to work out finances

Source: Freepik

The Government Accountability Office wrote in a report last year that between $100 and $135 billion was lost to unemployment fraud during the pandemic. 

California Lost Over $30 Billion to Employment Fraud

States such as California experienced a significant portion of this amount, with as much as $33 billion in fraudulent payments issued in the Golden State. 

An image of the city of Los Angeles’ skyline during a clear afternoon

Source: Wikimedia

Now, Republican senators are worried that money taken from the American taxpayers will be used to pay back the employment fraud, which they claim was caused by Biden’s labor head, Julie Su.

Republican Senators Send Letter

Republican Senators Mike Crapo and Bill Cassidy expressed their concerns in a letter sent to Labor Secretary Julie Su in early May. 

Photograph of Republican Senator Mike Crapo

Source: Anna Moneymaker/Getty Images

They are concerned with Labor Department guidelines published in December that could “allow California to shift the consequences of a still unknown amount of federal funds that was lost” by its Employment Development Department (EDD) during Su’s time in office.

Billions Paid to Fraudsters During COVID

While the total amount is currently unknown, it has been estimated that around $32.6 billion in fraudulent payments were issued in the state of California during the pandemic, according to figures from the Government Accountability Office. 

A woman in a facemask is pictured using an ATM during the pandemic

Source: Freepik

This amounts to almost one-third of all fraudulent unemployment insurance payments issued at the time. According to Sens. Cassidy and Crapo, this equates to more than double the yearly budget of the U.S. Department of Labor. 


The True Extent of the Fraud

A report released by the California State Controller revealed that it was difficult to pinpoint the true extent of the fraud because the state had little control over the reporting for federally funded programs during the pandemic. 

An image of a hacker dressed in all black committing fraud on his laptop

Source: Freepik

Their report declared that the state of California “had inadequate control over its financial reporting for federally funded unemployment insurance benefits.”


Senators Speak on the Waiving of Funds

Guidelines issued on how individual states are to approach recovering funds lost to fraud during the pandemic allow each state, to some extent, to decide whether funds should be paid back or waived. 

The official portrait of Senator Bill Cassidy

Source: Wikimedia

During a spoken testimony at the beginning of May, Crapo and Cassidy sat before the House Education and Workforce Committee. They explained that Su had previously claimed states could only “waive non-fraudulent overpayments.”


Senators Claim Labor Head Waived Fraud Prevention

In the letter they issued several days after the testimony, the senators referenced Su’s decision to waive fact-checking methods, which would have prevented fraud

A group of government officials pictured at a meeting

Source: Freepik

“While serving as Secretary for the California Labor & Workforce Development Agency (LWDA), you waived basic fact-checking and fraud prevention requirements for federal pandemic-related unemployment insurance (UI) payments,” the senators wrote.


Repeated Warnings Were Issued to the Department

According to the senators, Su’s actions directly contradicted the guidelines set in place by the U.S. Labor Department. California’s auditors made additional comments suggesting that it issued “repeated warnings” to the EDD. 

A woman is pictured opening a letter she received in the post

Source: Freepik

However, the department “did not bolster its fraud detection efforts until months into the pandemic, and it suspended a critical safeguard.”


EED Argues All Steps Were Taken to Recoup Lost Funds

According to the Employment Development Department, actions were implemented, and they tried all “reasonably necessary” steps to recoup the funds lost to fraudsters during the pandemic. 

An image of several office workers seated at a small desk

Source: Freepik

The EDD argued that as they tried to recoup the funds, the department is all but forgiven should the new guidelines issued by the labor department be approved. 


Senators Attempt to Access California's Liability

Crapo and Cassidy continue to press Su and have requested that the labor head answer numerous questions that can help them better discern how liable the state of California is. 

Labor Secretary Julie Su

Source: Wikimedia

It appears the senators are hopeful that they will be able to prove that Su and the labor department are responsible for the mishandling of government programs, which undoubtedly led to an excessive amount of fraudulent employment insurance payments. If so, it may reduce the chance of the $32 billion being paid by the American taxpayers.