Controlled Economies are Failed Economies

By an 11-10 vote, Biden labor secretary nominee Julie Su has advanced out of committee. While a vote of the full Senate awaits, workers and taxpayers might take stock of what Su leaves behind, the fallout from some $30 billion in unemployment fraud on her watch. John Kabatek, California state director for the National Federation of Independent Business (NFIB), traces it back to the pandemic. 

Government officials “began to benevolently decide who were to be the economic winners and losers. Many small businesses were deemed ‘non-essential’ and were directed to shut down operations. Some dissenters were shut down by force.” Workers lost their jobs, and many filed for unemployment benefits. 

Nearly $30 billion paid out of the Unemployment Insurance Fund (UI) by the Employment Development Department (EDD), under the control of Julie Su, were fraudulent claims. By Kabatek’s count, criminal organizations filed 70 percent of the claims. 

Su waived the security guidelines, and fraud-alert red flags were removed from multiple applications. That enabled 133 death-row to steal the unemployment benefits of legitimate workers. Kabatek compares it to a gold heist, and the massive rip-off is more than fodder for confirmation hearings. 

“California is now on the hook to the federal government, which plays the role of the states’ UI bank disburser, to the tune of $20 billion.” Those same small businesses once deemed “unessential” and forced to shut down “are proving to be pretty darn essential now that the time has come to pay for the $20 billion UI Fund deficit.” 

Small business owners must now pay an additional $420 per employee annually. So the state demands that businesses once shuttered, now “foot the bill for its own colossal failure.” 

All told, Kabatek makes a strong case that “controlled economies are failed economies.” As Julie Su’s confirmation vote awaits, California workers, business owners, and taxpayers have plenty to ponder.