Gavin Newsom’s goose is cooked after a huge investigation just dropped
Newsom tries to play the moderate. But his policies are more radical than he lets on.
And Gavin Newsom’s goose is cooked after a huge investigation just dropped.
The federal government is stepping in to scrutinize California’s long-troubled unemployment insurance system, highlighting ongoing concerns about lax oversight in the nation’s most populous—and often most criticized—state for bureaucratic mismanagement.
Federal Strike Team Targets Persistent Issues
The U.S. Department of Labor is preparing to dispatch a specialized “strike team” to California, with investigators from both national and regional offices set to examine financial irregularities and potential fraud in the state’s Employment Development Department (EDD) program.
Labor Secretary Lori Chavez-DeRemer stated: “Financial issues and potential fraud in California’s unemployment insurance program will be fully examined.”
She added: “The previous administration turned a blind eye toward failing Labor programs: This ends now.”
And: “Immediately, we are engaging a specialized strike team to uncover any potential fraud or abuse and quickly moving to protect the American worker and taxpayers.” The team is expected to arrive soon after a formal letter is sent to state officials, aiming to restore integrity to a system plagued by past failures.
Massive Pandemic-Era Losses and Lingering Debt
During the COVID-19 crisis, California received nearly $290 billion in federal relief funds, much of it funneled through the EDD, yet a 2023 state auditor report exposed major shortcomings in fraud prevention, resulting in billions in potentially fraudulent payouts—estimates reaching into the tens of billions overall.
The state still owes around $20 billion in federal loans taken to cover unemployment claims, forcing struggling businesses to shoulder higher payroll taxes for repayment.
Notable cases include a former EDD employee sentenced to 66 months in prison for $858,339 in fraudulent claims and four siblings in Kern County convicted for over $1.1 million in benefits tied to fake businesses.
More recently, over $900 million in unused COVID-era benefits has been flagged as at risk, including $720 million on prepaid debit cards and $192 million shifted to unclaimed property.
Accountability Push Amid California’s Track Record
The probe draws parallels to similar efforts in Minnesota and comes as critics point to California’s history of turning a “blind eye” to widespread abuse in its bloated programs.
While the investigation is just beginning, it underscores broader frustrations with a state system that has repeatedly allowed massive taxpayer losses, leaving everyday workers and employers to foot the bill for inefficiencies that seem uniquely entrenched in California’s governance.
Secretary Chavez-DeRemer expressed optimism, saying: “I look forward to restoring the California Unemployment Insurance program’s integrity and financial health.”
