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Scrutiny of Biden Labor Hire Expands as GOP Lawmakers Take Aim

Feb. 3, 2021, 9:09 PM

Three Republican members of Congress are the latest critics to raise questions about the appointment of former Washington state unemployment chief Suzi LeVine to run the federal office in charge of unemployment oversight.

LeVine’s appointment to the U.S. Labor Department job under President Joe Biden came after a rocky year as commissioner of Washington state’s Employment Security Department that at times brought calls for her resignation or firing.

Under her leadership, the Washington department paid out $600 million in fraudulent unemployment claims to a Nigerian crime ring (later recovering about $350 million) and suffered months-long delays in paying many of the state’s legitimate benefits claims. The department also faced accusations of resisting efforts by state auditors to investigate its operations.

While states across the country have confronted similar problems in processing a rush of jobless-aid claims, LeVine’s record over the last year hangs over her as she steps into the role of interim assistant secretary for the U.S. Labor Department’s Employment and Training Administration, which she started on Monday. The subagency has a $9 billion budget, about three-fourths of the DOL total, and is responsible for assisting states with their unemployment programs, managing national workforce development, and fielding employer requests for immigrant-worker visas.

“With thousands of our constituents affected by the ineffectiveness of Ms. LeVine’s leadership during the COVID-19 pandemic, we are deeply concerned that her appointment will have a negative impact on the millions of people who rely on the services of the Employment and Training Administration,” Washington state U.S. Reps. Dan Newhouse, Jaime Herrera Beutler, and Cathy McMorris Rodgers told Biden in a Tuesday letter.

The Republican lawmakers urged the new president to reconsider the appointment.

Whether LeVine, who’s a Democratic Party donor and fundraiser, might be appointed later to a permanent position within the Labor Department or some other federal agency isn’t clear. If Biden were to select her to head the ETA permanently, that appointment would require Senate confirmation—a process in which her record at the Washington state unemployment agency would likely come under far greater scrutiny.

Biden’s nominee to lead the Labor Department, Boston Mayor Marty Walsh, who has had brushes with scandal, is set for a Senate confirmation hearing Feb. 4. The president’s planned choice for deputy labor secretary, Julie Su, faces criticisms similar to those of LeVine after the California agency she leads got fleeced for more than $10 billion in bogus unemployment claims.

Democratic efforts to confirm them—though an intent to nominate Su hasn’t been formally announced—may sap the political capital needed to fight for LeVine, if the White House wanted to tap her for a Senate-confirmed role.

The “relentless attacks” of LeVine’s performance in Washington have been unfair and overlook the realities of a pandemic and economic crisis that sparked delays and fraud risks for unemployment programs around the country, said Democratic state Sen. Karen Keiser, who chairs the labor committee that oversees Washington’s unemployment program.

“We were more transparent and were upfront about what was going on, and therefore we got a lot more bad press,” Keiser said. LeVine “had a real passion for helping people who needed help. She actually did some of the unemployment claims herself on weekends when they were in the midst of the crisis.”

Unemployment insurance is just one policy bucket within a sprawling ETA portfolio that’s largely centered on workforce development. The job training focus fits more squarely with LeVine’s relevant agency experience, as she worked closely with ETA personnel during the Obama administration to promote expanding the nation’s apprenticeship system.

Further, the DOL official who plays a greater role in assisting states on UI implementation is the Office of Unemployment Insurance administrator, a vacant position that when filled would report to LeVine.

Political Connections

Prior to starting the Washington commissioner job in 2018, LeVine served as U.S. Ambassador to Switzerland and Liechtenstein under former President Barack Obama and also did nonprofit work related to workforce development and apprenticeships. She previously worked as a product manager at Microsoft Corp. and a sales and marketing executive at Expedia Group.

Critics, including Caleb Heimlich, chairman of the Washington State Republican Party, say LeVine’s appointment to the Labor Department job was a political reward rather than a choice based on merit.

“Throughout that whole debacle,” with Washington state’s unemployment program, “the person running the show was Suzi LeVine, who never lost her job. There was no accountability,” Heimlich said in a video posted to the party’s website. “Now we come to find out she has been promoted to the Biden administration, and she is now in a position where she is supervising unemployment programs in all 50 states.”

LeVine and the U.S. Labor Department didn’t respond to requests for comment for this article, and a spokesman for the state’s Employment Security Department declined to comment.

Washington’s Employment Security Department has had a history of operational problems that state legislators had urged it to fix in prior years, but without success, said Mark Harmsworth, a former Republican state lawmaker who now serves as small business director at the Washington Policy Center.

For example, he said the department’s internal financial reporting operates on about a 30-day lag, which prevents the department from having accurate, up-to-date numbers on how much money is left in the state unemployment trust fund.

“I would really hope that the lessons that were maybe not learned at the Washington state level aren’t taken to the federal level in D.C.,” Harmsworth said.

Governor’s Support

Washington Gov. Jay Inslee (D), who appointed LeVine to the state commissioner job in 2018, remained publicly supportive throughout calls for her resignation last year, and after her recent departure to join the U.S. Labor Department.

“Her dedication and hard-work will add value to the Biden-Harris administration. In our state, she led the Employment Security Department through an extremely challenging time and I never doubted that she had the best interests of working Washingtonians at the heart of all her endeavors,” Inslee said in a written statement last month when LeVine announced she was leaving the department.

Unlike LeVine, state unemployment directors in at least eight other states were fired or resigned last year under the pressure of the huge spike in jobless claims triggered by the pandemic.

She did face public criticism, however, from State Auditor Pat McCarthy, a fellow Democrat. McCarthy told LeVine in an October letter, which later became public through an open records request made by the Seattle Times, that auditors were being denied access to documents and personnel within LeVine’s department.

“As of this writing, the ESD is imposing significant constraints,” McCarthy wrote in the letter. “If ESD continues on this path, we will report that management interference prevented us from fully completing the audits.”

More recently, the auditor’s office itself has become the subject of controversy. The office disclosed this week that it learned of a data breach, exposing the personal information of up to 1.6 million people, including those who filed for unemployment claims during 2020.

The data was obtained from the Employment Security Department as part of the state audit—a point that Keiser, the Democratic Washington lawmaker—said gives credence to LeVine’s stance of hesitating to turn over sensitive information for the audits.

“Suzi LeVine was very protective of her agency,” Keiser said.

The state auditor’s office declined to comment beyond pointing to a status update that indicates it is still finishing its audits of the Employment Security Department.

To contact the reporter on this story: Chris Marr in Atlanta at cmarr@bloomberglaw.com

To contact the editors responsible for this story: Andrew Harris at aharris@bloomberglaw.com; John Lauinger at jlauinger@bloomberglaw.com

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