What Vince Fong's CAL Repayment Act Actually Does — And Why It's Aimed Squarely at California

If you follow our congressman’s news, you’ve probably seen him touting a new bill — the CAL Repayment Act — as a stand for fiscal accountability and a way to protect California’s small businesses and farmers from Sacramento’s mistakes. And I’ll say plainly: the instinct behind that is fair. California does owe a real debt. Our employers are paying more because of it. If you heard “accountability” and nodded, you were responding to something true.

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So I did what I think a representative is supposed to do for you — I sat down with the actual text of the bill (it’s short, and it’s public), and I read it the way I’ve spent a career reading insurance policies for the people I serve: not for what it’s called, but for what it will actually do to the people it touches. And what I found is that the name is doing an enormous amount of work the text simply does not back up.

What it is

It’s H.R. 8892, introduced May 19, 2026. It amends one corner of the Social Security Act — the part that governs the loans states take from the federal government to keep unemployment checks going when their state funds run dry. It was sent to the House Ways and Means Committee, picked up a single cosponsor from Pennsylvania, and there it has stayed. No hearing. No vote. Filed and parked. To be fair, any movement so soon after being introduced would be unusual and rare.

What this bill does and does not do

Here’s what the bill does not do. It does not put one dollar toward California’s existing debt — the roughly $21 billion everyone’s worried about. By its own words, it only applies to federal money awarded after it becomes law. The debt we have right now remains untouched.

What it does do: if California ever receives certain future federal funds, the state would have to use those funds to pay down the unemployment debt first, within five business days — before spending them on anything else. And if California doesn’t? The penalty isn’t “pay back what you misspent.” If the state diverts any of that incoming federal money — the eligible federal funds it receives that were supposed to go toward the $21 billion EDD (Employment Development Department) debt — to another purpose first, the bill says it must hand back “the full amount of the funds,” the entire disbursement it received and not just the diverted portion, within five business days.

And — this is the part I keep coming back to — the bill gives our employers no relief at all. The higher payroll tax they’re already paying keeps climbing under existing law, exactly as it does today. So a bill sold as protecting small businesses doesn’t lower a single business’s taxes by a single penny.

Where the $21 billion debt really came from

Before we go further, we need the whole story of what led to this debt, because almost everyone gets parts of it wrong.

Let’s start with the boring part, because it’s the most important: California’s unemployment fund is paid for entirely by employers, and only on the first $7,000 of each worker’s wages — one of the lowest taxable bases in the entire country. That base is so small that even in good years the fund collects less than it pays out, so it never built a real cushion. When COVID hit in 2020 and the state’s own shutdown orders put millions of people out of work almost overnight, the fund was drained within weeks, and California borrowed from the federal government to keep the unemployment checks flowing — about $17.8 billion by the end of that first year. That borrowing is what grew into today’s $21 billion. At its root, it was and is real money paid to real Californians who really lost their jobs, drawn from a fund that was never built to withstand a shock like a global pandemic.

Now the part that still makes people in this district angry — and they have every right to be. The EDD fraud during the pandemic was real, it was staggering, and it still is a genuine scandal. The state has confirmed at least $11.4 billion in fraudulent payments, and estimates of the true total run as high as $20 to $32 billion. Benefits went out in the names of people who didn’t exist, of people behind bars, even of sitting U.S. senators — and some of it landed with criminal rings overseas. The EDD was overwhelmed, it had let its own fraud defenses lapse, and it waved claims through in a way critics fairly called “pay now, verify later.” It was and is a betrayal of every honest taxpayer in this valley and the state. The people responsible need to be held accountable for it.

But here is the part the folks shouting “the debt is the fraud” don’t want you to hear: by the EDD’s own accounting, 95% of that fraud — all but about $1.3 billion of it — came out of a separate, federally funded pandemic program — Pandemic Unemployment Assistance (PUA), paid with Washington’s money, not drawn from the state fund that owes this $21 billion (EDD; Governor’s office via the Mercury News). Roughly $1.3 billion of fraud did hit the regular state Unemployment Insurance program, and that’s real money that can’t be ignored — but $1.3 billion is a sliver of a $21 billion debt that paid for overwhelmingly legitimate claims, sitting on top of a tax base that’s been too low for decades.

And let me be as fair to the state as I’ve been hard on it: Sacramento has not done nothing about the fraud. The EDD has now clawed back more than $5.9 billion of the stolen money, brought in a former U.S. attorney to lead the investigations, and opened nearly 1,800 fraud cases. It has spent close to a billion dollars rebuilding the system through a modernization effort called EDDNext — new identity verification, a public claims dashboard, and the prison-inmate cross-check that should have existed all along — and says it has now adopted all 21 of the State Auditor’s fraud-fighting recommendations. That is a real reckoning.

Two hard truths sit beside the reckoning. Most of the money is simply gone — roughly $5.9 billion recovered out of an estimated $20 billion, much of the rest wired overseas and never coming back. And because the fraud was overwhelmingly federal money, the dollars the EDD does recover are mostly returned to Washington — those dollars do not pay down our $21 billion Unemployment Insurance debt. So even a flawless fraud cleanup wouldn’t retire this $21 billion debt. These are two separate problems, and only one of them — the $21 billion one — is why your payroll taxes keep climbing.

So hold all of this in your hands at once, because it’s all accurate: the EDD fraud was, and is, a real scandal, the state is finally cleaning up after it, and it is still not the reason we owe this $21 billion. Anyone who blurs those things together is hoping you’ll be too angry to check the facts. It is important to know all the parts of what happened and how we got here, because they overlap.

How the CAL Repayment Act bill singles out California

Notice the bill never says “California.” It’s written generically — “a State,” as if it could apply anywhere. But here’s the quiet part: California is the only state in the country still carrying this COVID-era debt. New York paid off roughly $8 billion and got out. Connecticut got out. Even the home state of the bill’s one cosponsor — Pennsylvania — already paid theirs off.

So when you strip away the generic wording, you’re left with a “national” law, written at the precise moment California is the last state owing the COVID-era UI debt, whose mandate and whose penalty can — right now — fall on us and nowhere else. That’s not reform. That’s a bill with one address on the envelope, and the address is California, USA.

How the CAL Repayment Act kicks us while we’re down

California’s employers have already paid about $5.97 billion in higher federal taxes because of this debt — roughly $84 per employee and rising every year. That’s a real weight, and it lands hardest on the small business operations that are the Central Valley economy. They are already down.

And this bill’s answer to people who are already down is a new trigger aimed at the future. If California receives federal money it could lawfully put toward the loan — the flexible relief dollars a state actually has discretion over — it would have to send that money to the $21 billion debt first, within five business days, before spending a dollar of it here at home. And if the state spent it on California’s needs first? It would have to pay the entire amount back. The bill offers us nothing in return. No relief, no rebate, no plan.

Here’s the part that tells you everything: The business groups who’ve been sounding the alarm on this debt — the chambers, the employer associations — have a clear ask. They’ve been asking Sacramento for direct aid and small-business tax rebates — the very thing New York used to dig out of their COVID-era debt. Our congressman borrowed their alarm and their numbers, and then wrote a bill that delivers the opposite of what they actually asked for. He gave them a hammer when they asked for a hand.

And Sacramento? Also not delivering

I’m a Democrat, and I’m not going to pretend my own party has handled this well. If I’m going to be accurate about Washington, I must be just as accurate about Sacramento.

(Here’s where things stood as of June 9, 2026. The state budget has to be finalized by June 15, so this could still change — and I’ll update it if it does.) 📅

As I write this, the state budget moving through the Legislature does almost nothing for the employers carrying this debt. It covers the interest California owes on the loan — about $662 million in the coming fiscal year — but puts no money toward the principal itself (EDD’s own forecast projects the balance hitting $22.1 billion by the end of this year). In five years, the state has made exactly one principal payment — $250 million, back in 2022. As the nonpartisan Legislative Analyst’s Office put it, we’ve essentially been making interest-only payments.

And the $750 million for the UI Fund and $500 million in small-business tax rebates that businesses were promised back in 2022? Still not delivered — scaled back and deferred, year after year.

The one piece of actual small-business relief in the Governor’s May proposal is modest: cutting the $800 first-year minimum business tax in half, to $400, for brand-new LLCs and partnerships in 2027 through 2029. That’s something — but it’s small, it’s only for new businesses, and it has nothing to do with the unemployment debt squeezing the employers who are already here. Meanwhile, this is a tight budget that closes a deficit and even raises a few business taxes. There simply isn’t any real relief in the proposed budget.

So let’s put both halves together to see the whole situation: the employers carrying this burden are getting a press release from Washington and an interest-only holding pattern from Sacramento. Neither one is relief. Both parties have had years to fix this, and both have handed our small businesses a bill instead of a hand.

Why Sacramento can’t get out of its own way: follow the lobbying

If you’re wondering how a state this size lets a $21 billion debt just sit there for five years, the answer isn’t a mystery — it’s lobbying muscle and lack of political will. For nearly twenty-five years this exact issue has been frozen by a standoff between two of the most powerful forces in the Capitol, and neither will let the other win.

On one side is the business lobby — the California Chamber of Commerce, the National Federation of Independent Business, the California Business Roundtable. They block any move to raise the employer tax or expand benefits while the fund is in the red. Their signature weapon is the Chamber’s “Job Killer” list, and it works: since 1997, bills branded a “Job Killer” have been defeated or neutralized roughly 90% of the time.

On the other side is organized labor — the California Labor Federation, SEIU, the teachers’ union — which pushes to protect and expand benefits and would rather shore up the fund by raising the employer tax than by cutting what workers receive. With union-friendly Democrats holding roughly three-quarters of the Legislature, they have the votes to stop anything that trims benefits.

You can watch the collision play out across the whole twenty-five years — and it starts long before COVID. In 2001, SB 40 (Alarcón) nearly doubled the maximum weekly benefit, from $230 to $450, and raised the share of wages it replaced — a major labor win. But the same law pointedly did not raise the $7,000 taxable wage base or the tax rate to pay for it (LAO). Benefits went up; the money to fund them did not. That is the moment the structural hole was dug.

And that hole has never been filled, because the revenue side of the fix is the business lobby’s reddest line. California still taxes employers on only the first $7,000 of each worker’s wages — a figure frozen since 1983, the lowest base in the country, capturing less than 15% of what people actually earn (Kabateck Strategies). Every serious proposal to raise it runs straight into a “Job Killer” tag and dies.

If you want proof this is a chronic stalemate and not a one-time pandemic accident, look at what happened the last time the UI fund ran dry. During the Great Recession, California borrowed approximately $10 billion from the federal government, never repaid it from the state’s own pocket, and let Washington raise employer payroll taxes until the debt was finally cleared in 2018. Employers paid off the entire thing — and the California Legislature still refused to fix the base underneath it. So when COVID hit a fund that was already nearly empty, the exact same collapse happened again, only bigger. We ran this play once, learned nothing, and ran it again.

The bills since 2020 are just the latest rounds of that same fight. SB 799 (2023) would have given striking workers unemployment benefits — a Labor Federation priority, branded a Job Killer, and vetoed by Governor Newsom over the strain on the fund. SB 1116 (2024) tried again. SB 1434 (2024) would have raised the maximum weekly benefit by more than half — CalChamber estimated it could cost employers over $1.2 billion a year — and it died in committee. Each side can kill the other’s fix, so the only thing everyone agrees on is to do nothing — and “nothing” means paying the interest and letting the $21 billion COVID-era debt sit unpaid.

And the lobby money behind that paralysis is enormous and sustained — and now that the latest lobbying filings are in hand, we can see how lobbying effort was aimed squarely at these bills. In 2024, special-interest lobbying of California’s government hit a record $540 million. Within that fight, the California Chamber of Commerce reported about $5.4 million for the 2023–24 session and the California Business Roundtable about $5.0 million, both registered against the benefit bills — with the Chamber tagging them “job killers.” On labor’s side, SEIU reported roughly $3.4 million and the California Labor Federation millions more, in support. And none of this is new: the very same alignment shows up in the 2001 filings on SB 40 — the Chamber, the Business Roundtable, and National Federation of Independent Business (NFIB) lobbying against, the Labor Federation and SEIU lobbying for. Two sides, a quarter-century, a fortune — fought to a standstill, while the debt grew and your small businesses got handed the tab. (Dollar figures from California’s Cal-Access lobbying database; ⚠️ the totals are not all on an identical reporting basis — SEIU’s appears to reflect a single year — and the 2001 amounts rest on those filings alone.)

And the people paid to work these bills are a who’s-who of the two camps — the Chamber’s Robert Moutrie, the Labor Federation’s Sara Flocks and its president Lorena Gonzalez, NFIB’s John Kabateck, and the Business Roundtable’s Rob Lapsley. That last name should ring a bell: Lapsley is the same Business Roundtable president who co-authored Congressman Fong’s January op-ed on this very debt (fong.house.gov). The business lobby that has spent millions in the Sacramento fight and the congressman now campaigning on its talking points are, quite literally, co-authors.

(One note on how to apply these figures: California’s lobbying reports disclose each group’s total spending and the list of bills it lobbied, but never the dollars spent on any single bill. So every amount above is an organization’s overall lobbying total — never a per-bill figure, which the state doesn’t require anyone to report.)

Before Fong ran against Sacramento, he was Sacramento

Here’s the part I think every voter in this district needs to acknowledge: the man now presenting himself as the watchdog of this debt is no newcomer to it. Vince Fong spent seven years in the State Assembly — from 2016 until he left for Congress in 2024 — and for most of that time he was Vice Chair of the Assembly Budget Committee. He held a senior seat at the state’s budget table for the entire stretch this debt was created and the surpluses came and went.

I’ll give him his due: he was a consistent critic of those budgets, and he and his Kern County colleagues argued that the surplus should go toward paying the debt down. As far back as a 2023 budget hearing, he pressed the Department of Finance directly about the loan — and was told the administration’s plan was to “lobby at the federal level … in regards to forgiveness” (East Bay Times), forgiveness that never came. That’s a real position, and it’s consistent with what he says today. He didn’t invent this issue for a campaign; he raised the issue when he was in Sacramento.

But fairness cuts both ways. When the EDD crisis exploded at the end of 2020, the bill Fong put his name on that session wasn’t about unemployment or the EDD at all — it was a proposal to move money out of high-speed rail and into schools. The bill to actually overhaul the EDD that year came from a Bakersfield Democrat, Rudy Salas; the Republican EDD-fraud reform bills were carried by Senate Republicans (Bakersfield Californian). On the very crisis he now builds his Washington career around, his Sacramento footprint was the microphone, not the fix.

And in fairness, he was in the minority — Republicans couldn’t pass a bill or move the budget on their own, and it would be ridiculous to think otherwise. He couldn’t have forced a solution by himself. But that’s exactly why his current story doesn’t sit right. He blames “Sacramento’s negligence” for a debt he sat across the budget table from for seven years. The fix he championed then — use the real surplus dollars to pay it down — was more reasonable than the bill he’s offering now, which spends not one dollar of California money and would only ever touch hypothetical future federal funds. And the one reform the nonpartisan analysts say would actually keep the fund solvent — broadening the tiny $7,000 base it runs on (LAO) — is itself a tax increase on employers, and opposing tax increases is the throughline of his whole career: the Howard Jarvis Taxpayers Association endorsed him for exactly that record, and he has pledged to keep it up (HJTA). He wants the debt gone — but through paydown, not the revenue reform that would keep it from happening all over again.

So when you hear him say Sacramento failed, believe him. He was there.

What real accountability looks like

I think California needs to pay what it owes, and I think state leaders earned the criticism for letting this drift through the surplus years, when there was real money on the table to retire it. You can acknowledge that and still see the CAL Repayment Act for what it is.

Because accountability that helps CA-20 doesn’t look like a press release aimed at the one state still climbing out of the hole. Accountability looks like fighting for the relief our employers have been begging for. It looks like protecting the federal water and infrastructure dollars this district can’t farm without. It looks like a representative who treats the district office not as optional, but as an instrument — something you pick up on day one and use to actually move money and solve problems for the people who live here.

A bill that punishes your own district and calls it courage isn’t standing up for California. It’s standing on California.

We feed the nation. We deserve a representative who feeds us back.

With gratitude — and with my whole heart in this fight,

Sandra

Sources

Every figure in this piece traces to the record. ✅ marks a primary or government source; ⚠️ marks a secondary source (news or advocacy) used where a primary record isn’t readily public.

The bill itself

✅ H.R. 8892, the “CAL Repayment Act” — Congress.gov — official sponsor, cosponsor (Rep. Lloyd Smucker, PA-11), committee referral, and status (no hearing, no vote).
✅ 42 U.S.C. § 1322 — Legal Information Institute, Cornell Law School — the section of the Social Security Act the bill amends, including the prospective effective date and the existing voluntary-repayment structure.

The debt and the cost to employers 3. ✅ California EDD — Federal Unemployment Tax Act (FUTA) page — the outstanding UI loan balance and the rising employer FUTA cost. 4. ✅ California EDD — January 2026 UI Fund Forecast (PDF) — projected loan balance of $22.1 billion by end of 2026; the $17.8 billion first-year (2020) borrowing; confirms a single $250 million principal paydown (2022, AB 178). 5. ✅ U.S. Treasury — Title XII Advance Activities dataset — the live, daily federal record of which states owe and how much. 6. ⚠️ CalTax, reporting EDD’s forecast (May 29, 2026) — the $5.97 billion in higher taxes California employers have already paid; drawn from the primary EDD January 2026 UI Fund Forecast.

How the debt was built — and the EDD fraud 7. ✅ California EDD — Contribution Rates & Taxable Wage Limit — the $7,000 taxable wage base, one of the lowest in the nation, that structurally underfunds the system. 8. ⚠️ CalMatters — How California’s COVID unemployment system failed — the $20–32 billion range of total estimated pandemic fraud and EDD’s institutional failures. 9. ✅ California EDD — “Fraud by the Numbers” fact sheet (PDF) — EDD’s own breakdown: 95% of confirmed fraud from the federal PUA program, 5% from the state UI program. 10. ⚠️ Governor’s office, via the Mercury News (June 2022) — of the ~$20 billion in fraud, “all but $1.3 billion” involved federally funded pandemic programs.

Why it lands only on California 11. ✅ Federal Register — 2025 FUTA credit-reduction states — the federal list confirming which states still carried balances (not Pennsylvania). 12. ⚠️ Equifax Workforce Solutions — state UI loan repayment update — New York’s ~$8 billion payoff and Connecticut’s repayment in 2025.

What the business community actually asked for 13. ⚠️ CalChamber Advocacy — coalition urging UI debt assistance — the $750 million UI Fund contribution and $500 million in small-business tax rebates employers requested.

The state budget (as of June 9, 2026) 14. ✅ Governor’s Office — 2026-27 May Revision — the revised budget that closes the deficit; the first-year minimum-tax reduction for new businesses. 15. ✅ Legislative Analyst’s Office — Initial Comments on the May Revision — nonpartisan analysis confirming the tight, deficit-closing budget and selected business-tax increases. 16. ⚠️ ABC10 — California employers face higher taxes as UI debt tops $20 billion — the ~$662 million interest-only payment and the LAO’s “interest-only payments” characterization.

Fong’s Sacramento record 17. ⚠️ Associated Press / Los Angeles Times — Fong as Vice Chair of the Assembly Budget Committee, criticizing the state budget plan (June 2023). 18. ⚠️ East Bay Times (Feb. 2023) — Fong questioning the Department of Finance about the UI loan at a budget hearing; Finance’s deputy citing a plan to seek federal “forgiveness.” 19. ⚠️ Bakersfield Californian (Dec. 2020) — Fong’s AB 5 (redirecting high-speed-rail funds to schools) vs. Assemblymember Rudy Salas’s AB 56 (EDD overhaul); the prison-inmate fraud that prompted reform bills. 20. ✅ California Senate Republican Caucus — the GOP EDD-fraud reform bills (SB 58, SB 39, SB 232), carried by Senate Republicans Wilk, Grove, and Nielsen. 21. ✅ Legislative Analyst’s Office — “Fixing Unemployment Insurance” — the recommendation to raise California’s $7,000 taxable wage base, the structural fix for fund solvency. 22. ⚠️ Howard Jarvis Taxpayers Association PAC endorsement of Vince Fong — the anti-tax watchdog’s endorsement citing his record against tax increases (documents his general anti-tax record, not a specific wage-base vote).

How Sacramento responded to the fraud 23. ✅ California EDD — “Our Response to Criminal Fraud” — more than $5.9 billion in stolen funds recovered; nearly 1,800 fraud cases opened (data through September 2025). 24. ✅ Legislative Analyst’s Office — Overview of Efforts to Modernize EDD Systems — the multi-year, ~$900 million EDDNext modernization funded across the 2022–2026 budgets. 25. ✅ Assembly Budget Committee / EDD — EDD’s implementation of all 21 California State Auditor fraud-fighting recommendations, including inmate-data cross-matching and streamlined identity verification.

Sacramento’s lobbying stalemate 26. ⚠️ CalMatters — “Has California’s much-dreaded ‘job killer’ list lost some of its bite?” — the ~90% kill rate of CalChamber’s Job Killer list; SB 799 and the strikers’-UI fight. 27. ⚠️ CalMatters — Lobbying California officials topped half a billion dollars in 2024 — the $540 million record; SEIU and CalChamber spending figures. 28. ⚠️ CalMatters — “Tough love could end California’s unemployment insurance stalemate” — the 25-year business-vs-labor deadlock. 29. ✅ California LAO (2010) — “California’s Other Budget Deficit: The UI Fund Insolvency” — SB 40 (Ch. 409, Statutes of 2001, Alarcón) doubled the maximum benefit without raising the $7,000 wage base or tax rate; the fund’s January 2009 insolvency. 30. ⚠️ CalMatters — California’s unemployment insurance debt problem — the Great Recession ~$10 billion loan, repaid by employers via higher federal taxes by 2018, with no structural fix before COVID. 31. ⚠️ Kabateck Strategies — California UI debt: what employers need to know — the $7,000 taxable wage base, frozen since 1983 and the lowest in the nation. 32. ⚠️ CalChamber — “Job Killer Bill Increasing UI Taxes Stopped” — the $1.2 billion-a-year employer-cost estimate for SB 1434. 33. ⚠️ California Secretary of State — Cal-Access lobbying database — org-level lobbying totals and bill positions for CalChamber ($5.4M, 2023–24), the California Business Roundtable ($5.0M, 2023–24), SEIU (~$3.4M), the California Labor Federation, and NFIB, on SB 40 (2001) and SB 799 / SB 1116 / SB 1434 (2023–24). Compiled from Cal-Access and reviewed by the campaign; not independently re-verified. Totals are not all on an identical reporting basis, and the 2001 figures rest on those filings alone.

Paid for by Sandra Van Scotter for Congress · sandra4cd20.com