President Joe Biden issued his first veto Monday, protecting a rule that allows retirement plan managers to consider social issues when they make investment decisions.
The Department of Labor rule the resolution would have overturned says retirement plan fiduciaries can take environmental, social and governance — called “ESG” — factors into consideration, rather than strictly looking at investment returns, when deciding how to invest money saved in pension and retirement plans.
Critics of the rule, including Sen. Mitt Romney, R-Utah, say it jeopardizes Americans’ retirement savings, since ESG has been shown to lower investment returns, and encourages corporate leaders to take positions on controversial issues.
In a statement on Twitter, Romney said Biden’s veto of the resolution was “a mistake.”
This is a mistake. Democrats can’t get their radical policies through Congress, so they hope asset managers will do the work for them. It is completely inappropriate to use the retirement funds of hard-working Americans to advance Washington Democrats’ ideological preferences. https://t.co/e4iYLQK31N— Senator Mitt Romney (@SenatorRomney) March 20, 2023
“Democrats can’t get their radical policies through Congress, so they hope asset managers will do the work for them,” he said. “It is completely inappropriate to use the retirement funds of hard-working Americans to advance Washington Democrats’ ideological preferences.”
In the White House message on the veto, Biden said the DOL rule “protects” retirement savings and pensions.
“(T)he Republican-led resolution ... would prevent retirement plan fiduciaries from taking into account factors, such as the physical risks of climate change and poor corporate governance, that could affect investment returns,” Biden said.
In a tweet, Biden defended the veto, saying it would risk Americans’ retirement savings by “making it illegal to consider risk factors MAGA House Republicans don’t like.”
I just vetoed my first bill.— President Biden (@POTUS) March 20, 2023
This bill would risk your retirement savings by making it illegal to consider risk factors MAGA House Republicans don't like.
Your plan manager should be able to protect your hard-earned savings — whether Rep. Marjorie Taylor Greene likes it or not. pic.twitter.com/PxuoJBdEee
But Republican presidential candidate Vivek Ramaswamy called Biden’s framing of the veto “dishonest.”
“Before Biden’s Dept of Labor rule change, retirement fund managers could consider *only* investment returns,” he wrote on Twitter. “Now, Biden permits them to take into account “collateral benefits other than investment return” including factors like “climate change.” ... This is dangerous for both capitalism & democracy.”
This is a deeply dishonest framing of what Biden did today. Before Biden’s Dept of Labor rule change, retirement fund managers could consider *only* investment returns. Now, Biden permits them to take into account “collateral benefits other than investment return” including… https://t.co/fhh8AOn1zb— Vivek Ramaswamy (@VivekGRamaswamy) March 20, 2023
Beyond the partisan back and forth, in his statement Biden ignored members of his own party who voted in favor of the resolution, including Democratic Sens. Joe Manchin of West Virginia and Jon Tester of Montana.
In a statement released after Biden’s veto, Manchin said the Biden administration “continues to prioritize their radical policy agenda over the economic, energy and national security needs of our country, and it is absolutely infuriating.”
“This ESG rule will weaken our energy, national and economic security while jeopardizing the hard-earned retirement savings of 150 million West Virginians and Americans,” said Manchin. “Despite a clear and bipartisan rejection of the rule from Congress, President Biden is choosing to put his administration’s progressive agenda above the well-being of the American people.”
House Republicans may try to overturn the veto in a vote Thursday, according to a schedule released by House Majority Leader Steve Scalise, but it is unlikely they will get the two-thirds vote necessary. Only one Democrat in the House, Rep. Jared Golden of Maine, voted to approve the resolution.
Last week, 18 Republican governors, including Utah Gov. Spencer Cox, issued a letter saying they do not want retirement fiduciaries to take ESG factors into account when making investment decisions, and encouraging Biden not to veto the resolution.
The letter says the Labor Department rule “puts the pensions of thousands of hardworking Americans at risk to the radical environmental, social, and corporate governance movement, rather than prioritizing investment decisions on the highest rate of return.”
The governors said they would make changes at the state level to try to block investment managers from using ESG in their decision making.