Joe Biden issues first veto, rejecting attempt to block ESG effort
Republican-led bill sought to overturn regulation allowing retirement-plan managers to consider climate change, governance
FOX business host Charles Payne gives his take on hostility to the environmental, social and governance board on 'Making Money.'
President Biden issued the first veto of his presidency Monday, rejecting a Republican-led measure that would overturn a regulation allowing retirement-plan managers to consider climate change in their investment decisions.
The bill would have overturned a Biden administration regulation on environmental, social and corporate governance guidelines, or ESG.
The bill passed the GOP-led House Feb. 28 on a vote of 216-204, with one Democrat joining with Republicans in support. The Senate on March 1 approved a companion measure on a vote of 50-46, helped by the support of two moderate Democrats from Republican-leaning states, West Virginia Sen. Joe Manchin and Montana Sen. Jon Tester.
Sen. Manchin helped to get the bill through the Senate. In this photo Chairman Sen. Joe Manchin, D-W.Va., speaks during the Senate Energy and Natural Resources Committee hearing titled One Year Later: The Impact of the Russian Federation's War in Ukr … (Tom Williams/CQ-Roll Call, Inc via Getty Images / Getty Images)
Republican lawmakers targeted the Labor Department rule in question with a legislative tool known as the Congressional Review Act. It allows lawmakers to overturn a newly issued regulation on an expedited schedule with a simple majority vote in both houses of Congress.
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Guidelines regarding ESG have been targeted by conservatives, who have been arguing they are part of an effort by progressives to promote "woke capitalism." Defenders of the regulation say ESG simply adds another factor for managers to consider when making investments.
"This bill would risk your retirement savings by making it illegal to consider risk factors MAGA House Republicans don’t like," Mr. Biden said.
The veto is unlikely to be overridden in the narrowly divided Congress because that would require a two-thirds majority in both chambers. Democrats control 51 seats in the Senate.
Mr. Biden’s first veto came at a similar point in his presidency as that of former President Donald Trump, who issued his first veto in March 2019 over a resolution that would have prevented him from funding a wall along the U.S. southern border without congressional approval.
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Presidential vetoes have become less common in recent administrations. Former Presidents George W. Bush, Barack Obama and Mr. Trump each issued a dozen or fewer vetoes during their administrations, according to the American Presidency Project at the University of California, Santa Barbara. In contrast, former Presidents Bill Clinton and George H.W. Bush each issued more than three dozen vetoes.
Former President Bill Clinton issued more than three dozen vetoes. Here he participates in The Temple Emanu-El Streicker Center Presents: Two Presidents, One Extraordinary Evening at Temple Emanu-El on November 10, 2022 in New York City. (Michael Kovac/Getty Images) / Getty Images)
In his State of the Union address and in speeches around the country, Mr. Biden has said he is prepared to deploy his veto pen if Republicans seek cuts to Medicare or Social Security or measures to reduce the cost of prescription drugs.
His first veto stemmed from a more obscure issue. The Labor Department drafted a rule in November under the Employee Retirement Income Security Act allowing fiduciaries the right to consider climate change and ESG factors as they invested in privately held retirement plans. Considering ESG factors has become common in the finance world as hedge funds and investment firms have sought to address climate change and environmental impacts.
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Republicans in recent years have targeted such investments, calling them irresponsible and part of a progressive agenda. Proponents of the bill said fund managers should be focused on investment returns rather than be driven by factors they term political.
A federal appeals court on Monday blocked President Joe Biden's student debt relief plan days after a Texas federal judge struck it down. (Kent Nishimura / Los Angeles Times via Getty Images / Getty Images)
Mr. Biden is "doubling down on prioritizing a progressive agenda over Americans’ retirements and the will of Congress. Good luck explaining this one," said Sen. Mike Braun (R., Ind.). He said the ESG rule allows investment managers to push a political agenda at the expense of retirement savers receiving the best rate of return.
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Democrats characterized the matter as a question of empowering Americans to make investment decisions.
"Retirement plan fiduciaries should be able to consider any factor that maximizes financial returns for retirees across the country. That is not controversial—that is common sense," Mr. Biden said in his veto statement.