Biden's First Veto Stands

[ Posted Thursday, March 23rd, 2023 – 17:50 UTC ]

The House of Representatives tried to override President Joe Biden's first veto today, but the effort failed in a 219-200 vote -- far short of the two-thirds necessary to override (290 votes in a full House). This was the first-ever veto from Biden, on a bill Republicans had convinced a few Democrats to cross the aisle for. The bill itself would have changed a rule from the Labor Department to remove the freedom of conscience in the investment world. To put it another way, Republicans wanted a Big Government solution to a problem that essentially only exists within their own minds. Most Democrats were right to oppose imposing ideological limitations on what pension fund managers can and cannot do, and President Biden was right to veto it.

This is breaking news, so Politico is so far the only one with the story (a blurb, more like) about the House vote. In it, they provide the rule in question:

The U.S. Department of Labor today announced a final rule that allows plan fiduciaries to consider climate change and other environmental, social and governance factors when they select retirement investments and exercise shareholder rights, such as proxy voting.

Environmental, social, and governance factors are known as "E.S.G.," and the right has attempted to turn it into a political boogeyman ever since the rule came out at the end of last year. State-level attempts to "fight" E.S.G.-conscious investing have also moved forward in red states, where investment companies that do utilize the concept in any way are blacklisted by all state agencies. This was their first try at doing so on the national level.

The rule, as you can see, does not actually require any pension fund manager to do anything. It does not "force" anyone's views on anyone else. Republicans have tried to paint the whole thing as some nefarious lefty plot to attack certain industries (like the fossil fuel industry) by boycotting any funding for them. They paint it as government forcing fiduciaries to prioritize E.S.G. over the basic goal of any investment manager, which is to maximize returns for their customers.

Democrats are right to point out that the rule does no such thing. Here was President Biden's veto tweet, which lays out his own case:

I just vetoed my first bill.

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.

In other words, the Republicans are continuing their descent into attempting to use the power of government to strongarm companies into doing and saying only the things they deem ideologically acceptable. There was a time not so long ago that Republicans were the party of "corporate free speech" and even embraced strategies such as boycotting companies they disagreed with, but now some of them want to either punish companies (using the power of government) or forbid them from taking any political position they do not approve of. Florida Governor Ron DeSantis is leading this general movement, in his ongoing feud with Disney, but the E.S.G. bill was another front in this battle.

Investment fund managers should be able to make investment plans that cater to investors who do care about such things as the fight against climate change and corporations that value equality and diversity. People should be able to invest in such ideologically-constructed plans without government making them illegal. Fund managers are just as free to construct a plan that might be called "anti-E.S.G." where people who were against such corporations could invest knowing their money wouldn't be going towards such things. It's a free market, in other words, so everyone's wants and needs can be catered to without government interference.

We live in a legal world where (as Mitt Romney famously put it) "corporations are people too." The Supreme Court, in all its wisdom, has declared this to be true -- corporations have the right to free speech in the political arena. Which means they can support or not support -- or just ignore, which a lot of them do -- any particular political issue. Back when Republicans cheered these rights, most giant corporations were more friendly to the conservative viewpoint. But these days corporations see a lot of downside -- or "risk," as investment managers put it -- to ignoring things like being accommodating to L.G.B.T. workers. Or abortion rights. Or investing in industries that should be phased out like fossil fuels. They take the long view (since these can be lifelong investments) when it comes to figuring risk -- things like what an oil company will be making in terms of profit when nine out of ten cars on the road are electric (in the next few decades). And some investors, including institutional investors like giant pension plans, want to steer their money away from these longterm risks.

Republicans want to ban such considerations for investors. They want to take away this freedom from people or institutions planning their retirement/pension strategies. The whole thing is a non-issue anyway, since the rule under attack would not force or require any investment manager or company to do or not do anything. It merely allows them to do so.

We can look forward to a lot of what passes as the Republican agenda these days coming up in bills from the House. Some may even pass the Senate and wind up on Biden's desk. A lot of these issues (and the resulting bills) are nothing short of attempts to triangulate among their political opposition -- peeling off enough Democratic support by threatening to use the issue against them in future campaign ads. This worked to a certain extent (two Democratic senators, Joe Manchin and Jon Tester voted to pass the bill in the Senate), but it's really not a red-meat issue for most voters. Why should anyone care what other people can and can't do with their investment strategies, as long as they are free to invest in whatever manner they choose?

Joe Biden made it into his third year without having to veto anything, since Democrats controlled both houses of Congress for the first half of his term. The E.S.G. veto was his first, but it will likely not be his last. There are other issues out there that Republicans are itching to exploit by forcing tough votes on Democrats -- on legislation designed to be used in upcoming campaign ads. Which is all part of the game, of course. But it was good to see Democrats mostly holding together under this first attempt (only one House Democrat, Jared Golden of Maine, voted to overturn the president's veto today). It was a test of leadership for both Joe Biden and House Minority Leader Hakeem Jeffries, and they both seem to have passed with flying colors.

-- Chris Weigant


Follow Chris on Twitter: @ChrisWeigant


One Comment on “Biden's First Veto Stands”

  1. [1] 
    nypoet22 wrote:

    jared golden of maine? if there was no MDD this week thus far, there certainly is now.

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