US President Joe Biden issued his first veto Monday, overriding a Republican ban on pension funds considering progressive principles in their investment decisions.
The measure would have nullified a Labor Department rule that allowed retirement fund managers to take environmental, social and governance (ESG) factors into account.
But the 80-year-old Democratic leader refused to sign it into law, arguing that it threatened seniors’ savings by “making it illegal to consider risk factors."
“Your plan manager should be able to protect your hard-earned savings — whether Rep. Marjorie Taylor Greene likes it or not," Biden said, referring to a congresswoman who has become the standard-bearer for the Republican far right.
Republicans, who say the so-called ESG factors amount to political interference, used their slim majority in the House of Representatives to get the bill through.
In the Senate, Democrats hold a thin majority but three absentees and two party members joining the Republicans was enough to get the bill sent to Biden.
Supporters of the bill say the ESG factors are driven by leftist social concerns and should not be part of financial transactions.
Senator Joe Manchin, a centrist Democrat with interests in the West Virginia fossil fuel industry and a regular fly in the ointment for the party leadership, called the veto “infuriating."
“Despite a clear and bipartisan rejection of the rule from Congress, President Biden is choosing to put his administration’s progressive agenda above the wellbeing of the American people," he said.
Biden’s Labor Department reinstated the rule in November, undoing a push by former Republican president Donald Trump to penalize fund managers considering climate change in their decision-making.
Democrats pointed out that the policy is neutral on how ESG factors are taken into consideration so long as the investment fund is meeting its obligations to its beneficiaries.
Major investment firms like BlackRock applauded the rule, which the Biden administration frames as a financial boost to investors concerned about climate risk.
But Republican-led states have been pressuring firms for supposedly boycotting oil and gas companies as part of “responsible" investment strategies.
“It is clear that President Biden wants Wall Street to use your hard-earned money not to grow your savings, but to fund a far-left political agenda," said Republican House Speaker Kevin McCarthy.
“That will hurt seniors and workers, especially after President Biden’s reckless spending caused record inflation and rapid interest rate hikes."
Bill Cassidy, the top Republican on the Senate pensions committee, added that asset managers’ “only priority" should be helping Americans achieve the best return for their retirement.
“By vetoing this bipartisan resolution, President Biden is jeopardizing the retirement of 152 million Americans," he said.
Democratic Senate Majority Leader Chuck Schumer countered that the veto was “totally appropriate."
“For House Republicans to tell American companies they cannot pursue profits and societal goals when they wish to would be counterproductive and un-American," he said.
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