Biden vetoes Republican effort to overturn socially conscious retirement rule

Joe Biden issued the first veto of his presidency on Monday, rejecting legislation to overturn a labor department rule related to an investment strategy for Americans’ retirement plans that Republicans have derided as “woke capitalism”.

“The legislation passed by the Congress would put at risk the retirement savings of individuals across the country. They couldn’t take into consideration investments that would be impacted by climate, impacted by overpaying executives,” Biden said in an Oval Office video released by the White House. “And that’s why I decided to veto it.”

Republicans have railed against so-called “ESG” investing, an acronym that stands for “environmental, social and governance”, arguing that it prioritizes allocating money based on liberal political causes, such as efforts to combat climate change and divest from fossil fuels, instead of earning the best returns for retirement accounts.

“In his first veto, Biden just sided with woke Wall Street over workers. Tells you exactly where his priorities lie,” the House speaker, Kevin McCarthy, wrote in response. “Now – despite a bipartisan vote to block his ESG agenda – it’s clear Biden wants Wall Street to use your retirement savings to fund his far-left political causes.”

Their willingness to challenge corporate America, long seen as a reliable Republican ally, is just one front in the right’s “war on wokeness” that they claim has affected schools, companies and government.

The veto underscores Biden’s new, more confrontational relationship with Republicans in Congress after two years of working with Democratic majorities. Now the White House is readying for even more consequential battles in the months ahead over government spending and the nation’s debt limit. House Republicans, in turn, are using their control of the chamber to advance legislation they intend to use against Democrats in next year’s election.

The White House has argued that the legislation would have made it illegal for pension fund managers to consider “risk factors Maga House Republicans don’t like” such as the climate crisis when making investment decisions.

“Your plan manager should be able to protect your hard-earned savings — whether Rep. Marjorie Taylor Greene likes it or not,” Biden said in a tweet, referring to the far-right Georgia congresswoman who has made opposition to progressive ideas her political brand.

House Republicans advanced the bill after taking control of the chamber this year. And earlier this month, two Democratic senators, Joe Manchin of West Virginia and Jon Tester of Montana, voted with Republicans, sending the measure to Biden’s desk. Tester is running for re-election next year in states Donald Trump won handily.

In a statement, Manchin called it “absolutely infuriating” that Biden had chosen to “put his administration’s progressive agenda above the wellbeing of the American people”. The coal country Democrat said the rule threatened the nation’s economic security as Americans contend with high inflation and Russia’s war in Ukraine upends energy markets.

The veto, which was expected, sends the legislation back to Congress. House Republicans have scheduled a vote on Thursday in an attempt to override the veto, though to succeed would require support from at least two-thirds of each chamber, which appears unlikely.

Biden’s veto in effect preserves the status quo, allowing – but not requiring – retirement fund managers to consider environmental, social and corporate governance factors when making investment decisions. The rule ​reversed restrictions imposed by the Trump administration that ​made it harder for ​​retirement fund managers to consider such factors.

Though ESG is often framed as a socially conscious way of investing, proponents say weighing a company’s working conditions​, pending lawsuits​ or its environmental record can help uncover more stable and​ crucially, they argue,​ more profitable savings opportunities. ​The popular investment strategy has become a target of conservatives, with several Republican-led state legislatures passing or proposing legislation that would limit or ban their state governments from considering social or environmental impacts when making investment choices.

In a formal statement notifying Congress of his veto, Biden said that the labor department rule allowed “retirement plan fiduciaries to make fully informed investment decisions by considering all relevant factors that might impact a prospective investment”. By refusing to allow these considerations, Biden said, Republicans were “disregarding the principles of free markets and jeopardizing the life savings of working families and retirees”.

Following his initial veto, Biden on Monday signed into law a Republican-led resolution overruling an effort by the District of Columbia to overhaul its criminal code.

The president’s support for the measure had angered many Democrats, who expected him to veto it out of respect for the federal district’s right to self-governance. But for Biden, who is expected to formally announce his intention to seek re-election in the coming weeks, the move underscores the pressure he and his party are facing from Republicans who have sought to make rising violent crime rates a political liability.

Biden also signed into law a measure requiring the administration to declassify intelligence related to the origins of the coronavirus pandemic, which was passed by Congress without any opposition in either chamber. Since taking over the House this year, Republicans have revived the polarizing debate over how Covid-19 emerged, with a series of hearings into the matter.

Recently, the Department of Energy and the FBI indicated support for the theory that the virus leaked from a laboratory in China, though they did not release any evidence supporting their assessment. Many leading scientists and researchers believe the virus was most likely transmitted from animals to humans.

In a statement, Biden said he shared Congress’s goal of understanding the origins of a virus that has killed more than 1 million Americans.

“We need to get to the bottom of Covid-19’s origins to help ensure we can better prevent future pandemics,” he said in a statement.