The House voted to thwart a new rule from the Biden administration on Tuesday allowing 401(k) fund managers to consider climate change and social-justice politics when investing clients’ savings, a move that could pave the way for President Biden’s first veto.
The GOP-led chamber voted 216-204, with the support of one Democrat, for a resolution to scuttle a Labor Department provision that allows 401(k) fiduciaries to employ environmental, social and corporate governance investing.
Known as “ESG,” the practice is derided by Republicans as a “woke” investment practice that jeopardizes Americans’ retirement funds.
The resolution is privileged under the Congressional Review Act, which forces both chambers of Congress to vote on it.
Its fate is uncertain in the Democratic-led Senate as Republicans try to persuade vulnerable Democrats to break rank in the face of Mr. Biden’s veto threat.
“This is about retirement savings; the government shouldn’t be telling Americans how to invest money in retirement, or recommending, or suggesting,” Rep. Rick Allen, the Georgia Republican who helped craft the resolution with Rep. Andy Barr, Kentucky Republican, told The Washington Times.
The White House emphasizes that the rule, which reinstates a provision rolled back by former President Donald Trump, simply allows for the consideration of ESG and “is not a mandate.”
“It does not require any fiduciary to make investment decisions based solely on ESG factors,” the White House Office of Management and Budget said. “The rule simply makes sure that retirement plan fiduciaries must engage in a risk and return analysis of their investment decisions and recognizes that these factors can be relevant to that analysis.”
But Republicans aren’t buying it.
They argue the rule would allow investment managers to funnel everyday Americans’ money to progressive causes without clients’ awareness.
The resolution is part of a multi-pronged war by Republicans against ESG at the state and federal level, as Democrats and Wall Street firms who push ESG struggle to parry the blitz.
“Joe Biden is giving the middle finger to middle-class Americans who are concerned about the returns on their retirement funds,” said Sen. John Barrasso of Wyoming, the top Republican on the Senate Energy Committee. “He is more committed to his climate change agenda and his pipe dream than he is to the American dream of hundreds of millions of American families.”
The resolution is a toss-up in the Senate, which could vote as early as Wednesday.
Sen. Joe Manchin III of West Virginia is the lone Democrat who has publicly sided with Republicans, though other potential Democratic defectors remain undecided or close-lipped.
Depending on absent lawmakers, Republicans may have the votes or fall one shy.
Democratic Sen. Jon Tester of Montana, along with independents Angus King of Maine and Kyrsten Sinema of Arizona — both of whom caucus with Democrats — are being lobbied by Republicans.
“I’m going to get a brief on what is mandatory [under the rule], what’s not mandatory, and then I’m going to make a decision,” Mr. Tester told The Times.
Sen. Mike Braun, Indiana Republican, is the resolution’s lead author in the Senate.
“Hell, I don’t want anybody who I’m turning my money over to have any consideration other than to give me the best return,” he told The Times in a recent interview. “Pushing ideology through retirement and hard-earned investment funds does not make sense to me.”
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