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Top One Magazine

Joe Manchin and Jon Tester tee up Biden’s first veto

President Joe Biden will soon be in a position to issue his first veto, after moderate Senate Democrats helped Republicans pass a measure that would undo an environmental and social investing rule.

Sen. Jon Tester of Montana, a Democrat who is facing a tough 2024 election campaign, ensured passage of the rollback by announcing his support before the Wednesday afternoon vote. Sen. Joe Manchin of West Virginia, another Democrat facing reelection next year, also backed the effort.

The Senate passed the GOP-led resolution in a 50-46 vote. House Republicans passed it on Tuesday, with the backing of Rep. Jared Golden (D-Maine). It now heads to Biden’s desk.

Tester and Manchin defied Biden’s threat to veto the rollback, which targets a new Labor Department rule that allows retirement plan managers to incorporate climate and social factors into investment decisions. Republicans have criticized the regulation — which itself reversed a Trump-era rule discouraging environmentally and socially focused investing — as a threat to retirement savers because it would allow political forces to take precedence over returns.

“At a time when working families are dealing with higher costs, from health care to housing, we need to be focused on ensuring Montanans’ retirement savings are on the strongest footing possible,” Tester said in a statement. “I’m opposing this Biden Administration rule because I believe it undermines retirement accounts for working Montanans and is wrong for my state.”

The fact that Republicans are poised to push the measure through a divided Congress underscores the growing political momentum behind their crusade against what they deride as “woke” business practices. Conservative officials at the state and federal level are increasingly attacking big corporations for embracing social and environmental causes. It’s a push that Democrats in red states and swing districts are finding they’re unable to ignore.

Republicans took advantage of procedures under the Congressional Review Act that allow lawmakers to nullify recently issued rules with simple majority votes, avoiding the Senate filibuster.

The Biden administration said in its veto threat this week that undoing the DOL rule would “unnecessarily limit the options available to retirement plan participants and investors.”

Biden’s threat in a way gives moderate Democrats a free pass to distance themselves from the president because they don’t face the risk of the rollback actually being implemented.

Asked whether Democratic leadership had pressured him to vote “no,” Tester told reporters that they gave a presentation to the broader caucus Tuesday. But “it wasn’t like, pestering.”

The 2024 election “hasn’t been my focus, but that ought to be their focus,” Sen. Mike Braun (R-Ind.), who sponsored the measure, told reporters. “I just tried to make the merits of the case out there understandable to everyone listening.”

Manchin took to the Senate floor to blast the Biden DOL rule as “just another example of how our administration prioritizes a liberal policy agenda over protecting and growing the retirement accounts of 150 million Americans.”

The Labor Department rule at issue doesn’t require investment managers to focus on environmental, social and governance factors in retirement accounts, but instead clarifies that they’re free to do so.

ESG investing has been a big focus for money managers for years, partly in response to consumer demand for sustainable investment products.

Republicans’ campaign against the ESG movement has put them at odds with major Wall Street firms like BlackRock and State Street, which have struggled to mount a lobbying response. Braun said Wednesday that he personally didn’t get pushback from financial firms.

Senate Majority Leader Chuck Schumer in a Wall Street Journal op-ed blasted the GOP rollback effort, accusing Republicans of sacrificing their free market ideals in favor of “forcing their own views down the throats of every company and investor.”

“The whole anti-ESG operation is a fake, cooked up by the fossil fuel industry,” said Sen. Sheldon Whitehouse (D-R.I.) said in an interview.

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