Joe Biden is on course to issue the first veto of his presidency after two Democratic senators sided with Republican lawmakers in opposing a White House rule that allows fund managers to consider environmental, social and governance factors in their investment decisions.
Jon Tester, a Democratic senator from Montana, on Wednesday afternoon said he would join fellow Democrat Joe Manchin in voting to roll back a US labour department rule that allows retirement plan fiduciaries to include ESG considerations in their investments.
“At a time when working families are dealing with higher costs, from healthcare 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 move underscores the growing influence of conservatives in Washington, after Democrats lost control of the House of Representatives in last November’s midterm elections, ushering in a new era of divided government. It also lays bare the challenges Biden’s party faces heading into next year’s elections.
Tester, who has served in the Senate since 2007, is facing a tough re-election battle in 2024. Former president Donald Trump beat Biden in Montana by a nearly 17-point margin in 2020. Manchin, who represents the Republican stronghold of West Virginia, is also up for re-election next year, but has not said if he will seek another term in office. Trump defeated Biden in West Virginia by nearly 40 points in 2020.
The Senate, which Democrats control by a razor-thin margin, voted 50-46 in favour of the measure on Wednesday evening. The resolution had already been approved by the Republican-controlled House of Representatives, meaning it is now headed to the White House. Administration officials have said Biden intends to veto the measure, in what would be the first veto of his presidency.
“Republicans talk about their love of free markets, small government and letting the private sector do its work. The Republican bill is [the] opposite of that. It forces Maga Republicans’ ideology down the throats of [the] private sector,” Karine Jean-Pierre, White House press secretary, told reporters on Wednesday, in a reference to Trump’s “Make America Great Again” slogan.
While Biden’s veto will effectively kill efforts to roll back the labour department rule, Congress’s approval of the measure nevertheless underscores Republicans’ newfound abilities to exert influence and amplify their message in Washington.
National Republicans have made opposition to ESG a key pillar of their pitch to voters. Ron DeSantis, the Florida governor and likely presidential candidate, has banned fund managers for the state’s retirement system from including ESG factors in their decision-making.
Trump, the current frontrunner for the party’s presidential nomination in 2024, has also vowed to crack down on the practice, while anti-ESG fund manager Vivek Ramaswamy last week launched his own long-shot bid for the White House.