Today, Senator Mike Braun’s challenge to President Biden’s ESG rule that puts politics over profits for Hoosiers’ 401(k)s passed the U.S. Senate.
Senator Braun led every Republican Senator and Senator Joe Manchin as cosponsors on this challenge. Democratic Senator Jon Tester of Montana joined in voting against the Biden rule.
Biden’s rule, which went into effect in February, allows fiduciaries to invest based on ESG factors – which tend to favor President Biden’s political priorities, but produce a lower rate of return. Previously, fiduciaries could only invest based on the best rate of return for their clients. This rule applies to employer-sponsored 401(k)s, meaning 152 million Americans are subject to the new Biden rule.
The Senate passed the measure on a bipartisan vote of 50 to 46. It now goes to President Biden’s desk, where it is anticipated it will be his first veto: a bipartisan, bicameral rebuke of a major policy goal for the president.
Twenty-five states, including Indiana, are suing the Biden administration over this policy.
Senator Braun released this statement following his win on the Senate floor:
“My message to the White House is simple: Keep your hands off Hoosiers’ 401(k)s. President Biden is putting Hoosiers’ retirement savings at risk by changing the rules to allow money managers to invest based on progressive political goals rather than on the best rate of return. So many Americans’ retirement savings are already taking a hit from his inflation crisis,” said Senator Braun. “President Biden will now receive a searing, bipartisan rebuke of his policy that’s going to hurt Americans’ retirement savings.”
Representative Andy Barr led the House version, which passed on a bipartisan vote of 216 – 2014 on Tuesday.
BACKGROUND: More information about the challenge can be found here.
SENATE REPUBLICAN PRESS CONFERENCE ON SENATOR BRAUN’S ESG CHALLENGE:
Senator Braun’s opening statement:
Full conference with questions:
Remarks from Senator Braun about the challenge:
President Biden is playing politics with Americans’ retirement savings.
Many Americans are wondering how they’re going to have enough to retire.
And this administration’s priority is changing the rules so fiduciaries’ goal is no longer to get them the best rate of return.
A new rule from Biden’s Labor Department allows fiduciaries to consider other factors when making investment decisions.
This rule deals with the ERISA law.
That means all employer-sponsored 401(k) programs fall under this rule.
We’re talking about 152 million Americans’ retirement savings and $11.7 trillion dollars.
Under the previous rule, fiduciaries could only consider financial factors like achieving the highest rate of return.
The intention of this rule is for fiduciaries to be able to invest based on ESG — environment, social, or corporate governance factors.
ESG funds tend to be investments that align with the political preferences of the Biden administration on topics like climate change and social justice.
President Biden’s rule means money managers can pursue a progressive political agenda using your money – likely leaving you a lower rate of return.
Over the past five years, ESG funds underperformed the broader market, averaging a 6.3% return compared to 8.9% return.
Americans’ retirement savings are already taking such a hit from the inflation crisis.
A 2.6 percent lower return on ESG would make a world of difference for Hoosiers’ savings.
It’s a step too far to inject politics into Americans’ livelihoods.
Yesterday, the House voted to kill this overreach.
The vote was bipartisan.
Today, the Senate does the same.
It’s a clear message: Leave Americans’ 401(k)s alone.
President Biden is putting Americans’ retirement at risk to aid a progressive agenda most Americans don’t support.
I’m proud to stand up for Hoosiers against this rule.