President Joe Biden appears poised to exercise his presidential veto power for the first time since coming to office more than two years ago, in order to save a new Department of Labor rule.
On Wednesday, the Senate passed a resolution by a bipartisan vote of 50 to 46 aimed at preventing the implementation of a Department of Labor regulation on environmental, social and governance investing, also known as ESG investments.
The regulation has been backed by several major Wall Street asset managers, including BlackRock and State Street.
Democratic Senators Jon Tester of Montana and Joe Manchin of West Virginia, whose states voted strongly for Donald Trump in the 2020 presidential election, stood with Republicans in favor of the resolution.
It had already passed the House of Representatives by a vote of 216 to 204 on Tuesday, with Democratic Representative Jared Golden of Maine joining Republicans.
Some Republicans have criticized the new rule as "woke," while Tester issued a statement on Wednesday, shared with Newsweek, that said he believed "it undermines retirement accounts for working Montanans and is wrong for my state."
President Biden is now widely expected to veto the legislation—which has won the approval of both the House and Senate—in order to rescue the new rule.
The Department of Labor ESG Rule
The changes to the Department of Labour (DoL) rule, made after the DoL received about 900 written comments and over 20,000 petitions during a 60-day comment period, are a bid to clarify its previous guidance on ESG investments, which has evolved over the past 40 years.
The new rule will allow fiduciaries involved with pension schemes to include the economic effects of climate change and other relevant ESG considerations on particular investments, as long as these considerations do not sacrifice returns or create additional investment risk to the participants of the plan.
Nonetheless, Biden will need to exercise his veto power in order to save the new rule. All legislation passed by the House and Senate must be signed by the president before it becomes law. The president also has the power to reject legislation sent to his desk.
Veto Power
The Senate's website defines the president's veto as the "power of the President to refuse to approve a bill or joint resolution and thus prevent its enactment into law."
That definition notes that the president has 10 days, excluding Sundays, to sign a bill passed by Congress. If he issues a regular veto, "the President returns the legislation to the house in which it originated, usually with a message explaining the rationale for the veto."
However, a presidential veto can be overridden if a two-thirds majority in both the Senate and the House agree. In that case, the legislation becomes law despite the president's objections.
Given the narrow margins in the House and Senate, it appears unlikely that a veto can be overridden in this case.
Biden could not use a so-called "pocket veto" at this time since that occurs "when Congress adjourns during the ten-day period" and the president is unable to return the bill to Congress.
The president has threatened to use the veto in recent weeks—in order to prevent any cuts to Social Security and Medicare. A veto in this case would be a first for Biden and, with a divided Congress, he may not need to use the veto power again for some time.
Trump and Obama's Vetoes
Biden has not yet vetoed any legislation, but his two immediate predecessors both exercised the power.
Former President Donald Trump used the veto power 10 times during his four years in office, while former President Barack Obama used the veto power 12 times over eight years.
Trump's first veto was issued on October 15, 2019—more than two years into his administration. Obama issued his first veto on December 30, 2009—during his first year in office.
Both Trump and Obama had just one of their vetoes overridden by Congress.
Uncommon Knowledge
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
About the writer
Darragh Roche is a U.S. News Reporter based in Limerick, Ireland. His focus is reporting on U.S. politics. He has ... Read more
