Biden’s first-ever veto might be against the GOP war on ‘woke’ capitalism


Joe Biden could end up wielding the first veto of his presidency not on one of the great issues of state, but over a wonky skirmish sparked by the Republican Party’s assault on what its culture warriors brand as “woke” capitalism.

Congress has sent to his desk a resolution overturning a Labor Department rule that allows managers of retirement funds to consider environmental and other factors when picking investments. The measure passed the Democratic-controlled Senate on Wednesday with the votes of all Republicans and two vulnerable Democrats. And now Biden has vowed to block it.

The showdown might seem obscure, but it is a barometer of the kind of cultural backlash agenda that is certain to shape the tense politics of the next two years in divided Washington and in the Republican primary in the run-up to the 2024 presidential election.

The strategy is the latest front in the Republican Party’s self-described war on “woke” – in other words, their efforts to attack some climate change and social or racial equity policies that they believe will fire up their most conservative voters, many of whom fear their vision of American is under attack. The GOP is trying to define the next few years as a struggle between “normal or crazy,” as Arkansas Gov. Sarah Huckabee Sanders characterized the divide during her response to Biden’s State of the Union address.

The resolution Congress passed also shows how the GOP is increasingly unmoored from its role as the party of corporate America and Wall Street, as it seeks to weaponize the cultural anxieties of its most committed voters in red states. Investment firms had around $18 trillion in so-called Environmental, Social and Governance assets in 2021, according to PwC, which allow fund managers to make investing decisions based on such non-financial considerations. The GOP’s assault on socially conscious corporations is being pioneered by Florida Gov. Ron DeSantis, a likely 2024 contender who this week escalated his clash with the Walt Disney Company over its criticism of one of his laws that limits certain classroom instruction about sexual orientation and gender identity for young children.

The fact the anti-ESG measure made it to Biden’s desk at all is one of the first illustrations of the delicate power balance in Washington given the new Republican majority in the House and the still fragile Democratic edge in the Senate. It passed the Senate by 50-46 on Wednesday with Democrats hurt by the absence of Pennsylvania Sen. John Fetterman, who is hospitalized for depression. Two other Democrats, Sens. Joe Manchin from West Virginia and Jon Tester from Montana, voted with Republicans, reflecting tough reelection races both are likely to face next year in states former President Donald Trump won by double digits.

The resolution – which, unlike major legislation, only required a majority to pass – is likely to be the first of a flurry of Republican efforts to pass measures that have no chance of changing policy but that carry a hefty political message.

Republicans argue that the Biden administration rule – which reverses an attempt by the Trump White House to prohibit the consideration of ESG factors in investing – would cost Americans financially by reducing the value of their investments, including 401k pension plans. GOP leaders also insist that investing based on environmental considerations could cost jobs in the fossil fuel industry, for instance.

The Biden rule, however, does not require investment managers to make such decisions; it merely allows them to do so if they are relevant to risk and return analyses. While the differences between the Biden and Trump rules are intricate, the issue has blown up because it offers the GOP an opening to pivot to its broader claims that Democrats are trying to embed liberal political principles in vast sectors of government, business and everyday life.

“What’s happened here is the woke and weaponized bureaucracy at the Department of Labor has come out with new regulations on retirement funds, and they want retirement funds to be invested in things that are consistent with their very liberal, left-wing agenda,” Wyoming Sen. John Barrasso said on Tuesday.

Senate Republican leader Mitch McConnell of Kentucky accused the administration of wanting to let “Wall Street use workers’ hard-earned savings to pursue left-wing political initiatives.”

But Biden has warned that American workers should have the “fullest set of available tools” to maximize returns on their life savings and pensions. He said in a statement threatening a veto that the Trump-era rule got between investment advisers and workers and stopped plan managers from “considering all factors relevant to investment decisions.”

If Biden vetoes the measure as expected, Republicans are certain to charge that he has capitulated to extreme left-wing influences in the Democratic Party. But Biden, adopting a populist tone, is criticizing the GOP measure for limiting American workers’ earning potential from their savings. Democrats are also likely to charge that a far-right Republican Party is again demonstrating its cultural extremism and taking actions that could prejudice efforts to fight climate change and to foster racial equality. It is unlikely that there will be the sufficient two-thirds majority in the Senate and the House to overturn Biden’s potential veto.

There is one another candidate for Biden’s first presidential veto. Republicans are working to rescind a controversial Washington, DC, crime law that they argue is soft on violent offenders. A final Senate vote on the measure is expected next week. Manchin has already said he’d vote with Republicans, while Tester told reporters earlier this week he has not decided.

The Republican campaign against “wokeness” is often hard to define and, in some cases, is a rhetorical device rather than a coherent set of policy programs. Often it is a mindset or definition that means different things to different people.

But generally, it is employed by Republicans to target the belief that there are systemic injustices in US society – for instance, around race or sexuality – and policy responses to try to mitigate them. More broadly, as in the case of ESG investing, the GOP war on “woke” policy is invoked to decry government or institutional efforts to make inclusionary or socially conscious decisions. In education, for example, Republicans often target the teaching of gender and sexuality issues that they think go against conservative values.

Critics, however, often view such campaigns as attempts to create political wedge issues, which only end up hurting vulnerable individuals and groups. While attacks on “woke” policies are allied to the ideology of Trumpism and his efforts to destroy government institutions, DeSantis has perfected the use of government power in what he’s selling to conservatives as a defense of their values.

Among multiple efforts, DeSantis has used state power to prevent fund managers from using ESG considerations in investment decisions. His new book, “The Courage to Be Free,” which was published on Tuesday, bristles with countless references to “woke” ideology.

“Woke capital exerts a pernicious influence on society in several ways. First corporations politicize the economy when they leverage their economic power to take positions on issues that do not directly affect their businesses,” DeSantis wrote. The Florida governor also criticized what he sees as politicized companies that force employees to “self-flagellate” over concepts such as “white privilege” in diversity, equity and inclusion training.

As Republicans in Congress pushed this campaign forward in Washington this week, DeSantis escalated his duel with Disney in Florida, giving him more power over its special tax district. Democrats have accused him of inappropriately using power in an act of personal and political revenge that pales in comparison with how he would use federal power if he ever makes it to the Oval Office.

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