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Chairman Smith Op-Ed: Rig the tax code for working Americans, not woke companies

February 28, 2023

By Chairman Jason Smith (MO-08)

Washington Times

Inflation has robbed Americans’ wallets month after month since President Biden took office and launched his partisan spending spree. It has hit seniors particularly hard. Many are choosing to delay retirement and struggling to buy basic necessities on their fixed income. Now, another partisan political agenda threatens to further decimate the retirement security of millions of Americans.

Over the last two years, Democrats have worked tirelessly to enshrine so-called “environmental, social, and governance” (ESG) ambitions into America’s financial system. This corporate political crusade threatens the $20 trillion American retirement saving system, which is held in individuals’ 401(k)s and other retirement accounts.

By law, managers of these retirement funds are supposed to maximize returns for their investors. Working families need that protection to prevent Wall Street money managers from investing in failing, unprofitable ventures. Workers, seniors, and families count on their employers and money managers to make wise choices with their savings to help them retire in dignity.

Unfortunately, the Democrats’ ESG agenda would help funnel Americans’ retirement savings into politically charged woke investments that put climate alarmism and extreme social policies ahead of supporting the retirement of working-class families.

Take climate, for example, where President Biden has pledged the United States to reduce carbon emissions by 80% by 2030. The International Energy Agency estimates that by 2030, $5 trillion will have to be spent every year for the global economy to produce no emissions right – on track with Democrats’ goal. That’s every dollar the federal government collected last year being spent on dubious “green” energy programs. Were the radical voices in charge of today’s Democrat party merely battling this out in Congress, that would be one thing – at least there’s public debate and a vote. But this has turned into a pressure campaign against investment advisors to leverage Americans’ retirement accounts into funding extreme ESG climate schemes.

The Trump administration’s Department of Labor took steps to protect Americans’ retirement savings from the woke ESG interests. The Biden administration reversed course and rolled out the welcome mat for the ESG agenda to control how retirement funds are invested. As a result of the Biden administration stripping away legal protections for seniors and savers, Americans are at risk for lower financial returns and less retirement security.

Investing in ESG has shown to be a financial loser. In 2022, the top three publicly traded ESG funds performed 5.2% worse than the S&P 500 as a whole. When retirement accounts have lost nearly 25% since Biden became president, seniors cannot leave money on the table for the sake of Democrats’ woke ideology. Thanks to the pressure applied by state governments standing up for their citizens, net inflows into ESG funds fell by 76% last year.

Some are even using ESG language to mask their fraudulent schemes. Sam Bankman-Fried, a CEO who was recently arrested for securities fraud and money laundering, used buzzwords like “effective altruism” to get Democrat-controlled Washington to look favorably on his company and ignore the warning signs. The result was a company that fell into bankruptcy and innocent investors who were scammed out of billions of dollars. The word “clean” is a major part of the ESG vocabulary, but it’s often used to cover up a dirty reality beneath the surface.

What’s more, Democrats and Wall Street money managers are teaming up to create an ESG economy paid for by American taxpayers. During the Biden administration, taxpayers have been forced to pay the tab for the massive green corporate welfare agenda that includes luxury electric vehicle tax credits and handouts to politically-connected companies. The so-called “Inflation Reduction Act” enacted by Democrats last year gives $271 billion in tax credits to pay for “green” energy projects favored by the Democrat donor class and $362 million for big businesses to “greenify” their corporate HQs.

The same taxpayers who see their dollars go to fund this partisan ESG agenda that favors the wealthy and special interests are set to lose money in retirement accounts that now lack protection against low-return investments that align with the Biden administration’s extreme agenda.

The new Republican House Majority will hold the Biden administration accountable and ensure that our tax rules support Americans’ financial security, create jobs, spur investment in all corners of America, and provide higher wages for working families. If Wall Street chooses to cozy up to a radical Democrat agenda, Republicans will stand up for the best interests of the American worker so they can retire in dignity.