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Chairman Smith Opening Statement – Hearing on Protecting Seniors & Savers from ESG Activism

November 07, 2023

As prepared for delivery.

“Like many Americans, seniors and those living on fixed incomes have been decimated by President Biden’s inflation crisis.

“The cost of goods and services has risen 17.7 percent since Joe Biden became President. You can chart the rise in prices, starting with the first full month of Joe Biden’s presidency, and the rapid decline in Americans’ standard of living as $5 of pay now buys only $4.25 of goods and services. Yet, Democrats in Congress and the Biden White House insist the economy is as healthy as ever.

“Not only has President Biden’s inflation crisis harmed working families, but it has also endangered millions of seniors and those nearing retirement. Right now, 25 percent of Americans plan to delay their retirement, and 62 percent of women say they expect to retire later or don’t believe they will ever be able to retire because of inflation.

“Every single day, roughly 10,000 Baby Boomers reach retirement age. Yet, due to the President’s cost of living crisis, 1 in 6 seniors are considering going back to work – the number one reason they cite is a lack of money.

“Seniors who retired before President Biden took office haven’t been spared either. Inflation has eroded retirement accounts for even the most diligent savers. For example, a retirement portfolio valued today at $250,000 would buy the same amount of goods as $137,100 in 2000.

“Make no mistake, the Democrats’ reckless spending agenda caused this problem, and now their radical ESG agenda threatens what’s left of seniors’ retirement.

“Democrats are trying to enshrine so-called “environmental, social, and governance” ideology into America’s financial system by removing protections for savers in the tax code. This political crusade threatens the $33 trillion Americans have saved for retirement. As a committee, we have a responsibility to ensure that tax-advantaged retirement plans offer security to American seniors and future retirees. The tax code imposes strict requirements on every professional who manages tax-advantaged retirement plans in order to protect our seniors. The law states that state governments and the private sector must manage these accounts for the exclusive benefit of retirees. This standard has been in place for decades, and it predates rulemaking by the Department of Labor on fiduciary duties.

“Working families need that protection to prevent Wall Street money managers from putting climate alarmism and far-left policies ahead of their retirement security. But over the last couple of years, we’ve seen the ESG agenda turn into a pressure campaign that allows, and in some cases forces, investment advisors to gamble with retirees’ nest eggs.

“According to Bloomberg, investors have pulled back over $280 billion from ESG-targeted stocks since August of last year. And for good reason. According to our staff analysis of the top 20 ESG investment funds, ESG funds performed 18 percentage points worse than the stock market as a whole during the past year. A report on ESG investing produced by the Committee to Unleash Prosperity cites a review published by Boston College in 2020 that found ‘pension funds with an ESG orientation lagged those of non-ESG funds by two basis points per year over a ten-year period.’ Requiring retirement plan managers to invest in ESG funds is reckless and a danger to the system we have the responsibility to protect as members of the Ways & Means Committee.

“The Trump Administration’s Department of Labor issued rules prohibiting Wall Street managers from investing Americans’ retirement savings in woke ESG special interests. The purpose of the rules was to remind retirement plan managers of their sole responsibility: protect and build retirement security. The Biden Administration reversed course with a superseding rule that favors ESG activism, and then went as far as to veto a Congressional resolution back in March that would have corrected their error.

“This Committee has a duty to ensure that our tax rules support Americans’ financial security. We have a responsibility to put the needs of seniors ahead of climate extremists and far-left activists who want to use retirement savings to finance a political agenda.

“I hope my colleagues on the other side of the aisle will do what’s right and join us in protecting our seniors. I look forward to today’s discussion.”