With First Veto, President Biden Fails to Learn from California: Lee Schalk and Thomas Savidge in The Orange County Register

Lee Schalk, ALEC Vice President of Policy co-authored a guest column in The Orange County Register with ALEC Center for State Fiscal Reform Research Director Thomas Savidge, explaining why politically motivated investment strategies can be a recipe for disaster for state pension funds.

President Biden issued his first veto this week, rejecting a bipartisan resolution from Congress that protected pensions from politicized investment strategies like Environmental, Social and Governance (ESG). As many Californians have learned over the years, pension funds that utilize similar strategies can be a recipe for disaster.

The president defended the veto, saying the resolution would, “put at risk the retirement savings of individuals across the country.” But his claim falls flat. New research from Mike Edleson and Andy Puzder found that ESG investing yields lower returns than investing without political constraints. Additionally, researchers at Boston College found that ESG has failed to achieve its stated social goals.

Last year, a fossil fuel divestment bill threatened the solvency of public pensions in California. That divestment bill would have continued the over 20-year practice of sacrificing retirees’ returns in pursuit of a political agenda. Fortunately, the bill was halted for the 2022 legislative session.

Click here to read the full guest column.