Happy Wednesday! If you live in Fayette County, Georgia, and woke up earlier this week to find several buffalo moseying through your backyard, you probably assumed you were still dreaming.

You weren’t. Rapper Rick Ross was gifted the 2,000-pound beasts last year by an underwear brand, and they’ve recently developed a habit of wandering off his property and annoying his neighbors. “You gotta get loose sometimes and see the other side. Nothing wrong with that,” Ross said. “So when you see my buffalo, give it a carrot. Give it an apple. They so kind, they so peaceful.”

Quick Hits: Today’s Top Stories

• At an American Bankers Association event in Washington, D.C. on Tuesday, Treasury Secretary Janet Yellen defended regulators’ moves to guarantee deposits in both the Silicon Valley and Signature Banks after their collapse this month and said the U.S. government could step in to protect depositors at other banks should there be a broader run on the system. “Our intervention was necessary to protect the broader U.S. banking system,” she said. “And similar actions could be warranted if smaller institutions suffer deposit runs that pose the risk of contagion.”
• The National Association of Realtors reported Tuesday the median existing-home sales price in the U.S. was $363,000 in February—down 0.2 percent year-over-year in February 2023, and the first such annual decline since February 2012. Sales of previously-owned homes increased 14.5 percent from January—ending 12 consecutive months of declines—but were still down 22.6 percent year-over-year.
• The Defense Department announced Tuesday it will expedite the delivery of Abrams tanks to Ukraine, now aiming to have them in-country by the fall. The Pentagon said it would send an older—but refurbished—model of the M1 tank that can be pulled from existing Army stockpiles instead of new tanks that could have taken up to two years to build and ship. 
• Republican Gov. Ron DeSantis of Florida provided the strongest indication yet that he plans to run for president in 2024 on Tuesday, sitting down for an interview with Piers Morgan in which he touted his electoral and legislative victories, criticized Donald Trump’s management style, and predicted he would beat President Joe Biden in a theoretical head-to-head matchup. “If I were to run, I’m running against Biden,” he said. “I think the country wants a change. I think they want a fresh start and a new direction, and so we’ll be very vocal about that.”

‘Just Say No’ to PFAS

Don’t freak out, but odds are, you probably have a synthetic chemical that’s been linked to a number of maladies pumping through your veins as you read this newsletter. Was it a little more difficult for us to fall asleep last night after learning that fact? You bet. 

Last week, the Biden administration announced sweeping new rules aimed at curbing the amount of these chemicals in the nation’s water supply. Years in the making, the changes would establish federal limits on manufactured compounds known as per- and polyfluoroalkyl substances (PFAS), or “forever chemicals,” that don’t degrade naturally and can build up over time in the air, soil, and water, producing dangerous health effects. If implemented as proposed, the rules would represent the most significant change to water quality regulations in decades—but complying with them won’t be cheap. 

Baby’s First Veto

With just 670 days left in his term, President Biden had better pick up the pace if he wants to defeat Franklin Delano Roosevelt’s majestic record of 635 vetoes issued. He just has to nix 0.947 bills per day—how hard can it be?

Even if Biden falls short of FDR, he won’t be joining the existing seven-way tie for fewest presidential vetoes (zero). On Monday, he wielded the presidential pen to protect a Labor Department rule change clarifying that retirement fund investment managers may consider environmental, social, and governance (ESG) factors in choosing the most financially advantageous investments. ESG, like most investment strategies, has a mixed record—and its parameters are often vague and ill-defined. It’s also become a partisan lightning rod, as evidenced by the heated rhetoric lobbed back and forth this week.

Generally speaking, ESG investing involves considering a company’s environmental and social effects and the equity of its corporate governance when deciding whether to invest. Whether that’s motivated by a desire to make the world a better place by supporting positive-impact companies—or a belief that companies with these business practices are more likely to thrive—depends on who you ask. The fuzzy definitions produce confusion about what companies are ESG-approved, even among the framework’s chief proponents. A 2021 Wall Street Journal report on three ESG raters, for instance, found they gave opposite report cards to about a third of the firms they all analyzed.

ESG has nevertheless caught on like wildfire. Worldwide, Morgan Stanley estimates, about $22.8 trillion—1 in every 4 professionally managed dollars—is invested “sustainably.” For a while, data suggested, some ESG-focused funds did outperform—they tend to be comparatively tech-heavy and energy-light to avoid fossil fuels, and they rode the tech boom. But as the tech sector has stumbled in the post-pandemic, higher interest rate environment, so have many ESG funds. Even in the good times, returns on ESG investing often aren’t quite as high as they could be, as ESG fund managers typically charge higher fees than more traditional asset managers.

While individual investors may not mind risking a financial hit for a good cause, conservative lawmakers have criticized the practice, and not just because ESG criteria often match progressive values. They’re also concerned the investing strategy will dampen returns for retirement funds and other financial vehicles individual investors rely on without control of investment tradeoffs. 

That’s a reasonable fear, according to analysts who argue ESG isn’t a good long-term strategy. “The bottom line is if you are investing for goodness—which is what ultimately ESG is about—you have to settle for lower returns,” said Aswath Damodaran, a finance professor at New York University Stern School of Business. “At best, you can basically match what you could have done without the constraint.”

Republican lawmakers increasingly focused on opposing “wokeness” and “woke capitalism” have set their sights on stamping out ESG. By July 2022, Reuters reported, 17 conservative-led states had introduced at least 44 bills or laws penalizing companies taking stances on issues like gun control, climate change, and diversity—up from about a dozen measures in 2021. BlackRock, the world’s largest investment manager, has become a frequent target of conservative fire, and CEO Larry Fink said Republican state treasurers pulled $4 billion from the company last year over its ESG initiatives. In August 2022, Florida officials announced Florida Retirement System managers wouldn’t consider ESG, instead prioritizing “the highest return on investment for Florida’s taxpayers and retirees.”

The measure Biden vetoed Monday is only the latest strike in the fight over ESG. A Trump administration rule issued in 2020 didn’t outright ban ESG investing, but emphasized retirement fund managers’ fiduciary responsibility is to pursue the highest possible returns and ESG factors could only be considered as a tiebreaker of sorts, if the risks and possible returns of multiple investment options were deemed similar. Biden’s Labor Department amended that rule in late 2022, clarifying that these managers can consider ESG factors when expected returns from various investment options are otherwise expected to be equivalent. Biden vetoed Congress’ attempt to overturn this rule change, which some researchers say could influence investors’ decisions at the margins but isn’t a major shift. 

“When you look at the text of the rule, it does not alter the requirements under [the Employee Retirement Income Security Act] to invest with an [eye] towards the pecuniary gain for the beneficiaries,” said Jennifer Schulp, director of financial regulation studies at the libertarian Cato Institute. “In that way, the rule is not very different from the Trump rule even though they have different language.” 

Not that you’d know it from the rhetoric. “This bill would risk your retirement savings by making it illegal to consider risk factors MAGA House Republicans don’t like,” Biden said Monday, explaining his veto. “Your plan manager should be able to protect your hard-earned savings—whether Rep. Marjorie Taylor Greene likes it or not.” White House spokesperson Robyn Patterson said Monday the bill would have jeopardized “the hard-earned life savings of cops, firefighters, teachers, and other workers–all in service of an extreme, MAGA Republican ideology.”

Indeed, the legislation Biden vetoed did have support from noted MAGA extremists like … Sens. Joe Manchin and Mitt Romney. “This Administration continues to prioritize their radical policy agenda over the economic, energy and national security needs of our country, and it is absolutely infuriating,” Manchin said in a statement after Biden nixed the bill. Romney echoed the frustration: “This is a mistake. Democrats can’t get their radical policies through Congress, so they hope asset managers will do the work for them.” 

With limited bipartisan support—among Democrats, only Manchin and Sen. Jon Tester of Montana backed the bill in the upper chamber and Rep. Jared Golden of Maine in the lower—it’s unlikely the measure will garner enough support to override Biden’s veto. Texas is leading a multi-state lawsuit opposing the rule, and states are moving ahead with other anti-ESG measures. This month, Florida Gov. DeSantis announced an 18-state alliance to support “removing all state pension funds and state-controlled investments from firms that follow the ESG model of ‘politics before fiduciary duty.’”

In the meantime, Schulp says folks watching their pensions from home needn’t fret about the ultimate outcome for the Labor Department’s rule, whatever it may be. “The rhetoric on the Republican side that this is going to cause some, say, dramatic decrease in attention to returns for pension investing is overblown,” she told The Dispatch. “The rhetoric on the Democratic side that this is going to open up a lot of capital for green or social justice investing is also overblown… The political rhetoric on both sides of this is out of control.” Investment strategies may change, but some things never do.

Worth Your Time 

• In a profile of GOP Rep. James Comer of Kentucky, Jonathan Swan and Luke Broadwater detail the fourth-term congressman’s tenuous position as the chairman of the House Oversight and Accountability Committee, the tip of the Republican investigative spear pointed at the Biden administration. “Mr. Comer, who voted to certify Mr. Biden’s victory and was a favorite among Democrats in Kentucky’s Legislature, has transformed himself to command the Republican war machine in Congress—becoming a high-profile example of what it takes to rise and thrive in the Fox News-fed MAGA universe,” they report for the New York Times. “Mr. Comer’s committee is populated by the most hard-line House Republicans. Mr. Comer conceded he was limited in how much he could control such members given their outsize influence in the party. ‘It’s hard for a coach to tell LeBron James what he’s doing wrong,’ he said. Fellow Republicans argue Mr. Comer is as well suited as anyone to manage rapacious expectations from the party’s base. ‘He’s likely to do it in a more kind of level-headed, less flamboyant way than some members of the House might do that job,’ Senator Mitch McConnell, Republican of Kentucky and the minority leader, said in an interview.”
• Mike Pence would very much like to be president, but as McKay Coppins reports for The Atlantic, the former vice president is a sort of “Goldilocks” candidate: not Trumpy enough for some, too Trumpy for others, and just right for almost no one. “Of the 34 Republicans who participated [in pollster Sarah Longwell’s focus groups], I heard only four people say they’d consider Pence for president—and two of them immediately started talking themselves out of it after indicating interest,” he writes. “What to make of that 6 to 7 percent he gets in the primary polls? ‘I imagine there’s a cohort of GOP voters who are not particularly engaged who don’t want Trump again, and Pence is the only other name they really know,’ Longwell speculated. That, or ‘they’re all from Indiana,’ the state where Pence served as governor. A second Republican pollster, who requested anonymity to offer his candid view, told me, ‘Seven percent is a weak showing for the immediate former VP.’”

You Couldn’t Script It Any Better

(Besides Team USA winning, of course.)

Presented Without Comment

Also Presented Without Comment

Toeing the Company Line

• Will Trump be indicted? Should he be? What will Ron DeSantis do if he is? Sarah, Andrew, and Drucker answered all those questions and more on last night’s Dispatch Live (🔒). Members who missed the conversation can catch a rerun—either video or audio-only—by clicking here. 
• In the newsletters: Haley details the Senate debate over ending a pair of war authorizations and Nick argues (🔒) House Republicans shouldn’t interfere in Alvin Bragg’s (ill-advised) prosecution of Donald Trump. “[Reps.] Jordan, Comer, and Steil sent their letter before anyone had seen the indictment,” he writes. “They’re not responding to facially ludicrous criminal charges or weak evidence. They’re firing a last-second shot across Bragg’s bow based on guesswork to try to intimidate him into not charging Trump at all.”
• On the podcasts: Jonah is joined by Phillip K. Howard to discuss his new book on public sector unions and Vital Interests author Tom Joscelyn makes his triumphant return to the Dispatch Podcast to discuss his time working for the January 6th Committee.
• On the site today: Price delves into the specifics of the possible case against Trump and Jonah argues explains why he thinks that case is seriously flawed. Plus, Danielle Pletka looks at how Giorgia Meloni’s first six months as Italy’s prime minister have defied her portrayal in the media. 

Let Us Know

Is the Biden administration right to regulate PFAS?