Republicans are in a position to score a win against the Labor Department by blocking its rule to tighten standards for people who give investment advice. As of now, the provision is part of a year-end spending bill, according to a Republican appropriator. But there are still a few refining rounds to go.
The investment advice rule is a top priority for the administration, but some Democrats aren’t willing to fall on their swords to protect it. Hence the Republican opportunity.
“I’m not willing to shut down the government over it, not at all,” said Rep. Lacy Clay (D-Mo,) in an interview.
Clay was one of 90 House Democrats who signed a letter to Labor Secretary Thomas Perez in September urging the department to reconsider its proposed rule. The rule as written would apply strict “best interest” standards to anyone who provides investment advice in a professional capacity.
Proponents of the rule view it as a necessary safeguard to ensure quality advice for low- and middle-income investors. Detractors say it will backfire and deprive those same investors of valuable advice.
Clay may not like the DOL rule, but he also isn’t fond of an oft-used trick in Congress to deprive the administration of working its will — denying funding for individual agency initiatives. That’s precisely what Republicans are proposing to do. “If someone comes up with this creative way of blocking the rule, that’s just another symptom of what’s wrong here,” he said.
In October, the House passed a bill that would block the Labor Department’s rule and shift the rule-making process to the Securities and Exchange Commission. It only received three Democratic votes, in part because of a campaign from the administration and allied Democrats, such as Sen. Elizabeth Warren (D-Mass.). Even concerned Democrats, Clay among them, were generally unwilling to vote against a major administration priority as a standalone measure.
The situation might change, however, if the rollback is part of a massive, must-pass spending bill. When asked if such a rider would be a poison pill for him and other Democrats, Clay responded, “Nah.”
“If it was a standalone amendment, I would still vote against it,” he continued. But if an omnibus package that includes the DOL rider passes Congress, he added, “It would be up to the administration and what they want to do.”
Republican appropriators are considering some 30 policy riders to the omnibus spending bill, including politically contentious issues as defunding Planned Parenthood and instituting new screening processes for Syrian refugees. Those two, among others, are considered to be non-starters for Democrats and could sink the spending bill. Congress must pass the omnibus measure or a continuing resolution by Dec. 11 to avoid a government shutdown.
Not all Democrats agree with Clay’s stance that blocking the fiduciary rule might be okay. Rep. Rosa DeLauro (D-Conn.), a close ally of House Minority Leader Nancy Pelosi and one of the more liberal members of the Democratic caucus, vehemently opposed the inclusion of the DOL rule rider and dismissed it as a Republican negotiating ploy.
“[Blocking] the fiduciary rule is a non-starter. I understand negotiations, so maybe you dump the kitchen sink, but it isn’t serious. I think I can characterize it in that way,” she said.
Republicans are hoping to exploit the rift among Democrats over the fiduciary rule by including it in the omnibus spending bill and daring them to put up a fight. In the end, Republicans are betting it probably won’t be worth their while.
“There are a lot of people who have concerns about this, and they will tell you that. …I don’t want to name names. There’s a bipartisan concern,” said Rep, Tom Cole (R-Okla.), the chairman of the House Appropriations Labor-HHS-Education subcommittee.
Cole said he has not gotten the impression from Democrats that a fiduciary rider would be poison pill along the lines of the language to defund Planned Parenthood. That understanding has informed the appropriators’ decision to keep the rider alive for the moment. “It survived the initial round and now it’s at the chairman level,” he said.