R. Alexander Acosta, President Donald Trump’s nominee to be secretary of Labor, said Wednesday that if confirmed, he would follow the president’s Feb. 3 executive order directing Labor to review its fiduciary rule.
Noting the Labor Department’s current proposal to delay for 60 days the effective date of the fiduciary rule — from April 10 to June 9 — Sen. Elizabeth Warren, D-Mass., queried Acosta during his confirmation hearing before the Senate Health, Education, Labor and Pensions Committee on whether, if confirmed before the delay is finalized, he would “promise to stop” such a delay.
Acosta, law dean at the public Florida International University in Miami, replied: “There is an executive action which addresses with specificity the fiduciary rule. It has asked the Department of Labor to look at the rule and to assess specific questions: Will the rule reduce the investment options available to investors? Will the rule increase litigation? Will the rule financially impact retiree investors? And the executive action directs the secretary of Labor and Department of Labor to repeal or revise the fiduciary rule if any of the criteria laid out in that executive order is found.”
That criteria “really regulates and determines the Department of Labor’s approach to the fiduciary rule,” Acosta continued, adding that he supports “following executive actions from the president, who will be my boss.”
Warren stated that a 60-day delay of the rule’s effective date would cost Americans “$3.7 billion that they’ll get cheated out of by unscrupulous retirement advisors. … How committed are you to protecting the American investor and retirees?” she asked Acosta.
Acosta replied: “If the question is: ‘Do I think it’s important to protect the American retiree?’ Absolutely.”
Warren probed further, asking Acosta, “Generally, do you support this [fiduciary] rule? Do you think this rule is a good idea?”
Said Acosta: “With respect, the rule goes far beyond simply addressing the standard of conduct [of] an investment advisor.”
Warren accused Acosta of “hiding behind an executive order” that Trump issued asking agency heads to review pending regulations and “dodging” her questions, including committing to appeal an injunction to the Labor Department’s overtime rule, which was halted recently by a Texas federal judge.
“If you can’t give me straight answers on your views …, not hide behind an executive order, but your views on this [fiduciary rule] and commit to stand up for workers on these obvious and very important issues, then I don’t have any confidence that you’re the right person for this job,” Warren said.
Sen. Lamar Alexander, R-Tenn., chairman of the committee, shot back that he wouldn’t have “any confidence in you for this position if you did answer the question that way, because I have a completely different view than Senator Warren does. I think the fiduciary rule deprives millions of Americans of an opportunity for investment advice.”
Alexander, in his opening remarks at Acosta’s hearing, said that the Obama administration issued “130% more final rules” than the previous administration’s Labor Department, citing the fiduciary rule, which he said “makes it more expensive for the average worker to access investment advice.”
Acosta noted during his testimony the executive order issued by Trump states that “each Cabinet officer must review all rules and make determinations if they should be revised.”
During the Labor Department’s review, “high on the list will be to protect workers with appropriate rules,” he said.
Acosta added: “We would enforce all rules that are in effect pending that review” of rules ordered by Trump.
When queried on his overall “big picture” view of regulation, Acosta replied that Trump “has ordered that we eliminate regulations that are not serving a meaningful purpose,” adding that “we need to free up small business” in order to create jobs. Acosta was introduced during the hearing by two fellow Cuban-Americans, Sens. Marco Rubio, R-Fla., and Ted Cruz, R-Texas.
Rubio called Acosta a “brilliant, brilliant legal mind with a deep knowledge of labor issues.” Cruz, who attended law school with Acosta and has known him for 25 years, cited Acosta’s academic accomplishments but noted that he’s also “a man of character, who takes very serious fidelity to the law and to the constitution and has a passion for justice.”
As to the controversial overtime pay rule, Alexander called the rule “one of the worst examples of a regulation,” that received “widespread condemnation” for raising college tuitions “by hundreds of dollars per student” and impacted nonprofits, adding that “it’s not in effect thanks to a court.”
Alexander then queried Acosta on what he’d do about the overtime rule.
“It’s pending in litigation,” Acosta said, noting that the overtime rule hasn’t been updated since 2004. “I think it’s unfortunate that rules that involve dollar values can sometimes go more than a decade, sometimes 15 years, without updating. Life does become more expensive over time.”
But Alexander pressed Acosta on the “doubling” of the threshold, and “applying so heavily the impact of it on nonprofits.”
“I think it’s so unfortunate that they go so long without adjusting,” Acosta replied, “because when they are adjusted you see impacts such as a doubling of the amount that does create, what I’ll call, a stress on the system, particularly in geographic areas that are lower wage.”
He continued: “One of the challenges that we face in addressing the overtime rule is: Since 2004 there’s been no change, now there is a very large change, and how should that be addressed as a policy matter I think it a very difficult decision but a very serious one because the economy does feel a substantial impact from such a large change.”
If confirmed, Acosta said, he would look at the overtime rule “very closely,” but noted that one of the questions caught up in the litigation is whether the Labor secretary has the power to enact the increase as set out in the rule.