The Supreme Court case 'Trump v. Slaughter,' concerning the firing of an FTC commissioner, is poised to dismantle longstanding protections for independent agencies. A ruling favoring the president would transfer significant power from Congress to the executive branch, fundamentally altering the separation of powers in American government.
The Trump administration's strategy for control isn't writing new authoritarian laws, but aggressively using latent executive authority that past administrations ignored. This demonstrates how a democracy's own structures can be turned against it without passing a single new piece of legislation, as seen with the FCC.
The threat to the Federal Reserve's independence is not limited to a single appointment. It involves a broader potential strategy of simultaneously nominating a chair, replacing other board members like Lisa Cook, and filling vacancies as they arise. This creates the possibility for a majority of the Fed board to become politically aligned with the administration.
In Trump v. United States, the Supreme Court granted presidents immunity from criminal prosecution for official acts related to their "core constitutional functions," such as pardoning or directing investigations. This protection applies even if the actions are performed in bad faith, creating an unprecedented shield from accountability.
The Supreme Court is systematically dismantling laws that protect heads of independent agencies (like the CFPB and FTC) from being fired at will. This aligns with the "unitary executive theory," concentrating power in the presidency and eroding the apolitical nature of regulatory bodies.
The arguments to allow presidential firing of FTC commissioners create a slippery slope that threatens other independent, multi-member bodies. This logic could extend to the Federal Reserve's Board of Governors, potentially politicizing U.S. monetary policy—an outcome so significant that even the court's conservative justices appear wary of its implications.
The legal battle over President Trump's tariffs and President Biden's student loan forgiveness both hinge on the "major questions doctrine." This Supreme Court principle asserts that if the executive branch exercises a power with vast economic and political impact based on ambiguous statutory language, the Court will rule against it, demanding explicit authorization from Congress.
The administration's executive order to block state-level AI laws is not about creating a unified federal policy. Instead, it's a strategic move to eliminate all regulation entirely, providing a free pass for major tech companies to operate without oversight under the guise of promoting U.S. innovation and dominance.
Alan Blinder identifies a pending Supreme Court case on the President's power to remove a Fed governor as a potential market catalyst. An adverse ruling would set a precedent allowing political removal of governors, which could abruptly awaken "bond vigilantes" to the reality of a compromised central bank.
Senator Elizabeth Warren argues that the separation of powers is not self-enforcing; it depends on each branch jealously guarding its own authority. A constitutional crisis arises when Congress becomes compliant and allows the executive branch to usurp its powers.
Despite expected legislative gridlock, investors should focus on the executive branch. The president's most impactful market tools, such as tariff policy and deregulation via executive agencies, do not require congressional approval. Significant policy shifts can therefore occur even when Congress is divided and inactive.