Just a few minutes into Monday’s Supreme Court argument over the scope of presidential power to fire leaders of independent agencies, Justice Brett M. Kavanaugh posed a question to the lawyer representing the Trump administration: What about the Federal Reserve?
The case before the court concerns Rebecca Kelly Slaughter, a member of the Federal Trade Commission whom President Trump wants to fire. Though a federal law requires him to provide a reason, he maintains that the Constitution’s separation of powers allows him to remove such officials for any reason or no reason at all.
During the arguments, it was clear that Mr. Trump was heading toward a sweeping victory, one that would allow him to exert complete control over the F.T.C. and many other agencies that Congress had sought to insulate from political interference. There was only one hurdle.
His lawyer, Solicitor General D. John Sauer, had to satisfy the justices that a ruling in his favor would not jeopardize the independence of the Fed, which could spook the markets and endanger the economy.
This required a principled theory, and it was not clear whether Mr. Sauer had one.
“General Sauer, can I ask you about the Federal Reserve?” Justice Kavanaugh asked. “The other side says that your position would undermine the independence of the Federal Reserve and they have concerns about that, and I share those concerns. So, how would you distinguish the Federal Reserve from agencies such as the Federal Trade Commission?”
The Fed will figure in a case to be argued next month involving Lisa D. Cook, a Fed governor whom Mr. Trump has tried to fire.
Mr. Sauer’s answer to Justice Kavanaugh’s question on Monday, which must have been tested and honed as he prepared for the argument, basically cited an earlier statement from the court that was not notable for its clarity.
In May, in an unsigned opinion letting Mr. Trump temporarily remove leaders of the Merit Systems Protection Board and the National Labor Relations Board, the majority had gone out of its way to carve out the Fed, whose status was not, at that time, before the court.
“The Federal Reserve is a uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States,” the opinion said.
On Monday, Mr. Sauer noted that the sentence contained some important parts of speech. “There’s two adjectives there or an adjective and an adverb,” he said, pointing to “unique” and “distinct.”
“The Federal Reserve has been described as sui generis,” he said, adding that firing its leaders would “raise their own set of unique distinct issues.” He did not specify why exactly the Fed was unique and distinct.
Lev Menand, a law professor at Columbia, said the effort to carve out the Fed was not particularly cogent.
“Neither the government nor the justices have worked out a way to do this consistent with the constitutional theory advanced by the president,” he said.
At the argument, Mr. Sauer said the administration had not challenged the constitutionality of congressional limits on the president’s power to fire members of the Fed, suggesting the court could leave the question for another day.
He did not mention Mr. Trump’s attempt to fire Ms. Cook, a Fed governor. But in that instance, Mr. Trump has asserted he has cause — an allegation that she engaged in mortgage fraud. She has denied wrongdoing. The court has let Ms. Cook keep her job for now, and it will hear arguments in her case next month.
Mr. Trump, in an effort to pressure the Fed to lower interest rates, has mused about trying to fire Jerome H. Powell, the Fed chair, but he has not followed through. Indeed, no president has sought to remove a member of the Fed board without cause.
Justice Elena Kagan indicated that the logic of Mr. Sauer’s position should include the Fed. “Once you’re down this road,” she said, “it’s a little bit hard to see how you stop.”
Mr. Sauer said the distinctions the court had already drawn should suffice. “So it isn’t that we have gone down this road,” he said. “I think the court has been down this road.”
Justice Kavanaugh, for his part, has long been concerned with preserving the independence of the Fed. He wrote about it in a 2009 article in The Minnesota Law Review as a judge on the U.S. Court of Appeals for the District of Columbia Circuit, before his elevation to the Supreme Court.
“In some situations,” he wrote, “it may be worthwhile to insulate particular agencies from direct presidential oversight or control — the Federal Reserve Board may be one example, due to its power to directly affect the short-term functioning of the U.S. economy by setting interest rates and adjusting the money supply.”
Amit Agarwal, a lawyer for Ms. Slaughter, the fired F.T.C. commissioner, said that while Mr. Sauer was “not challenging right now the Federal Reserve” there would be “absolutely no principled basis” for treating it differently.
Still, the court has more than once shown that it can simply write a sentence asserting that the Fed is different.
Adam Liptak covers the Supreme Court and writes Sidebar, a column on legal developments. A graduate of Yale Law School, he practiced law for 14 years before joining The Times in 2002.
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