Large swaths of the modern regulatory state are unconstitutional as currently structured. So the Supreme Court seems likely to rule, judging from oral argument last week, in Trump v. Slaughter. How can constitutional order be restored? There’s an easy way and a hard way. The justices will probably take the easy way. But the hard way is worth closer consideration, as disruptive as it would be.
President Donald Trump teed up the case in March by firing Rebecca Slaughter, a Democrat on the Federal Trade Commission. The 1914 law establishing the FTC tried to make the agency bipartisan and independent, including by restricting the president’s ability to fire commissioners. Slaughter sued to challenge her removal, and the Trump administration countered that the law’s removal restriction is unconstitutional.
In legal terms, Trump’s argument goes like this: The Constitution vests “the executive power” in the president. The FTC exercises executive power by enforcing federal antitrust laws, among other things. Therefore, its leaders must answer to the president. In political terms, the argument is even simpler: Democracy means the people should be able to control their government. If powerful government officials are too insulated from democratic politics, that control is lost.
The conservative justices on the Supreme Court take those arguments seriously, and rightly so. The easiest way to address them is simply to clarify that Trump has the power fire Slaughter (and, by implication, the heads of many other agencies thought to have a measure of independence, such as the Securities and Exchange Commission, the National Labor Relations Board, the Federal Energy Regulatory Commission and the Federal Election Commission) at his discretion.
The problem is that such a decision wouldn’t restore the constitutional balance of power that existed before the 20th-century proliferation of so-called independent agencies. It would “almost automatically create a dozen or more ‘purely’ executive departments Congress never intended,” law professor Michael T. Morley wrote in an amicus brief. In other words, it would take power that Congress meant to lodge in walled-off institutions and transfer it to the president.
“Had Congress known the Constitution bars it from protecting the heads of ostensibly independent agencies from at-will presidential removal,” Morley observed, it would probably have written the Federal Trade Commission Act — and other laws — differently to prevent presidential abuse. For example, Congress might have “narrowed the scope of the powers it conferred,” “required the agency to follow additional procedures before exercising those powers” or “expanded the scope of judicial review” of agency actions.
For an example of a previously independent agency hijacked for partisan mischief, look no further than the Federal Housing Finance Agency. When Congress created the obscure institution in 2008, it protected the director from presidential removal. In 2021, the Supreme Court ruled that protection unconstitutional. The ruling enabled Trump to install businessman William J. Pulte as FHFA director this year, as Josh Blackman noted in Reason magazine. Pulte is leveraging the office for opposition research into Trump’s political enemies, using his access to bank loan details to frivolously accuse various Democrats of mortgage fraud.
Of course, “independent” regulators sometimes abuse their power as well. They can also hide behind their independence to conceal abuses; at least it’s clear on whose behalf Pulte is acting. The point is that making agencies “politically accountable” to the president also gives him new weapons to sic on the opposition party. The president can already weaponize the Justice Department. But the alphabet soup of regulatory bodies overseeing the nooks and crannies of the economy and political system could be mined by a president’s enterprising minions in new and creative ways. The stakes of presidential elections would increase.
That doesn’t mean the Supreme Court can ignore the constitutional affront these agencies represent as reservoirs of executive power outside the control of the executive branch. If anything, it suggests that a sledgehammer, rather than a scalpel, is the appropriate judicial tool.
Rather than tweaking the law by making regulators removable at the president’s will, the court could force a more fundamental rethink of the agencies’ power to bring them in line with the Constitution. It could rule that the removal protections in laws like the Federal Trade Commission Act make the whole scheme unconstitutional and send Congress back to the drawing board. Or it could remand the case to lower courts to decide which functions of independent agencies are constitutionally permissible given their political insulation, and which involve significant executive power that the president needs to control.
This “remedy” question was discussed only in passing at oral argument in the Slaughter case, and it’s unlikely a majority of of justices would agree to such disruptive steps. But the fear of disruption here might be misplaced. Yes, taking a sledgehammer to the regulatory state would be economically disruptive in the short term. But a runaway presidency will be constitutionally disruptive in the long term.
This dilemma might become more acute as the court considers removal protections for governors of the Federal Reserve. In debates about agency independence, the central bank is the elephant in the room. The Supreme Court has tried to distinguish the Fed from other independent agencies, reassuring the public (and markets) that the central bank won’t be affected by the ruling in Slaughter. Very few people think presidential control of the money supply is a good idea.
That distinction makes sense insofar as monetary policy is not an “executive” power (the Constitution gives Congress the power to coin money). But the Fed also has acquired increasingly significant regulatory powers over the banking system. Those functions are as executive and political as the regulatory activities of the FTC. Why should they be insulated from the president? The solution to this dilemma, as law professor Michael W. McConnell has argued in these pages, is for Congress to eliminate the Fed’s regulatory powers and move them to “a new entity governed in the same way as other regulatory agencies.” That way, its monetary-policy function can stay independent.
If Congress doesn’t follow that advice, and if the justices affirm maximum presidential removal power, then the Fed’s independence could come under greater threat. As Justice Elena Kagan said in the Slaughter oral argument: “Once you use a particular kind of argument to justify one thing, you can’t turn your back on that kind of argument if it also justifies another thing in the exact same way.”
Handing the president direct control of the regulatory state will bring unintended consequences. There is no elegant way for the Supreme Court to unwind the constitutional damage from decades of independent-agency governance. So the justices might as well weigh alternative ways to bring the branches of government back into balance — including striking at the regulatory state itself.
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