LAST WEEK, AFTER MONTHS of threatening to fire Federal Reserve Chair Jerome Powell, President Donald Trump signaled he was backing off. Trump’s rationale—or pretext, if you prefer—for going after Powell is cost overruns and delays in the $2.5 billion renovation of the agency’s headquarters in Washington, D.C. The more plausible explanation is Trump’s longstanding anger at Powell for the Fed’s refusal to lower interest rates; Trump has called Powell a “very stupid person” for not cutting them from above 4 percent down to 1 percent.
Why did Trump back down? Maybe it’s because markets dipped as his threats crescendoed. Or maybe it’s because White House lawyers reportedly advised him that the move would not hold up in court. The New York Times likewise wrote that “legal experts widely agreed that Mr. Trump could not outright fire Mr. Powell before the end of his term simply because of a disagreement over decisions related to monetary policy.” Under the Federal Reserve Act of 1913, the appraisal goes, Trump cannot legally fire Powell except “for cause,” and the mishandling of a building renovation doesn’t count.
Although technically true, this assessment ignores the unprecedented legal realities these days. Powell is not insulated from termination. Donald Trump does not care about what the law says. The pattern is clear: Time and again, when Trump complains (via legal filings) to his pals in the majority on the Supreme Court that the lower courts are holding him to the rule of law, they let him do what he wants. They could very well do it if he fires Powell, too.
In fact, Trump has already fired two officials without “cause” in contravention of statutory language similar to the “for cause” language that’s supposed to protect Powell from being fired for no good reason. (Trump’s “real goal,” the Times suggests, is to control federal monetary policy himself.) When he ran to the Supreme Court to whine that the lower federal courts applied the law governing those officials’ jobs, the right-wing majority sided with Trump, effectively overruling a 90-year-old Supreme Court precedent holding that “for cause” limitations on firing certain officials are constitutional.
Some background: There are many agencies across the government for which Congress constrained the president’s power to remove certain officials except “for cause,” including the Federal Election Commission, the Federal Trade Commission, the U.S. Postal Service, the Federal Energy Regulatory Commission, and the Consumer Product Safety Commission. The Constitution is explicit about the president’s power to appoint principal officers, but says nothing about their removal. The Court has long held that the appointment and removal powers go hand-in-hand—but ruled in an important 1935 case, Humphrey’s Executor v. United States, that Congress can impose “for cause” limits on certain employees (that is, a showing inefficiency, neglect of duty, or malfeasance in office before removal is legal) in order to insulate them from being terminated for purely political reasons. In that decision, which involved the statutory limit on firing FTC officials except for cause, the Court noted that “the commission is to be nonpartisan, and it must, from the very nature of its duties, act with entire impartiality.”
Bear in mind that the question of whether or not the “for cause” language holds is really a question about the power of Congress to pass laws creating executive branch agencies and defining their authority. In its ruling this past May, Trump v. Wilcox, the Supreme Court’s 6–3 majority allowed Trump to fire the heads of two agencies—the National Labor Relations Board and the Merit Systems Protection Board—even though he hadn’t bothered to comply with similar “for cause” limits mandated by federal law. The Court did this on an emergency basis without full briefing and oral argument, summarily concluding that “because the Constitution vests the executive power in the President, . . . he may remove without cause executive officers who exercise that power on his behalf, subject to narrow exceptions recognized by our precedents.” (In 2020, the Court tweaked the 1935 ruling a bit, but didn’t overrule its basic premise that “for cause” limits are constitutional.)
The majority pretended that “we do not ultimately decide in this posture” whether the firings of the NLRB and MSPB heads fell within the exceptions. But as a practical matter, those people lost their jobs. So Trump won both the battle and the war. Meanwhile, the majority left lower courts, scholars, judges, lawyers, and law students scratching their heads as to exactly why it decided as it did given the 90-year-old precedent maintaining that the statutes creating the NLRB (dating from 1933) and the MSPB (dating from 1979) and imposing “for cause” limits on removal of the heads of those agencies are constitutional. (This is an irresponsible abdication of its obligation to explain what the law is under Marbury v. Madison, but one that this majority has been doing a lot these days.)
Interestingly, in Wilcox, the majority acknowledged that its quick-and-dirty analysis posed a problem for Fed Chair Powell. Signaling an awareness of how Trump would interpret its decision, the Court wrote (in an opinion that no justice claimed responsibility for):
Finally, respondents Gwynne Wilcox and Cathy Harris contend that arguments in this case necessarily implicate the constitutionality of for-cause removal protections for members of the Federal Reserve’s Board of Governors or other members of the Federal Open Market Committee. . . . We disagree. 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.
In a word . . . huh?
This is not a meaningful distinction. It’s not even legal analysis. The NLRB and the MSPB are both “uniquely structured,” too. What the Court means by “quasi-private” and “distinct historical tradition” are not explained. And why the “First and Second Banks of the United States”—failed antecedents not relevant to the Federal Reserve’s constitutional status—somehow deserve a special carveout from its line of cases involving statutes containing “for cause” language is a complete mystery.
If Trump does fire Powell and that firing makes its way to the Supreme Court, it is naïve to expect that the majority will draw a red line and tell him “no” because the law requires it to. The Court didn’t do that in Wilcox. It didn’t do it in the birthright citizenship case, despite the plain text of the Fourteenth Amendment. And it didn’t even do it to protect migrants from deportation without due process to South Sudan where they face possible torture or death. Given the right-wing majority’s track record, Powell’s fate will not necessarily depend on what the law says. In all likelihood, it really depends upon the whim of Donald Trump.
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Great Job Kim Wehle & the Team @ The Bulwark Source link for sharing this story.
